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Articles 1 - 19 of 19
Full-Text Articles in Business
Disclosure Regulation: Past, Present, And Future, S.P. Kothari, Liandong Zhang
Disclosure Regulation: Past, Present, And Future, S.P. Kothari, Liandong Zhang
Research Collection School Of Accountancy
This monograph provides an overview of the theories of disclosure regulation and recent developments in the disclosure regulation literature. We organize our discussion around three basic questions. First, why do we need to regulate corporate disclosure in the financial market? Second, which theories explain the current state of disclosure regulation? Third, what are the economic consequences of disclosure regulation? In exploring the third question, we discuss several examples of disclosure regulation related to information production, dissemination, and presentation. Then, we provide an overview of the current debate on mandating environmental, social and governance (ESG) disclosure and reporting. Finally, we conclude …
The Value Of Assurance Over Internal Controls: Evidence From Mergers And Acquisitions, Ryan Courtlin Cating
The Value Of Assurance Over Internal Controls: Evidence From Mergers And Acquisitions, Ryan Courtlin Cating
Graduate Theses and Dissertations
In this study, I examine the value of assurance over internal controls in the mergers and acquisitions setting. Specifically, I examine the how the existence of an internal control audit mandated under Section 404(b) of SOX affects information asymmetry as proxied for by the likelihood of a company becoming the target of an acquisition. I find that companies with internal control audits are significantly more likely to receive bids than their counterparts that do not have an internal control audit. Upon further investigation, I find that the mechanism by which companies are more likely to become the target of an …
The First Sign: Detecting Future Financial Fraud From The Ipo Prospectus, Lisa Spadaccini Anderson
The First Sign: Detecting Future Financial Fraud From The Ipo Prospectus, Lisa Spadaccini Anderson
Graduate Theses and Dissertations
In this study, I examine whether it is possible to predict future financial statement fraud using disclosure content prior to the fraud. Specifically, I employ a machine learning algorithm to construct a unique measure based on the lexical cues embedded within a firm’s first public disclosure, the Management’s Discussion and Analysis section of the S-1 filing, during the Initial Public Offering process. I use this measure to predict whether a firm that is not already committing fraud will commit fraud within five years of the Initial Public Offering (IPO) that results in an Accounting or Enforcement Release (AAER). I find …
Buying Products From Whom You Know: Personal Connections And Information Asymmetry In Supply Chain Relationships, Ting Chen, Hagit Levy, Xiumin Martin, Ron Shalev
Buying Products From Whom You Know: Personal Connections And Information Asymmetry In Supply Chain Relationships, Ting Chen, Hagit Levy, Xiumin Martin, Ron Shalev
Publications and Research
This study investigates the role personal connections play in a crucial element of the supply chain—supplier selection. We find that the likelihood that a potential supplier (hereafter, a vendor) is selected to be an actual supplier (hereafter, supplier) increases when personal connections between executives of the vendor and the customer exist. The magnitude of the effect varies predictably across management ranks and positions and is stronger when information asymmetries between a vendor and a customer are high. Conditioning on the existence of a supply-chain partnership, a departure of a personally connected executive prompts the termination of the supply-chain relationship more …
Does Corporate Eco-Innovation Affect Stock Price Crash Risk?, Rashid Zaman, Nader Atawnah, Muhammad Haseeb, Muhammad Nadeem, Saadia Irfan
Does Corporate Eco-Innovation Affect Stock Price Crash Risk?, Rashid Zaman, Nader Atawnah, Muhammad Haseeb, Muhammad Nadeem, Saadia Irfan
Research outputs 2014 to 2021
We examine the effect of corporate environmental innovation (hereafter eco-innovation) on stock price crash risk and document a significant negative association. Utilising a large sample of publicly listed U.S. firms for the period 2003 to 2017, we find that an increase in eco-innovation from the 25th to the 75th percentile is associated with 17.62% reduction in stock price crash risk. This outcome remains robust to a variety of sensitivity tests and after accounting for potential endogeneity concerns. Eco-innovative firms attract more institutional investors and equity analyst following and disclose more information leading to lower stock price crash risk. Additional tests …
Feedback’S Effect On Budgetary Slack And Self-Efficacy As Moderation Variable, Aryani Intan Endah Rahmawati, Supriyadi ,
Feedback’S Effect On Budgetary Slack And Self-Efficacy As Moderation Variable, Aryani Intan Endah Rahmawati, Supriyadi ,
Jurnal Akuntansi dan Keuangan Indonesia
This study aimed to examine the effect of positive and negative feedback on budgetary slack and the interaction between feedback and self-efficacy on budgetary slack under a condition of information asymmetry. Preliminary researches have tested various ways of mitigating budgetary slack practices, which did not separate the effects of positive and negative feedback. This study hypothesized that positive feedback minimizes the potential for budgetary slack under conditions of information asymmetry—and vice versa. Additionally, high self-efficacy reinforces positive feedback in reducing budgetary slack under conditions of information asymmetry—and vice versa. By employing experimental data, this study documented the results that positive …
Analysts’ Cash Flow Forecasts, Information Asymmetry, And Financing Choices Of Firms, Mengyu Ma
Analysts’ Cash Flow Forecasts, Information Asymmetry, And Financing Choices Of Firms, Mengyu Ma
FIU Electronic Theses and Dissertations
Prior research documents mixed results regarding the usefulness of cash flow forecasts. One stream of literature documents analysts provided cash flow information is associated with more accurate earnings forecasts, better accruals quality, stronger market reaction, and more precious information about future valuation. Another stream of literature claims that cash flow forecasts are a simple extension of analysts’ own earnings forecasts and are not useful. I contribute to this debate by examining potential implications of cash flow forecasts for information environment. My dissertation consists of three separate but closely related studies, which investigate how analysts’ cash flow forecasts are linked with …
Consequences Of Disclosing Clinical Trial Results: Evidence From The Food And Drug Administration Amendments Act, Thomas Borveau, Vedran Capkun, Yin Wang
Consequences Of Disclosing Clinical Trial Results: Evidence From The Food And Drug Administration Amendments Act, Thomas Borveau, Vedran Capkun, Yin Wang
Research Collection School Of Accountancy
We examine how the U.S. Food and Drug Administration Amendments Act (FDAAA) of 2007, which requires additional disclosures regarding clinical trial results, impacts information asymmetry between the disclosing pharmaceutical firm and capital market participants, the general public, academics, and practitioners. We document a reduction in information asymmetry in capital markets. We also document an increase in adverse event and product problem complaint reports filed against the pharmaceutical firms to the FDA and a higher number of drug and medical device recalls for affected firms after the FDAAA enactment. Finally, cross-sectional analyses suggest that the increase in FDA complaint reports and …
Does Institutional Ownership Affect Information Sharing With Independent Board Members?, Deborah D. Smith, Heidi H. Meier, Pervaiz Alam
Does Institutional Ownership Affect Information Sharing With Independent Board Members?, Deborah D. Smith, Heidi H. Meier, Pervaiz Alam
Business Faculty Publications
Research Question This is an investigation of board independence to determine whether management shares information with the board, or withholds information to retain autonomy. A key contribution is to examine the interaction of institutional ownership with the main test variables to determine whether institutional governance influences the information environment as board independence is increased. Research Findings The results show that information asymmetry decreases internally and increases externally as board independence increases, yet institutional ownership appears to moderate or reverse this relationship. The following variables are used to explain why managers of firms are likely to have more information than outsiders: …
Conditional Conservatism And Debt Versus Equity Financing, Beng Wee Goh, Chee Yeow Lim, Gerald J. Lobo, Yen H. Tong
Conditional Conservatism And Debt Versus Equity Financing, Beng Wee Goh, Chee Yeow Lim, Gerald J. Lobo, Yen H. Tong
Research Collection School Of Accountancy
Extant research suggests that conditional conservatism reduces information asymmetry between a firm and its shareholders as well as its debtholders. However, there is little evidence on whether conditional conservatism reduces information asymmetry differentially for shareholders and debtholders. We use the setting of a firm's choice between equity versus debt when it seeks a significant amount of external financing to examine this research question. We find that when firms raise a significant amount of external financing, the use of equity (versus debt) increases with the level of conservatism. We also find that the reduction in cost of equity associated with conservatism …
The Impact Of Unions On Information Asymmetry, Caroline Burke
The Impact Of Unions On Information Asymmetry, Caroline Burke
Graduate Theses and Dissertations
Prior literature documents a positive association between union power, calculated using industry-level union data, and information asymmetry. Prior literature also finds a mitigating effect from employee ownership on the negative association between union power and voluntary disclosure. Using a sample of company observations for fiscal years 2008 through 2010, I examine the effect of company-specific measures of employee unionization on market-based measures of information asymmetry (proxied for by insider trading activity, analyst following, and analyst dispersion). I also examine whether employee ownership impacts the effect of company-specific measures of employee unionization on my market-based measures of information asymmetry. I find …
Analyst Coverage And Stock Price Crash Risk, I-Fang Lee Yvonne
Analyst Coverage And Stock Price Crash Risk, I-Fang Lee Yvonne
Accounting Dissertations
In this study, I investigate the impact of analyst coverage changes on firms’ subsequent firm-specific crash risk. Using a sample of 24,228 firm-year observations from 2000 to 2013, I show that changes in analyst coverage are negatively associated with changes in one-year-ahead crash risk. This result is consistent with analysts’ information gathering activities and analyses limiting bad news hoarding behavior, and is generally inconsistent with analyst pressure leading to more bad news hoarding by managers. Moreover, I find the negative association between coverage changes and changes in subsequent crash risk to be more pronounced when the coverage change is attributable …
The Effect Of Board Independence On Information Asymmetry, Beng Wee Goh, Jimmy Lee, Jeffrey Ng, Kevin Ow Yong
The Effect Of Board Independence On Information Asymmetry, Beng Wee Goh, Jimmy Lee, Jeffrey Ng, Kevin Ow Yong
Research Collection School Of Accountancy
Boards have an important role in ensuring that investors’ interests are protected. Our paper first examines whether the independence of a firm's board affects information asymmetry among investors. We provide evidence that greater board independence leads to lower information asymmetry. Next, we provide evidence that more voluntary disclosure and greater analyst coverage are two underlying mechanisms via which greater board independence reduces information asymmetry. Of the two mechanisms, we find that analyst coverage is more significant in influencing how board independence affects information asymmetry. Overall, our paper contributes to a better understanding of the effect of board independence on information …
The Determinants And Consequences Of Disclosure Committee Adoption, Lyle Roy Schmardebeck
The Determinants And Consequences Of Disclosure Committee Adoption, Lyle Roy Schmardebeck
Graduate Theses and Dissertations
After the passage of the Sarbanes-Oxley Act of 2002, the Securities and Exchange Commission recommended that companies voluntarily adopt disclosure committees to aid in preparing company disclosures. In this paper, I investigate the determinants and consequences of disclosure committee adoption. I find that companies with material weaknesses in internal controls over financial reporting and less readable 10-K filings are more likely to adopt disclosure committees. In consequences analyses, using a propensity score matched control sample and a difference-in-differences research design, I find that 10-K filings are longer and less readable after disclosure committee adoption. However, consistent with institutional theory, I …
Releasing Information In Xbrl: Does It Improve Information Asymmetry For Early U.S. Adopters?, Marshall A. Geiger, David S. North, Daniel D. Selby
Releasing Information In Xbrl: Does It Improve Information Asymmetry For Early U.S. Adopters?, Marshall A. Geiger, David S. North, Daniel D. Selby
Accounting Faculty Publications
Information released in XBRL is intended to improve the quality and accessibility of SEC filings, leading to less information asymmetry in the equity market. Research findings on the effects of XBRL on information asymmetry in the US., however, are mixed. Kim et al. (2012) reports that XBRL reduces information asymmetry while Blankespoor et al. (2012) reports that XBRL increases information asymmetry. In contrast to these prior studies, we report that the answer as to whether XBRL affects information asymmetry is matter of firm size. In this study we examine shifts in two measures of information asymmetry for early adopters of …
The Liability Of Foreignness In International Equity Investments: Evidence From The U.S. Stock Market, Bok Baik, Jun-Koo Kang, Jin-Mo Kim, Joonho Lee
The Liability Of Foreignness In International Equity Investments: Evidence From The U.S. Stock Market, Bok Baik, Jun-Koo Kang, Jin-Mo Kim, Joonho Lee
Research Collection School Of Accountancy
Using foreign institutional ownership data in the US from 1990 to 2007, we examine whether foreign institutional investors face liabilities of foreignness (LOF) in the US stock market. We find that foreign institutional investors prefer low information asymmetry stocks more than domestic institutional investors do, and this preference for low information asymmetry stocks is particularly strong among foreign institutional investors from countries with high LOF. More importantly, we find that a change in foreign institutional ownership is negatively related to future returns, whereas this relation does not exist for domestic institutional ownership. The negative relation between the change in foreign …
Direct And Mediated Associations Among Earnings Quality, Information Asymmetry And The Cost Of Equity, Nilabhra Bhattacharya, Frank Ecker, Per Olsson, Katherine Schipper
Direct And Mediated Associations Among Earnings Quality, Information Asymmetry And The Cost Of Equity, Nilabhra Bhattacharya, Frank Ecker, Per Olsson, Katherine Schipper
Research Collection School Of Accountancy
Using path analysis, we investigate the direct and indirect links between three measures of earnings quality and the cost of equity. Our investigation is motivated by analytical models that specify both a direct link and an indirect link that is mediated by information asymmetry, but do not suggest which link would be more important empirically. We measure information asymmetry as both the adverse selection component of the bid-ask spread and the probability of informed trading (PIN). For a large sample of Value Line firms during 1993–2005, we find statistically reliable evidence of both a direct path from earnings quality to …
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 …
Do Accruals Exacerbate Information Asymmetry In The Market?, Sonia Wasan
Do Accruals Exacerbate Information Asymmetry In The Market?, Sonia Wasan
LSU Doctoral Dissertations
A considerable body of evidence, both archival and experimental, suggests that accounting accruals are heterogeneously interpreted by investors. In this study, I examine whether the information asymmetry among investors arising from this heterogeneous interpretation, implied in these empirical results, affects transactions costs in the form of the bid-ask spread and its adverse selection component. I examine this impact both, in general, for all trading activity occurring for a firm over a continuous flow of information during the year and around the first release of accrual information for each quarter. The results of the study provide empirical evidence of a positive …