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Articles 121 - 150 of 665

Full-Text Articles in Corporate Finance

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 …

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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

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Contracting With Controllable Risk, Christopher S. Armstrong, Stephen A. Glaeser, Sterling Huang Jul 2022

Contracting With Controllable Risk, Christopher S. Armstrong, Stephen A. Glaeser, Sterling Huang

Research Collection School Of Accountancy

We examine how executives' ability to control their firms' exposure to risk affects the design of their incentive-compensation contracts. Our natural experimental evidence shows that exchange-traded weather derivatives allow executives to control their firms' exposure to weather risk. Once these derivatives became available, those executives who use them to hedge experience relative reductions in their total compensation and equity incentives. The decline in compensation is consistent with a reduction in the risk premium that executives receive for exposure to weather risk. The decline in equity incentives is consistent with the relation between risk and incentives shifting in a complementary direction …

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Managerial Trustworthiness And Buybacks, Sterling Huang, Kaisa Snellman, Theo Vermaelen Jun 2022

Managerial Trustworthiness And Buybacks, Sterling Huang, Kaisa Snellman, Theo Vermaelen

Research Collection School Of Accountancy

CEO trustworthiness is positively related to long-term excess returns after buyback announcements. When the CEO is trustworthy, statements that the stock is undervalued are more credible. CEO trustworthiness is initially measured by the extent to which people in the county where the company headquarters is located trust each other. Further, the positive impact of trustworthiness on excess returns is higher when the CEO has been a long-term resident of a high-trust county, and correspondingly, trustworthy CEOs are less likely to be accused of financial misreporting. Our conclusions are confirmed when we use alternative measures of trustworthiness such as employee trust …

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Short Interest And Corporate Investment: Evidence From Supply Chain Partners, Xia Chen, Guojin Gong, Shuqing Luo Jun 2022

Short Interest And Corporate Investment: Evidence From Supply Chain Partners, Xia Chen, Guojin Gong, Shuqing Luo

Research Collection School Of Accountancy

Short interest contains valuable information about a firm’s business fundamentals. We investigate whether such information affects business partners’ real investment decisions in the supply-chain setting. We predict and find that a supplier’s future investments (including inventory, R&D, and tangible asset investments) decrease with its customer’s current short interest. This negative relation is stronger when the supplier faces greater difficulty in assessing its customer’s business fundamentals and when short interest is more likely to indicate longlasting deterioration in the customer’s fundamentals. Additional analysis does not support the alternative explanation that the supplier adjusts investments in response to unfavorable information obtained via …

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Active Independent Directors And Earnings Quality, Yuanto Kusnadi, Bin Srinidhi Jun 2022

Active Independent Directors And Earnings Quality, Yuanto Kusnadi, Bin Srinidhi

Research Collection School Of Accountancy

We examine the relationship between active independent directors and earnings quality for U.S. firms. We construct measures that proxy for activeness of independent directors and find that the proportion of active independent directors is under half on average. Our finding shows that earnings quality increases with the percentage of active independent directors on the board. Once the active independent directors are separated out, the other independent directors do not have any effect on earnings quality. This finding supports the hypothesis that the activeness of independent directors is incrementally significant over just the proportion of independent directors for the quality of …

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An Automation Tax- Adopt With Caution, Vincent Ooi Jun 2022

An Automation Tax- Adopt With Caution, Vincent Ooi

Research Collection Yong Pung How School Of Law

The post highlights three main issues that may result from the rapid and widespread automation of jobs: 1) declining tax revenues; 2) inequitable distribution of gains and losses from automation; and 3) social costs of job displacement, such as social support and retraining programmes for displaced workers.An automation tax may be imposed on a temporary basis to manage (slow) the rate of displacement of workers due to the adoption of automation technologies, but should not be a permanent feature. Otherwise, there will be a risk of loss of competitiveness in the long-term, possibly resulting in even greater economic harm.One main …

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New Assets, (Largely) Same Old Rules: The Taxation Of Digital Tokens, Vincent Ooi May 2022

New Assets, (Largely) Same Old Rules: The Taxation Of Digital Tokens, Vincent Ooi

Research Collection Yong Pung How School Of Law

In this blog post, I highlight the fact that across jurisdictions, tax provisions specifically drafted to address the taxation of digital tokens are still quite rare, meaning that existing orthodox tax rules will have to be applied. However, care must be taken when applying tax provisions and one must be aware of the limits of "reasoning by analogy".Some tax provisions make reference to specific assets or asset classes and it cannot be assumed that digital tokens which look very similar to these assets will inevitably fall under those provisions. For example, no matter how much a digital payment token looks …

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Major Government Customers And Loan Contract Terms, Daniel A. Cohen, Bin Li, Ningzhong Li, Yun Lou Mar 2022

Major Government Customers And Loan Contract Terms, Daniel A. Cohen, Bin Li, Ningzhong Li, Yun Lou

Research Collection School Of Accountancy

We examine the relation between the presence of U.S. government as a major customer and a supplier firm’s loan contract terms, using major corporate customers as a benchmark. We find that firms with major government customers are associated with fewer covenants and a lower likelihood of having performance pricing provisions in their loan contracts. In contrast, we do not find such associations for firms with major corporate customers. Further, we find no evidence that the existence of major government customers is related to the supplier firm’s loan spread, security, or maturity. We conjecture that lenders benefit from the stricter monitoring …

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The Influence Of Corporate Income Taxes On Investment Location: Evidence From Corporate Headquarters Relocations, Travis Chow, Sterling Huang, Kenneth J. Klassen, Jeffrey Ng Feb 2022

The Influence Of Corporate Income Taxes On Investment Location: Evidence From Corporate Headquarters Relocations, Travis Chow, Sterling Huang, Kenneth J. Klassen, Jeffrey Ng

Research Collection School Of Accountancy

This study examines the effects of jurisdictions’ corporate taxes and other policies on firms’ headquarters (HQ) location decisions. Using changes in state corporate income tax rates across time and states as the setting, we find that a one-percentage-point increase in the HQ state corporate income tax rate increases the likelihood of firms relocating their HQ out of the state by 16.8%, and an equivalent decrease in the HQ state rate decreases the likelihood of HQ relocations by 9.1%. Exploiting the unique tax policy features within the state apportionment system lends strong support to the interpretation that taxation drives this effect. …

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Analysts' Site Visits And Corporate Innovation, Qiang Cheng, Yutao Wang, Holly I. Yang, Zheyuan Zhang Feb 2022

Analysts' Site Visits And Corporate Innovation, Qiang Cheng, Yutao Wang, Holly I. Yang, Zheyuan Zhang

Research Collection School Of Accountancy

While prior studies examine whether analyst coverage affects corporate innovation, there is little research on the mechanism through which financial analysts affect corporate innovation. In this paper, we examine whether and how analysts’ questions about innovation affect corporate innovation activities and outcomes. Using a sample of corporate site visits in China, we find that when analysts ask questions about innovation during site visits, the firms invest more in research and development and file more patent applications in the future. This association is stronger when analysts have a greater information and monitoring role. In addition, consistent with knowledge diffusion between firms, …

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Spacs: Is It For Real Estate?, Melvyn Teo, Ronald Tan, Indran Thana, Yin Mei Lock Jan 2022

Spacs: Is It For Real Estate?, Melvyn Teo, Ronald Tan, Indran Thana, Yin Mei Lock

Perspectives@SMU

SPACs are gaining popularity but investors should do their homework

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Postmaterialism And Corporate Tax Avoidance, Yujia Cui, Jiwei Wang, Kangtao Ye Jan 2022

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

Research Collection School Of Accountancy

This paper explores how postmaterialism culture influences corporate tax avoidance behavior. Using a proprietary dataset of China tax audits, we find that firms owned by investors from countries with higher postmaterialism values are less likely to engage in tax avoidance behavior in China. In addition, we find 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 use a cross-country sample from 21 countries over 22 years. The evidence from …

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Financial Capacity And The Demand For Audit Quality, Chee Yeow Lim, Gerald J. Lobo, Pingui Rao, Heng Yue Jan 2022

Financial Capacity And The Demand For Audit Quality, Chee Yeow Lim, Gerald J. Lobo, Pingui Rao, Heng Yue

Research Collection School Of Accountancy

Prior research documents that financial capacity could be positively or negatively associated with the demand for audit quality. We re-examine this relation using changes in local real estate prices as exogenous shocks to corporate financial capacity. Using auditor size, auditor industry specialisation, and auditor fees as measures of audit quality, we find robust evidence that an increase (decrease) in financial capacity significantly reduces (increases) the demand for audit quality, and that this relation is more pronounced when firms are more financially constrained, when external monitoring by institutional investors and financial analysts is weaker, and when there is more negative news …

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Audit Adjustments Matter: What They Reveal About Companies' Financial Reporting, Themin Suwardy, Chu Yeong Lim Jan 2022

Audit Adjustments Matter: What They Reveal About Companies' Financial Reporting, Themin Suwardy, Chu Yeong Lim

Research Collection School Of Accountancy

This study investigates the characteristics, nature and extent of proposed audit adjustments to the financial statements of listed companies in Singapore. Data was gathered from the 2018 to 2020 financial statements of 412 companies, along with views of close to 280 audit committee chairs and heads of finance (or similar designations) on the effectiveness of their companies’ finance function.

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Turning The Covid-19 Pandemic Into An Opportunity For Digital Disruption In The E-Commerce Industry: A Case Study Of Digital Commerce Intelligence Pte Ltd, Yuanto Kusnadi, Gary Pan Jan 2022

Turning The Covid-19 Pandemic Into An Opportunity For Digital Disruption In The E-Commerce Industry: A Case Study Of Digital Commerce Intelligence Pte Ltd, Yuanto Kusnadi, Gary Pan

Research Collection School Of Accountancy

No abstract provided.

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Conditional Relationship Between Distress Risk And Stock Returns, Su Hee Yun, Jung Min Kim Jan 2022

Conditional Relationship Between Distress Risk And Stock Returns, Su Hee Yun, Jung Min Kim

Research Collection Lee Kong Chian School Of Business

Purpose: Previous research on the relationship between a firm’s distress risk and future stock returns produces inconsistent results. This study attempts to explain the conflicting results of earlier studies by showing that systematic distress risk leads to positive rewards, while unsystematic distress risk leads to low stock returns. In addition, this study intends to elucidate the factors of systematic distress risk and unsystematic distress risk, respectively. In this way, this study informs the rational investor what kind of distress risk they should take. Design/methodology/approach: This study considers two distress-predictor sets to show a possibility between distress risk and stock returns …

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Outsourcing Climate Change, Rui Dai, Rui Duan, Hao Liang, Lilian Ng Jan 2022

Outsourcing Climate Change, Rui Dai, Rui Duan, Hao Liang, Lilian Ng

Research Collection Lee Kong Chian School Of Business

This paper examines whether and how firms combat climate change. Our study provides robust evidence that firms outsource part of their carbon emissions to foreign suppliers and shows how internal and external stakeholders significantly shape firms' environmental policies. Furthermore, firms tend to seek a foreign supplier and decrease their emission abatement efforts as pressure to reduce domestic emissions intensifies. These firms are also less incentivized to develop green technologies. Finally, we find that outsourcing emissions has real and economic consequences, with investors demanding a higher carbon premium for their exposures to carbon risks associated with increased outsourced emissions.

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The Impact Of The Ifrs 9 Expected Loss Approach On Accounting Conservatism, Clarence Goh, Chu Yeong Lim, Kevin Ow Yong Dec 2021

The Impact Of The Ifrs 9 Expected Loss Approach On Accounting Conservatism, Clarence Goh, Chu Yeong Lim, Kevin Ow Yong

Research Collection School Of Accountancy

Using an experimental setting, this paper examines the impact of the International Financial Reporting Standard (IFRS 9) expected credit loss (ECL) approach on accounting conservatism. The ECL approach enables banks to incorporate loan loss provisions (LLP) on a timelier basis and help bank regulators anticipate weaknesses in banks’ loan portfolios. Conversely, the ECL model could be more susceptible to managerial discretion. More conservative bank managers might make excessivecredit provisions. Our findings show that high conservatism is positively associated with higher levels of LLP. In addition, the effect of accounting conservatism is contingent upon the type of loan loss model. We …

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Socially Responsible Corporate Customers, Rui Dai, Hao Liang, Lilian Ng Nov 2021

Socially Responsible Corporate Customers, Rui Dai, Hao Liang, Lilian Ng

Research Collection Lee Kong Chian School Of Business

Corporate customers are an important stakeholder in global supply chains. We employ several unique international databases to test whether socially responsible corporate customers can infuse similar socially responsible business behavior in suppliers. Our findings suggest a unilateral effect on corporate social responsibility (CSR) only from customers to suppliers, an evidence further supported by exogenous variation in customers’ close-call CSR proposals and by product scandals. Customers exert influence on suppliers’ CSR through positive assortative matching and their decision-making process. Enhanced collaborative CSR efforts help improve operational efficiency and firm valuation of both customers and suppliers but increase only the customers’ future …

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Local Political Corruption And M&As, Chun Liu, Yang Chen, Shanmin Li, Liang Sun, Mengjie Yang Oct 2021

Local Political Corruption And M&As, Chun Liu, Yang Chen, Shanmin Li, Liang Sun, Mengjie Yang

Research Collection School Of Accountancy

We examine the relation between local political corruption and firms' cross-province M&As using provincial-level data on corruption in China. The results show that firms in more corrupt regions are less likely to engage in cross-province M&As. Further analyses reveal that the effects of local corruption on the probability of cross-province M&As are stronger when corrupt officers have greater impeding benefits or lower impeding costs. Meanwhile, Both ex-ante intervention and ex post punishment are important channels through which corrupt officers hinder firms' cross province M&As. Moreover, informal institutions, such as social capital and informal networks can help to alleviate the negative …

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What Are The Four Traits Of Digitally Mature Organizations?, Clarence Goh, Gary Pan, Poh Sun Seow, Yuanto Kusnadi, Gek Choo Shirlena Tan Oct 2021

What Are The Four Traits Of Digitally Mature Organizations?, Clarence Goh, Gary Pan, Poh Sun Seow, Yuanto Kusnadi, Gek Choo Shirlena Tan

Research Collection School Of Accountancy

A study conducted by Deloitte Southeast Asia and the Singapore Management University said there are four traits that could identify digitally mature organisations based on how they manage the governance, risk, and compliance aspects of digital transformation.

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The Profitability Of Warrant Issuers: An Empirical Investigation Of Single Stock And Index Warrants, Ichaya Wongnapakarn, Arnat Leemakdej, Chiyachantana N. Chiraphol, Pattarawan Prasarnphanich, Eakapat Manitkajornkit Oct 2021

The Profitability Of Warrant Issuers: An Empirical Investigation Of Single Stock And Index Warrants, Ichaya Wongnapakarn, Arnat Leemakdej, Chiyachantana N. Chiraphol, Pattarawan Prasarnphanich, Eakapat Manitkajornkit

Research Collection Lee Kong Chian School Of Business

This study examines the derivative warrant's profit of issuers compensated with the risk from issuing call and put derivative warrants because they have commitments in risk management and managing risk by hedging the underlying exposure. The average profit of issuers is a cumulative profit from the first trading day until the last trading day. Consistent with the imperfect competition for issuing put derivative warrants on single stock from different securities borrowing and lending advantages, the profit margin of a put warrant is higher than the call warrant. However, the profit margin from a put warrant is not necessarily higher than …

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Board Composition, Board Diversity And Stock Performance, Chiyachantana N. Chiraphol, Siripen Pattanawihok, Pattarawan Prrasarnphanich Oct 2021

Board Composition, Board Diversity And Stock Performance, Chiyachantana N. Chiraphol, Siripen Pattanawihok, Pattarawan Prrasarnphanich

Research Collection Lee Kong Chian School Of Business

The study investigates the relationship between six board compositions and stock returns. The results indicate a significant association between various board compositions and stock returns. Specifically, board size and executive directors have a negative impact, whereas independent directors enhance stock returns. Busy directors positively impact the abnormal stock returns for the companies in the non-financial industry, which implies that busy directors who serve on more boards tend to be well connected. More importantly, the results indicate a significant positive relationship between board tenure and stock returns. Board service time is perceived as the board quality of knowledge and experience from …

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Trust In Fair Value Accounting: Evidence From The Field, Clarence Goh, Chu Yeong Lim, Jeffery Ng, Gary Pan, Kevin Ow Yong Sep 2021

Trust In Fair Value Accounting: Evidence From The Field, Clarence Goh, Chu Yeong Lim, Jeffery Ng, Gary Pan, Kevin Ow Yong

Research Collection School Of Accountancy

We survey stakeholders in the financial reporting process to examine trust in fair value accounting. Although respondents demonstrate high confidence in financial statements, they believe that fair value accounting decreases trust in financial reporting and that preparing fair value numbers is costly but beneficial. They also strongly believe in the Conceptual Framework underlying standard setting. Using multivariate regression analyses, we find that perceiving fair value accounting as beneficial is positively associated with trust in it, consistent with the theory of reasoned action that people engage in behavior (e.g., trust) based on expected positive outcomes of that behavior. We find that …

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Inside Brokers, Frank Weikai Li, Abhiroop Mukherjee, Rik Sen Sep 2021

Inside Brokers, Frank Weikai Li, Abhiroop Mukherjee, Rik Sen

Research Collection Lee Kong Chian School Of Business

We identify the broker each corporate insider trades through, and find that analysts and mutual fund managers affiliated with such “inside brokers” have a substantial information advantage on the insider’s firm. Affiliated analysts issue more accurate earnings forecasts, and affiliated mutual funds trade the insider’s stock more profitably than their peers, following insider trades through their brokerage. Notably, this advantage persists well after these insider trades are publicly disclosed. Our results challenge the prevalent perception that information asymmetry arising from insider trading is acute only before trade disclosure, and suggest that brokers facilitating these trades are in a position to …

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Public Audit Oversight And The Originate-To-Distribute Model, Daniel Aobdia, Yiwei Dou, Jungbae Kim Aug 2021

Public Audit Oversight And The Originate-To-Distribute Model, Daniel Aobdia, Yiwei Dou, Jungbae Kim

Research Collection School Of Accountancy

The originate-to-distribute (OTD) model, in which the originators of mortgages sell or securitize the mortgages to third parties, likely contributed to the 2008 financial crisis. Auditors were blamed for permitting clients to understate the risks of the model in their financial reports, fostering undisciplined lending. We investigate whether public audit oversight influences OTD lending by promoting more vigilant audits of the financial reports of originators. Using a difference-in-differences design prior to the financial crisis, we find reduced OTD lending by banks after the Public Company Accounting Oversight Board (PCAOB) criticizes their auditors’ audits of financial reports regarding OTD transactions. The …

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Managerial Liability And Corporate Innovation: Evidence From A Legal Shock, Yuguan Guan, Liandong Zhang, Liu Zheng, Hong Zou Aug 2021

Managerial Liability And Corporate Innovation: Evidence From A Legal Shock, Yuguan Guan, Liandong Zhang, Liu Zheng, Hong Zou

Research Collection School Of Accountancy

Despite a longstanding debate over the pros and cons of imposing legal liability on directors and officers (D&Os), there is limited evidence on how D&O liability affects corporate innovation. We study this question by exploiting Nevada's 2001 corporate law change that dramatically lowered D&O legal liability and helped Nevada become the second most popular state for out-of-state incorporations. We find that firms incorporated in Nevada exhibit an increase in innovation outputs relative to matched control firms after the law change, particularly firms facing higher litigation risk or operating in more innovative industries. The results are driven mainly by exchange-listed firms …

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The Impact Of Ceo/Cfo Outside Directorships On Auditor Selection And Audit Quality, Jaeyoon Yu, Byungjin Kwak, Myung Seok Park, Yoonseok Zang Aug 2021

The Impact Of Ceo/Cfo Outside Directorships On Auditor Selection And Audit Quality, Jaeyoon Yu, Byungjin Kwak, Myung Seok Park, Yoonseok Zang

Research Collection School Of Accountancy

We examine whether outside directorships of chief executive officer/chief financial officer (CEO/CFO) and resulting network ties to auditors affect auditor selection decisions and subsequent audit quality. The network ties arise when the CEO/CFO of a firm (home firm) serves as an outside director of another firm that hires an auditor (connected auditor). Using a sample of firms that switch auditors in the post-Sarbanes-Oxley Act period, we find that home firms are more likely to appoint connected auditors. We also find that home firms hiring connected auditors experience a significant decline in subsequent audit quality, compared to those hiring …

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Terrorist Attacks, Managerial Sentiment, And Corporate Disclosures, Wen Chen, Haibin Wu, Liandong Zhang Jul 2021

Terrorist Attacks, Managerial Sentiment, And Corporate Disclosures, Wen Chen, Haibin Wu, Liandong Zhang

Research Collection School Of Accountancy

This study investigates the effect of managerial sentiment on corporate disclosure decisions. Using terrorist attacks in the United States as adverse shocks to managerial sentiment, we find that firms located in the metropolitan areas attacked issue more negatively biased earnings forecasts. The effect is stronger for firms with higher operating uncertainty and firms with younger, inexperienced, or less confident executives and it is weaker for firms located in states with increasing violent crime rates. A potential alternative explanation is that managers could strategically bias earnings forecasts downward and attribute the poor performance to terrorist attacks. To address this issue, we …

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