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Articles 1 - 15 of 15
Full-Text Articles in Corporate Finance
The Governance Of Director Compensation, Lily Fang, Sterling Huang
The Governance Of Director Compensation, Lily Fang, Sterling Huang
Research Collection School Of Accountancy
The average total compensation of directors in U.S.-listed companies was $342,030 in 2020, 5.06 times the median household income. Directors set their own pay, giving rise to potential self-dealing. We argue and document that in the presence of self-dealing, external mechanisms such as legal standards act as effective means of governance. Following a landmark Delaware court ruling that subjected director pay to a more stringent legal standard, Delaware-incorporated firms reduced director compensation relative to non-Delaware firms and experienced positive and non-transient stock price reactions. Our results indicate that proper governance of director compensation enhances firm value.
Managers' Pay Duration And Voluntary Disclosures, Qiang Cheng, Young Jun Cho, Jae B. Kim
Managers' Pay Duration And Voluntary Disclosures, Qiang Cheng, Young Jun Cho, Jae B. Kim
Research Collection School Of Accountancy
Given the adverse effect on their welfare, managers are reluctant to disclose bad news in a timely fashion. We examine the effect of managers' pay duration on firms' voluntary disclosures of bad news. Pay duration refers to the average period that it takes for managers' annual compensation to vest. We hypothesize and find that pay durations can incentivize managers to provide more bad news earnings forecasts. This result holds after controlling for the endogeneity of pay duration. In addition, we find that the effect of pay duration is more pronounced for firms with weaker governance and with poorer information environments, …
That Could Have Been Me: Director Deaths, Mortality Salience And Ceo Prosocial Behavior, Guoli Chen, Craig Crossland, Sterling Huang
That Could Have Been Me: Director Deaths, Mortality Salience And Ceo Prosocial Behavior, Guoli Chen, Craig Crossland, Sterling Huang
Research Collection School Of Accountancy
Mortality salience—the awareness of the inevitability of death—is often traumatic. However, it can also be associated with a range of positive, self-transcendent cognitive responses, such as a greater desire to help others, contribute to society, and make a more meaningful contribution in one’s life and career. In this study, we provide evidence of a link between chief executive officer (CEO) mortality salience—triggered by the death of a director at the same firm—and a subsequent increase in firm-level prosocial behavior or corporate social responsibility (CSR). We further show that this core relationship is amplified in situations where the death of the …
Executive Compensation And Cash Contributions To Defined Benefit Pension Plans, Qiang Cheng, Laura Swenson
Executive Compensation And Cash Contributions To Defined Benefit Pension Plans, Qiang Cheng, Laura Swenson
Research Collection School Of Accountancy
Pension contribution has a significant impact on firm valuation, employee benefit, and the financial situation of the Pension Benefit Guaranty Corporation (PBGC). Using a comprehensive dataset of defined benefit pension (DB) plan contributions, we investigate economic and accounting determinants of pension contributions. We argue that a firm’s pension contribution decision reflects the trade-off between the benefit – reducing the pension liability, and the cost – reducing cash flows from operations and cash available for other purposes. With respect to economic determinants, we find that firms contribute more when funding status is low and when profitability, cash flows from operations and …
Ceo Overconfidence And Management Forecasting, Paul Hribar, Holly I. Yang
Ceo Overconfidence And Management Forecasting, Paul Hribar, Holly I. Yang
Research Collection School Of Accountancy
This paper examines how overconfidence affects the properties of management forecasts. Using both the ‘over‐optimism’ and ‘miscalibration’ effects of overconfidence to generate our predictions, we examine three research questions. First, we examine whether overconfidence increases the likelihood of issuing a forecast. Second, we examine whether overconfidence increases the amount of optimism in management forecasts. Third, we examine whether overconfidence increases the specificity and precision of the forecast. We use both options‐ and press‐based measures to proxy for individual overconfidence, and find support for all three research questions. We further find that the results are concentrated among firms that provide forecasts …
Female Board Representation And Corporate Acquisition Intensity, Guoli Chen, Craig Crossland, Sterling Huang
Female Board Representation And Corporate Acquisition Intensity, Guoli Chen, Craig Crossland, Sterling Huang
Research Collection School Of Accountancy
This study examines the impact of female board representation on firm-level strategic behavior within the domain of mergers and acquisitions (M&A). We build on social identity theory to predict that greater female representation on a firm's board will be negatively associated with both the number of acquisitions the firm engages in and, conditional on doing a deal, acquisition size. Using a comprehensive, multi-year sample of U.S. public firms, we find strong support for our hypotheses. We demonstrate the robustness of our findings through the use of a difference-in-differences analysis on a sub-sample of firms that experienced exogenous changes in board …
Ceo Contractual Protection And Managerial Short-Termism, Xia Chen, Qiang Cheng, Alvis K. Lo, Xin Wang
Ceo Contractual Protection And Managerial Short-Termism, Xia Chen, Qiang Cheng, Alvis K. Lo, Xin Wang
Research Collection School Of Accountancy
How to address managerial short-termism is an important issue for companies, regulators, and researchers. We examine the effect of CEO contractual protection, in the form of employment agreements and severance pay agreements, on managerial short-termism. We find that firms with CEO contractual protection are less likely to cut R&D expenditures to avoid earnings decreases and are less likely to engage in real earnings management. The effect of CEO contractual protection is both statistically and economically significant. We further find that this effect increases with the duration and monetary strength of CEO contractual protection. The cross-sectional analyses indicate that the effect …
Conservatism And Equity Ownership Of The Founding Family, Shuping Chen, Xia Chen, Qiang Cheng
Conservatism And Equity Ownership Of The Founding Family, Shuping Chen, Xia Chen, Qiang Cheng
Research Collection School Of Accountancy
We investigate the impact of founding family ownership on accounting conservatism. Family ownership is characterised by large, under-diversified equity stake and long investment horizon. These features give family owners both the incentives and the ability to implement conservative financial reporting to reduce legal liability and mitigate agency conflicts with other stakeholders. Since CEOs can have different incentives towards conservatism, we focus on ownership of non-CEO founding family members in our investigation. We find that conservatism increases with non-CEO family ownership, supporting our prediction. This relationship becomes insignificant in family firms with founders serving as CEOs, either due to founder CEOs' …
Family Ownership And Ceo Turnovers, Xia Chen, Qiang Cheng, Zhonglan Dai
Family Ownership And Ceo Turnovers, Xia Chen, Qiang Cheng, Zhonglan Dai
Research Collection School Of Accountancy
This paper investigates the impact of the founding family’s presence on CEO turnover decisions. We find that family firms managed by CEOs outside the founding family (i.e., professional CEO family firms) have higher CEO turnover-performance sensitivity than family firms managed by family members (i.e., family CEO firms) or non-family firms. These results are robust to alternative performance measures and CEO turnover definitions. Additional analyses indicate that higher family ownership leads to even higher (lower) turnover-performance sensitivity in professional CEO family firms (family CEO firms). These results indicate that, with regard to CEO turnover decisions, better monitoring of CEOs by family …
Productivity, Return-On-Capital And Stock Price Performance, Andrew Lee, Tracey Zhang
Productivity, Return-On-Capital And Stock Price Performance, Andrew Lee, Tracey Zhang
Research Collection School Of Accountancy
Productivity improvements in businesses are invariably championed as value-enhancing propositions. Whether the improvements are labour-related or asset-related, the value of a business is arguably enhanced when its employees are more productive, its assets are utilised more productively, and its operations are conducted more efficiently.
Executive Equity Compensation And Earnings Management: A Quantile Regression Approach, Chih-Ying Chen, Ming-Yuan Li
Executive Equity Compensation And Earnings Management: A Quantile Regression Approach, Chih-Ying Chen, Ming-Yuan Li
Research Collection School Of Accountancy
Prior research has investigated the association between executive equity compensation and earnings management but the evidence is not conclusive. We investigate this question using the quantile regression approach which allows the coefficient on the independent variable (equity compensation) to shift across the distribution of the dependent variable (earnings management). Based on a sample of 18,203 U.S. non-financial firm-year observations from 1995 to 2008, we find that chief executive officer (CEO) equity compensation is positively associated with the absolute value of discretionary accruals at all quantiles of absolute discretionary accruals, but the association becomes weaker as the quantile decreases. The association …
Disclosure Of Management Guidance In Conference Calls: Materiality, Determinants And Consequences, Benjamin Lansford, Jimmy Kiat Bee Lee, Jennifer W. Tucker
Disclosure Of Management Guidance In Conference Calls: Materiality, Determinants And Consequences, Benjamin Lansford, Jimmy Kiat Bee Lee, Jennifer W. Tucker
Research Collection School Of Accountancy
The SEC advises firms to release all material information in their earnings announcement press release before their corresponding conference call. Until May 2009, the NYSE went further by explicitly prohibiting the disclosure of new material information in a conference call. However, we document that the S&P 500 firms, including those that are NYSE-listed, disclose a non-trivial amount of management guidance exclusively in their conference calls. Firms in challenging forecasting environments rely more on the conference call, probably because the call enables managers to “flesh out” the guidance. In contrast, firms with relatively low investor visibility and high litigation risk rely …
Are Us Family Firms Subject To Agency Problems? Evidence From Ceo Turnover And Firm Valuation, Xia Chen, Zhonglan Dai
Are Us Family Firms Subject To Agency Problems? Evidence From Ceo Turnover And Firm Valuation, Xia Chen, Zhonglan Dai
Research Collection School Of Accountancy
This paper investigates the impact of the founding family's presence in US public firms on the extent of agency problems related to CEO turnover decisions and on firm valuations after poor performance. In particular, we focus on three types of US public firms: family CEO firms, professional CEO family firms (family firms managed by a hired CEO outside the founding family), and non-family firms. We hypothesize that, the agency problem arising from the expropriation of small shareholders by large shareholders in family CEO firms and the agency problem arising from the separation of ownership and control in non-family firms, lead …
Impact Of Gender And Ethnic Composition Of South African Boards Of Directors On Intellectual Capital Performance, Jean-Luc Wolfgang Mitchell Van Der Zahn
Impact Of Gender And Ethnic Composition Of South African Boards Of Directors On Intellectual Capital Performance, Jean-Luc Wolfgang Mitchell Van Der Zahn
Research Collection School Of Accountancy
This study examines the association between the gender and ethnic composition of boards of directors and firm performance in a transitional nation. In contrast to prior research that largely focuses on firm performance within a financial context, this study concentrates on intellectual capital performance. Using data collected from 84 South African, empirical results indicate a positive association between the percentage of female and non-white directors on the board and a firm’s intellectual capital performance. Additional analysis shows the designation of female directors as an insider has a negative effect of intellectual capital performance. Designation of female and non-white directors as …
Firm Ownership Structure And Intellectual Capital Disclosures, Stephen Firer, S. M. Williamson
Firm Ownership Structure And Intellectual Capital Disclosures, Stephen Firer, S. M. Williamson
Research Collection School Of Accountancy
The primary purpose of this study is to investigate the association between three ownership structure characteristics and voluntary intellectual capital (IC) disclosure practices. Data for this study is hand collected from the 2000 annual reports of 390 Singapore publicly traded firms. Empirical results indicate Singapore publicly traded firms more closely owned were less likely to voluntarily disclose IC related information than were those where executive directors had smaller holdings in the entity. Finally, findings indicate government linked corporations (GLCs) will likely make more voluntary IC disclosures than non-GLCs. Overall, this study makes several unique contributions to the literature. First, the …