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Research Collection School Of Accountancy

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Full-Text Articles in Accounting

Do Firms Respond To Peer Disclosures? Evidence From Disclosures Of Clinical Trial Results, Vedran Capkun, Yun Lou, Clemens A. Otto, Yin Wang May 2023

Do Firms Respond To Peer Disclosures? Evidence From Disclosures Of Clinical Trial Results, Vedran Capkun, Yun Lou, Clemens A. Otto, Yin Wang

Research Collection School Of Accountancy

Using data on the registration of clinical trials and the disclosure of trial results, we examine how firms respond to peer disclosures. We find that firms are less likely to disclose their own trial results if the results of a larger number of closely related trials are disclosed by their peers. This relation is stronger if the firms face higher competition (as measured by the number of competing trials). It is weaker if the firms are further along in their research than the peers (as measured by the trials’ phase) and if the peers’ disclosures convey more negative news (as …


Friends Can Help: The Effects Of Relationship In The Chinese Book-Building Process, Ting Luo, Wei Luo, Heng Yue, Lu Zhang May 2023

Friends Can Help: The Effects Of Relationship In The Chinese Book-Building Process, Ting Luo, Wei Luo, Heng Yue, Lu Zhang

Research Collection School Of Accountancy

Using detailed bidding information in Chinese IPO book-building process, we find that institutional investors who have a close relationship with the underwriter are more likely to participate in bidding and their bidding prices are higher, compared to other institutional investors. We also find that related institutional investors bid higher when the underwriter is more likely to need or receive their support. Further analysis suggests that related institutional investors gain some benefits for their support to the underwriter, including receiving more shares in profitable IPOs, better timing their exit from the IPO in the open market, and receiving more optimistic earnings …


The Sec Revolving Door And Comment Letters, Michael Shen, Samuel T. Tan May 2023

The Sec Revolving Door And Comment Letters, Michael Shen, Samuel T. Tan

Research Collection School Of Accountancy

Government officials, advocacy groups, and the business press have raised concerns that former SEC employees may continue to influence the SEC after leaving the agency. Using hand-collected data on the characteristics of 1,384 lawyers who represented firms in responding to SEC comment letters between 2005 and 2016, we examine the impact of post-revolving SEC employees on the SEC comment letter process. Among other determinants, we find that older and larger firms with a history of litigation are more likely to hire former SEC lawyers over non-SEC lawyers. Relative to firms that involve only non-SEC lawyers, we find that firms that …


The Effect Of Social Skills On Analyst Performance, Cong Cong Li, An-Ping Lin, Hai Lu Apr 2023

The Effect Of Social Skills On Analyst Performance, Cong Cong Li, An-Ping Lin, Hai Lu

Research Collection School Of Accountancy

Social skills are important but difficult to measure. So far, few empirical studies have examined the effect of social skills on the performance of professionals. Using the number of LinkedIn connections as a proxy for social skills, we investigate the effect of financial analysts' social skills on their performance. We use multiple ways to validate the measure of social skills and show that analysts with better social skills produce more accurate earnings forecasts and that their stock recommendations elicit stronger market reactions. Furthermore, these socially skilled analysts are more likely to be voted as All-Star Analysts. This study provides the …


Accelerating Business Transformation In The Digital Age, Gary Pan, Shankararaman, Venky Mar 2023

Accelerating Business Transformation In The Digital Age, Gary Pan, Shankararaman, Venky

Research Collection School Of Accountancy

Business Transformation involves making fundamental changes in how business is conducted in order to help cope with shifts in market environment. This chapter focuses on the role played by digital technology in business transformation and the mindset shifts required to embark on a digital transformation journey. More relevantly, this chapter also highlights how data analytics is driving digital transformation.


“High” Innovators? Marijuana Legalization And Regional Innovation, Stephanie Cheng, Pengkai Lin, Yinliang Tan, Yuchen Zhang Mar 2023

“High” Innovators? Marijuana Legalization And Regional Innovation, Stephanie Cheng, Pengkai Lin, Yinliang Tan, Yuchen Zhang

Research Collection School Of Accountancy

The past three decades have witnessed a tremendous shift in public health policies towards marijuana legalization in the U.S. Adopting the process-based view of innovation, we hypothesize that marijuana's increased use and related consequences after its legalization affect innovators’ behavior and social environment during the innovation process, which in turn impacts regional innovation. Utilizing the staggered adoption of medical marijuana laws by 20 states between 1996 and 2013 as a quasi-experimental setting, we find that legalizing medical marijuana reduces the overall output of regional innovation, as proxied by patents’ total forward-citation count aggregated by innovator location. Further analyses decomposing the …


Nurturing Accountants With The Right Expertise For The Green Economy, Holly Yang, Jiwei Wang Mar 2023

Nurturing Accountants With The Right Expertise For The Green Economy, Holly Yang, Jiwei Wang

Research Collection School Of Accountancy

In a commentary, SMU Associate Professor of Accounting and Co-Director (Academic Research) of School of Accountancy Research Holly Yang, and SMU Associate Professor of Accounting (Practice) Wang Jiwei, who is also Programme Director of Master of Professional Accounting and Master of Science in Accounting, highlighted the need to quickly equip the next generation of accountants with sustainability knowledge as sustainability reporting becomes an integral part of any organisation’s sustainability efforts. They discussed how integrating sustainability into the curriculum will nurture a new generation of accounting graduates suited for existing and upcoming positions in sustainability, and shared that at SMU, all …


Exogenous Loss Of Analyst Coverage And Choice Of Audit Quality, Simon Yu Kit Fung, Zheng Wang, Liandong Zhang, Xindong Zhu Mar 2023

Exogenous Loss Of Analyst Coverage And Choice Of Audit Quality, Simon Yu Kit Fung, Zheng Wang, Liandong Zhang, Xindong Zhu

Research Collection School Of Accountancy

We show that a firm’s likelihood of appointing auditors with industry expertise or with a larger office increases after the firm is affected by an exogenous reduction in analyst coverage, relative to its matched control firms. This effect is stronger for affected firms with greater reductions in analyst monitoring, for smaller or younger firms, for firms with lower institutional or CEO ownership, and when the lost analysts are more effective monitors. We further show that affected firms that switch to high-quality auditors receive more positive market reaction, experience a smaller decrease in stock liquidity and a smaller increase in cost …


Marijuana Liberalization And Public Finance: A Capital Market Perspective On The Passage Of Medical Use Laws, Stephanie F. Cheng, Gus De Franco, Pengkai Lin Feb 2023

Marijuana Liberalization And Public Finance: A Capital Market Perspective On The Passage Of Medical Use Laws, Stephanie F. Cheng, Gus De Franco, Pengkai Lin

Research Collection School Of Accountancy

We find that the staggered passage of state-level laws that legalize marijuana for medical use increases states' borrowing costs by 7–9 basis points. Consistent with economic theory on substance use suggesting that marijuana legalization increases local consumption of the drug (by expanding its availability and reducing its perceived risks), we predict and find that increased consumption represents an important mechanism that explains the higher state bond spreads. We also show that following such laws’ passage, states incur higher marijuana-consumption-related expenditures, including for police, corrections, and public welfare.


Can Honesty Reminders Reduce Dishonesty In Budgetary Slack?, Wilfred W. H. Cheng, Chee Yeow Lim, Chi Kwan Yuen Jan 2023

Can Honesty Reminders Reduce Dishonesty In Budgetary Slack?, Wilfred W. H. Cheng, Chee Yeow Lim, Chi Kwan Yuen

Research Collection School Of Accountancy

This study investigates the effect of honesty reminders on budgetary slack. Based on self-concept maintenance theory, the authors posit that honesty reminders can reduce budgetary slack by making people more aware of their own standards of honesty, resulting in more honest behavior. Using an experimental research design, the authors find evidence that honesty reminders reduce budgetary slack. The authors also find that although penalties can similarly reduce budgetary slack, they tend to cause distrust and resentment from subordinates. Therefore, honesty reminders may be a less costly method than penalties for reducing budgetary slack.


Postmaterialism And Corporate Tax Avoidance, Yujia Cui, Jiwei Wang, Kangtao Ye Jan 2023

Postmaterialism And Corporate Tax Avoidance, Yujia Cui, Jiwei Wang, Kangtao Ye

Research Collection School Of Accountancy

Using a proprietary dataset of China tax audits, we found that firms owned by investors from countries with higher postmaterialism values were less likely to engage in tax-avoidance behavior in China. In addition, we found some evidence that the negative association between postmaterialism and tax avoidance is more pronounced when tax enforcement is stronger, indicating that national culture and formal institutions act as complements. To check the external validity of our main results, we further used a cross-country sample from 21 countries over 22 years. The evidence from the cross-country sample was consistent with the findings obtained from the China …


Disclosure Regulation: Past, Present, And Future, S.P. Kothari, Liandong Zhang, Luo Zuo Jan 2023

Disclosure Regulation: Past, Present, And Future, S.P. Kothari, Liandong Zhang, Luo Zuo

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 …


Information Sharing Between Mutual Funds And Auditors, Ole‐Kristian Hope, Pingui Rao, Yanping Xu, Heng Yue Jan 2023

Information Sharing Between Mutual Funds And Auditors, Ole‐Kristian Hope, Pingui Rao, Yanping Xu, Heng Yue

Research Collection School Of Accountancy

This paper examines whether there is information sharing between mutual funds and their auditors about the auditors’ other listed firm clients. Using data from the Chinese market, we find that mutual funds earn higher profits from trading in firms that share the same auditors. The effects are more pronounced when firms have a more opaque information environment and when the audit partners for the fund and the partners for the listed firm share school ties. The evidence is consistent with information flowing from auditors to mutual funds, providing mutual funds with an information advantage in firms that share the same …


Trust And Contracting: Evidence From Church Sex Scandals, Gilles Hilary, Sterling Huang Jan 2023

Trust And Contracting: Evidence From Church Sex Scandals, Gilles Hilary, Sterling Huang

Research Collection School Of Accountancy

Firms located in communities in which people are, on average, more trusting enjoy some benefits in terms of the power of CEO contracts. We present two pieces of empirical evidence to support this claim: (1) higher average trust in a county is associated with “flatter” executive contracts and (2) when an exogenous shock occurs (such as a scandal involving an important social institution), both trust and contracting move in similar directions. We obtain the first result in a panel specification and the second in a “difference-in-difference” specification that uses the revelation of sex scandals involving the Catholic Church across different …


Understanding Sentiment Through Context, Richard M.Crowley, M.H. Franco Wong Dec 2022

Understanding Sentiment Through Context, Richard M.Crowley, M.H. Franco Wong

Research Collection School Of Accountancy

We examine whether empirical results using text-based sentiment of U.S. annual reports depend on the underlying context, within documents, from which sentiment is measured. We construct a clause-level measure of context, showing that sentiment is driven by many different contexts and that positive and negative sentiment are driven by different contexts. We then construct context-level sentiment measures and examine whether sentiment works as expected at the context-level across four prediction problems. Our results demonstrate that document-level sentiment exhibits significant noise in prediction and suggest that document-level aggregation of sentiment leads to missed empirical nuances. The contexts driving sentiment results vary …


The Effectiveness Of Using Python Programming Approach In Teaching Financial Analytics, Clarence Goh, Yuanto Kusnadi, Gary Pan Dec 2022

The Effectiveness Of Using Python Programming Approach In Teaching Financial Analytics, Clarence Goh, Yuanto Kusnadi, Gary Pan

Research Collection School Of Accountancy

This study presents a learning method and challenges regarding implementing a Python programming approach in teaching financial analytics to graduate accounting students. The advent of Big Data, as well as related applications and technologies, has significantly changed the process and practice of accounting. This has led to essential changes in the construction and teaching content of accounting education. While there have been several studies examining how data analytics is embedded in the accounting curriculum, the majority of the teaching cases in accounting focus on analysis and communication with Excel as the principal tool, with very few covering the necessary steps …


Using An Online Bidding Game To Teach Costing In Management Accounting, Poh Sun Seow, Suay Peng Wong Dec 2022

Using An Online Bidding Game To Teach Costing In Management Accounting, Poh Sun Seow, Suay Peng Wong

Research Collection School Of Accountancy

This paper describes an online multi-player game (Bidding Game), which was developed to reinforce the understanding of cost behavior and cost concepts taught in an introductory management accounting undergraduate course. The Bidding Game was motivated by the aim to facilitate active learning as students apply the theories that they have learnt in a fun and interactive manner. The survey results suggest that the game significantly improves students’ perceived knowledge of the costing topic. Students also agreed that the game enhanced their learning and that they had a positive experience playing the game.


The Past, Present, And Future Of China-Related Accounting Research, Qiang Cheng, Luzi Hail, Gwen Yu Nov 2022

The Past, Present, And Future Of China-Related Accounting Research, Qiang Cheng, Luzi Hail, Gwen Yu

Research Collection School Of Accountancy

This discussion makes several observations regarding the past 25 years of China-related accounting research reviewed in Lennox and Wu (2022). First, we discuss factors of supply and demand that led to the rise of China-related studies and how this growth has contributed to the internationalization of accounting research. We note that the taxonomy of the literature by geographic region rather than topic or methodology is unusual and makes it difficult to formulate a common framework that would help organize the many contributions. Next, we distill distinct patterns in authorship, choice of topics, and asserted contributions of China-related studies. Studies are …


Governance, Risk And Compliance (Grc) In Digital Transformation: Investor Views, Clarence Goh, Yuanto Kusnadi, Gary Pan, Poh Sun Seow Nov 2022

Governance, Risk And Compliance (Grc) In Digital Transformation: Investor Views, Clarence Goh, Yuanto Kusnadi, Gary Pan, Poh Sun Seow

Research Collection School Of Accountancy

Companies are embracing digital transformation to enhance their competitiveness. Existing studies show that it is important for companies to manage the governance, risk, and compliance (GRC) aspects of their digital transformation initiatives. While companies are increasingly understanding the importance of the role of GRC in digital transformation, it is unclear from the investors’ views. Thus, this study examines whether investors are placing importance on the role of GRC in digital transformation for their investment decisions. The results show that investors care about the GRC aspects of digital transformation initiatives undertaken by companies. The findings of this study are consistent with …


Cfo Gaps: Determinants And Impact On The Corporate Information Environment, Xia Chen, Na Li, An-Ping Lin Oct 2022

Cfo Gaps: Determinants And Impact On The Corporate Information Environment, Xia Chen, Na Li, An-Ping Lin

Research Collection School Of Accountancy

A CFO gap arises when the CFO position is left vacant for a period between the departure of the old CFO and the appointment of a new CFO. We find that CFO gaps are fairly common; over the sample period 2004–2016, approximately one-third of CFO turnovers are associated with a CFO gap, lasting on average two quarters and two months. CFO gaps are more likely for firms that face more labor market search frictions and with financial reporting and performance issues, and are less likely for firms with succession plans and with greater growth opportunities. While CFO gaps are not …


Making Virtual Project-Based Learning Work During The Covid-19 Pandemic, Yuanto Kusnadi, Gary Pan, Shankararaman, Venky Oct 2022

Making Virtual Project-Based Learning Work During The Covid-19 Pandemic, Yuanto Kusnadi, Gary Pan, Shankararaman, Venky

Research Collection School Of Accountancy

Project-based learning is an increasingly popular pedagogical approach in university education shown to be effective in fostering problem-solving, analytical, design thinking and teamwork skills. The COVID-19 pandemic has led to universities pivoting from project-based learning (PBL) in the classroom to a virtual learning environment. By examining local student consulting courses conducted virtually in a Singapore University (UNIS) during the COVID-19 pandemic, this study aims to address the knowledge gap in the PBL literature by identifying the roles played by digital literacy - in utilising the digital tools that support virtual learning, in a virtual learning environment. The study also serves …


Trusting The Stock Market: Further Evidence From Ipos Around The World, Kiridaran Kanagaretnam, Kiat Bee Jimmy Lee, Chee Yeow Lim, Gerald J. Lobo Sep 2022

Trusting The Stock Market: Further Evidence From Ipos Around The World, Kiridaran Kanagaretnam, Kiat Bee Jimmy Lee, Chee Yeow Lim, Gerald J. Lobo

Research Collection School Of Accountancy

Using an international sample of IPO firms from 36 countries and a country-level index for societal trust, we find strong evidence that societal trust is negatively associated with the degree of IPO underpricing. In cross-sectional analyses, we find that the effect of societal trust in reducing IPO underpricing is more pronounced when the information environment is less transparent, when the stock market environment is less robust, and when legal institutions are weaker, settings where the effect of trust is likely to be more salient. Our study contributes to and extends the literature by providing strong evidence that an informal institution …


Insider Trading Restrictions And Real Earnings Management: International Evidence, Jiwei Wang, Yuanto Kusnadi, Jiwei Wang, Yujie Wang Sep 2022

Insider Trading Restrictions And Real Earnings Management: International Evidence, Jiwei Wang, Yuanto Kusnadi, Jiwei Wang, Yujie Wang

Research Collection School Of Accountancy

We examine the implications of insider trading restrictions on firms’ real activities earnings management in an international setting. Using a sample of 28 countries over the period from 1992 to 2007, we find evidence that is supportive of the substitution hypothesis, in that managers have incentives to substitute accruals earnings management for real activities earnings management. This effect is found to be more pronounced for firms in countries with more restrictive insider trading regulation. Our result is robust to alternative measures of real activities earnings man- agement and insider trading restrictions, alternative sub-samples, alternative regression specifi- cations, and controlling for …


Subsidiary Governance And Corporate Tax Planning: The Effect Of Parent-Subsidiary Common Directors And Offficers, Xin Wang, Yongxin Xu, Liandong Zhang, Gaoping Zheng Sep 2022

Subsidiary Governance And Corporate Tax Planning: The Effect Of Parent-Subsidiary Common Directors And Offficers, Xin Wang, Yongxin Xu, Liandong Zhang, Gaoping Zheng

Research Collection School Of Accountancy

Top executives of the parent company often take positions as the directors and officers (D&Os) of subsidiaries. These parent-subsidiary common D&Os have better access to subsidiary information and can exert more influence over subsidiary operations. Therefore they can better identify tax-planning opportunities and coordinate tax arrangements. Using the mandatory disclosure of top executives' subsidiary positions for Chinese listed firms, we find that effective income tax rate is lower for firms with common D&Os. The tax-saving effect is stronger for firms with more intangible assets and with related-party transactions involving subsidiaries. The effect is also stronger when common D&Os have positions …


Strategic Disclosure And Debt Covenant Violation, Thomas Bourveau, Derrald Stice, Rencheng Wang Sep 2022

Strategic Disclosure And Debt Covenant Violation, Thomas Bourveau, Derrald Stice, Rencheng Wang

Research Collection School Of Accountancy

This study examines how managers change their forecasting behavior as a debt covenant violation approaches. Using a sample of firms that disclose a debt covenant violation (DCV) in their financial statements, we find that management forecasts are more optimistic in the period leading up to a DCV, and this result is not driven by managers’ unintentional forecast bias. Additionally, we find that managers who are more optimistic in their forecasts also take on more risk and increase dividend payouts before violations, consistent with managers strategically using earnings forecasts to justify their activities favorable to shareholders but likely to be curtailed …


Uncovering The Value Of Blockchain Applications In The World Of Finance, Qiang Cheng Sep 2022

Uncovering The Value Of Blockchain Applications In The World Of Finance, Qiang Cheng

Research Collection School Of Accountancy

This article discusses the benefits of using blockchain in the context of asset-backed security (ABS) issuance: reducing information asymmetry between issuers and investors, reducing yield spread of ABS, disciplining credit rating agencies, increasing the quality of underlying assets, and reducing issuers’ risk exposure. Such benefits should apply to other blockchain applications in the world of finance.


Insider Trading Restrictions And Real Activities Earnings Management: International Evidence, Yuanto Kusnadi, Yuanto Kusnadi, Jiwei Wang, Yujie Wang Sep 2022

Insider Trading Restrictions And Real Activities Earnings Management: International Evidence, Yuanto Kusnadi, Yuanto Kusnadi, Jiwei Wang, Yujie Wang

Research Collection School Of Accountancy

We examine the implications of insider trading restrictions on firms’ real activities earnings management in an international setting. Using a sample of 28 countries over the period from 1992 to 2007, we find evidence that is supportive of the substitution hypothesis, in that managers have incentives to substitute accruals earnings management for real activities earnings management. This effect is found to be more pronounced for firms in countries with more restrictive insider trading regulation. Our result is robust to alternative measures of real activities earnings management and insider trading restrictions, alternative sub-samples, alternative regression specifications, and controlling for endogeneity. In …


Sustainability: Jobs And Skills For The Accountancy Profession, Jiwei Wang, Holly I. Yang, Liandong Zhang Aug 2022

Sustainability: Jobs And Skills For The Accountancy Profession, Jiwei Wang, Holly I. Yang, Liandong Zhang

Research Collection School Of Accountancy

Sustainability is a megatrend that is changing the way we think about business and offering new opportunities and jobs for the accountancy sector. At the 26th Conference of the Parties (COP26), also known as the United Nations Climate Change Conference, the international business community was galvanised into action. Singapore, too, has intensified its sustainability plans with the Singapore Green Plan 2030


The Effects Of Csr Reputation And Csr Crisis Response Strategy On Investor Judgments, Clarence Goh Aug 2022

The Effects Of Csr Reputation And Csr Crisis Response Strategy On Investor Judgments, Clarence Goh

Research Collection School Of Accountancy

I use a controlled experiment to examine, in the context of CSR crises, whether investors’ investment judgments are influenced by a firm’s CSR reputation and CSR crisis response strategy. I find that for good CSR reputation firms, the use of a rebuild or deny crisis response strategy does not lead to improvements in investment judgments. However, for bad CSR reputation firms, the use of a deny response strategy leads to improvements in investment judgments while the use of a rebuild strategy does not.


Do Analysts’ Eps Forecasts Obey Benford’S Law? An Empirical Analysis, Clarence Goh Aug 2022

Do Analysts’ Eps Forecasts Obey Benford’S Law? An Empirical Analysis, Clarence Goh

Research Collection School Of Accountancy

Benford’s law gives the expected frequencies of digits in tabulated data. In this study, I investigate the extent to which a sample of analysts’ earnings per share (EPS) forecasts obey Benford’s law. I conduct Benford’s law’s second digit and last-two digits tests on a sample of analyst EPS forecasts of S&P 500 firms from 1998 to 2018. Overall, I find that analysts’ EPS forecasts obey Benford’s law’s second digit test but do not obey the last-two digits test. These findings suggest that while analysts do not engage in number invention, they do engage in rounding when making EPS forecasts.