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Articles 301 - 330 of 330
Full-Text Articles in Business
Legal Systems And Earnings Quality: The Role Of Auditor Industry Specialization, Chee Yeow Lim, Soo Young Kwon, Patricia Mui Siang Tan
Legal Systems And Earnings Quality: The Role Of Auditor Industry Specialization, Chee Yeow Lim, Soo Young Kwon, Patricia Mui Siang Tan
Research Collection School Of Accountancy
This paper extends prior studies in auditor industry specialization to an international setting and examines if the impact of industry specialist auditors on earnings quality is dependent on the legal environments. Using data for 28 countries over 20 industries from 1993 to 2003, we find that clients of industry specialist auditors have lower discretionary current accruals and higher earnings response coefficients than clients of nonspecialist auditors. In addition, we find that the impact of auditor industry specialization on earnings quality increases as the legal environment weakens. Collectively, the results suggest that the benefits from engaging the services of industry specialist …
Do Direct Cash Flow Disclosures Help Predict Future Operating Cash Flows And Earnings?, Steven Francis Orpurt, Yoonseok Zang
Do Direct Cash Flow Disclosures Help Predict Future Operating Cash Flows And Earnings?, Steven Francis Orpurt, Yoonseok Zang
Research Collection School Of Accountancy
Motivated by recent FASB, IASB and CFA Institute comments, we extend the scant literature on direct method cash flow disclosures by exploring their predictive ability. A primary stated purpose of the direct method is to better forecast future operating performance. To test this purpose, we use a FERC (future ERC) methodology, finding that firms voluntarily producing direct method statements reflect more information about future earnings in their current stock returns than other firms. Supporting our FERC analysis, we document that substantial articulation errors exist when direct method cash flow components are estimated from either indirect method cash flow statements or …
Are Us Family Firms Subject To Agency Problems? Evidence From Ceo Turnover And Firm Valuation, Xia Chen, Zhonglan Dai
Are Us Family Firms Subject To Agency Problems? Evidence From Ceo Turnover And Firm Valuation, Xia Chen, Zhonglan Dai
Research Collection School Of Accountancy
This paper investigates the impact of the founding family's presence in US public firms on the extent of agency problems related to CEO turnover decisions and on firm valuations after poor performance. In particular, we focus on three types of US public firms: family CEO firms, professional CEO family firms (family firms managed by a hired CEO outside the founding family), and non-family firms. We hypothesize that, the agency problem arising from the expropriation of small shareholders by large shareholders in family CEO firms and the agency problem arising from the separation of ownership and control in non-family firms, lead …
Auditor Locality, Audit Quality And Audit Pricing, Jong-Hag Choi, Jeong-Bon Kim, Aini Qiu, Yoonseok Zang
Auditor Locality, Audit Quality And Audit Pricing, Jong-Hag Choi, Jeong-Bon Kim, Aini Qiu, Yoonseok Zang
Research Collection School Of Accountancy
No abstract provided.
Exploring The Role That Forecast Surprise And Forecast Error Play In Determining Management Forecast Precision, Jong-Hag Choi, Linda Myers, Yoonseok Zang, David Ziebart
Exploring The Role That Forecast Surprise And Forecast Error Play In Determining Management Forecast Precision, Jong-Hag Choi, Linda Myers, Yoonseok Zang, David Ziebart
Research Collection School Of Accountancy
No abstract provided.
Systematic Share Price Fluctuations After Bankruptcy Filings And The Investors Who Drive Them, Mark C. Dawkins, Nilabhra Bhattacharya, Linda Smith Bamber
Systematic Share Price Fluctuations After Bankruptcy Filings And The Investors Who Drive Them, Mark C. Dawkins, Nilabhra Bhattacharya, Linda Smith Bamber
Research Collection School Of Accountancy
Beginning in the 1990s, firms often continue to trade on the major national exchanges after Chapter 11 bankruptcy filings. For bankruptcies filed from 1993-2003, we find that the more negative the filing period price reaction, the more favorable the immediate post- filing returns, on average. This reversal is not attributable to bid-ask bounce, it holds after controlling for other factors associated with post-filing returns, and it appears more attributable to the activities of large traders than to small traders. Supplementary tests reveal that the pattern of post-filing returns differs significantly for bankruptcies filed in bull versus bear markets. Bankruptcies filed …
Bonding To The Improved Disclosure Environment In The Us: Firms Listing Choices And Their Capital Market Consequences, Ole-Kristian Hope, Tony Kang, Yoonseok Zang
Bonding To The Improved Disclosure Environment In The Us: Firms Listing Choices And Their Capital Market Consequences, Ole-Kristian Hope, Tony Kang, Yoonseok Zang
Research Collection School Of Accountancy
This paper examines whether the current reporting and disclosure requirements for foreign registrants in the United States affect foreign firms' decisions to list on a U.S. exchange. We find that while firms from a weak disclosure environment are more likely to cross-list and either trade over-the-counter or be placed privately among institutional investors, they are less likely to list on an exchange in which firms are required to comply with U.S. GAAP. This is consistent with the idea that the decrease in the potential private control benefits accruing to managers discourages them from listing on an organized exchange. We further …
Who Trades On Pro Forma Earnings Information?, Nilabhra Bhattacharya, Erv Black, Ted Christensen, Rick Mergenthaler
Who Trades On Pro Forma Earnings Information?, Nilabhra Bhattacharya, Erv Black, Ted Christensen, Rick Mergenthaler
Research Collection School Of Accountancy
In recent years, many companies have emphasized adjusted‐GAAP earnings numbers in their quarterly press releases. While managers use different names to describe these nonstandard earnings metrics, the financial press frequently refers to them as “pro forma” earnings. Managers and other advocates of pro forma reporting argue that these disclosures provide a clearer picture of companies' core earnings. On the other hand, regulators, policymakers, and the financial press often allege that managers' pro forma earnings disclosures are opportunistic attempts to mislead investors. Recent evidence suggests that while many pro forma earnings disclosures are altruistically motivated, some may represent managers' attempts to …
Comprehensive Income, Future Earnings, And Market Mispricing, Jong-Hag Choi, Somnath Das, Yoonseok Zang
Comprehensive Income, Future Earnings, And Market Mispricing, Jong-Hag Choi, Somnath Das, Yoonseok Zang
Research Collection School Of Accountancy
No abstract provided.
Insider Trading And Voluntary Disclosures, Qiang Cheng, Kin Lo
Insider Trading And Voluntary Disclosures, Qiang Cheng, Kin Lo
Research Collection School Of Accountancy
We hypothesize that insiders strategically choose disclosure policies and the timing of their equity trades to maximize trading profits, subject to the litigation costs associated with disclosure and insider trading. Accounting for endogeneity between disclosures and trading, we find that when managers plan to purchase shares, they increase the number of bad news forecasts to reduce the purchase price. In addition, this relation is stronger for trades initiated by chief executive officers than for those initiated by other executives. Confirming this strategic behavior, we find that managers successfully time their trades around bad news forecasts, buying fewer shares beforehand and …
Institutional Holdings And Analysts’ Stock Recommendations, Qiang Cheng, Xia Chen
Institutional Holdings And Analysts’ Stock Recommendations, Qiang Cheng, Xia Chen
Research Collection School Of Accountancy
Prior studies document that institutional investors outperform the mar- ket. We investigate whether this superior performance is partly derived from institutional investors use of sell-side analysts stock recommenda- tions. First, we find that the quarterly change in institutional ownership is positively correlated with consensus recommendations. After control- ling for other determinants of institutional holdings, the quarterly change in institutional ownership is on average 0.90 percent higher for firms with favorable recommendations than for those with unfavorable recommendations. Second, using large trades to proxy for institutional trading, we find that there are more buyer-initiated than seller-initiated large trades around favorable recommendations …
The Association Between Audit Quality And Abnormal Audit Fees, Jong-Hag Choi, Jeong-Bon Kim, Yoonseok Zang
The Association Between Audit Quality And Abnormal Audit Fees, Jong-Hag Choi, Jeong-Bon Kim, Yoonseok Zang
Research Collection School Of Accountancy
Using a sample of 9,820 firm-year observations over the 2000-2003 period, this paper examines whether, and how, audit quality proxied by unsigned discretionary accruals is associated with abnormal audit fees, i.e., actual audit fees in excess of expected, normal audit fees. The results of various regressions reveal that the association between the two is insignificant for the full sample, significantly positive for the subsample of clients with positive abnormal fees, and insignificantly negative for the subsample of clients with negative abnormal fees. The above results suggest that auditors’ incentives to compromise audit quality differ systematically for more profitable clients (with …
Accounting Restatements: Are They Always Bad News For Investors?, Dan Segal, Jeffrey L. Callen, Joshua Livnat
Accounting Restatements: Are They Always Bad News For Investors?, Dan Segal, Jeffrey L. Callen, Joshua Livnat
Research Collection School Of Accountancy
This study investigates a large sample of financial statement restatements over the period 1986-2001, and compares restatements caused by changes in accounting principles to those caused by errors. Typically, investors perceive restatements as negative signals due to three potential reasons: (a) the restatement indicates problems with the accounting system that may be manifestations of broader operational (and managerial) problems, (b) the restatement causes downward revisions in future cash flows expectations, and (c) the restatement indicates managerial attempts to cover up income decline through “cooking the books.” We provide evidence that market reactions to restatements due to errors are generally negative. …
Impact Of Gender And Ethnic Composition Of South African Boards Of Directors On Intellectual Capital Performance, Jean-Luc Wolfgang Mitchell Van Der Zahn
Impact Of Gender And Ethnic Composition Of South African Boards Of Directors On Intellectual Capital Performance, Jean-Luc Wolfgang Mitchell Van Der Zahn
Research Collection School Of Accountancy
This study examines the association between the gender and ethnic composition of boards of directors and firm performance in a transitional nation. In contrast to prior research that largely focuses on firm performance within a financial context, this study concentrates on intellectual capital performance. Using data collected from 84 South African, empirical results indicate a positive association between the percentage of female and non-white directors on the board and a firm’s intellectual capital performance. Additional analysis shows the designation of female directors as an insider has a negative effect of intellectual capital performance. Designation of female and non-white directors as …
Accounting Conservatism And Managerial Incentives, Young Koan Kwon
Accounting Conservatism And Managerial Incentives, Young Koan Kwon
Research Collection School Of Accountancy
There are two sources of agency costs under moral hazard: (1) distortions in incentive contracts and (2) implementation of suboptimal decisions. In the accounting literature, the relation between conservative accounting and agency costs of type (1) has received considerable attention (cf. Watts 2002). However, little appears to be known about the effects of accounting conservatism on agency costs of type (2) or trade-offs between agency costs of types (1) and (2). The purpose of this study is to examine this void. In a principal-agent setting in which the principal motivates the agent to expend effort using accounting earnings, this study …
Client, Industry And Country Factors Affecting Choice Of Big N Industry Expert Auditors, Michael Ettredge, Soo Young Kwon, Chee Yeow Lim
Client, Industry And Country Factors Affecting Choice Of Big N Industry Expert Auditors, Michael Ettredge, Soo Young Kwon, Chee Yeow Lim
Research Collection School Of Accountancy
This study investigates client choice of industry specialist auditors from among the Big N (Big 4 or 5) in an international (non-U.S.) setting. We investigate client-specific, industry-level and country-level factors hypothesized to enhance or decrease Big N clients' demand for industry expertise. Using data for 29 countries and 14 broad industries from 1993-2005, we find that international client choice of industry specialist Big N auditors is positively associated with client size, client growth opportunities, and client capital intensity. The choice of industry specialists from among the Big N is more prevalent in countries where levels of investor protection, quality of …
Firm Ownership Structure And Intellectual Capital Disclosures, Stephen Firer, S. M. Williamson
Firm Ownership Structure And Intellectual Capital Disclosures, Stephen Firer, S. M. Williamson
Research Collection School Of Accountancy
The primary purpose of this study is to investigate the association between three ownership structure characteristics and voluntary intellectual capital (IC) disclosure practices. Data for this study is hand collected from the 2000 annual reports of 390 Singapore publicly traded firms. Empirical results indicate Singapore publicly traded firms more closely owned were less likely to voluntarily disclose IC related information than were those where executive directors had smaller holdings in the entity. Finally, findings indicate government linked corporations (GLCs) will likely make more voluntary IC disclosures than non-GLCs. Overall, this study makes several unique contributions to the literature. First, the …
Audit Quality, Legal And Disclosure Environments, And Analysts' Forecast Accuracy: Some International Evidence, Jong-Hag Choi, Tony Kang, Young Koan Kwon, Yoonseok Zang
Audit Quality, Legal And Disclosure Environments, And Analysts' Forecast Accuracy: Some International Evidence, Jong-Hag Choi, Tony Kang, Young Koan Kwon, Yoonseok Zang
Research Collection School Of Accountancy
In this study, we investigate the relation between the quality of external audit and earnings predictability of firms situated in different legal and disclosure environments around the world. In a sample of multinational firms cross-listed in the United States, we find that the association between audit quality and forecast accuracy is stronger in weak legal and disclosure environments than in strong legal and disclosure environments. We interpret these results as suggesting that audit service can serve as an alternative device to improve market participants' information environment in weak legal and disclosure environments.
Voluntary Decisions On Audit Committee Composition And Expertise And The Influence Of Board Of Director Characteristics: Further Evidence From Singapore, Jean-Luc Wolfgang Mitchell Van Der Zahn, Inderpal Singh
Voluntary Decisions On Audit Committee Composition And Expertise And The Influence Of Board Of Director Characteristics: Further Evidence From Singapore, Jean-Luc Wolfgang Mitchell Van Der Zahn, Inderpal Singh
Research Collection School Of Accountancy
No abstract provided.
Equity Incentives And Earnings Management, Qiang Cheng, Terry Warfield
Equity Incentives And Earnings Management, Qiang Cheng, Terry Warfield
Research Collection School Of Accountancy
This paper examines the link between managers' equity incentives—arising from stock-based compensation and stock ownership—and earnings management. We hypothesize that managers with high equity incentives are more likely to sell shares in the future and this motivates these managers to engage in earnings management to increase the value of the shares to be sold. Using stock-based compensation and stock ownership data over the 1993–2000 time period, we document that managers with high equity incentives sell more shares in subsequent periods. As expected, we find that managers with high equity incentives are more likely to report earnings that meet or just …
What Determines Residual Income?, Qiang Cheng
What Determines Residual Income?, Qiang Cheng
Research Collection School Of Accountancy
This paper investigates the determinants of residual income scaled by book value of equity, i.e., abnormal return on equity (ROE), by analyzing the impact of value-creation (economic rents) and value-recording (conservative accounting) processes on abnormal ROE. I rely on economic theories to characterize economic rents and develop an empirical measure—the conservative accounting factor—to capture the effect of conservative accounting. As expected, industry abnormal ROE increases with industry concentration, industry-level barriers to entry, and industry conservative accounting factors. Also as expected, the difference between firm and industry abnormal ROE increases with market share, firm size, firm-level barriers to entry, and firm …
Domestic And Foreign Earnings, Stock Return Variability, And The Impact Of Investor Sophistication, Dan Segal, Jeffrey L. Callen, Ole-Kristian Hope
Domestic And Foreign Earnings, Stock Return Variability, And The Impact Of Investor Sophistication, Dan Segal, Jeffrey L. Callen, Ole-Kristian Hope
Research Collection School Of Accountancy
We examine the importance of foreign earnings relative to domestic earnings for a sample of U.S. multinationals using variance decomposition. Our methodology represents an alternative and complementary approach over the prior literature, which is based on traditional regressions and earnings response coefficients. We document that domestic earnings are more important in explaining the variance of unexpected returns than are foreign earnings and that the relative importance of domestic earnings is a decreasing function of investor sophistication. Last, we classify institutional investors as either short- or long-term oriented following Bushee [1998]. We find that the variance contribution of foreign earnings increases …
The Role Of Analysts’ Forecasts In Accounting-Based Valuation: A Critical Evaluation, Qiang Cheng
The Role Of Analysts’ Forecasts In Accounting-Based Valuation: A Critical Evaluation, Qiang Cheng
Research Collection School Of Accountancy
This paper critically evaluates the use of analysts forecasts in accounting-based valuation. Specifically, I assess the usefulness and the limitation of analysts forecasts in predicting future earnings and in explaining the market-to-book ratio, in light of a comprehensive set of 22 explicit information items, including: economic rent proxies, conservative accounting proxies, earnings quality signals, transitory earnings proxies, industry characteristics, and risk and growth proxies. While analysts forecasts capture 45–83% of the information from these sources depending on model specifications, they do not appear to fully incorporate certain information items. In particular, proxies for conservative accounting and transitory earnings are incrementally …
International Cross-Listing And The Bonding Hypothesis, Dan Segal, Michael King
International Cross-Listing And The Bonding Hypothesis, Dan Segal, Michael King
Research Collection School Of Accountancy
The authors describe a new view of cross-listing that links the impact on firm valuation to the firm's ability to develop an active secondary market for its shares in the U.S. markets. Contrary to previous research, cross-listing may not provide benefits for all firms, even when those firms meet the highest regulatory requirements for disclosure and supervision. When cross-listed firms are divided into two groups on the basis of their share turnover in the home market relative to the U.S. market, the firms that develop active trading in the U.S. market experience an increase in valuation. Cross-listed firms that remain …
Assessing The Relative Informativeness And Permanence Of Pro Forma Earnings And Gaap Operating Earnings, Nilabhra Bhattacharya, Erv Black, Ted Christensen, Chad Larson
Assessing The Relative Informativeness And Permanence Of Pro Forma Earnings And Gaap Operating Earnings, Nilabhra Bhattacharya, Erv Black, Ted Christensen, Chad Larson
Research Collection School Of Accountancy
This study investigates whether market participants perceive pro forma earnings to be more informative and more persistent than GAAP operating income by analyzing a sample of 1,149 actual pro forma press releases. We find that pro forma announcers report frequent GAAP losses and are mostly concentrated in the service and high-tech industries. Our analyses of short-window abnormal returns and revisions in analysts’ one-quarter-ahead earnings forecasts indicate that pro forma earnings are more informative and more permanent than GAAP operating earnings. Our evidence suggests that market participants believe pro forma earnings are more representative of “core earnings” than GAAP operating income.
The Market Perception Of Corporate Claims, Qiang Cheng, Peter Frischmann, Terry Warfield
The Market Perception Of Corporate Claims, Qiang Cheng, Peter Frischmann, Terry Warfield
Research Collection School Of Accountancy
This paper examines the economic substance of a broad range of securities by investigating their association with systematic risk and prices. The analysis is motivated by continuing security innovation and its impact on hybrid security reporting. Based on a sample of 2,617 firms that reported minority interests or preferred stock during 1993–1997, the results indicate that redeemable preferred securities (including trust preferred stock) are not viewed by the market as either debt or equity, suggesting dichotomous security classification may lack representational faithfulness. Inconsistent with their treatment in the financial statements, non-redeemable preferred stock and minority interests are viewed as debt-like …
An Investigation Of Goodwill Accounting Policy Choice Within A Specific Knowledge Framework, Pearl H. N. Tan
An Investigation Of Goodwill Accounting Policy Choice Within A Specific Knowledge Framework, Pearl H. N. Tan
Research Collection School Of Accountancy
This study, using Singapore data, investigates the relationship between Chief Executive Officers' (CEO) specific knowledge and the accounting method choice on capitalisation of goodwill. International Accounting Standard 22 (1987), applicable in Singapore in 1996, the year of the study, permits a choice between capitalisation with subsequent amortisation and immediate write-off of goodwill to reserves. This study proposes a positive relationship between human capital specificity of CEOs and the recognition of purchased goodwill on the balance sheet. Specific knowledge is unique to firms and is acquired through experience. Given that specialised assets arise from firm-specific circumstances, firm-specific knowledge potentially explains the …
Instructional Case: Worldwide Shipping Corporation Ltd: Early Or Late Adoption Of A New International Accounting Ssandard?, Pearl Tan, Peter Lee
Instructional Case: Worldwide Shipping Corporation Ltd: Early Or Late Adoption Of A New International Accounting Ssandard?, Pearl Tan, Peter Lee
Research Collection School Of Accountancy
The management of Worldwide Shipping Corp. Ltd. is confronted with a dilemma when a new international accounting standard on leases is introduced which contains a transitional provision allowing firms to defer implementation for a period of 4 years. Students are required to put themselves in the position of managers who have to weigh the adverse impact of early adoption of the new accounting standard against a responsibility for fair financial reporting. The case aims to provide students with a better understanding of the impact of off-balance sheet transactions on a firm's financial statements. The case requires students to examine implications …
Auditing Practices In Singapore, See Liang Foo
Auditing Practices In Singapore, See Liang Foo
Research Collection School Of Accountancy
The accounting profession in Singapore plays an important part in the country's economy because it ensures foreign investors' confidence that their investments are audited by competent, independent, and credible auditors. The emergence of joint stock companies in Singapore was made possible by the Indian Joint Stock Companies Act of 1857. The Act requires every company to maintain proper accounting and other records which will explain sufficiently the transactions and financial position of the company and to enable true and fair profit and loss account and balance-sheet and any documents required to be attached thereto to be prepared from time to …
The Determination Of Audit Fees: Analysis In The Singapore Context, Lay Chin Low, Pearl Hock Neo Tan, Hian Chye Koh
The Determination Of Audit Fees: Analysis In The Singapore Context, Lay Chin Low, Pearl Hock Neo Tan, Hian Chye Koh
Research Collection School Of Accountancy
Presents information on a study which addressed the issue of audit fees determination in the audit services market in Singapore. Research design and methodology; Contributions and limitations of audit models; Conclusions.