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Research Collection School Of Accountancy

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Full-Text Articles in Business

Terrorist Attacks, Managerial Sentiment, And Corporate Disclosures, Wen Chen, Haibin Wu, Liandong Zhang May 2020

Terrorist Attacks, Managerial Sentiment, And Corporate Disclosures, Wen Chen, Haibin Wu, Liandong Zhang

Research Collection School Of Accountancy

This study investigates the effect of managerial sentiment on corporate disclosure decisions. Using terrorist attacks in the United States as adverse shocks to managerial sentiment, we find that firms located in the metropolitan areas attacked issue more negatively biased earnings forecasts. The effect is stronger for firms with higher operating uncertainty and firms with younger, inexperienced, or less confident executives and it is weaker for firms located in states with increasing violent crime rates. A potential alternative explanation is that managers could strategically bias earnings forecasts downward and attribute the poor performance to terrorist attacks. To address this issue, we ...


Accounting Quality And Debt Concentration, Ningzhong Li, Yun Lou, Clemens A. Otto, Regina Wittenberg-Moerman Apr 2020

Accounting Quality And Debt Concentration, Ningzhong Li, Yun Lou, Clemens A. Otto, Regina Wittenberg-Moerman

Research Collection School Of Accountancy

We examine the relation between accounting quality and debt concentration in corporate capital structures (i.e., firms' tendency to rely predominantly on only a few types of debt). Motivated by theoretical and empiricalresearch that supports a strong link between debt concentration and creditors' coordination costs and the importance of accounting quality in reducing these costs, we hypothesize that firms with higher accounting quality have less concentrated debt structures. Measuring accounting quality with a comprehensive index based on the occurrence of material internal control weaknesses, accounting restatements, SEC AAERs, and firms' reliance on small auditors, we find that higher accounting quality ...


Text Analytics, Nlp, And Accounting Research, Richard M. Crowley Apr 2020

Text Analytics, Nlp, And Accounting Research, Richard M. Crowley

Research Collection School Of Accountancy

The presentation covered: What is text analytics and NLP?; How text analytics has evolved in the accounting literature since the 1980s; What current (as of 2020) methods are used in the literature; What methods are on the horizon.


What Are You Saying? Using Topic To Detect Financial Misreporting, Nerissa C. Brown, Richard M. Crowley, W. Brooke Elliott Mar 2020

What Are You Saying? Using Topic To Detect Financial Misreporting, Nerissa C. Brown, Richard M. Crowley, W. Brooke Elliott

Research Collection School Of Accountancy

We use a machine learning technique to assess whether the thematic content of financial statement disclosures (labeled topic) is incrementally informative in predicting intentional misreporting. Using a Bayesian topic modeling algorithm, we determine and empirically quantify the topic content of a large collection of 10‐K narratives spanning 1994 to 2012. We find that the algorithm produces a valid set of semantically meaningful topics that predict financial misreporting, based on samples of Securities and Exchange Commission (SEC) enforcement actions (Accounting and Auditing Enforcement Releases [AAERs]) and irregularities identified from financial restatements and 10‐K filing amendments. Our out‐of‐sample ...


(When) Does Transparency Hurt Liquidity?, Karthik Balakrishnan, Aytekin Ertan, Yun Je Lee Feb 2020

(When) Does Transparency Hurt Liquidity?, Karthik Balakrishnan, Aytekin Ertan, Yun Je Lee

Research Collection School Of Accountancy

Conventional wisdom suggests that increases in public information improve market liquidity. However, if greater public information incentivizes only sophisticated investors to produce private information, it could exacerbate information asymmetry among investors and thus reduce liquidity. We explore this argument on a sample of mortgage-backed securities (MBSs) by using a recent European regulation that mandates complex disclosures about the individual loans underlying MBSs. We find that the liquidity of the debt tranches of disclosed MBSs declines by 23% post-regulation. Our inferences are stronger when the securities are harder to value and when the disparity in investor sophistication is higher. In contrast ...


An Illustrative Explanation Of Changes In Ownership Interests, Pearl Hock-Neo Tan Feb 2020

An Illustrative Explanation Of Changes In Ownership Interests, Pearl Hock-Neo Tan

Research Collection School Of Accountancy

The ISCA Breakfast Talk on January 15 brought together 94 members to hear from Dr Pearl Tan, Associate Professor (Education), Singapore Management University. Dr Tan explained and illustrated the principles behind the accounting for changes in ownership interests with and without change in control, in Financial Reporting Standard (FRS) 103 Business Combinations and FRS 110 Consolidated Financial Statements. Although the standards are not new, she emphasised that clarity in their principles is essential in group reporting.


Happy Analysts, Ole-Kristian Hope, Congcong Li, An-Ping Lin, Maryjane Rabier Feb 2020

Happy Analysts, Ole-Kristian Hope, Congcong Li, An-Ping Lin, Maryjane Rabier

Research Collection School Of Accountancy

This paper is the first to investigate the role of work-life balance in financial analysts’ performance and career advancement. Using a large sample of Glassdoor reviews by financial analysts, we find a significant non-linear relation between work-life balance satisfaction and analyst performance and analyst career advancement. Specifically, when work-life balance satisfaction is relatively low, an increase in work-life balance is associated with better analyst performance and career advancement; however, when perceived work-life balance is already high, a further increase in work-life balance is associated with worse analyst performance and career advancement.


Consequences Of Disclosing Clinical Trial Results: Evidence From The Food And Drug Administration Amendments Act, Thomas Borveau, Vedran Capkun, Yin Wang Feb 2020

Consequences Of Disclosing Clinical Trial Results: Evidence From The Food And Drug Administration Amendments Act, Thomas Borveau, Vedran Capkun, Yin Wang

Research Collection School Of Accountancy

We examine how the U.S. Food and Drug Administration Amendments Act (FDAAA) of 2007, which requires additional disclosures regarding clinical trial results, impacts information asymmetry between the disclosing pharmaceutical firm and capital market participants, the general public, academics, and practitioners. We document a reduction in information asymmetry in capital markets. We also document an increase in adverse event and product problem complaint reports filed against the pharmaceutical firms to the FDA and a higher number of drug and medical device recalls for affected firms after the FDAAA enactment. Finally, cross-sectional analyses suggest that the increase in FDA complaint reports ...


Using Online Tutorials To Teach The Accounting Cycle, Tracey Chunqi Zhang, Lay-Chin Low, Poh Sun Seow Jan 2020

Using Online Tutorials To Teach The Accounting Cycle, Tracey Chunqi Zhang, Lay-Chin Low, Poh Sun Seow

Research Collection School Of Accountancy

The accounting cycle is an important yet difficult topic for introductoryfinancial accounting students to learn. These students often lack the businesscontext to understand the accounting cycle and find the traditional teachingapproach dry. This problem motivates the authors to examine whether a blendedlearning approach via online tutorials can improve students’ perceivedknowledge of the accounting cycle for the undergraduate introductory financialaccounting course. The authors developed four innovative online tutorials witha coherent storyline to enable students to learn the accounting cycle and to supplementin-class learning. To test the effectiveness of online tutorials, anindependent survey was conducted by the Centre of Teaching Excellence at ...


Family Entrenchment And Internal Control: Evidence From S&P 1500 Firms, Xia Chen, Mei Feng, Chan Li Jan 2020

Family Entrenchment And Internal Control: Evidence From S&P 1500 Firms, Xia Chen, Mei Feng, Chan Li

Research Collection School Of Accountancy

We examine whether family owners exploit internal control weaknesses for entrenchment purposes and whether the public disclosure requirement under SOX 404 helps alleviate this entrenchment. We find supportive evidence for both questions. In the initial years of SOX 404 implementation (2004 and 2005), ineffective internal control in family CEO firms is more conducive to entrenchment - measured by the occurrence of misstatements, frauds, and related party transactions - than ineffective internal control in nonfamily firms is. With the public disclosure requirement of SOX 404 in place, family CEO firms are more likely to remediate internal control weaknesses, and the resulting improvement in ...


Short Sellers And Long‐Run Management Forecasts, Xia Chen, Qiang Cheng, Ting Luo, Heng Yue Jan 2020

Short Sellers And Long‐Run Management Forecasts, Xia Chen, Qiang Cheng, Ting Luo, Heng Yue

Research Collection School Of Accountancy

We examine how short sellers affect long‐run management forecasts using a natural experiment (Regulation SHO) that relaxes short‐selling constraints on a group of randomly selected firms (referred to as pilot firms). We find that compared to other firms, the pilot firms issue more long‐run good news forecasts but do not change the frequency of long‐run bad news forecasts. The increase in good news forecasts is greater when the pilot firms have higher quality forecasts, greater uncertainty about firm value, or higher manager equity incentives. Overall, these results and the results of additional analyses indicate that the ...


Cross-Industry Information Sharing And Analyst Performance, Allen Huang, An-Ping Lin, Amy Zang Jan 2020

Cross-Industry Information Sharing And Analyst Performance, Allen Huang, An-Ping Lin, Amy Zang

Research Collection School Of Accountancy

This study shows that analyst research benefits from the sharing of information about economically connected industries among colleagues. Measuring the intensity of potential information sharing with the level of economic connection between an analyst’s industry and her colleagues’ industries, we find that it is positively correlated with an analyst’s earnings forecast accuracy, stock recommendation profitability, coverage breadth, and report frequency after controlling for other determinants including broker or analyst fixed effects. We also find that analysts are more likely to issue reports when highly connected colleagues produce information. We show that sharing information with colleagues covering downstream (upstream ...


Does Litigation Encourage Or Deter Real Earnings Management?, Sterling Huang, Sugata Roychowdhury, Ewa Sletten Dec 2019

Does Litigation Encourage Or Deter 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 ...


Do Innovative Firms Communicate More? Evidence From The Relation Between Patenting And Management Guidance, Sterling Huang, Jeffrey Ng, Tharinda Ranasinghe, Mingyue Zhang Dec 2019

Do Innovative Firms Communicate More? Evidence From The Relation Between Patenting And Management Guidance, Sterling Huang, Jeffrey Ng, Tharinda Ranasinghe, Mingyue Zhang

Research Collection School Of Accountancy

Successful innovations could induce more disclosure if the information asymmetry between the firm and its investors about post-innovation outcomes leads investors to demand more information. However, such innovations also likely entail greater proprietary cost concerns, which deter disclosure. This paper uses patent grants to examine the effect of innovation success on management guidance behavior. We find that more management guidance follows patent grants, suggesting that despite disclosure cost concerns, firms with successful innovations do respond to information demand. This association is stronger after enactment of Regulation Fair Disclosure and for firms with greater institutional investor ownership, further highlighting the role ...


Examining Learning Transformation In Project-Based Learning Process, Gary Pan, Poh Sun Seow, Grace Koh Nov 2019

Examining Learning Transformation In Project-Based Learning Process, Gary Pan, Poh Sun Seow, Grace Koh

Research Collection School Of Accountancy

This paper presents a learning transformation framework for analyzing how learning evolves during project-based learning process. Here we adopt Lewin’s (1951) change theory as an analytical lens to examine the project-based learning curriculum at a University called UNI-X. This is a major contribution to PBL literature as little is known about the dynamics of learning during PBL process. In fact, the learning transformation framework can serve as the basis for further research in PBL process. For educators, this study provides them with useful insights on how to break project members’ escalating commitment to previous failing ideas and accept alternative ...


Spillover Effects Of Clients’ Tax Enforcement On Financial Statement Auditors: Evidence From A Discontinuity Design, Travis K. Chow, Jeffrey Pittman, Muzhi Wang, Le Zhao Nov 2019

Spillover Effects Of Clients’ Tax Enforcement On Financial Statement Auditors: Evidence From A Discontinuity Design, Travis K. Chow, Jeffrey Pittman, Muzhi Wang, Le Zhao

Research Collection School Of Accountancy

We examine the impact of clients’ tax enforcement on financial statement auditors. In a regression discontinuity design, we exploit the firm-registration-date-based application of a new rule that assigns firms to two different tax enforcement regimes. Our analysis implies that auditors exert less effort–evident in lower audit fees and shorter audit report lags–when their clients are monitored by the more stringent tax authority. In results supporting that audit quality improves in this situation despite the fall in auditor effort, we report that clients subject to tougher tax enforcement exhibit a lower incidence of accounting restatements and tax-related restatements. Additionally ...


Understanding The Connection Of Performance And Z-Scores For Manufacturing Firms In South Korea, S.L. Foo, Shaakalya Pathak Oct 2019

Understanding The Connection Of Performance And Z-Scores For Manufacturing Firms In South Korea, S.L. Foo, Shaakalya Pathak

Research Collection School Of Accountancy

South Korea is a key leading economy in the Asia Pacific region. This study examines the relationship between the financial health, as measured by the Altman Z-Score, and corporate performance, as measured by the Return on Equity (ROE), of listed manufacturing companies in this market. A linear regression has been conducted between these variables to determine the magnitude and direction of their relationships. The trends of Z-Scores over a five-year period have also been analysed. The analysis covers the period from 2013 to 2017 (inclusive) and yields a statistically positive correlation between ROE and the Z-Score for the market. South ...


Political Connections And The Value Of Cash Holdings, Yuanto Kusnadi Sep 2019

Political Connections And The Value Of Cash Holdings, Yuanto Kusnadi

Research Collection School Of Accountancy

This study examines how political connections influence the value of cash holdings in an international setting. The main finding reveals that political connections are not associated with the value of cash holdings in the overall sample. However, further analysis demonstrates that political connections are negatively associated with the value of cash holdings for firms inemerging markets and in countries with high levels of corruption. Moreover, the negative valuation of cash holdings is driven by firms that are connected through large shareholders. Overall, the findings provide new insights into the value relevance of cash holdings, especially for politically connected firms.


Family Firms And Labor Market Regulation, Morten Bennedsen, Sterling Huang, Hannes F. Wagner, Stefan Zeume Sep 2019

Family Firms And Labor Market Regulation, Morten Bennedsen, Sterling Huang, Hannes F. Wagner, Stefan Zeume

Research Collection School Of Accountancy

In a panel across twenty-eight countries over 10 years, we show that family firms on average enjoy performance advantages over nonfamily firms only when labor markets are less regulated. We confirm this result in a matched firm sample using a survey-based instrument as a family control. Furthermore, family firms exhibit lower variation in employment levels in less-regulated labor markets, supporting the notion that labor relations drive family firms’ performance advantages. Our results are consistent with the notion that both family ownership and labor market reforms provide employment protection and thus partly substitute as governance mechanisms.


An Examination Of Corporate Performance And Altman Z-Scores Of Indian Manufacturing Firms, See Liang Foo, Shaakalya Pathak Sep 2019

An Examination Of Corporate Performance And Altman Z-Scores Of Indian Manufacturing Firms, See Liang Foo, Shaakalya Pathak

Research Collection School Of Accountancy

India is a key leading economy in the Asia Pacific region. This study examines the relationship between the financial health, as measured by the Altman Z-Score, and corporate performance, as measured by the Return on Equity (ROE), of listed manufacturing companies in this market. A linear regression has been conducted between these variables to determine the magnitude and direction of their relationships. The trends of Z-Scores over a five-year period have also been analysed. The analysis covers the period from 2013 to 2017 (inclusive) and yields a statistically positive correlation between ROE and the Z-Score for the market. India registered ...


The Minimum Wage And Corporate Tax Planning, Xiaoxi Li, Chee Yeow Lim, Yanping Xu Sep 2019

The Minimum Wage And Corporate Tax Planning, Xiaoxi Li, Chee Yeow Lim, Yanping Xu

Research Collection School Of Accountancy

This paper investigates the impact of the minimum wage (MW) on corporate tax planning. By exploiting heterogeneity in the MW level across cities and over time in China, we find that increases in the MW are associated with greater tax planning by firms. Our results are robust to the consideration of a sample of contiguous firms in two adjacent cities subject to different MWs, a change specification and a difference-in-differences research design that exploits the enactment of the Labor Contract Law in 2008 as an exogenous shock to the MW. In cross-sectional analyses, we find that the positive impact of ...


Studying The Relationship Between Japanese Firms' Corporate Health And Results, See Liang Foo, Shaakalya Pathak Sep 2019

Studying The Relationship Between Japanese Firms' Corporate Health And Results, See Liang Foo, Shaakalya Pathak

Research Collection School Of Accountancy

Japan is a key leading economy in the Asia Pacific region. This study examines the relationship between the financial health, as measured by the Altman Z-Score, and corporate performance, as measured by the Return on Equity (ROE), of listed manufacturing companies in this market (the Tokyo Stock Exchange). A linear regression has been conducted between these variables to determine the magnitude and direction of their relationships. The trends of Z-Scores over a five-year period have also been analysed. The analysis covers the period from 2013 to 2017 (inclusive) and yields a statistically positive correlation between ROE and the Z-Score for ...


Non-Gaap Earnings And Stock Price Crash Risk, Charles Hsu, Rencheng Wang, Benjamin C. Whipple Sep 2019

Non-Gaap Earnings And Stock Price Crash Risk, Charles Hsu, Rencheng Wang, Benjamin C. Whipple

Research Collection School Of Accountancy

Prior research concludes that stock price crash risk is primarily attributable to managers’ withholding of bad news from investors. We extend this literature by investigating whether crash risk can also occur when managers disclose additional information via non-GAAP reporting, which downplays reported bad news by re-directing investors’ attention to other, more positive aspects of performance. We find that the likelihood of crash risk is higher when managers have reported non-GAAP earnings more frequently during the past year. We also find that managers appear to use non-GAAP reporting as a substitute for the more common reason for crash risk in prior ...


China's Anti‐Corruption Campaign And Financial Reporting Quality, Ole-Kristian Hope, Heng Yue, Qinlin Zhong Aug 2019

China's Anti‐Corruption Campaign And Financial Reporting Quality, Ole-Kristian Hope, Heng Yue, Qinlin Zhong

Research Collection School Of Accountancy

We examine the impact of China’s anti-corruption campaign on firm-level financial reporting quality (FRQ). As an important component of the anti-corruption campaign, in October 2013, “Rule 18” was issued to prohibit party and government officials from serving as directors for publicly listed firms. The regulation led to a large number of official directors resigning from their roles as directors involuntarily. As such, Rule 18 has effectively weakened, if not fullydiscontinued, the political connections of the firms that previously hired officials as directors. Our empirical analyses employ a difference-in-differences research design with firm fixed effects and PSM to examine the ...


Informativeness Of The Expanded Audit Report: Evidence From China, Beng Wee Goh, Dan Li, Muzhi Wang Aug 2019

Informativeness Of The Expanded Audit Report: Evidence From China, Beng Wee Goh, Dan Li, Muzhi Wang

Research Collection School Of Accountancy

Studies examining the consequences of adopting the expanded audit report in the U. K. setting generally find little or no evidence that the expanded auditor’s report provide incremental information to investors (e.g. Gutierrez et al. 2018; Lennox et al. 2018). Motivated by the notion that emerging economies have a more opaque information environment and hence a greater demand for more information in the audit report, we examine the informativeness of the expanded audit report in China. We find that firms that the adoption of the expanded audit report is significantly associated with a more positive market reaction, a ...


善用数据分析提升企业决策质量 [Using Data Analysis To Improve On Quality Of Business Solutions], Benjamin Huan Zhou Lee Jul 2019

善用数据分析提升企业决策质量 [Using Data Analysis To Improve On Quality Of Business Solutions], Benjamin Huan Zhou Lee

Research Collection School Of Accountancy

No abstract provided.


Regulations And Brain Drain: Evidence From Wall Street Star Analysts’ Career Choices, Congcong Li, Yuyan Guan, Hai Lu, Franco Wong Jul 2019

Regulations And Brain Drain: Evidence From Wall Street Star Analysts’ Career Choices, Congcong Li, Yuyan Guan, Hai Lu, Franco Wong

Research Collection School Of Accountancy

The Global Settlement, along with related regulations in the early 2000s, prohibits the use of investment banking revenue to fund equity research and compensate equity analysts. We find that all-star analysts from investment banks are more likely to exit the profession or move to the buy side after the regulations. The departed star analysts’ earnings revisions and stock recommendations are more informative than those of the remaining analysts who followed the same companies. To the extent that star analysts are superior to their nonstar counterparts in terms of research ability and ability to inform the market, the exit of star ...


Charting The Future Of Accountancy With Ai, Clarence Goh, Gary Pan, Poh Sun Seow, Benjamin Huan Zhou Lee, Melvin Yong Jul 2019

Charting The Future Of Accountancy With Ai, Clarence Goh, Gary Pan, Poh Sun Seow, Benjamin Huan Zhou Lee, Melvin Yong

Research Collection School Of Accountancy

No abstract provided.


Grooming The Next Generation Of Accounting Professionals For The Age Of Artificial Intelligence., Gary Pan, Poh Sun Seow, Clarence Goh, Benjamin Huan Zhou Lee Jul 2019

Grooming The Next Generation Of Accounting Professionals For The Age Of Artificial Intelligence., Gary Pan, Poh Sun Seow, Clarence Goh, Benjamin Huan Zhou Lee

Research Collection School Of Accountancy

The chapter examines how we can equip the future generations of accountants with skills that will allow them to thrive in the AI world of the future.


Auditor Choice And Information Asymmetry: Evidence From International Syndicated Loans, Zhiming Ma, Derrald Stice, Rencheng Wang Jun 2019

Auditor Choice And Information Asymmetry: Evidence From International Syndicated Loans, Zhiming Ma, Derrald Stice, Rencheng Wang

Research Collection School Of Accountancy

Analyzing a large sample of non-US public firms from 31 countries that obtain private loans, we find that loan syndicates that lend to borrowers that employ Big N auditors are larger and less concentrated and that the lead arrangers and largest investors of these syndicates are able to hold a lower proportion of the loan after issuance. Further analysis demonstrates that this effect exists only in countries with strong creditor rights and in those countries with high levels of societal trust, suggesting that both sound formal and informal institutional factors are prerequisites for lenders and borrowers to benefit from differential ...