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Full-Text Articles in Business
Contracting And Reporting Conservatism Around A Change In Fiduciary Duties, Daniel Bens, Sterling Huang, Liang Tan, Wan Wongsumwai
Contracting And Reporting Conservatism Around A Change In Fiduciary Duties, Daniel Bens, Sterling Huang, Liang Tan, Wan Wongsumwai
Research Collection School Of Accountancy
We exploit an influential 1991 Delaware court ruling to examine the impact of changes in managerial fiduciary duties on firms’ accounting and contracting choices. The ruling expanded directors’ fiduciary duties in favor of creditors and away from shareholders for a specific group of firms. Using a hand-collected sample of debt contracts around the ruling date, we find that, following the ruling, debt contracts of affected firms rely less on the use of income escalators (provisions in loan contracts which require changes in net worth to reflect losses in full, but only partially for gains and profits) and other conservative adjustments …
Does Litigation Deter Or Encourage Real Earnings Management, Sterling Huang, Sugata Roychowdhury, Ewa Sletten
Does Litigation Deter Or Encourage Real Earnings Management, Sterling Huang, Sugata Roychowdhury, Ewa Sletten
Research Collection School Of Accountancy
In this paper, we rely on an exogenous shock to examine the impact of litigation risk on real earnings management (REM). We conduct differences-in-differences tests centered on an unanticipated court ruling that reduced litigation risk for firms headquartered in the Ninth Circuit. REM increases significantly following the ruling for Ninth-Circuit firms relative to other firms, consistent with litigation risk deterring REM. Additional analyses reveal that REM rises more following the ruling when firms issue more optimistic disclosures. The evidence is consistent with litigation deterring REM by constraining managers' ability to issue optimistic and misleading disclosures that can conceal the myopic …
Essays On Corporate Finance, Shuyu Xue Shuyu
Essays On Corporate Finance, Shuyu Xue Shuyu
Dissertations and Theses Collection (Open Access)
This dissertation has two essays on corporate finance. In the first chapter, I investigate the dual-class structure. The dual-class structure is often regarded as poor corporate governance and the source of agency problems. However, I find that, for companies with high information asymmetry and long investment horizon, dual-class structure delivers higher operating performance and valuation ratios. These performing dual-class companies tend to have a higher investment in intangibles, more innovations, less pay-out, and less CEO compensation. The findings suggest that dual-class structure could be optimal in empowering information-advantageous inside shareholders and ensuring corporate long-term goals.
In the second chapter of …