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Articles 541 - 570 of 665
Full-Text Articles in Corporate Finance
Corporate Valuation Around The World: The Effects Of Governance, Growth, And Openness, Choong Tze Chua, Cheol S. Eun, Sandy Lai
Corporate Valuation Around The World: The Effects Of Governance, Growth, And Openness, Choong Tze Chua, Cheol S. Eun, Sandy Lai
Research Collection Lee Kong Chian School Of Business
The purpose of this paper is to provide a comprehensive analysis of corporate valuation around the world. Specifically, we (i) document and compare corporate valuation around the world, and (ii) identify the key factors that drive cross-country differences in valuation. In doing so, we utilize the country-level Tobin's q (CTQ), computed as the ratio of the aggregate market value to book value of all assets held by all public firms domiciled in a country, which amounts to the Tobin's q for the [`]market portfolio' of the country. The key findings of the paper are: First, CTQ varies greatly across countries, …
Audit Fees: To Disclose Or Not To Disclose?, Teng Aun Khoo, Soo Chiat Hwang
Audit Fees: To Disclose Or Not To Disclose?, Teng Aun Khoo, Soo Chiat Hwang
Research Collection School Of Accountancy
The authors argue that the disclosure of audit fees can provide a more level playing field in Singapore, and would also be consistent with the other major capital markets in the world. Auditors' independence is the cornerstone of the auditing profession, because without auditor's independence investors would not be able to rely on the so-called "audited" financial statements. Currently in Singapore, audit-fee disclosure is not mandatory except for banks as stipulated by the Monetary Authority of Singapore (MAS).
The Roles That Forecast Surprise And Forecast Error Play In Determining Management Forecast Precision, Jong-Hag Choi, Linda A. Myers, Yoonseok Zang, David A. Ziebart
The Roles That Forecast Surprise And Forecast Error Play In Determining Management Forecast Precision, Jong-Hag Choi, Linda A. Myers, Yoonseok Zang, David A. Ziebart
Research Collection School Of Accountancy
Studying the determinants of management forecast precision is important because a better understanding of the factors affecting management’s choice of forecast precision can provide investors and other users with cues about the characteristics of the information contained in the forecasts. In addition, as regulators assess the regulation of voluntary management disclosures, they need to better understand how managers choose among forecast precision disclosure alternatives. Using 16,872 management earnings forecasts collected from 1995 through 2004, we provide strong evidence that forecast precision is negatively associated with the magnitude of the forecast surprise and that this negative association is stronger when the …
Corporate Philanthropic Giving, Advertising Intensity, And Industry Competition Level, Ran Zhang, Jigao Zhu, Heng Yue, Chunyan Zhu
Corporate Philanthropic Giving, Advertising Intensity, And Industry Competition Level, Ran Zhang, Jigao Zhu, Heng Yue, Chunyan Zhu
Research Collection School Of Accountancy
This article examines whether the likelihoodand amount of firm charitable giving in response tocatastrophic events are related to firm advertising intensity,and whether industry competition level moderatesthis relationship. Using data on Chinese firms’ philanthropicresponse to the 2008 Sichuan earthquake, we findthat firm advertising intensity is positively associated withboth the probability and the amount of corporate giving.The results also indicate that this positive advertisingintensity-philanthropic giving relationship is stronger incompetitive industries, and firms in competitive industriesare more likely to donate. This study thus provides evidencesuggesting that even in the wake of catastrophicevents, corporate philanthropic giving is strategic.
Direct And Indirect Effects Of Internal Control Weakness And External Audit Effort On Accruals Quality: Evidence From A Unique Canadian Regulatory Setting, Hai Lu, Gordon D Richardson, Steven Salterio
Direct And Indirect Effects Of Internal Control Weakness And External Audit Effort On Accruals Quality: Evidence From A Unique Canadian Regulatory Setting, Hai Lu, Gordon D Richardson, Steven Salterio
Research Collection School Of Accountancy
Public disclosure about effectiveness of internal control systems is subject to much controversy in Canada, resulting in Canadian disclosures being made in Management Discussion and Analysis (MD&A). These disclosures are provided to investors without a definition of the weaknesses to be reported, without implementation effectiveness testing, no direct management certification and no external audit of such disclosures. Though the cost of such SOX North disclosures are lower than in the U.S setting, the credibility of these disclosures is far from assured, posing an important empirical issue for regulators interested in the cost versus benefit trade-off of various disclosure regimes. We …
Do Shareholders Or Stakeholders Appropriate The Rents From Corporate Diversification? The Influence Of Ownership Structure, Parthiban David, Jonathan P. O'Brien, Toru Yoshikawa, Andrew Delios
Do Shareholders Or Stakeholders Appropriate The Rents From Corporate Diversification? The Influence Of Ownership Structure, Parthiban David, Jonathan P. O'Brien, Toru Yoshikawa, Andrew Delios
Research Collection Lee Kong Chian School Of Business
Prior work on the performance consequences of corporate diversification has treated all powerful owners as seeking the same benefits from diversification (i.e, higher profit rather than growth) and therefore limiting value appropriation by other stakeholders such as employees and managers. In contrast, we distinguish between domestic "relational" owners and foreign "transactional" owners in Japanese corporations. Although transactional owners do indeed prioritize profitability when diversifying, relational owners primarily seek growth rather than profits from diversification. Furthermore, relational owners also allow managers and employees to appropriate more of the rents arising from diversification than do transactional owners.
Audit Office Size, Audit Quality And Audit Pricing, Jong-Hag Choi, Francis Kim, Jeong-Bon Kim, Yoonseok Zang
Audit Office Size, Audit Quality And Audit Pricing, Jong-Hag Choi, Francis Kim, Jeong-Bon Kim, Yoonseok Zang
Research Collection School Of Accountancy
Using a large sample of U.S. audit client firms over the period 2000-2005, this paper investigates whether and how the size of a local practice office within an audit firm (henceforth, office size) is a significant, engagement-specific factor determining audit quality and audit fees over and beyond audit firm size at the national level and auditor industry leadership at the city or office level. For our empirical tests, audit quality is measured by unsigned abnormal accruals, and the office size is measured in two different ways: one based on the number of audit clients in each office and the other …
On The Relationship Between Analyst Reports And Corporate Disclosures: Exploring The Roles Of Information Discovery And Interpretation, Xia Chen, Qiang Cheng, Kin Lo
On The Relationship Between Analyst Reports And Corporate Disclosures: Exploring The Roles Of Information Discovery And Interpretation, Xia Chen, Qiang Cheng, Kin Lo
Research Collection School Of Accountancy
We examine the relationship between analyst research and corporate earnings announcements to explore the relative importance of information discovery versus interpretation of previously released information. Using equity market reaction to capture information content, we find that information discovery (interpretation) dominates in the week before (after) firms announce their earnings. In addition, we find that the interpretation role increases in importance with the difficulty of financial accounting information. Analysis of all weeks surrounding earnings announcements shows that the information discovery role is overall more important. We are able to reconcile this result with the opposite finding in Francis et al. (2002).
The Pricing Of Conservative Accounting And The Measurement Of Conservatism At The Firm-Year Level, Dan Segal, Jeffrey L. Callen, Ole-Kristian Hope
The Pricing Of Conservative Accounting And The Measurement Of Conservatism At The Firm-Year Level, Dan Segal, Jeffrey L. Callen, Ole-Kristian Hope
Research Collection School Of Accountancy
This paper analyzes the relation between equity prices and conditional conservatism and introduces a new measure of conservatism at the firm-year level. We show that the asymmetric properties of conservative accounting, the existence of non-accounting sources of information, and the properties of GAAP related to special items combine to generate a nonlinear relation between unexpected equity returns and earnings news (the shock to expected current and future earnings). Based on this model, we construct a conservatism ratio (CR) defined as the ratio of the current earnings shock to earnings news. CR measures the proportion of the total shock to expected …
Corporate Governance, Investor Protection, And Auditor Choice In Emerging Markets, Mahmud Hossain, Chee Yeow Lim, Patricia Mui Siang Tan
Corporate Governance, Investor Protection, And Auditor Choice In Emerging Markets, Mahmud Hossain, Chee Yeow Lim, Patricia Mui Siang Tan
Research Collection School Of Accountancy
In this study, we examine the effect of firm-level governance on the firm's choice of an external auditor. Further, we test how the relation between corporate governance and auditor choice may be affected by the strength of legal environment. The results show that firm-level governance scores are positively related to the firm's auditor choice. This association is strengthened by country-level legal protection. Specifically, the positive association between auditor choice and the firm-level governance scores is weaker (stronger) in a low (high) legal environment. These findings are robust after controlling for determinants that were found to be significant in earlier research. …
Overinvestment And The Operating Performance Of Seo Firms, Fangjian Fu
Overinvestment And The Operating Performance Of Seo Firms, Fangjian Fu
Research Collection Lee Kong Chian School Of Business
Prior studies have documented that firms' operating performance deteriorates following seasoned equity offerings (SEOs). This paper proposes and empirically tests the hypothesis that the poor performance is caused by managers' overinvestment. I show that, subsequent to the offering, SEO firms tend to invest more heavily than non-issuing control firms that are in the same industry and have enough financial slack and similar amounts of investment opportunities. More importantly, I find a negative relation between post-issue investment and operating performance, controlling for investment opportunities and pre-issue performance. The evidence supports an overinvestment interpretation as it stands in contrast to the prediction …
Why "Democracy" And "Drifter" Firms Can Have Abnormal Returns: The Joint Importance Of Corporate Governance And Abnormal Accruals In Separating Winners From Losers, Koon Boon Kee
Dissertations and Theses Collection (Open Access)
Do managers exercise accounting discretion in an opportunistic or efficient manner? Good governance structures, which mitigate agency costs, are necessary to ensure that the accounting information supplied by management is not opportunistically manipulated. The output of quality accounting information, in turn, serves as an input to better governance structures. Thus, governance and earnings quality (EQ) are inexorably linked through a complementarity relationship. This suggests two previously unexamined relationships. Firstly, the governance effects on performance in the influential paper by Gompers, Ishii and Metrick (2003) is overrated without good EQ, measured by the magnitude of abnormal accruals (AA), as an input. …
Why Does Corporate Governance Matter? Evidence From Seasoned Bond Offerings, Fang Wang
Why Does Corporate Governance Matter? Evidence From Seasoned Bond Offerings, Fang Wang
Dissertations and Theses Collection (Open Access)
To examine the importance of corporate governance, I look at how management and investors behave in the event of seasoned bond offerings, controlling for the corporate governance structure of issuing firms. I find that companies with the weakest governance structure aggressively manipulate their earnings upwards during the two years prior to the debt issuances. And when the bond offerings are announced to the market, these same firms experienced positive abnormal returns over a three day event period, indicating that investors of poorly governed firms value a debt financing for the alleged decrease in agency cost.
Does Corporate Governance Matter, Evidence From Earnings Management Practices In Singapore, Lingxu Hu
Does Corporate Governance Matter, Evidence From Earnings Management Practices In Singapore, Lingxu Hu
Dissertations and Theses Collection (Open Access)
This paper addresses two questions. First, do good corporate governance practices add values to company or does it lead to higher stock returns in Singapore? Second, does poorly governed listed company in SGX tend to manage their earnings by using discretionary accruals? Following the approach of Gompers et al. (2003), we formed two portfolios consisting of well-governed and poorly governed companies. Well governed companies are able to maintain a higher return relative to poorly governed companies. I also look at the firm valuation from the adoption of corporate governance practices. Our result shows a positive relationship between firm valuation and …
Moral Hazard, Firms’ Internal Governance And Management Earnings Forecasts, Jimmy Lee
Moral Hazard, Firms’ Internal Governance And Management Earnings Forecasts, Jimmy Lee
Research Collection School Of Accountancy
This paper investigates the role of management earnings forecasts in mitigating information asymmetry between investors andmanagers relating to moral hazard, and explains how earnings guidance facilitates monitoring. I demonstrate that firms that are more susceptible to moral hazard problems and more difficult to monitor are also more likely to issue annual earningsforecasts and they do so more frequently. In addition, I examine how firm internal governance drives forecasting decisions andshow that stronger board governance and managerial equity incentives are associated with higher likelihood and frequency of forecast issuance. Finally, I provide robust evidence that managerial equity incentives are associated with …
Corporate Governance And Earnings Management Before Share Repurchase Announcements In Singapore, Jian Ming Chua
Corporate Governance And Earnings Management Before Share Repurchase Announcements In Singapore, Jian Ming Chua
Dissertations and Theses Collection (Open Access)
Share repurchase in Singapore was legalized in 1998. It is well known that investors view share repurchase as good news. This study is based on share repurchase announcements from 2006 to 2009. The mean Cumulative Market-Adjusted Returns (CAR) for the period [0, +1] and [-1, +1] are significant at 1.25% and 1.33% respectively. In Singapore, there are positive abnormal returns following share repurchase announcements in support of the ―free cash flow‖ hypothesis. By using the Singapore Corporate Governance Index as a proxy, the weakly governed companies exhibit the strongest, positive and significant CAR of 2.62% for the period [0, +1]. …
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., …
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 …
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.
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 …
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.
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 …
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.
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 …
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 …
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 …
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 …
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 …