Open Access. Powered by Scholars. Published by Universities.®
- Keyword
-
- Agency theory (2)
- Institutional investors (2)
- Political connections (2)
- Asset Pricing (1)
- Capital constraints (1)
-
- Capital expenditure (1)
- Cash Flow (1)
- Close gubernatorial election (1)
- Corporate Governance (1)
- Corporate Payout (1)
- Corporate globalization. (1)
- Corporate investment (1)
- Corruption (1)
- Discount Rate (1)
- ETFs (1)
- Economic globalization (1)
- Executive compensation (1)
- Feedback effect of financial markets (1)
- Firm production (1)
- Firm value (1)
- GARCH model (1)
- Growth options (1)
- Individualism (1)
- Information Asymmetry (1)
- Intangible capital (1)
- International (1)
- Investor Sentiment (1)
- Limits to arbitrag (1)
- Liquidity (1)
- Local Informational Advantage (1)
Articles 1 - 14 of 14
Full-Text Articles in Business
A State-Stewardship View On Executive Compensation, Hao Liang, Luc Renneboog, Sunny Li Sun
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 …
Open Market Share Repurchase Programs And Corporate Governance: Company Performance, Gary Caton, Jeremy Goh, Yen Teik Lee, Scott C. Linn
Open Market Share Repurchase Programs And Corporate Governance: Company Performance, Gary Caton, Jeremy Goh, Yen Teik Lee, Scott C. Linn
Research Collection Lee Kong Chian School Of Business
Payout policies based on share repurchase programs provide greater flexibility than do those based on cash dividends. We develop and test an empirical model in which strongly-governed companies outperform weakly-governed companies after announcing share repurchase programs. Our findings include positive associations between strong governance and both post-announcement adjusted operating performance and abnormal stock returns. The results are robust to sample selection bias, different sample criteria, governance measurement, and various control variables. In addition, governance strength is associated with larger post-announcement changes in CEO incentive compensation and merger and acquisition activity, both of which we argue are consistent with strongly-governed companies …
The Bright Side Of Political Uncertainty: The Case Of R&D, Julian Atanassov, Brandon Julio, Tiecheng Leng
The Bright Side Of Political Uncertainty: The Case Of R&D, Julian Atanassov, Brandon Julio, Tiecheng Leng
Research Collection Lee Kong Chian School Of Business
We examine the relationship between political uncertainty and R&D investment by exploiting the timing of U.S. gubernatorial elections as a source of plausibly exogenous variation in uncertainty. In contrast to the literature documenting negative effects of political uncertainty on real investment, we find that uncertainty over government policy encourages firm-level R&D. Firms increase R&D investments by an average of 4.6% in election years relative to non-election years. The uncertainty effect is stronger in hotly contested elections, in politically sensitive and hard-to-innovate industries, and in firms subject to higher growth options and greater product market competition. Our findings suggest that, as …
Institutional Trading During A Wave Of Corporate Scandals: 'Perfect Payday'?, Gennaro Bernile, Johan Sulaeman, Qin Wang
Institutional Trading During A Wave Of Corporate Scandals: 'Perfect Payday'?, Gennaro Bernile, Johan Sulaeman, Qin Wang
Research Collection Lee Kong Chian School Of Business
This paper examines the role of institutional trading during the option backdating scandal of 2006-2007. Unlike their inability to anticipate other corporate events, institutional investors as a group display negative abnormal trading imbalances (i.e., buy minus sell volumes) in anticipation of firm-specific backdating exposures. Consistent with informed trading, the underlying trades earn positive abnormal short- and long-term profits. Moreover, the negative abnormal imbalances are larger in magnitude when backdating is likely a more severe issue. Local institutions, in particular, display negative trading imbalances earlier in event-time and earn consistently higher trading profits than non-local institutions. Although we find some evidence …
Local Business Cycles And Local Liquidity, Gennaro Bernile, George Korniotis, Alok Kumar, Qin Wang
Local Business Cycles And Local Liquidity, Gennaro Bernile, George Korniotis, Alok Kumar, Qin Wang
Research Collection Lee Kong Chian School Of Business
This study examines whether state-level economic conditions affect the liquidity of local firms. We find that liquidity levels of local stocks are higher (lower) when the local economy has performed well (poorly). This relation is stronger when local financing constraints are more binding, the local information environment is more opaque, and local institutional ownership levels and trading intensity are higher. Overall the evidence supports the notion that the geographical segmentation of U.S. capital markets generates predictable patterns in local liquidity.
The Persistence Of Long-Run Abnormal Returns Following Stock Repurchases And Offerings, Fangjian Fu, Sheng Huang
The Persistence Of Long-Run Abnormal Returns Following Stock Repurchases And Offerings, Fangjian Fu, Sheng Huang
Research Collection Lee Kong Chian School Of Business
The long-run abnormal returns following both stock repurchases and seasoned equity offerings disappear for the events in 2003–2012. The disappearance is associated with the changing market environment: increased institutional investment, decreased trading costs, improved liquidity, and enhanced regulations on corporate governance and information disclosure. In response to the more efficient pricing of stocks, firms become less opportunistic in stock repurchases and offerings. Recent events of stock repurchases and offerings are motivated more by business-operating reasons than to exploit mispricing. Both external market factors and internal firm factors contribute to the disappearance of the postevent abnormal returns. Our findings on the …
Home Away From Home: Geography Of Information And Local Investors, Gennaro Bernile, Alok Kumar, Johan Sulaeman
Home Away From Home: Geography Of Information And Local Investors, Gennaro Bernile, Alok Kumar, Johan Sulaeman
Research Collection Lee Kong Chian School Of Business
We develop a 10K-based measure of spatial variation in the availability of value-relevant information that reflects the multi-dimensional nature of firm location. Spatially distributed information generates location-based information asymmetries that affect institutional portfolio decisions and performance. Institutions overweigh firms with greater local economic exposure and earn superior returns on corresponding trades, even for firms not headquartered locally. These patterns are stronger among harder-to-value stocks. Consistent with local informational advantage, local investor performance increases with the local exposure of individual stock holdings and her portfolio as a whole, and more so when her portfolio is more heavily tilted toward local stocks.
Density Forecast Evaluation For Dependent Financial Data: Theory And Applications, Aurobindo Ghosh, Anil K. Bera
Density Forecast Evaluation For Dependent Financial Data: Theory And Applications, Aurobindo Ghosh, Anil K. Bera
Research Collection Lee Kong Chian School Of Business
In this paper, we propose a formal test for density forecast evaluation in presence of dependent data. Apart from accepting or rejecting the tested model, our smooth test identifies the possible sources (such as the location, scale and shape of the distribution) of rejection, thereby helping in revising the initial model. We also propose how to augment the smooth test to investigate explicit forms of dependence in the data within the same test framework. An extensive application to S&P 500 returns indicate capturing time-varying volatility and non-gaussianity significantly improve the performance of the model. Although we are dealing with index …
Why Do U.S. Firms Invest Less Over Time?, Fangjian Fu, Sheng Huang, Rong Wang
Why Do U.S. Firms Invest Less Over Time?, Fangjian Fu, Sheng Huang, Rong Wang
Research Collection Lee Kong Chian School Of Business
The ratio of capital expenditure to total assets of U.S. firms decreases by more than half from 1980 to 2012. The decline in capital investment is pervasive; it has occurred for firms in most industries and is robust to firms of different sizes, investment opportunities, profitability, accesses to external financing, and expenses on R&D or acquisitions. Existing theories of corporate investment fall short in explaining the decline trend. The decline is also not explained by time variation in firm characteristics, industry composition, and public listing cohorts, or by corporate lifecycle. Our further evidence suggests that it is related to the …
When Everyone Misses On The Same Side: Debiased Earnings Surprises And Stock Returns, Chin-Han Chiang, Wei Dai, Jianqing Fan, Harrison Hong, Jun Tu
When Everyone Misses On The Same Side: Debiased Earnings Surprises And Stock Returns, Chin-Han Chiang, Wei Dai, Jianqing Fan, Harrison Hong, Jun Tu
Research Collection Lee Kong Chian School Of Business
In event studies of capital market efficiency, an earnings surprise has historically been measured by the consensus error, defined as earnings minus the consensus or average of professional forecasts. The rationale is that the consensus is an accurate measure of the market’s expectation of earnings. But since forecasts can be biased due to conflicts of interest and some investors can see through these conflicts, this rationale is flawed and the consensus error a biased measure of an earnings surprise. We show that the fraction of forecasts that miss on the same side (FOM), by ignoring the size of the misses, …
Investor Sentiment Aligned: A Powerful Predictor Of Stock Returns, Dashan Huang, Fuwei Jiang, Jun Tu, Guofu Zhou
Investor Sentiment Aligned: A Powerful Predictor Of Stock Returns, Dashan Huang, Fuwei Jiang, Jun Tu, Guofu Zhou
Research Collection Lee Kong Chian School Of Business
We propose a new investor sentiment index that is aligned with the purpose of predicting the aggregate stock market. By eliminating a common noise component in sentiment proxies, the new index has much greater predictive power than existing sentiment indices have both in and out of sample, and the predictability becomes both statistically and economically significant. In addition, it outperforms well-recognized macroeconomic variables and can also predict cross-sectional stock returns sorted by industry, size, value, and momentum. The driving force of the predictive power appears to stem from investors' biased beliefs about future cash flows.
Political Connections And Firm Value: Evidence From The Regression Discontinuity Design Of Close Gubernatorial Elections, Quoc-Anh Do, Yen Teik Lee, Bang D. Nguyen
Political Connections And Firm Value: Evidence From The Regression Discontinuity Design Of Close Gubernatorial Elections, Quoc-Anh Do, Yen Teik Lee, Bang D. Nguyen
Research Collection Lee Kong Chian School Of Business
Using the regression discontinuity design of close gubernatorial elections in the U.S., we identify a significant and positive impact of the social networks of corporate directors and politicians on firm value. Firms connected to elected governors increase their value by 3.89%. Political connections are more valuable for firms connected to winning challengers, for smaller and financially dependent firms, in more corrupt states, in states of connected firms’ headquarters and operations, and in closer, smaller, and active networks. Post-election, firms connected to the winner receive significantly more state procurement contracts and invest more than do firms connected to the loser.
An Anatomy Of State Control In The Globalization Of State-Owned Enterprises, Hao Liang, Bing Ren, Sunny Li Sun
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 …
Momentum Life Cycle Around The World, Frank Weikai Li, K. C. John Wei
Momentum Life Cycle Around The World, Frank Weikai Li, K. C. John Wei
Research Collection Lee Kong Chian School Of Business
The momentum life cycle (MLC) hypothesis first proposed by Lee and Swaminathan (2000) applies also to global markets. Early-stage strategies significantly outperform the late-stage and conventional strategies in most countries. Individualism culture is positively associated with late-stage but unrelated to early-stage momentum profitability, suggesting that early- and late-stage momentums are driven by different underlying mechanisms. Consistent with Stein’s (2009) model that arbitrageurs could amplify mispricing, we find that late-stage momentum profits are more pronounced in countries with lower limits to arbitrage. Furthermore, we find that the MLC also applies to exchange traded funds in the United States.