Open Access. Powered by Scholars. Published by Universities.®
- Keyword
-
- Corporate governance (2)
- Financial performance (2)
- Institutional investors (2)
- Accounting improprieties (1)
- Agency Costs (1)
-
- Analyst forecast revision. (1)
- Analysts’ reports (1)
- Audit committees (1)
- Audit quality (1)
- Audit risk (1)
- Business processes (1)
- CEO compensation (1)
- Capacity constraints (1)
- Capital structure (1)
- China (1)
- Conference calls (1)
- Corporations (1)
- Customer management (1)
- Customer satisfaction (1)
- Debt overhang (1)
- Decision aids (1)
- Direct method (1)
- Directors (1)
- Disclosure venue (1)
- Downside risk (1)
- Enron (1)
- Environmental jolt; Corporate acquisitions; Organizational slack; Firm performance; Asian Economic Crisis; Environmental munificence (1)
- Equity valuation (1)
- Financial reporting (1)
- Forecasting future cash flows and earnings (1)
- Publication
- Publication Type
Articles 1 - 19 of 19
Full-Text Articles in Business
Tunneling Through Intercorporate Loans: The China Experience, Guohua Jiang, Charles M. C. Lee, Heng Yue
Tunneling Through Intercorporate Loans: The China Experience, Guohua Jiang, Charles M. C. Lee, Heng Yue
Research Collection School of Accountancy
This study investigates a particularly brazen form of corporate abuse, in which controlling shareholders use intercorporate loans to siphon billions of RMB from hundreds of Chinese listed companies during the 1996 to 2006 period. We document the nature and extent of these transactions, evaluate their economic consequences, examine factors that affect their cross-sectional severity, and report on the mitigating roles of auditors, institutional investors, and regulators. Collectively, our findings shed light on the severity of the minority shareholder expropriation problem in China, as well as the relative efficacy of various legal and extra-legal governance mechanisms in that country.
Customer Satisfaction And Stock Returns Risk, Kapil R. Tuli, Sundar G. Bharadwaj
Customer Satisfaction And Stock Returns Risk, Kapil R. Tuli, Sundar G. Bharadwaj
Research Collection Lee Kong Chian School Of Business
Over the past decade, several studies have argued that customer satisfaction has high relevance for financial markets because it has a significant impact on stock returns. However, little attention has been given to understanding the impact of customer satisfaction on the risk of stock returns. The finance literature suggests that investors that judge performance only in terms of returns place more resources than warranted in risky opportunities, forgo profitable opportunities, and apply misguided performance evaluations. Accordingly, this study develops, tests, and finds empirical support for the hypotheses that positive changes (i.e., improvement) in customer satisfaction result in negative changes (i.e., …
Leverage Change, Debt Overhang, And Stock Prices, Jie Cai, Zhe Zhang
Leverage Change, Debt Overhang, And Stock Prices, Jie Cai, Zhe Zhang
Research Collection Lee Kong Chian School Of Business
We document a significant and negative effect of the change in a firm’s leverage ratio on its stock prices. We find that the negative effect is stronger for firms with a greater likelihood of debt overhang. Moreover, firms with an increase in leverage ratio tend to have less future investment. These findings are consistent with Myers' (1977) debt overhang theory that an increase in leverage may lead to future underinvestment, thus reducing a firm's value.
Conflicts Of Interest And Stock Recommendations: The Effects Of The Global Settlement And Related Regulations, Ohad Kadan, Leonardo Madureria, Rong Wang, Tzachi Zach
Conflicts Of Interest And Stock Recommendations: The Effects Of The Global Settlement And Related Regulations, Ohad Kadan, Leonardo Madureria, Rong Wang, Tzachi Zach
Research Collection Lee Kong Chian School Of Business
We study the effect of the Global Analyst Research Settlement and related regulations on sell-side research. These regulations attempted to mitigate the interdependence between research and investment banking. We document that following the regulations many brokerage houses have migrated from the traditional five-tier rating system to a three-tier system. Optimistic recommendations have become less frequent and more informative, whereas neutral and pessimistic recommendations have become more frequent and less informative. Importantly, the overall informativeness of recommendations has declined. The likelihood of issuing optimistic recommendations no longer depends on affiliation with the covered firm, although affiliated analysts are still reluctant to …
Institutional Investors And The Informational Efficiency Of Prices, Ekkehart Boehmer, Eric K. Kelley
Institutional Investors And The Informational Efficiency Of Prices, Ekkehart Boehmer, Eric K. Kelley
Research Collection Lee Kong Chian School Of Business
Using a broad panel of NYSE-listed stocks between 1983 and 2004, we study the relation between institutional shareholdings and the relative informational efficiency of prices, measured as deviations from a random walk. Stocks with greater institutional ownership are priced more efficiently, and we show that variation in liquidity does not drive this result. One mechanism through which prices become more efficient is institutional trading activity, even when institutions trade passively. But efficiency is also directly related to institutional holdings, even after controlling for institutional trading, analyst coverage, short selling, variation in liquidity, and firm characteristics.
The Impact Of Earnings On The Pricing Of Credit Default Swaps, Dan Segal, Jeffrey L. Callen, Joshua Livnat
The Impact Of Earnings On The Pricing Of Credit Default Swaps, Dan Segal, Jeffrey L. Callen, Joshua Livnat
Research Collection School Of Accountancy
This study evaluates the impact of earnings on credit risk in the Credit Default Swap (CDS) market using levels, changes, and event study analyses. We find that earnings (cash flows, accruals) of reference firms are negatively and significantly correlated with the level of CDS premia, consistent with earnings (cash flows, accruals) conveying information about default risk. Based on the changes analysis, a 1 percent increase in ROA decreases CDS rates significantly by about 5 percent. We also find that (1) CDS premia are more highly correlated with below-median earnings than with above-median earnings and (2) CDS premia are more highly …
From Crisis To Opportunity: Environmental Jolt, Corporate Acquisitions, And Firm Performance, William P. Wan, Daphne W. Yiu
From Crisis To Opportunity: Environmental Jolt, Corporate Acquisitions, And Firm Performance, William P. Wan, Daphne W. Yiu
Research Collection Lee Kong Chian School Of Business
This study incorporates the external environmental context into the study of corporate acquisitions by examining the performance implications of corporate acquisitions during an environmental jolt that alters the levels of environmental munificence. We posit that compared to the periods before and after an environmental jolt, corporate acquisitions during a jolt would be positively related to firm performance. Furthermore, we suggest that organizational slack would improve firm performance and accentuate the positive relationship between corporate acquisitions and firm performance during an environmental jolt; however, it would have negative impact on firm performance and make the acquisition-performance relationship more negative before and …
Market-Based Capabilities And Financial Performance Of Firms: Insights Into Marketing's Contribution To Firm Value, Sridhar N. Ramaswami, Rajendra K. Srivastava, Mukesh Bhargava
Market-Based Capabilities And Financial Performance Of Firms: Insights Into Marketing's Contribution To Firm Value, Sridhar N. Ramaswami, Rajendra K. Srivastava, Mukesh Bhargava
Research Collection Lee Kong Chian School Of Business
While there is recognition that market-based capabilities contribute to a firm’s financial performance, the exposition is largely conceptual (Srivastava et al. Journal of Marketing 62:2–18, 1998; Journal of Marketing 63:168–179, 1999). Using a resource based view of the firm, the present study proposes that (1) market-based assets and capabilities of a firm impacts (2) performance in three market-facing business processes (new product development, supply-chain and customer management), which in turn, influence (3) the firm’s financial performance. It develops related hypotheses and tests the framework empirically. The study also examines for the first time the interrelationship among the three business processes …
Audit Committees, Boards Of Directors, And Remediation Of Material Weaknesses In Internal Control, Beng Wee Goh
Audit Committees, Boards Of Directors, And Remediation Of Material Weaknesses In Internal Control, Beng Wee Goh
Research Collection School Of Accountancy
The Sarbanes-Oxley Act (SOX) was passed in 2002 in response to a series ofaccounting improprieties at well-known companies such as Enron and WorldCom.One important aspect of SOX is the internal control requirements. SOX section302 requires that management evaluate the effectiveness of disclosure and controlprocedures, report results of the evaluation, and indicate any “significant changes”in internal controls since the last 10-K or 10-Q report (Securities and ExchangeCommission [SEC] 2002). In addition, SOX section 404 requires that manage-ment’s assessment of the effectiveness of internal control over financial reportingand auditors’ attestation on management’s assessment be included in firms’ 10-Kreports (SEC 2003a). The heightened …
The Long-Term Effects Of Cross-Listing, Investor Recognition, And Ownership Structure On Valuation, Michael R. King, Dan Segal
The Long-Term Effects Of Cross-Listing, Investor Recognition, And Ownership Structure On Valuation, Michael R. King, Dan Segal
Research Collection School Of Accountancy
We show that investor recognition and bonding associated with a U.S. cross-listing are distinct effects using a sample of Canadian firms. In contrast to the post-listing decline documented in the literature, we find that cross-listed firms with a single class of shares enjoy a permanent increase in valuation if they attract and maintain investor recognition over time. Valuations of firms that fail to widen their U.S. shareholder base return to pre-listing levels within two years. Cross-listed firms with dual-class shares exhibit a permanent increase in valuation regardless of the level of U.S. investor holdings, consistent with firm-level bonding.
Do Direct Cash Flow Disclosures Help Predict Future Operating Cash Flows And Earnings?, Steven F. Orpurt, Yoonseok Zang
Do Direct Cash Flow Disclosures Help Predict Future Operating Cash Flows And Earnings?, Steven F. Orpurt, Yoonseok Zang
Research Collection School Of Accountancy
Motivated by recent FASB, IASB, and CFA Institute comments, we explore the predictive value of direct method cash flow disclosures. A primary stated purpose of the direct method is to better forecast future performance. To examine this purpose, we first document that direct method line items, such as cash received from customers, are not reliably estimable using income statements and either balance sheets or indirect method statements of cash flows. When these estimation (articulation) errors are included in cash flows and earnings forecasting models, forecasting performance significantly improves. In addition, employing a future ERC (FERC) methodology, we find evidence suggesting …
Disclosure Of Management Guidance In Conference Calls: Materiality, Determinants And Consequences, Benjamin Lansford, Jimmy Kiat Bee Lee, Jennifer W. Tucker
Disclosure Of Management Guidance In Conference Calls: Materiality, Determinants And Consequences, Benjamin Lansford, Jimmy Kiat Bee Lee, Jennifer W. Tucker
Research Collection School Of Accountancy
The SEC advises firms to release all material information in their earnings announcement press release before their corresponding conference call. Until May 2009, the NYSE went further by explicitly prohibiting the disclosure of new material information in a conference call. However, we document that the S&P 500 firms, including those that are NYSE-listed, disclose a non-trivial amount of management guidance exclusively in their conference calls. Firms in challenging forecasting environments rely more on the conference call, probably because the call enables managers to “flesh out” the guidance. In contrast, firms with relatively low investor visibility and high litigation risk rely …
Cue Usage In Financial Statement Fraud Risk Assessments: Effects Of Technical Knowledge And Decision Aid Use, Jean Lin Seow
Cue Usage In Financial Statement Fraud Risk Assessments: Effects Of Technical Knowledge And Decision Aid Use, Jean Lin Seow
Research Collection School Of Accountancy
This paper investigates the effects of technical knowledge and decision aid use on financial statement fraud risk assessments made by directors and students. More extreme fraud risk assessments are made when participants identify and process larger (smaller) numbers of diagnostic (non-diagnostic) factors, with technical knowledge driving diagnostic factor identification. Significant decision aid-technical knowledge effects are also found; decision aid use has a detrimental effect on high-knowledge directors while improving performance in inexperienced, low-knowledge students. These results suggest that although decision aids can afford gains in performance in inexperienced users, they can have unintended and/or paradoxical behavioural effects on experienced users.
The Association Between Institutional Ownership And Audit Properties, Soongsoo Han, Tony Kang, Lynn Reesc
The Association Between Institutional Ownership And Audit Properties, Soongsoo Han, Tony Kang, Lynn Reesc
Research Collection School Of Accountancy
In this study, we examine how institutional ownership affects the quality and riskiness of the financial statement audit. We hypothesize that institutional investors can influence corporate policy to employ governance mechanisms that reduce their monitoring costs. Our evidence shows that firms are more likely to hire a Big 4 auditor (our proxy for audit quality) when long-term institutional ownership is high, suggesting that long-term institutional investors view high quality audits as a viable means of improving corporate governance while reducing their direct monitoring costs. We find no association between auditor choice and short-term institutional ownership. Next, we find that auditors …
Stakeholder Influences On Diversification: Implications For Shareholders And Stakeholders, Partiban David, Jonathan P. O’Brien, Toru Yoshikawa, Andrew Delios
Stakeholder Influences On Diversification: Implications For Shareholders And Stakeholders, Partiban David, Jonathan P. O’Brien, Toru Yoshikawa, Andrew Delios
Research Collection Lee Kong Chian School Of Business
The article presents the results of research into the relative influence of stakeholders and shareholders on corporate strategic planning in terms of diversification and performance, focusing on concepts such as opportunity cost and rent appropriation. An overview of related previous studies is provided, along with details of the research protocol, which involved data analysis drawn from a sample of Japanese firms and their corporate profits from the years 1990 through 2004. A distinction between transactional and relational ownership is described, which can lead to different priorities in terms of profit and growth.
Asking Tougher Questions In Tough Times, Irving Low, Claudia Eio, See Liang Foo, Yang Hoong Pang, Kwong Sin Leong, John Joseph Williams
Asking Tougher Questions In Tough Times, Irving Low, Claudia Eio, See Liang Foo, Yang Hoong Pang, Kwong Sin Leong, John Joseph Williams
Research Collection School Of Accountancy
The recent wave of corporate governance disasters globally raises many eyebrows and burning questions whether audit committees (ACs) are doing the right things to effectively discharge their roles and responsibilities. To further test the integrity and reputation of the Singapore market as a listing gateway for foreign companies in turbulent times like these, the headlines are also reporting a spate of suspected and actual corporate fraud and scandals involving China-based, Singapore listed companies (commonly referred to as “S-chips”). Many angry investors and the public question whether ACs and independent directors are doing their jobs.
Acquisitions Driven By Stock Overvaluation, Leming Lin
Acquisitions Driven By Stock Overvaluation, Leming Lin
Dissertations and Theses Collection (Open Access)
Overvaluation might drive a firm to use its stock to acquire another firm whose stock is not as overpriced. Though hypothetically desirable, these acquisitions create little, if any, value for acquirer shareholders. Two factors impede value creation for acquirer stockholders from these transactions (despite large differences in relative overvaluation at announcement): acquirers paying large premiums to targets, and investors' correction of acquirer overvaluation during the bid period. Furthermore, acquirer CEOs obtain a large amount of new stock and option grants after acquisitions and realize a net gain in wealth, further suggesting that equity overvaluation increases agency costs and the resulting …
Venture Capital Firm's Reputation Effect On Its Start-Up Company's Long Term Operating Performance And Survivorship, Huei Siang Yap
Venture Capital Firm's Reputation Effect On Its Start-Up Company's Long Term Operating Performance And Survivorship, Huei Siang Yap
Dissertations and Theses Collection (Open Access)
In this paper, I tested the effects of three proxies for venture capitalist(VC) reputation on its invested company's long term industry-djusted operating performances (ROA , ROE), market-to-book ratio and survival time (time to delisting) in the aftermarket. VC's market share and VC's IPO share have strong and positive association with the post-IPO long-term performance metrics, and the effects are statistically significant even after accounting for self-selection bias. For long term survivorship of start-up companies, I applied hazard analysis to the IPO company's time to delisting with accelerated failure time (AFT) model as the baseline hazard function, and found that start …
Does Size Matter In The Hedge Fund Industry?, Song Wee Melvyn Teo
Does Size Matter In The Hedge Fund Industry?, Song Wee Melvyn Teo
Research Collection Lee Kong Chian School Of Business
We document a negative and convex relationship between hedge fund size and future risk-adjusted returns. Small hedge funds outperform large hedge funds by 3.65 percent per year after adjusting for risk. This over performance is not driven by fund age, leverage, serial correlation, or self-selection biases. The capacity constraints manifest across various investment styles and regions. In particular, they are strongest for funds managed by multiple principals who trade small, illiquid securities, suggesting that the observed diseconomies can be traced to price impact and hierarchy costs (Stein, 2002). While investors direct disproportionately more capital to smaller funds, they do not …