Corporate Finance Commons^™

The Determinants Of Trade Credit Extension And The Problem Of Late Payment In The Malaysian Manufacturing Sector., Teh Chee Ghee

Student Works (2010-2019)

This study investigates the determinants of trade credit extension and the association between late payment from trade debtors and profitability in the Malaysian manufacturing sector. It is based on exploratory data analysis and ordinary least squares (OLS) regressions on a crosssectional sample of 383 and 287 public-listed manufacturing companies, respectively, using audited financial statements for the financial year ending 2007/2008.Investment in accounts receivables is even higher than in inventories in the Malaysian manufacturing sector. Contrary to previous studies, this study finds that large companies,manufacturers with higher liquidity and with higher collateral assets extend less trade credit, indicating that the listed …

Why "Democracy" And "Drifter" Firms Can Have Abnormal Returns: The Joint Importance Of Corporate Governance And Abnormal Accruals In Separating Winners From Losers, Koon Boon Kee

Dissertations and Theses Collection (Open Access)

Do managers exercise accounting discretion in an opportunistic or efficient manner? Good governance structures, which mitigate agency costs, are necessary to ensure that the accounting information supplied by management is not opportunistically manipulated. The output of quality accounting information, in turn, serves as an input to better governance structures. Thus, governance and earnings quality (EQ) are inexorably linked through a complementarity relationship. This suggests two previously unexamined relationships. Firstly, the governance effects on performance in the influential paper by Gompers, Ishii and Metrick (2003) is overrated without good EQ, measured by the magnitude of abnormal accruals (AA), as an input. …

Why Does Corporate Governance Matter? Evidence From Seasoned Bond Offerings, Fang Wang

Dissertations and Theses Collection (Open Access)

To examine the importance of corporate governance, I look at how management and investors behave in the event of seasoned bond offerings, controlling for the corporate governance structure of issuing firms. I find that companies with the weakest governance structure aggressively manipulate their earnings upwards during the two years prior to the debt issuances. And when the bond offerings are announced to the market, these same firms experienced positive abnormal returns over a three day event period, indicating that investors of poorly governed firms value a debt financing for the alleged decrease in agency cost.

Does Corporate Governance Matter, Evidence From Earnings Management Practices In Singapore, Lingxu Hu

Dissertations and Theses Collection (Open Access)

This paper addresses two questions. First, do good corporate governance practices add values to company or does it lead to higher stock returns in Singapore? Second, does poorly governed listed company in SGX tend to manage their earnings by using discretionary accruals? Following the approach of Gompers et al. (2003), we formed two portfolios consisting of well-governed and poorly governed companies. Well governed companies are able to maintain a higher return relative to poorly governed companies. I also look at the firm valuation from the adoption of corporate governance practices. Our result shows a positive relationship between firm valuation and …

Effectively Hedging The Interest Rate Risk Of Wide Floating Rate Coupon Spreads, Thomas Schröder, Kwamie Dunbar

WCBT Working Papers

Bond issuers frequently immunize/hedge their interest rate exposure by means of interest rate swaps (IRS). The receiving leg matches all bond cash-flows, while the pay leg requires floating rate coupon payments of form LIBOR + a spread. The goal of hedging against interest rate risk is only achieved in full if the present value of this spread is zero. Using market data we show that under a traditional IRS hedging strategy an investor could still experience significant cash flow losses given a 1% shift in the underlying benchmark yield curve.

We consider the instantaneous interest-rate risk of a bond portfolio …

Backdated Stock Options Ownership Impact On The Corporation, Management, & Shareholders, Karen Cascini, Alan Delfavero

WCBT Faculty Publications

In the post-Sarbanes-Oxley Act (SOx) world, there has been an unprecedented crackdown on fraudulent activity occurring within corporate America. During recent years, many companies have granted stock options to their executives and employees as part of compensation packages. While the issuance of stock options as a component of compensation is considered to be a legal practice, corruption has taken this corporate resource to unlawful heights. Recently, numerous corporations have been in the news for potentially backdating stock options. Accordingly, the purpose of this paper is to distinguish between legal and illegal aspects of backdating stock options, and to examine the …

Intra-Industry Effects Of Takeovers: A Study Of The Operating Performance Of Rival Firms, Rupendra Paliwal

WCBT Faculty Publications

This paper investigates whether the managers of industry rivals act to mitigate their agency exposure and improve operating performance when one of the firms in the industry is subject to a takeover attempt. The results indicate that rival firms in general decrease free cashflows, improve operating performance, reduce capital expenditures, and increase leverage in response to a control threat within the industry. In particular, rival firms with potentially higher agency costs i.e., fewer investment opportunities and high cash or high free cashflows exhibit a higher reduction in cash levels and free cashflows subsequent to a control threat in their industry. …

The Extreme Risk Problem For Monetary Policies Of The Euro-Candidates Countries, Hubert Gabrisch, Lucjan T. Orlowski

WCBT Working Papers

We argue that monetary policies in euro-candidate countries should also aim at mitigating excessive instability of the key target and instrument variables of monetary policy during turbulent market periods. Our empirical tests show a significant degree of leptokurtosis, thus prevalence of tail-risks, in the conditional volatility series of such variables in the euro-candidate countries. Their central banks will be well-advised to use both standard and unorthodox (discretionary) tools of monetary policy to mitigate such extreme risks while steering their economies out of the crisis and through the euroconvergence process. Such policies provide flexibility that is not embedded in the Taylor-type …

Corporate Governance And Earnings Management Before Share Repurchase Announcements In Singapore, Jian Ming Chua

Dissertations and Theses Collection (Open Access)

Share repurchase in Singapore was legalized in 1998. It is well known that investors view share repurchase as good news. This study is based on share repurchase announcements from 2006 to 2009. The mean Cumulative Market-Adjusted Returns (CAR) for the period [0, +1] and [-1, +1] are significant at 1.25% and 1.33% respectively. In Singapore, there are positive abnormal returns following share repurchase announcements in support of the ―free cash flow‖ hypothesis. By using the Singapore Corporate Governance Index as a proxy, the weakly governed companies exhibit the strongest, positive and significant CAR of 2.62% for the period [0, +1]. …

Esops And Corporate Officers' Compensation., Stoyu Ivanov

Faculty Publications

In the literature two major hypotheses have been developed for Employee Stock Ownership Plans used as a takeover defense, the management entrenchment and shareholder interest hypotheses, with the existing research not finding conclusive evidence for either one. In this paper we provide evidence that the entrenchmenthypothesis is not supported by finding that Employee Stock Ownership Plan firms pay less to their managers than non-Employee Stock Ownership Plan firms. If managers were truly entrenched they would have been able to expropriate wealth from the existing shareholders, which appears not to be the case for Employee Stock Ownership Plan firms.

Strategic Asymmetric Multicultural Alliances In Business, Anthony James Scriffignano

Antioch University Dissertations & Theses

Global economics and other factors make it increasingly difficult for organizations to operate within the boundaries of one country in a rational way (e.g., leveraging best practices, profitable, achieving goals). In this study, I looked at strategic business alliances, transcending simple quid pro quo relationships to deliver ongoing partner value. I refined my study to multicultural relationships, having differing cultural identities (i.e., ideas, heritage, language, or demographics from differing geographies). Finally, I considered asymmetry (i.e., inequity in working relationship). Using a mixed-methodology design, I surveyed alliance participants and interviewed participants from selected alliances. A multi-case study addresses emergent themes of …

Moral Hazard, Firms’ Internal Governance And Management Earnings Forecasts, Jimmy Lee

Research Collection School Of Accountancy

This paper investigates the role of management earnings forecasts in mitigating information asymmetry between investors andmanagers relating to moral hazard, and explains how earnings guidance facilitates monitoring. I demonstrate that firms that are more susceptible to moral hazard problems and more difficult to monitor are also more likely to issue annual earningsforecasts and they do so more frequently. In addition, I examine how firm internal governance drives forecasting decisions andshow that stronger board governance and managerial equity incentives are associated with higher likelihood and frequency of forecast issuance. Finally, I provide robust evidence that managerial equity incentives are associated with …