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Full-Text Articles in Business
Insider Ownership And Financial Analysts’ Information Environment: Evidence From Dual-Class Firms, Arno Forst, Barry Hettler, Ran Ron Barniv
Insider Ownership And Financial Analysts’ Information Environment: Evidence From Dual-Class Firms, Arno Forst, Barry Hettler, Ran Ron Barniv
School of Accountancy Faculty Publications and Presentations
We examine the association of insider ownership with financial analysts’ forecast accuracy and dispersion in a sample of U.S. dual-class firms. Insider ownership exerts two effects: a positive incentive effect and a negative entrenchment effect. The lack of significant findings in prior research regarding the association between insider ownership and forecast accuracy may be attributable to the offsetting forces of these two effects. Using a comprehensive hand-collected sample of U.S. firms that maintain more than one class of common stock, we are able to disentangle incentive and entrenchment effects which are confounded in single-class firms. We find that disproportionate insider …
Disproportionate Insider Control And The Demand For Audit Quality, Arno Forst, Barry Hettler
Disproportionate Insider Control And The Demand For Audit Quality, Arno Forst, Barry Hettler
School of Accountancy Faculty Publications and Presentations
We examine the relationship between disproportionate insider control, enabled through dual-class share structures, and the demand for audit quality. Using a comprehensive hand-collected sample of U.S. dual-class firms, we find that, consistent with outside shareholders’ increased demand for external monitoring, as well as self-bonding by entrenched insiders, disproportionate insider control is positively associated with the propensity to hire a Big 4 or industry specialist auditor, auditor independence, and audit fees. Corroborating a self-bonding explanation, additional analyses show that audit quality mitigates the negative association of disproportionate insider control and firm value. In expanded analyses, we also investigate the separate effects …
Heightened Shareholder Interest In Firm Affairs Following The Inception Of Credit Default, Hyun Hong, Ji Woo Ryou, Anup Srivastava
Heightened Shareholder Interest In Firm Affairs Following The Inception Of Credit Default, Hyun Hong, Ji Woo Ryou, Anup Srivastava
School of Accountancy Faculty Publications and Presentations
The literature shows that a lender becomes reluctant to aid a distressed client after it receives insurance on its outstanding debt via a credit default swap (CDS). The onset of CDS trade thus accelerates client bankruptcy. We predict that the client firm’s shareholders would respond by demanding improved corporate governance and financial reporting quality to protect their interests. We find an increase in independence of the board of directors and a decline in the dual position of chief executive office and board chairman following the onset of CDS trading. We also find higher earnings response coefficient and trading volumes around …