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- Information environment (2)
- Interest alignment (2)
- Managerial ownership (2)
- Accounting standards (1)
- Analyst coverage (1)
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- Audit (1)
- Audit firm rotation (1)
- Audit process (1)
- Audit report (1)
- Audit specialization (1)
- CEO compensation (1)
- Correlation (1)
- Cost of raising capital (1)
- Earnings (1)
- Earnings restatements (1)
- Evidence (1)
- Extra-legal institutions (1)
- Framing (1)
- Goodwill accounting (1)
- Information asymmetry (1)
- Judgment (1)
- Legal protection (1)
- Listed firms (1)
- Market efficiency (1)
- Multiple hypothesis (1)
- Operating performance (1)
- Political Economy (1)
- Post-earnings announcement drift (1)
- Profitability analysis (1)
- Seasoned equity offering (1)
Articles 1 - 19 of 19
Full-Text Articles in Business
Profitability Analysis Of Chinese Listed Firms: 1992-2004, Jianjun Niu, Heng Yue, Guohua Jiang
Profitability Analysis Of Chinese Listed Firms: 1992-2004, Jianjun Niu, Heng Yue, Guohua Jiang
Research Collection School Of Accountancy
This research collects and analyses the profitability data of Chineselisted companies from 1992 to 2004. Results show that, on average, theprofitability of Chinese listed companies has declined over the period. Post-IPOearnings also exhibit a downward trend. A further analysis reveals that changes inlisted firms’ profitability ratio follow a strong mean reversion pattern.
Managerial Ownership, Corporate Monitoring And Audit Pricing, Soongsoo Han, Julia Higgs, Tony Kang
Managerial Ownership, Corporate Monitoring And Audit Pricing, Soongsoo Han, Julia Higgs, Tony Kang
Research Collection School Of Accountancy
We study whether managerial ownership and corporate monitoring (board quality and analyst coverage) relate to audit pricing. Managerial ownership has been identified as a fraud risk factor under SAS 99. However, the role of ownership is not clear. Under an alignment view, high levels of stock ownership align management with shareholders. Under an entrenchment view, high levels of ownership may motivate management to be self interested. Corporate monitoring, as measured by analyst coverage and overall board quality (Gomper’s index), are associated with information quality. Audit pricing will be affected to the extent that auditors perceive monitoring as being relevant to …
Managerial Ownership And Firms' Information Environment, Soongsoo Han, Tony Kang, Gerald Lobo
Managerial Ownership And Firms' Information Environment, Soongsoo Han, Tony Kang, Gerald Lobo
Research Collection School Of Accountancy
We examine the relation between managerial stock ownership and the firm’s information environment. We focus on three dimensions of the information environment: total, public, and private information precision (Barron, Kim, Lim and Stevens 1998). Our results suggest that firms’ total and public information precision are positively related to managerial ownership. In contrast, there is no clear pattern in private information precision across different levels of managerial ownership. We also observe that managerial ownership has a greater impact on the firm’s public information environment after the implementation of Regulation Fair Disclosure, suggesting that the regulation was effective in improving the firms’ …
Audit Profile: The Auditor-General's Office Of Singapore, Soo Ping Lim
Audit Profile: The Auditor-General's Office Of Singapore, Soo Ping Lim
Research Collection School Of Accountancy
No abstract provided.
Making Sense Of Fair-Value Accounting, Chu Yeong Lim, Tong Kin Andrew Lee
Making Sense Of Fair-Value Accounting, Chu Yeong Lim, Tong Kin Andrew Lee
Research Collection School Of Accountancy
No abstract provided.
Earnings Restatements, Changes In Ceo Compensation, And Firm Performance, Qiang Cheng, David Farber
Earnings Restatements, Changes In Ceo Compensation, And Firm Performance, Qiang Cheng, David Farber
Research Collection School Of Accountancy
Prior research finds that earnings restatements are linked to CEOs' excessive option-based compensation and equity holdings. In this paper, we investigate whether firms that experience earnings restatements recontract with their CEOs to reduce their option-based compensation and if so, whether this leads to improved firm performance. Based on 289 restatement firms over the period 1997–2001, we find that the proportion of CEOs' compensation in the form of options declines significantly in the two years following the restatement. Furthermore, we document that this reduction is accompanied by a decrease in the riskiness of investments, as reflected in lower stock return volatility …
Analyst Coverage And The Cost Of Raising Equity Capital: Evidence From Underpricing Of Seasoned Equity Offerings, Robert M. Bowen, Xia Chen, Qiang Cheng
Analyst Coverage And The Cost Of Raising Equity Capital: Evidence From Underpricing Of Seasoned Equity Offerings, Robert M. Bowen, Xia Chen, Qiang Cheng
Research Collection School Of Accountancy
Theorists have long recognized that information asymmetry among investors adversely affects the cost of raising equity capital (e.g., Diamond and Verrecchia 1991). When there is information asymmetry, relatively uninformed investors are reluctant to trade because of higher potential loss from transacting with informed investors (e.g., Glosten and Milgrom 1985; Kyle 1985). To trade, uninformed investors demand compensation for the risks of trading with informed investors (O’Hara 2003). In the case of issuing new equity, firms must issue shares at a discount to overcome the reluctance of uninformed investors. Such discounting leads to smaller proceeds to the firm and a higher …
Managerial Ownership And Firms' Information Environment, Soongsoo Han, Tony Kang, Gerald Lobo
Managerial Ownership And Firms' Information Environment, Soongsoo Han, Tony Kang, Gerald Lobo
Research Collection School Of Accountancy
We examine the relation between managerial stock ownership and the firm’s information environment. We focus on three dimensions of the information environment: total, public, and private information precision (Barron, Kim, Lim and Stevens 1998). Our results suggest that firms’ total and public information precision are positively related to managerial ownership. In contrast, there is no clear pattern in private information precision across different levels of managerial ownership. We also observe that managerial ownership has a greater impact on the firm’s public information environment after the implementation of Regulation Fair Disclosure, suggesting that the regulation was effective in improving the firms’ …
Does Earnings Quality Affect Information Asymmetry: Evidence From Trading Costs, Nilabhra Bhattacharya, Hemang Desai, Kumar Venkataraman
Does Earnings Quality Affect Information Asymmetry: Evidence From Trading Costs, Nilabhra Bhattacharya, Hemang Desai, Kumar Venkataraman
Research Collection School Of Accountancy
The adverse consequences of poor earnings quality have been the subject of significant debate among academics, practitioners and regulators. However, the empirical evidence on pricing implications of earnings quality is sparse and controversial. We examine one potential consequence of poor earnings quality - its impact on information asymmetry. We document that poor earnings quality increases the adverse selection risk as manifested in trading costs and lowers liquidity in financial markets. Both innate and discretionary components of earnings quality contribute significantly to information asymmetry. Further, poor earnings quality exacerbates information asymmetry around earnings announcements, especially for firms where earnings represent the …
Cross-Country Analysis Of Auditor Specialization Premium: Effect Of Legal, Extra-Legal And Political Environments, Sirinidhi Bin, M. Hossain, Chee Yeow Lim
Cross-Country Analysis Of Auditor Specialization Premium: Effect Of Legal, Extra-Legal And Political Environments, Sirinidhi Bin, M. Hossain, Chee Yeow Lim
Research Collection School Of Accountancy
Previous literature has provided mixed evidence of a premium in audit fee for industry-specialist auditors in US and other developed countries. In this cross-country study spanning twelve non-US countries, we provide evidence of such a premium in the international context, implying that specialist auditors provide a higher level of investor assurance than non-specialists. Further, we show that the average audit fee in countries with effective legal, extra-legal and political institutions is higher but the specialization premium is lower than in other countries. We interpret this finding as evidence that while effective institutions increase the demand for average level of audit …
The Association Between Excess Audit Fees And Audit Quality: A Us-Uk Comparison, Soongsoo Han, Tony Kang, Yong Keun Yoo
The Association Between Excess Audit Fees And Audit Quality: A Us-Uk Comparison, Soongsoo Han, Tony Kang, Yong Keun Yoo
Research Collection School Of Accountancy
Prior studies that examine the association between excess audit fees and audit quality (measured by discretionary accruals) using US data fail to document a significant association. However, there is no convincing explanation for this result to date. In this study, we test a cancellation hypothesis, which suggests that the non-association might be due to the cancellation effect between the risk-effort effect and the bonding effect that excess fees capture. To the extent that excess fees capture the compensation for effort the auditor puts in for a risky client, which is not captured in the existing audit fee models (the risk-effort …
A Survey Of Audit Committee Members Of Public Listed Companies In Singapore, Kwong Sin Leong, Themin Suwardy, Yang Hoong Pang
A Survey Of Audit Committee Members Of Public Listed Companies In Singapore, Kwong Sin Leong, Themin Suwardy, Yang Hoong Pang
Research Collection School Of Accountancy
This report summarises the results of the survey of audit committee members of public listed companies in Singapore commissionedby the Audit Committee Guidance Committee (ACGC). Funding for this project was provided by School of Accountancy, Singapore Management University. The sampling frame was locally-domiciled audit committee members of publicly listed companies in Singapore. A sample size of 711 would have been adequate to achieve a 95% confidence level, and a 3% confidence interval. The survey was sent out to 873 names and addresses provided by the Accounting and Corporate Regulatory of Singapore on 14 March2008, with a reminder on 4 April …
Do Family Firms Provide More Or Less Voluntary Disclosure?, Xia Chen, Shuping Chen, Qiang Cheng
Do Family Firms Provide More Or Less Voluntary Disclosure?, Xia Chen, Shuping Chen, Qiang Cheng
Research Collection School Of Accountancy
We examine the voluntary disclosure practices of family firms. We find that, compared to nonfamily firms, family firms provide fewer earnings forecasts and conference calls, but more earnings warnings. Whereas the former is consistent with family owners having a longer investment horizon, better monitoring of management, and lower information asymmetry between owners and managers, the higher likelihood of earnings warnings is consistent with family owners having greater litigation and reputation cost concerns. We also document that family ownership dominates nonfamily insider ownership and concentrated institutional ownership in explaining the likelihood of voluntary disclosure. Using alternative proxies for the founding family's …
Governance Role Of Auditors And Legal Environment: Evidence From Corporate Disclosure Transparency, Sam Han, Tony Kang, Yong Keun Yoo
Governance Role Of Auditors And Legal Environment: Evidence From Corporate Disclosure Transparency, Sam Han, Tony Kang, Yong Keun Yoo
Research Collection School Of Accountancy
This study examines whether auditor size associates with disclosure transparency. Given thatprior studies generally focus on discretionary accruals to investigate the relation betweenauditor size and financial reporting quality, there is little evidence on how auditor size relates toother attributes of reporting quality. Further, studies that examine this associationinternationally produce mixed results as to how auditor size relates to reporting quality indifferent legal origins. Focusing on corporate disclosure transparency (i.e., disclosure levels), wefind that auditor size and disclosure level are positively associated across countries and that theassociation is stronger in code law regimes than in common law regimes. The latter findingsupports …
Non-Audit Service Fees And Audit Quality: The Impact Of Auditor Specialization, Chee Yeow Lim, Hun-Tong Tan
Non-Audit Service Fees And Audit Quality: The Impact Of Auditor Specialization, Chee Yeow Lim, Hun-Tong Tan
Research Collection School Of Accountancy
We posit that the effect of non-audit fees on audit quality is conditional on auditor industry specialization. Industry specialist auditors are more likely than nonspecialists to be concerned about reputation losses and litigation exposure, and to benefit from knowledge spillovers from the provision of non-audit services. We find evidence that audit quality measured by increased propensity to issue going-concern opinion, increased propensity to miss analysts' forecasts, as well as higher earnings-response coefficients increases with the level of non-audit services acquired from industry specialist auditors compared to nonspecialist auditors.
Discretionary Behavior With Respect To The Adoption Of Sfas 142 And The Behavior Of Security Prices, Yoonseok Zang
Discretionary Behavior With Respect To The Adoption Of Sfas 142 And The Behavior Of Security Prices, Yoonseok Zang
Research Collection School Of Accountancy
In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS 142, Goodwill and Other Intangible Assets, which takes a very different approach to how goodwill is accounted for subsequent to the initial recognition. The new statement requires that goodwill no longer be amortized, but instead requires a transitional goodwill impairment (initial impairment loss or IIL) test in the adoption fiscal year and an annual impairment test thereafter. Since SFAS 142 allows firms substantial judgment in the adoption year in determining the amount of impairment loss, this dissertation first examines management discretionary behavior in measuring the IIL. The result shows …
Implications Of Transaction Costs For The Post-Earnings-Announcement Drift, Jeffrey Ng, Rodrigo Verdi, Tjomme Rusticus
Implications Of Transaction Costs For The Post-Earnings-Announcement Drift, Jeffrey Ng, Rodrigo Verdi, Tjomme Rusticus
Research Collection School Of Accountancy
This paper examines the effect of transaction costs on the post–earnings announcement drift (PEAD). Using standard market microstructure features we show that transaction costs constrain the informed trades that are necessary to incorporate earnings information into price. This implies weaker return responses at the time of the earnings announcement and higher subsequent returns drift for firms with higher transaction costs. Consistent with this prediction, we find that earnings response coefficients are lower for firms with higher transaction costs. Using portfolio analyses, we find that the profits of implementing the PEAD trading strategy are significantly reduced by transaction costs. In addition, …
The Framing And Evaluation Of Multiple Hypotheses, Theodore J. Mock, Arnold Wright, Rajendra P. Srivastava, Hai Lu
The Framing And Evaluation Of Multiple Hypotheses, Theodore J. Mock, Arnold Wright, Rajendra P. Srivastava, Hai Lu
Research Collection School Of Accountancy
This study provides exploratory evidence on auditors’ framing and evaluation of hypotheses, identifies implications for improving audit decision-making and facilitates the interpretation of prior research. Prior studies usually assume hypotheses to be framed as mutually exclusive and exhaustive. However, both verbal protocol evidence and probability assessments reveal that in a realistic case most auditors frame the hypotheses as a non-mutually exclusive and exhaustive set of causes. Further, auditor probability assessments tend to reflect multiple causes. Finally, exploratory analyses indicate auditors have difficulty in updating assessments consistent with the perceived interrelationships between hypotheses.
Audit Partner Tenure, Audit Firm Tenure, And Discretionary Accruals: Does Long Auditor Tenure Impair Earnings Quality?, Chih-Ying Chen, Chan-Jane Lin, Yu-Chen Lin
Audit Partner Tenure, Audit Firm Tenure, And Discretionary Accruals: Does Long Auditor Tenure Impair Earnings Quality?, Chih-Ying Chen, Chan-Jane Lin, Yu-Chen Lin
Research Collection School Of Accountancy
Mandatory audit partner relation has been adopted in some countries while audit firm rotation is still being debated in many places. Most of the extant research on the relation between auditor tenure and earnings quality provides evidence at the audit firm level. However, since audit firm tenure is correlated with partner tenure and audit firm rotation is more costly than partner rotation, it is important to know whether earnings quality is related to audit firm tenure, partner tenure, or both. We investigate this issue using a sample of Taiwanese companies for which the audit report must be signed by two …