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Articles 1 - 21 of 21
Full-Text Articles in Corporate Finance
Cfo Gaps: Determinants And Impact On The Corporate Information Environment, Xia Chen, Na Li, An-Ping Lin
Cfo Gaps: Determinants And Impact On The Corporate Information Environment, Xia Chen, Na Li, An-Ping Lin
Research Collection School Of Accountancy
A CFO gap arises when the CFO position is left vacant for a period between the departure of the old CFO and the appointment of a new CFO. We find that CFO gaps are fairly common; over the sample period 2004–2016, approximately one-third of CFO turnovers are associated with a CFO gap, lasting on average two quarters and two months. CFO gaps are more likely for firms that face more labor market search frictions and with financial reporting and performance issues, and are less likely for firms with succession plans and with greater growth opportunities. While CFO gaps are not …
Strategic Disclosure And Debt Covenant Violation, Thomas Bourveau, Derrald Stice, Rencheng Wang
Strategic Disclosure And Debt Covenant Violation, Thomas Bourveau, Derrald Stice, Rencheng Wang
Research Collection School Of Accountancy
This study examines how managers change their forecasting behavior as a debt covenant violation approaches. Using a sample of firms that disclose a debt covenant violation (DCV) in their financial statements, we find that management forecasts are more optimistic in the period leading up to a DCV, and this result is not driven by managers’ unintentional forecast bias. Additionally, we find that managers who are more optimistic in their forecasts also take on more risk and increase dividend payouts before violations, consistent with managers strategically using earnings forecasts to justify their activities favorable to shareholders but likely to be curtailed …
Sustainability: Jobs And Skills For The Accountancy Profession, Jiwei Wang, Holly I. Yang, Liandong Zhang
Sustainability: Jobs And Skills For The Accountancy Profession, Jiwei Wang, Holly I. Yang, Liandong Zhang
Research Collection School Of Accountancy
Sustainability is a megatrend that is changing the way we think about business and offering new opportunities and jobs for the accountancy sector. At the 26th Conference of the Parties (COP26), also known as the United Nations Climate Change Conference, the international business community was galvanised into action. Singapore, too, has intensified its sustainability plans with the Singapore Green Plan 2030
Contracting With Controllable Risk, Christopher S. Armstrong, Stephen A. Glaeser, Sterling Huang
Contracting With Controllable Risk, Christopher S. Armstrong, Stephen A. Glaeser, Sterling Huang
Research Collection School Of Accountancy
We examine how executives' ability to control their firms' exposure to risk affects the design of their incentive-compensation contracts. Our natural experimental evidence shows that exchange-traded weather derivatives allow executives to control their firms' exposure to weather risk. Once these derivatives became available, those executives who use them to hedge experience relative reductions in their total compensation and equity incentives. The decline in compensation is consistent with a reduction in the risk premium that executives receive for exposure to weather risk. The decline in equity incentives is consistent with the relation between risk and incentives shifting in a complementary direction …
Active Independent Directors And Earnings Quality, Yuanto Kusnadi, Bin Srinidhi
Active Independent Directors And Earnings Quality, Yuanto Kusnadi, Bin Srinidhi
Research Collection School Of Accountancy
We examine the relationship between active independent directors and earnings quality for U.S. firms. We construct measures that proxy for activeness of independent directors and find that the proportion of active independent directors is under half on average. Our finding shows that earnings quality increases with the percentage of active independent directors on the board. Once the active independent directors are separated out, the other independent directors do not have any effect on earnings quality. This finding supports the hypothesis that the activeness of independent directors is incrementally significant over just the proportion of independent directors for the quality of …
Managerial Trustworthiness And Buybacks, Sterling Huang, Kaisa Snellman, Theo Vermaelen
Managerial Trustworthiness And Buybacks, Sterling Huang, Kaisa Snellman, Theo Vermaelen
Research Collection School Of Accountancy
CEO trustworthiness is positively related to long-term excess returns after buyback announcements. When the CEO is trustworthy, statements that the stock is undervalued are more credible. CEO trustworthiness is initially measured by the extent to which people in the county where the company headquarters is located trust each other. Further, the positive impact of trustworthiness on excess returns is higher when the CEO has been a long-term resident of a high-trust county, and correspondingly, trustworthy CEOs are less likely to be accused of financial misreporting. Our conclusions are confirmed when we use alternative measures of trustworthiness such as employee trust …
Short Interest And Corporate Investment: Evidence From Supply Chain Partners, Xia Chen, Guojin Gong, Shuqing Luo
Short Interest And Corporate Investment: Evidence From Supply Chain Partners, Xia Chen, Guojin Gong, Shuqing Luo
Research Collection School Of Accountancy
Short interest contains valuable information about a firm’s business fundamentals. We investigate whether such information affects business partners’ real investment decisions in the supply-chain setting. We predict and find that a supplier’s future investments (including inventory, R&D, and tangible asset investments) decrease with its customer’s current short interest. This negative relation is stronger when the supplier faces greater difficulty in assessing its customer’s business fundamentals and when short interest is more likely to indicate longlasting deterioration in the customer’s fundamentals. Additional analysis does not support the alternative explanation that the supplier adjusts investments in response to unfavorable information obtained via …
An Automation Tax- Adopt With Caution, Vincent Ooi
An Automation Tax- Adopt With Caution, Vincent Ooi
Research Collection Yong Pung How School Of Law
The post highlights three main issues that may result from the rapid and widespread automation of jobs: 1) declining tax revenues; 2) inequitable distribution of gains and losses from automation; and 3) social costs of job displacement, such as social support and retraining programmes for displaced workers.An automation tax may be imposed on a temporary basis to manage (slow) the rate of displacement of workers due to the adoption of automation technologies, but should not be a permanent feature. Otherwise, there will be a risk of loss of competitiveness in the long-term, possibly resulting in even greater economic harm.One main …
New Assets, (Largely) Same Old Rules: The Taxation Of Digital Tokens, Vincent Ooi
New Assets, (Largely) Same Old Rules: The Taxation Of Digital Tokens, Vincent Ooi
Research Collection Yong Pung How School Of Law
In this blog post, I highlight the fact that across jurisdictions, tax provisions specifically drafted to address the taxation of digital tokens are still quite rare, meaning that existing orthodox tax rules will have to be applied. However, care must be taken when applying tax provisions and one must be aware of the limits of "reasoning by analogy".Some tax provisions make reference to specific assets or asset classes and it cannot be assumed that digital tokens which look very similar to these assets will inevitably fall under those provisions. For example, no matter how much a digital payment token looks …
Institutional Cross-Ownership Of Peer Firms And Investment Sensitivity To Stock Price, Young Jun Cho, Holly I. Yang
Institutional Cross-Ownership Of Peer Firms And Investment Sensitivity To Stock Price, Young Jun Cho, Holly I. Yang
Research Collection School Of Accountancy
Theory suggests that stock price guides managers in corporate decisions as managers learn from price. We reason that cross-ownership lowers information processing costs and increases industry specialization, improving revelatory price efficiency (Bond, Edmans, and Goldstein 2012). Consistent with our expectations, we find that a firm’s investment-q sensitivity increases as its cross-ownership increases, suggesting that cross-ownership facilitates managerial learning from price and thus investment efficiency. We strengthen the causal inference by conducting a difference-in-differences analysis using financial institution mergers as an identification strategy. We also find that the increase in the investment-q sensitivity associated with cross-ownership is more pronounced for firms …
Major Government Customers And Loan Contract Terms, Daniel A. Cohen, Bin Li, Ningzhong Li, Yun Lou
Major Government Customers And Loan Contract Terms, Daniel A. Cohen, Bin Li, Ningzhong Li, Yun Lou
Research Collection School Of Accountancy
We examine the relation between the presence of U.S. government as a major customer and a supplier firm’s loan contract terms, using major corporate customers as a benchmark. We find that firms with major government customers are associated with fewer covenants and a lower likelihood of having performance pricing provisions in their loan contracts. In contrast, we do not find such associations for firms with major corporate customers. Further, we find no evidence that the existence of major government customers is related to the supplier firm’s loan spread, security, or maturity. We conjecture that lenders benefit from the stricter monitoring …
Cds Channels Of Influence On Discretionary Accruals, Hao Cheng, Kian Guan Lim
Cds Channels Of Influence On Discretionary Accruals, Hao Cheng, Kian Guan Lim
Research Collection Lee Kong Chian School Of Business
Existing studies indicated that firm debt holders can use the credit default swap (CDS) market to hedge their credit risk, and thus they would reduce their monitoring of the firms, leading to largely distressed firms shirking and increasing positive abnormal earnings accruals. Besides providing insurance, however, the CDS spreads also perform price discovery of credit risk information sought by trade creditors and potential lenders who are not protected. High absolute abnormal discretionary accruals or bad earnings quality, especially negative abnormal accruals, would lead adverse CDS price signals that are very costly to the firm. This compels the firm under nondistressed …
The Influence Of Corporate Income Taxes On Investment Location: Evidence From Corporate Headquarters Relocations, Travis Chow, Sterling Huang, Kenneth J. Klassen, Jeffrey Ng
The Influence Of Corporate Income Taxes On Investment Location: Evidence From Corporate Headquarters Relocations, Travis Chow, Sterling Huang, Kenneth J. Klassen, Jeffrey Ng
Research Collection School Of Accountancy
This study examines the effects of jurisdictions’ corporate taxes and other policies on firms’ headquarters (HQ) location decisions. Using changes in state corporate income tax rates across time and states as the setting, we find that a one-percentage-point increase in the HQ state corporate income tax rate increases the likelihood of firms relocating their HQ out of the state by 16.8%, and an equivalent decrease in the HQ state rate decreases the likelihood of HQ relocations by 9.1%. Exploiting the unique tax policy features within the state apportionment system lends strong support to the interpretation that taxation drives this effect. …
Analysts' Site Visits And Corporate Innovation, Qiang Cheng, Yutao Wang, Holly I. Yang, Zheyuan Zhang
Analysts' Site Visits And Corporate Innovation, Qiang Cheng, Yutao Wang, Holly I. Yang, Zheyuan Zhang
Research Collection School Of Accountancy
While prior studies examine whether analyst coverage affects corporate innovation, there is little research on the mechanism through which financial analysts affect corporate innovation. In this paper, we examine whether and how analysts’ questions about innovation affect corporate innovation activities and outcomes. Using a sample of corporate site visits in China, we find that when analysts ask questions about innovation during site visits, the firms invest more in research and development and file more patent applications in the future. This association is stronger when analysts have a greater information and monitoring role. In addition, consistent with knowledge diffusion between firms, …
Spacs: Is It For Real Estate?, Melvyn Teo, Ronald Tan, Indran Thana, Yin Mei Lock
Spacs: Is It For Real Estate?, Melvyn Teo, Ronald Tan, Indran Thana, Yin Mei Lock
Perspectives@SMU
SPACs are gaining popularity but investors should do their homework
Financial Capacity And The Demand For Audit Quality, Chee Yeow Lim, Gerald J. Lobo, Pingui Rao, Heng Yue
Financial Capacity And The Demand For Audit Quality, Chee Yeow Lim, Gerald J. Lobo, Pingui Rao, Heng Yue
Research Collection School Of Accountancy
Prior research documents that financial capacity could be positively or negatively associated with the demand for audit quality. We re-examine this relation using changes in local real estate prices as exogenous shocks to corporate financial capacity. Using auditor size, auditor industry specialisation, and auditor fees as measures of audit quality, we find robust evidence that an increase (decrease) in financial capacity significantly reduces (increases) the demand for audit quality, and that this relation is more pronounced when firms are more financially constrained, when external monitoring by institutional investors and financial analysts is weaker, and when there is more negative news …
Audit Adjustments Matter: What They Reveal About Companies' Financial Reporting, Themin Suwardy, Chu Yeong Lim
Audit Adjustments Matter: What They Reveal About Companies' Financial Reporting, Themin Suwardy, Chu Yeong Lim
Research Collection School Of Accountancy
This study investigates the characteristics, nature and extent of proposed audit adjustments to the financial statements of listed companies in Singapore. Data was gathered from the 2018 to 2020 financial statements of 412 companies, along with views of close to 280 audit committee chairs and heads of finance (or similar designations) on the effectiveness of their companies’ finance function.
Postmaterialism And Corporate Tax Avoidance, Yujia Cui, Jiwei Wang, Kangtao Ye
Postmaterialism And Corporate Tax Avoidance, Yujia Cui, Jiwei Wang, Kangtao Ye
Research Collection School Of Accountancy
This paper explores how postmaterialism culture influences corporate tax avoidance behavior. Using a proprietary dataset of China tax audits, we find that firms owned by investors from countries with higher postmaterialism values are less likely to engage in tax avoidance behavior in China. In addition, we find some evidence that the negative association between postmaterialism and tax avoidance is more pronounced when tax enforcement is stronger, indicating that national culture and formal institutions act as complements. To check the external validity of our main results, we further use a cross-country sample from 21 countries over 22 years. The evidence from …
Turning The Covid-19 Pandemic Into An Opportunity For Digital Disruption In The E-Commerce Industry: A Case Study Of Digital Commerce Intelligence Pte Ltd, Yuanto Kusnadi, Gary Pan
Turning The Covid-19 Pandemic Into An Opportunity For Digital Disruption In The E-Commerce Industry: A Case Study Of Digital Commerce Intelligence Pte Ltd, Yuanto Kusnadi, Gary Pan
Research Collection School Of Accountancy
No abstract provided.
Outsourcing Climate Change, Rui Dai, Rui Duan, Hao Liang, Lilian Ng
Outsourcing Climate Change, Rui Dai, Rui Duan, Hao Liang, Lilian Ng
Research Collection Lee Kong Chian School Of Business
This paper examines whether and how firms combat climate change. Our study provides robust evidence that firms outsource part of their carbon emissions to foreign suppliers and shows how internal and external stakeholders significantly shape firms' environmental policies. Furthermore, firms tend to seek a foreign supplier and decrease their emission abatement efforts as pressure to reduce domestic emissions intensifies. These firms are also less incentivized to develop green technologies. Finally, we find that outsourcing emissions has real and economic consequences, with investors demanding a higher carbon premium for their exposures to carbon risks associated with increased outsourced emissions.
Conditional Relationship Between Distress Risk And Stock Returns, Su Hee Yun, Jung Min Kim
Conditional Relationship Between Distress Risk And Stock Returns, Su Hee Yun, Jung Min Kim
Research Collection Lee Kong Chian School Of Business
Purpose: Previous research on the relationship between a firm’s distress risk and future stock returns produces inconsistent results. This study attempts to explain the conflicting results of earlier studies by showing that systematic distress risk leads to positive rewards, while unsystematic distress risk leads to low stock returns. In addition, this study intends to elucidate the factors of systematic distress risk and unsystematic distress risk, respectively. In this way, this study informs the rational investor what kind of distress risk they should take. Design/methodology/approach: This study considers two distress-predictor sets to show a possibility between distress risk and stock returns …