Asian Studies Commons^™

Cross Border Public Offering Of Securities In Fostering An Integrated Asean Securities Market: The Experiences Of Singapore, Malaysia And Thailand, Wai Yee Wan

Research Collection Yong Pung How School Of Law

In 2015, the Association of South-East Asian Nations (ASEAN) Economic Community was formally established and its aim was to achieve, among other things, an integrated securities market within ASEAN.

Before the formal establishment of the ASEAN Economic Community, in 2009, with a view towards achieving the objective of securities integration, Singapore, Malaysia and Thailand adopted the ASEAN Disclosure Standards, a set of harmonized disclosure standards for issuers making cross-border initial public offerings (IPOs). These participating Member States also entered into a framework for the expedited review for cross-listings. However, more than 5 years later, there is no documented use of …

Why Do Publicly Listed Firms Evade Taxes: Evidence From China, Travis Chow, Bin Ke, Hongqi Yuan, Yao Zhang

Research Collection School Of Accountancy

Taking advantage of the mandatory disclosure of detected corporate tax evasions in China, we examine why publicly listed firms evade taxes. Different from most prior studies that focus on corporate income tax avoidance, we consider tax evasions related to both income taxes and non-income taxes. We also use a bivariate probit model to account for the partial observability of corporate tax evasion. Many of our regression results using the bivariate probit model are different from the results using the reduced form probit model that ignores the partial observability of tax evasion. Many of our results are also different from those …

Do Politically Connected Directors Affect Accounting Quality? Evidence From China's Anti-Corruption Campaign (Rule 18), Ole-Kristian Hope, Heng Yue, Qinlin Zhong

Research Collection School Of Accountancy

We examine the impact of politically connected directors on accounting quality using a quasi experiment in China. In October 2013, “Rule 18” was issued to prohibit government and party officials, who were concurrently holding public offices or had recently retired from such positions within the last three years, from serving as directors for publicly listed firms. The regulation is part of China’s anti-corruption campaign, and it has led to a large number of politically connected directors resigning from their roles as directors involuntarily. As such, Rule 18 has effectively weakened, if not fully discontinued, the political connections of the firms …

Multinational Firms And Cash Holdings: Evidence From China, Weijun Wu, Yang Yang, Sili Zhou

Research Collection Lee Kong Chian School Of Business

To adapt to globalization, Chinese multinational firms have more exploitation of cash. This paper shows that Chinese multinational corporations (MNCs) do not hold significantly more cash relative to domestic firms unless these multinationals heavily relay on the foreign sales. In addition, the multinationals of non-State-Owned Enterprises (Non-SOEs) exhibit the insignificant difference in cash holdings for non-multinationals. We also find that Chinese MNCs invest more but are less profitable, especially in non-SOE subsample. Overall, we conclude that the need of cash liquidity of multinational corporations in China is different from those in U.S.

Ownership And Identities Of The Largest Shareholders And Dividend Policy: Evidence From Vietnam, Trien Vinh Le, Trang Huyen Le

Research Collection School Of Accountancy

This study investigates the relationship between the level of shareholdings and identities of the largest shareholders, and cash dividend policy. The study is conducted with a sample of 180 firms listed on Vietnam stock exchange markets from 2009 to 2013. The fixed effect model is employed to analyze the balanced panel data. The results show that the higher the level of holdings by the largest shareholders, the lower the dividend payout. Moreover, companies with the State and Foreign investors as the largest shareholders have higher dividend payout ratio than companies with local investors and managers as the largest shareholders. The …

Audit Committees And Financial Reporting Quality In Singapore, Yuanto Kusnadi, Kwong Sin Leong, Themin Suwardy, Jiwei Wang

Research Collection School Of Accountancy

We examine three characteristics (independence, expertise, and overlapping membership) of audit committees and their impact on the financial reporting quality for Singapore-listed companies. The main finding is that financial reporting quality will be higher if audit committees have mixed expertise in accounting, finance, and/or supervisory. In addition, we do not find evidence that incremental independence of audit committees enhances financial reporting quality because audit committees already consist of a majority of independent directors. Finally, we fail to find any impact of overlapping membership on audit and remuneration committees on financial reporting quality. Overall, the results have policy implications on improving …

Political Turnovers, Ownership, And Corporate Investment In China, Jerry X. Cao, Julio Brandon, Tiecheng Leng, Sili Zhou

Research Collection Lee Kong Chian School Of Business

We examine the impact of political influence and ownership on corporate investment by exploiting the unique way provincial leaders are promoted in China. The tournament-style promotion system creates incentives for new governors to exert influence over investment in the early years of their term. We find a divergence in investment rates between state owned enterprises (SOEs) and private firms following political turnover. SOEs increase investment by 6.0% following the turnover while investment rates for private firms decline, suggesting that the political influence exerted over SOEs may crowd out private investment.

Financial Reporting Quality Of Chinese Reverse Merger Firms: The Reverse Merger Effect Or The China Effect?, Kun-Chih Chen, Qiang Cheng, Ying Chou Lin, Yu-Chen Lin, Xing Xiao

Research Collection School Of Accountancy

In this paper, we examine why Chinese reverse merger (RM) firms have lower financial reporting quality than U.S. IPO firms. We find that the financial reporting quality of U.S. RM firms is similar to that of matched U.S. IPO firms, but Chinese RM firms exhibit lower financial reporting quality than Chinese ADR firms. We also find that Chinese RM firms exhibit lower financial reporting quality than U.S. RM firms. These results indicate that the use of the RM process is associated with poor financial reporting quality only in firms from China, where legal enforcement and investor protection are weak. In …

Leveraging Foreign Institutional Logic In The Adoption Of Stock Option Pay Among Japanese Firms, Xuesong Geng, Toru Yoshikawa, Asli M. Colpan

Research Collection Lee Kong Chian School Of Business

We investigate why Japanese firms have adopted executive stock option pay, which was developed with shareholder-oriented institutional logic that was inconsistent with Japanese stakeholder-oriented institutional logic. We argue that Japanese managers have self-serving incentives to leverage stock ownership of foreign investors and their associated institutional logic to legitimize the adoption of stock option pay. Our empirical analyses with a large sample of Japanese firms between 1997 and 2007 show that when managers have elite education, high pay inequality with ordinary employees, and when firms experience poor sales growth, foreign ownership is more likely associated with the adoption of stock option …

Financial Health And Corporate Performance: A Comparison Of Manufacturing Companies In China And India, See Liang Foo, Shaakalya Pathak

Research Collection School Of Accountancy

The People’s Republic of China (China) and India are two leading economies in Asia Pacific. 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 these two markets. A linear regression was conducted between these variables to determine the magnitude and direction of their relationships. The trends of Z-Scores over a fourteen-year period are also analysed. The analysis covers the period from 2000 to 2013 (inclusive) and yielded a statistically positive correlation between ROE and the Z-Score for both …

Financial Health And Corporate Performance Of Listed Manufacturing Companies In South Korea And Taiwan: A Comparative Study Of The Two Asian Tigers, See Liang Foo, Shaakalya Pathak

Research Collection School Of Accountancy

South Korea and Taiwan are two leading economies in Asia Pacific. 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 these two markets. A linear regression was conducted between these variables to determine the magnitude and direction of their relationships. The trends of Z-Scores over a fourteen-year period are also analyzed. The analysis covers the period from 2000 to 2013(inclusive) and yielded a statistically positive correlation between ROE and the Z-Score for both markets. South Korea and Taiwan …

Social Capital, Informal Governance, And Post-Ipo Firm Performance: A Study Of Chinese Entrepreneurial Firms, Jerry X. Cao, Yuan Ding, Hua Zhang

Research Collection Lee Kong Chian School Of Business

Social capital can serve as informal governance in weak investor-protection regimes. Using hand-collected data on entrepreneurs' political connections and firm ownership, we construct several original measures of social capital and examine their effect on the performance of entrepreneurial firms in China after their initial public offerings. Political connections or a high percentage of external investors tend to enhance firm performance, but intragroup related-party transactions commonly lead to performance decline. These forms of social capital have a strong influence on the performance of Chinese firms, whereas formal governance variables such as board size or board independence have little effect. Although social …

Corporate Reorganisation Of China’S Listed Companies: Winners And Losers, Zinian Zhang

Research Collection Yong Pung How School Of Law

This article is the first empirical study investigating the corporate reorganisation of Chinese domestically-listed companies. Through examining these cases, it challenges the assertion made by most of these corporate reorganisation plans and by Chinese state-run media reports that creditors and general public shareholders were the major beneficiaries. Through an analysis of the data generated from all forth-three such cases, this articles reveals that: First, unsecured creditors could have, on average, received 61.37% more of their claims if the fundamental value distribution principle, the absolute priority norm, could have been complied with in these reorganisations; Second, if the general-public-shareholder-protection scheme issued …

A State-Stewardship View On Executive Compensation, Hao Liang, Luc Renneboog, Sunny Li Sun

Research Collection Lee Kong Chian School Of Business

We take a state-stewardship view on corporate governance and executive compensation in economies with strong political involvement, where state-appointed managers act as responsible ‘stewards’ rather than ‘agents’ of the state. We test this view on China and find that Chinese managers are remunerated not for maximizing equity value but for increasing the value of state-owned assets. Managerial compensation depends on political connections and prestige, and on the firms’ contribution to political goals. These effects were attenuated since the market-oriented governance reform. In a social welfare perspective, such compensation stimulates not the maximization of shareholder value but the preservation of the …

Fair Value Hierarchy Measures: Post-Implementation Evidence On Ifrs 7, Pearl Tan

Research Collection School Of Accountancy

Using a balance sheet valuation model, this study examines if information on the fair value hierarchy of on-balance sheet financial assets and financial liabilities are incorporated in the market’s valuation of companies’ equities in Singapore. The results of the study show significant associations between as-reported Level 1 and Level 2 fair value measures of financial assets and market values. However, the results are not significant for Level 3 fair value measures of financial assets and each of the three levels of fair value measures of financial liabilities. The results also show that returns are more positively associated with as-reported gains …

Audit Committees And Financial Reporting Quality In Singapore, Kwong Sin Leong, Jiwei Wang, Themin Suwardy, Yuanto Kusnadi

Research Collection School Of Accountancy

No abstract provided.

Financial Health And Corporate Performance Of Listed Manufacturing Companies In Hong Kong And Singapore – A Comparative Study Of The Two Asian Tigers, Foo S.L.

Research Collection School Of Accountancy

Hong Kong and Singapore are two leading economies in Asia Pacific. 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 these two markets. A linear regression was conducted between these variables to determine the magnitude and direction of their relationships. The trends of Z-Scores over a fourteen-year period are also analyzed. The analysis covers the period from 2000 to 2013(inclusive) and yielded a statistically positive correlation between ROE and the Z-Score for both markets. Singapore and Hong Kong …

An Anatomy Of State Control In The Globalization Of State-Owned Enterprises, Hao Liang, Bing Ren, Sunny Li Sun

Research Collection Lee Kong Chian School Of Business

Integrating agency theory with institutional analysis in international business, we propose a state-control perspective to analyze government-control mechanisms in emerging economies’ globalization of state-owned enterprises (SOEs). We identify two types of state control that influence SOEs’ globalization decisions and the degree of globalization: state ownership control and executives’ political connections, both of which are contingent upon the home country’s evolving institutional environments. Using a two-step corporate globalization decision model and 17,272 firm-year observations of non-financial, Chinese-listed companies, we find a strong impact of both types of state control on SOEs’ globalization, although the impacts differ between the periods before and …

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' …

Should Singapore Adopt 'Say On Pay'?, Clarence Goh

Research Collection School Of Accountancy

SoP may require disclosures that could harm a firm's competitive interests.

Should Singapore Adopt 'Say On Pay'?, Clarence Goh

Research Collection School Of Accountancy

SoP may require disclosures that could harm a firm's competitive interests.

Causes And Consequences Of Corporate Asset Exchanges By Listed Companies In China, Fang Lou, Jiwei Wang, Hongqi Yuan

Research Collection School Of Accountancy

China's listed companies often exchange corporate assets with their parent companies. We find that listed companies that have been incompletely restructured from former state-owned enterprises and in sound financial condition tend to exchange higher quality assets for lower quality assets (i.e., tunneling). However, when there is a need to avoid reporting a loss and to raise additional capital, listed companies tend to exchange lower quality assets for higher quality assets (i.e., propping). We also find that the market reacts indifferently to asset exchange announcements. Finally, we find asset exchanges motivated by a tunneling (propping) incentive to be associated with poorer …

Wealth Management In Singapore, Francis Koh

Research Collection Lee Kong Chian School Of Business

As early as 2015, Singapore may oust Switzerland as the world’s top finance hub. But the path forward requires adjustments in the strategic direction of individual firms. Wealth management in Singapore is vibrant, growing, challenging.

Media Coverage And Firm Valuation: Evidence From China, Jiwei Wang, Kangtao Ye

Research Collection School Of Accountancy

Drawing on both a managerial discipline perspective and an information intermediary perspective, we explore how media coverage of a firm’s controlling shareholder influences firm valuation in corporate China. Using 366 listed family firms in China from 2003 to 2006, we find that firms in which controlling shareholders receive more neutral media reports enjoy higher valuation, whereas negative media reports on controlling shareholders impose adverse effects on firm valuation. Interestingly, favorable media coverage of the controlling shareholders does not enhance firm value. Further analyses reveal that ownership structure and audit quality moderate the relationship between media coverage and firm valuation. Our …

Financial Reporting Quality Of Chinese Reverse Merger Firms: The Reverse Merger Effect Or The China Effect?, Kun-Chih Chen, Qiang Cheng, Ying Chou Lin, Yu-Chen Lin, Xing Xiao

Research Collection School Of Accountancy

In this paper, we examine why Chinese reverse merger (RM) firms have lower financial reporting quality. We find that while U.S. RM firms have similar financial reporting quality as matched U.S. IPO firms, Chinese RM firms exhibit lower financial reporting quality than Chinese ADR firms. We further find that Chinese RM firms exhibit lower financial reporting quality than U.S. RM firms. These results indicate that the use of RM process is associated with poor financial reporting quality only in firms from China, where the legal enforcement is weaker than U.S. In addition, we find that compared to Chinese ADR firms, …

A Survey Of Executive Compensation Contracts In China’S Listed Companies, Yubo Li, Fang Lou, Jiwei Wang, Hongqi Yuan

Research Collection School Of Accountancy

We analyze 228 executive compensation contracts voluntarily disclosed by Chinese listed firms and find that central-government-controlled companies disclose more information in executive compensation contracts than local-government-controlled and non-government-controlled companies. Cash-based payments are the main form of executive compensation, whereas equity-based payments are seldom used by Chinese listed companies. On average, there are no significant differences in the value of basic salaries and performance-based compensation in executive compensation contracts. But, compared with their counterparts in non-government-controlled companies, executives in government-controlled companies are given more incentive compensation. Accounting earnings are typically used in executive compensation contracts, with few firms using stock returns …

Political Connection And Firm Value, James S. Ang, David K. Ding, Tiong Yang Thong

Research Collection Lee Kong Chian School Of Business

We study the effect of political connection (PC) on company value in an environment where low PC is due to better institutions and not confounded by favorable social/cultural factors. We find that in Singapore, the only country that fits this description, PC in general adds little to the value of a company. However, in industries that are subject to more stringent government regulations, PC appears to be somewhat important. Robustness checks show that alternative PC variables give rise to similar results, and the addition of control variables do not drastically change the findings. Politically connected firms have higher managerial ownership …

Social Capital, Informal Governance, And Post-Ipo Firm Performance: A Study Of Chinese Entrepreneurial Firms, Jerry X. Cao, Yuan Ding, Hua Zhang

Research Collection Lee Kong Chian School Of Business

This paper explores the links between entrepreneurs' social capital and post-IPO firm performance in China's unique capital market and regulatory setting. Using hand-collected data on entrepreneurs' political connections and firm financial information, we construct original measures for various types of social capital and examine their roles in determining the accounting and financial performance of entrepreneurial firms after an IPO. On one hand, firm accounting performance is enhanced by entrepreneurs' bridging social capital, such as political connections or a willingness to share power with external investors. On the other hand, bonding social capital such as intra-group related party transactions causes performance …

Corporate Governance: The Role Of Independent Directors, Singapore Management University

Perspectives@SMU

Companies in Singapore may now have to spend more time and resources to look for independent directors for their firms after the recent revised Corporate Governance Code, but the efforts will be worth it, said Jeremy Goh, associate professor of finance at SMU at a panel discussion during the 3rd Singapore Corporate Governance Week.

Can Us Economic Variables Predict Chinese Stock Market?, Jeremy Goh, Fuwei Jiang, Jun Tu, Yuchen Wang

Research Collection Lee Kong Chian School Of Business

In the last few decades, we observed a significant increase in global economic activities and these activities may have an impact on both China's economy and stock market. Given the potential impact, we empirically examine whether US economic variables are leading indicators of the Chinese stock market. Prior to China joining the World Trade Organization (WTO) in the end of 2001, we find no statistical relationship between US economic variables and the Chinese stock market returns. However, we find US economic variables have statistically significant predictive power for periods after China's admission into the WTO. In addition, we show that …