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Articles 61 - 78 of 78
Full-Text Articles in Finance and Financial Management
The Party's Over: The Role Of Earnings Guidance In Resolving Sentiment-Driven Overvaluation, Nicholas Seybert, Holly I. Yang
The Party's Over: The Role Of Earnings Guidance In Resolving Sentiment-Driven Overvaluation, Nicholas Seybert, Holly I. Yang
Research Collection School Of Accountancy
This paper shows that an important link between investor sentiment and firm over valuation is optimistic earnings expectations, and that management earnings guidance helps resolve sentiment-driven overvaluation. Using previously identified firm characteristics, we find that most of the negative returns to uncertain firms in months following high-sentiment periods fall within the three-day window around the issuance of management earnings guidance. Comparisons of guidance months to nonguidance months show that guidance issuance affects the magnitude and not just the daily distribution of negative returns. There is also some evidence of negative returns around earnings announcements for firms that previously issued guidance, …
Effects Of National Culture On Earnings Quality Of Banks, Chee Yeow Lim, Kanagaretnam Kiridaran, Gerald J. Lobo
Effects Of National Culture On Earnings Quality Of Banks, Chee Yeow Lim, Kanagaretnam Kiridaran, Gerald J. Lobo
Research Collection School Of Accountancy
We examine the relation between four dimensions of national culture and earnings quality of banks using a sample of banks from 39 countries. Our main analysis, which focuses on the pre-financial crisis period 1993–2006, indicates that banks in high individualism, high masculinity, and low uncertainty avoidance societies manage earnings to just-meet-or-beat the prior year's earnings. In tests of income smoothing through loan loss provisions, we find that banks in high individualism, high power distance, and low uncertainty avoidance societies report smoother earnings. Our exploratory analysis of the effects of national culture on accounting outcomes during the financial crisis period 2007–2008 …
Equity Incentives And Earnings Management: Evidence From The Banking Industry, Qiang Cheng, Terry Warfield, Minlei Ye
Equity Incentives And Earnings Management: Evidence From The Banking Industry, Qiang Cheng, Terry Warfield, Minlei Ye
Research Collection School Of Accountancy
We examine the relationship between equity incentives and earnings management in the banking industry. By focusing on this regulated industry and using industry-specific earnings management proxies, we provide evidence on the impact of regulation on earnings management arising from chief executive officers' equity incentives. We find that bank managers with high equity incentives are more likely to manage earnings, but only when capital ratios are closer to the minimums required by regulators. This finding indicates that, in the banking industry, potential regulatory intervention induces, rather than mitigates, earnings management arising from equity incentives.
Corporate Governance And Mindfulness: The Impact Of Management Accounting Systems Change, John Joseph Williams, Alfred E. Seaman
Corporate Governance And Mindfulness: The Impact Of Management Accounting Systems Change, John Joseph Williams, Alfred E. Seaman
Research Collection School Of Accountancy
The International Federation of Accountants (2009) argues that a governance structure should go beyond conformance with regulations and equally support a performance dimension that can lead to better outcomes. This paper explores the relationship between these two governance dimensions and the capacity for mindfulness, utilizing organizational theory that describes high reliability organizations. Survey data was obtained from top-level accounting professionals in a sample of 124 Canadian firms. Regression results support the hypothesis that both the conformance and performance dimensions of governance are significant determinants of the capacity for mindfulness. Additional analysis shows that the explanatory power of this relationship persists …
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 …
Tunneling As An Incentive For Earnings Management During The Ipo Process In China, Jiwei Wang, Joseph Aharony, Hongqi Yuan
Tunneling As An Incentive For Earnings Management During The Ipo Process In China, Jiwei Wang, Joseph Aharony, Hongqi Yuan
Research Collection School Of Accountancy
Using a sample of 185 Chinese IPO firms listed on the Shanghai Stock Exchange during the period 1999-2001, we show that related-party (RP) sales of goods and services could be used opportunistically to manage earnings upwards in the pre-IPO period. We also provide evidence that such behavior may be motivated by the prospect of tunneling opportunities in the post-IPO period, i.e., exploiting economic resources from minority shareholders for the benefit of the parent company. We provide evidence of one such opportunistic tunneling tool: non-repayment by Chinese parent companies of net outstanding corporate loans made to them by their newly listed …
Effects Of International Institutional Factors On Earnings Quality Of Banks, Chee Yeow Lim, Gerald Lobo, Kanagaretnam Kiridaran
Effects Of International Institutional Factors On Earnings Quality Of Banks, Chee Yeow Lim, Gerald Lobo, Kanagaretnam Kiridaran
Research Collection School Of Accountancy
No abstract provided.
International Evidence On Analyst Monitoring And Earnings Management: The Roles Of Corporate Disclosure And National Culture, Soongsoo Han, Tony Kang, Gerald Lobo, Yong Keun Yoo
International Evidence On Analyst Monitoring And Earnings Management: The Roles Of Corporate Disclosure And National Culture, Soongsoo Han, Tony Kang, Gerald Lobo, Yong Keun Yoo
Research Collection School Of Accountancy
We examine country-level determinants of private information search incentives, and whether analysts’ role in constraining managers’ opportunistic earnings management varies across countries. In a sample of 31,312 firm-year observations originating from 30 countries, we document that: (1) analyst coverage is negatively (positively) related to the level of corporate disclosure (how secretive the national culture is); (2) the negative association between analyst coverage and earnings management is observed in stronger investor protection countries but not in weaker investor protection countries; and (3) analyst monitoring fails to mitigate culturedriven earnings manipulations in countries with more individualistic and uncertainty-tolerant cultures. Taken together, financial …
Discretionary Behavior With Respect To The Adoption Of Sfas 142 And The Behavior Of Security Prices, Yoonseok Zang
Discretionary Behavior With Respect To The Adoption Of Sfas 142 And The Behavior Of Security Prices, Yoonseok Zang
Research Collection School Of Accountancy
In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS 142, Goodwill and Other Intangible Assets, which takes a very different approach to how goodwill is accounted for subsequent to the initial recognition. The new statement requires that goodwill no longer be amortized, but instead requires a transitional goodwill impairment (initial impairment loss or IIL) test in the adoption fiscal year and an annual impairment test thereafter. Since SFAS 142 allows firms substantial judgment in the adoption year in determining the amount of impairment loss, this dissertation first examines management discretionary behavior in measuring the IIL. The result shows …
Value Discount Of Business Groups Surrounding The Asian Financial Crisis: Evidence From Korean Chaebols, James Jinho Chang, Young Jun Cho, Won Kang, Hyun-Han Shin
Value Discount Of Business Groups Surrounding The Asian Financial Crisis: Evidence From Korean Chaebols, James Jinho Chang, Young Jun Cho, Won Kang, Hyun-Han Shin
Research Collection School Of Accountancy
We examine the effect of business group membership on firm value in each pre-and postcrisis Korea. Consistent with prior studies, results show that group affiliated chaebol firms suffer value discount relative to non-chaebol firms in the precrisis period. However, we also find that chaebol firms experience an improvement in firm value relative to non-chaebol firms after the financial crisis. These findings imply that the value discount of business groups reported in prior studies is not an inevitable consequence of diversification, but can be alleviated or overcome by structural reforms in business practices or economic conditions.
The Change In Corporate Transparency Of Korean Firms After The Asian Financial Crisis: An Analysis Using Analysts' Forecast Data, Jinho Chang, Young Jun Cho, Hyun-Han Shin
The Change In Corporate Transparency Of Korean Firms After The Asian Financial Crisis: An Analysis Using Analysts' Forecast Data, Jinho Chang, Young Jun Cho, Hyun-Han Shin
Research Collection School Of Accountancy
Using analysts' forecast error and forecast dispersion of firms covered by the I/B/E/S database, this study examines the change in information asymmetry of Korean firms around the financial crisis of 1997. Results show that the information asymmetry of Korean firms is lower after the financial crisis than before, implying that corporate transparency did, in effect, improve with the change in business environment. In addition, this study finds that chaebol firms have higher information asymmetry than non-chaebol firm, and also that the corporate transparency improvement of chaebol firms is not higher than that of non-chaebol firms in the post-crisis period despite …
Exploring The Role That Forecast Surprise And Forecast Error Play In Determining Management Forecast Precision, Jong-Hag Choi, Linda Myers, Yoonseok Zang, David Ziebart
Exploring The Role That Forecast Surprise And Forecast Error Play In Determining Management Forecast Precision, Jong-Hag Choi, Linda Myers, Yoonseok Zang, David Ziebart
Research Collection School Of Accountancy
No abstract provided.
Comprehensive Income, Future Earnings, And Market Mispricing, Jong-Hag Choi, Somnath Das, Yoonseok Zang
Comprehensive Income, Future Earnings, And Market Mispricing, Jong-Hag Choi, Somnath Das, Yoonseok Zang
Research Collection School Of Accountancy
No abstract provided.
The Association Between Earnings Quality And Regulatory Report Opinions In The Accounting Industry, Tracey Chunqi Zhang, Katherine Gunny
The Association Between Earnings Quality And Regulatory Report Opinions In The Accounting Industry, Tracey Chunqi Zhang, Katherine Gunny
Research Collection School Of Accountancy
We compare the outcome of two different information systems – self regulation versus private sector regulation – in the accounting industry. Under the Sarbanes-Oxley Act, Public Company Accounting Oversight Board (PCAOB) inspections replaced American Institute of Certified Public Accountants (AICPA) peer reviews of auditors. Peer review opinions are useful with respect to decisions about hiring and firing of auditors (Hilary and Lennox, 2005); therefore, the question remains what are the benefits of incurring the cost to replace a selfregulatory system with a private regulatory agency. We examine the usefulness of these two information systems at distinguishing earnings quality at firms …
Loss Function Asymmetry And Forecast Optimality: Evidence From Individual Analysts' Forecasts, Stanimir Markov, Min Yen Tan
Loss Function Asymmetry And Forecast Optimality: Evidence From Individual Analysts' Forecasts, Stanimir Markov, Min Yen Tan
Research Collection School Of Accountancy
We examine the optimality of quarterly earning forecasts issued by individual analysts. When we conduct Ordinary Least Squares (OLS) and Least Absolute Deviations (LAD) analyses, which assume loss function symmetry, we reject the null of forecast optimality at 5% significance level more than 5% of the time. Relaxing the symmetry assumption reduces the frequency of rejections below 5%. We demonstrate that the cross-sectional variation in the asymmetry parameter of the loss function is related to analyst employment. Overall, our evidence is consistent with the joint hypothesis of asymmetric loss and forecast optimality rather than the alternative of symmetric loss and …
Empirical Evidence On Jurisdictions That Adopt Ifrs, Ole-Kristian Hope, Justin Jin, Tony Kang
Empirical Evidence On Jurisdictions That Adopt Ifrs, Ole-Kristian Hope, Justin Jin, Tony Kang
Research Collection School Of Accountancy
International Financial Reporting Standards (IFRS) have recently been adopted in a number of jurisdictions, including the European Union. Despite the importance of IFRS in the context of global accounting standards harmonization, little is known regarding what institutional factors influence countries' decisions to voluntarily adopt IFRS. This issue is relevant to standard-setters because a better understanding of the motivations for adoption will enable them to promote IFRS more effectively to countries that currently do not employ IFRS. Consistent with bonding theory, we find that countries with weaker investor protection mechanisms are more likely to adopt IFRS. Our evidence also shows that …
Separating The Effects Of Asymmetric Incentives And Inefficient Use Of Information On Financial Analysts' Consensus Earnings Forecast Errors, Stanimir Markov, Min Yen Tan
Separating The Effects Of Asymmetric Incentives And Inefficient Use Of Information On Financial Analysts' Consensus Earnings Forecast Errors, Stanimir Markov, Min Yen Tan
Research Collection School Of Accountancy
Prior research on financial analysts’ consensus earnings forecast errors has tended to explore either incentives-based or inefficient information use-based explanations for the properties of the analysts’ forecast errors. This has limited our understanding of financial analysts’ expectation formation process as incentives and cognitive biases are likely to simultaneously affect the properties of the analysts’ consensus forecast errors. Our main contribution is in separating these two effects. In particular, using consensus quarterly earnings forecast data, we document that analysts have asymmetric loss function and that they do not fully use information about past earnings and forecast errors in minimizing their expected …
The Effects Of Sfas 131 Geographic Segment Disclosures On The Valuation Of Foreign Earnings, Ole-Kristian Hope, Tony Kang, Wayne Thomas, Florin Vasvari
The Effects Of Sfas 131 Geographic Segment Disclosures On The Valuation Of Foreign Earnings, Ole-Kristian Hope, Tony Kang, Wayne Thomas, Florin Vasvari
Research Collection School Of Accountancy
Foreign operations are becoming increasingly important for U.S. companies. We investigate whether the market’s valuation of foreign earnings is a function of the firm’s geographic segment disclosures. Specifically, we examine the effects of an increase in the number of geographic segments disclosed and the inclusion of earnings measures in geographic segment disclosures following the adoption of SFAS 131. We find strong evidence that our proxies for increased disclosure are positively associated with the valuation of foreign earnings. Our results are robust to a number of sensitivity analyses. Taken together, our results suggest that the pricing of foreign earnings is associated …