Finance and Financial Management Commons^™

Stakeholder Orientation And Operations Outcomes: Evidence From Constituency Statutes., Karca Aral, Erasmo Giambona, Luk N. Van Wassenhove

The Lender Center for Social Justice

Analyzes how legal changes promoting stakeholder orientation affect firm operations and outcomes, bridging law, governance, and operations management.

The Effect Of Investor Sentiment On Earnings Management, Lin Chen

Finance and Real Estate Dissertations - Archive

The association between investor sentiment and corporate reporting decisions/outcomes has been recently examined in the accounting and finance literature. As an important outcome of corporate reporting decisions, earnings management (EM) may be affected by investor sentiment. In this dissertation, I examine two research questions. The first is whether investor sentiment is associated with the propensity of firms’ engaging in the two primary forms of EM: accrual earnings management (AEM) and real earnings management (REM). The second question is whether firms’ internal governance strength and external audit quality would moderate the association between investor sentiment and AEM as well as REM. …

An Analysis Of The Effects Of Foreign Ownership On The Level Of Tax Avoidance Across Philippine Publicly Listed Firms, Ailyn A. Shi, Francis R. Concepcion, Cheri Mae R. Laguinday, Trisha Amber T. Ong Hian Huy, Angelo A. Unite

DLSU Business & Economics Review

Tax avoidance schemes used by firms to lessen their tax burden have long attracted widespread concern in the Philippines, where poor tax collection due to tax leakages has contributed to chronic fiscal deficits in the country. In this regard, corporate governance mechanisms, such as the firm’s ownership structure, play a significant role in ensuring that management acts ethically and in the best interest of the firm’s owners. In this study, we examine the effect of foreign ownership on corporate tax avoidance for non-financial firms listed in the Philippine Stock Exchange (PSE) from 2009 to 2015. Using three different measures of …

Corporate Governance: Of Misses, Awareness And Improvements, Havovi Heerjee Joshi

Asian Management Insights

Have a more robust and effective corporate governance framework that includes a focus on environmental sustainability and social impact.

The Global Sustainability Footprint Of Sovereign Wealth Funds, Hao Liang, Luc Renneboog

Research Collection Lee Kong Chian School Of Business

With the emergence of sovereign wealth funds (SWFs) around the world managing equity of over $8 trillion, their impact on the corporate landscape and social welfare is being scrutinized. This study investigates whether and how SWFs incorporate environmental, social, and governance (ESG) considerations in their investment decisions in publicly listed corporations, as well as the subsequent evolution of target firms' ESG performance. We find that SWF funds do consider the level of past ESG performance as well as recent ESG score improvement when taking ownership stakes in listed companies. These results are driven by the SWF funds that do have …

The Role Of Mutual Funds In Corporate Social Responsibility, Zhichuan Li, Saurin Patel, Srikanth Ramani

Business Publications

This paper examines the role of mutual funds in corporate social responsibility (CSR). Using a fund-level, holdings-based CSR score, we find that CSR-friendly mutual funds improve firms’ CSR standings. This effect is more pronounced for firms with higher mutual fund ownership and stronger corporate governance. We further show that while CSR-friendly mutual funds have influence on almost all CSR categories, they focus on increasing CSR strengths rather than reducing CSR concerns. We also discover that CSR-friendly funds are more likely to vote in favor of CSR proposals, and that firms owned by CSR-friendly funds are more likely to link their …

Tepoel Lecture: Bond Trustees And The Rising Challenge Of Activist Investors, Steven L. Schwarcz

Faculty Scholarship

No abstract provided.

Armor Holdings Inc.: An Application Of The Foreign Corrupt Practices Act, Fatima Alali, Silvia Romero

Department of Accounting and Finance Faculty Scholarship and Creative Works

The U.S. Foreign Corrupt Practices Act (FCPA) has gained significant popularity in recent years across borders due to the increased investigation and penalties under the law. The following case is a real-life case that highlights the main provisions of the FCPA. Using cases in teaching an auditing or ethics course is much needed to develop students’ professional judgment, critical and analytical thinking skills and communication skills. Presently, there are a few cases that address the Foreign Corrupt Practices Act and its effect on financial reporting and auditor responsibilities about illegal acts. The Armor Holdings case is interesting and information is …

Managerial Entrenchment And Financial Reporting Comparability, Qifeng Wu

Open Access Theses & Dissertations

This study examines whether managerial entrenchment has an association with firms' financial statement comparability. I find that managerial entrenchment has a significant negative association with financial statement comparability, providing a new notion about the management influence on financial reporting quality. Moreover, by using the business segment as a proxy for business complexity, I find that the variation of accounting comparability with its peer firms mainly stems from managers' investment choice. This finding supports FASB's assertion that financial statement comparability is a reporting quality that should be enhanced among firms with similar economic events. Lastly, I test if managerial entrenchment mitigates …

Corporate Social Responsibility And Investment Efficiency: Evidence From An Emerging Asian Market, Ming-Te Lee

DLSU Business & Economics Review

The purpose of this paper is to test opposing views of the relationship between corporate social responsibility (CSR) and investment efficiency in a major Asian emerging stock market. The empirical results show that CSR significantly mitigates investment inefficiency among Taiwanese firms. This finding is consistent with the notion that socially responsible Taiwanese firms have fewer agency problems and lower information asymmetry, thus reducing investment inefficiency. The empirical results also show that CSR has a more pronounced effect in mitigating investment inefficiency for Taiwanese firms with more effective corporate governance. In particular, due to the mandatory preparation of CSR reporting, CSR …

Corporate Governance In The Banking Sector, Ishrat Husain Dr.

Faculty Research - Talks, Speeches, & Discourse

Corporate Governance for the banking sector should be viewed in the overall context of the Governance structure of a country. Therefore, to expect that ‘one shoe fits all’ model for all the South Asian Countries would be unrealistic. In countries where capital markets are edging out banking or non-banking financial institutions such as Microfinance banks are nibbling away the market share the standards and norms applicable to banks should be equally applied to other financial sector players. To stringent standards for the banks and too lax for shadow banking have brought grief in the past and would remain a recipe …

The Geography Of Csr, David K. Ding, Christo Ferreira, Udomsak Wongchoti

Research Collection Lee Kong Chian School Of Business

We regress socio-economic indicators against firm level CSR scores using a sample of over 26,000 firm year observations from 1991 through 2009. We find that a firm's CSR profile is linked to the socio-economic conditions of the firm's geographic headquarters (HQ) location. The study documents that the legal, cultural, economic, and demographic differences across geography significantly explain the variation in CSR means between metropolitan statistical areas, states, and regions. We also find that the relation between CSR and firm performance is conditional on socio-economic factors, which highlight the endogeneity concerns inherent in CSR studies. Lastly, we show that firms that …

Growth Options And Corporate Goodness, Linh Thompson

USF Tampa Graduate Theses and Dissertations

I find evidence to support the negative impact of growth options on corporate social responsibility (CSR). I propose that attention-constrained managers reduce corporate goodness to focus on growth opportunities. The effect is more pronounced for well-governed firms, for financially-constrained firms, and for capital-intensive social dimensions. Firms reduce their research and development (R&D) and capital expenditures, and experience lower annual buy-and-hold abnormal returns (BHAR) subsequent to significant increases in their social performance. I also report value implications of CSR investments. The empirical evidence suggests that managerial choices to divert attention from growth projects toward CSR hurt shareholders.

Corporate Governance Implementation In The Nigerian Banking Industry, David Nkata Bassey

Walden Dissertations and Doctoral Studies

The increasing level of fraud, the collapse of banks, and the loss of confidence in the Nigerian banking industry have been attributed to poor corporate governance. The problem of this study was effective implementation of corporate governance in Nigeria where multiple regulations are in place. The purpose of this qualitative single case study was to understand how corporate governance is implemented in the Nigerian banking industry in the face of a multiplicity of regulations. The research question investigated how Nigerian bank managers implement corporate governance regulations in the face of a multiplicity of regulations. The conceptual framework was grounded in …

Blockholder Characteristics And Earnings Quality, Aslihan G. Korkmaz, Qingzhong Ma, Haigang Zhou

Business Faculty Publications

This study focuses on the impact of blockholder characteristics on earnings quality. Most of the studies in
literature make the implicit assumption that blockholders are a homogeneous group. This study is one of
few studies that acknowledges the heterogeneity of blockholders and attempts to understand the
unexplained proportion of blockholder heterogeneity. Earnings quality is calculated using the modified
Dechow and Dichev (2002) model with fixed effects (FDD model) by Lee and Masulis (2009), and it is
regressed on various blockholder characteristics. The results show that earnings quality is lower for
firms with market-driven and multilateral blockholders.

Corporate Donations And Shareholder Value, Hao Liang, Luc Renneboog

Research Collection Lee Kong Chian School Of Business

Do corporate donations enhance shareholder wealth or reflect agency problems? We address this question for a global sample of firms whereby we distinguish between charitable and political donations, as well as between donations in cash and in kind. We find that charitable donations are positively related to financial performance and firm value, which is consistent with the value-enhancement hypothesis. This positive effect on firm value is stronger for cash than in-kind donations. In contrast, political donations do not appear to enhance shareholder value, but rather tend to reflect agency problems, as they are higher for firms with poor internal corporate …

Creating An Ethical Organizational Environment In Banking, Svenja Nitsche

Walden Dissertations and Doctoral Studies

An ethical organizational environment ensures a trustworthy organization. This case study explored strategies that banking managers in the United Arab Emirates used to create an ethical organizational environment, one that emphasized the inclusion of ethical values, moral principles, and commitment to society. The target population included senior managers who created and implemented strategies to ensure employees adopted the ethical values in pursuit of an ethical environment. Ethical climate theory provided the conceptual framework for this study. Interviews with 5 managers and company documentation contributed the data for this research. Data were analyzed following inductive investigation and case description. Connecting corporate …

Too Big To Fool: Moral Hazard, Bailouts, And Corporate Responsibility, Steven L. Schwarcz

Faculty Scholarship

Domestic and international regulatory efforts to prevent another financial crisis have been converging on the idea of trying to end the problem of “too big to fail”—that systemically important financial firms take excessive risks because they profit from success and are (or at least, expect to be) bailed out by government money to avoid failure. The legal solutions being advanced to control this morally hazardous behavior tend, however, to be inefficient, ineffective, or even dangerous—such as breaking up firms and limiting their size, which can reduce economies of scale and scope; or restricting central bank authority to bail out failing …

Controlling Systemic Risk Through Corporate Governance, Steven L. Schwarcz

Faculty Scholarship

Most of the regulatory measures to control excessive risk taking by systemically important firms are designed to reduce moral hazard and to align the interests of managers and investors. These measures may be flawed because they are based on questionable assumptions. Excessive corporate risk taking is, at its core, a corporate governance problem. Shareholder primacy requires managers to view the consequences of their firm’s risk taking only from the standpoint of the firm and its shareholders, ignoring harm to the public. In governing, managers of systemically important firms should also consider public harm. This proposal engages the long-standing debate whether …

Rethinking Corporate Governance For A Bondholder Financed, Systemically Risky World, Steven L. Schwarcz

Faculty Scholarship

This Article makes two arguments that, combined, demonstrate an important synergy: first, including bondholders in corporate governance could help to reduce systemic risk because bondholders are more risk averse than shareholders; second, corporate governance should include bondholders because bonds now dwarf equity as a source of corporate financing and bond prices are increasingly tied to firm performance.

Impact Of Corporate Governance On Capital Structure Of Pakistan, Irfan Haider Shakri

ECU Posters

Corporate Governance-CG is a mechanism that protects the interest of all stakeholders specially shareholders in a modern economic and corporate world that is responsible for economic growth of an economy. Capital structure is one of the weightiest decision that effects the performance of the firm. This study empirically finds how corporate governance practices impact the capital structure of the firm.

Drivers Behind The Monitoring Effectiveness Of Global Institutional Investors: Evidence From Earnings Management, Incheol Kim, Steve Miller, Hong Wan, Bin Wang

Finance Faculty Research and Publications

This paper studies the drivers behind the monitoring effectiveness of institutional investors in curbing earnings management in an international setting. We identify three distinct drivers and propose two competing hypotheses: the hometown advantage hypothesis predicts that because of proximity to monitoring information, domestic institutions have a comparative advantage over foreign institutions in deterring earnings management, whereas the global investor hypothesis predicts that foreign institutions have a comparative advantage because of their proclivity toward activism and ability to deploy superior monitoring technologies. Consistent with the hometown advantage hypothesis, in aggregate, domestic, but not foreign, institutional ownership is associated with less earnings …

Does It Pay To Be Different? Relative Csr And Its Impact On Firm Value, David K. Ding, Christo Ferreira, Udomsak Wongchoti

Research Collection Lee Kong Chian School Of Business

Conventional aggregation of Corporate Social Responsibility (CSR) raw scores and its interpreted impact on firm value have provided mixed evidence in the literature. We show that the value impact of CSR activities relies heavily on the industry-specific relative position of the firm. Only firms that distinguish themselves over their peers are associated with increased firm value. This finding is robust and holds for both responsible and irresponsible behaviors. Information concerns and portfolio construction can allude to a possible CSR clientele, suggesting the existence of an optimal CSR level. Our peer-effect results are robust to unobserved heterogeneity along the lines of …

Shareholder Advocacy In Corporate Elections: Case Studies In Proxy Voting Websites For Retail Investors, Robin Miller

Sustainability and Social Justice

One of the key rights shareholders retain is the right to vote on issues affecting the companies in which they invest. This voting right is seen as one of the primary means of exercising diligent corporate governance (Cole 2003, Fairfax 2009). Only 28 percent of individual investors vote in corporate elections compared with 91 percent of institutional investors. Informed voting decisions at corporate elections can be very information intensive, and theories of rational apathy and the free rider problem may explain a lack of participation from individual investors.

Many shareholders cannot attend annual corporate meetings, so they …

Misalignment: Corporate Risk-Taking And Public Duty, Steven L. Schwarcz

Faculty Scholarship

This article argues for a “public governance duty” to help manage excessive risk-taking by systemically important firms. Although governments worldwide, including the United States, have issued an array of regulations to attempt to curb that risk-taking by aligning managerial and investor interests, those regulations implicitly assume that investors would oppose excessively risky business ventures. That leaves a critical misalignment: because much of the harm from a systemically important firm’s failure would be externalized onto the public, including ordinary citizens impacted by an economic collapse, such a firm can engage in risk-taking ventures with positive expected value to its investors but …

The Role Of Corporate Governance In Preventing Bank Failures In Zimbabwe., Bernard Chidziva

Walden Dissertations and Doctoral Studies

The 2008-2009 global financial crisis resulting in some banks collapsing has raised questions about the corporate governance of financial institutions. Some bank managers lack an understanding of the role of corporate governance in preventing bank failures. In this multiple case study, data were collected through interviews and triangulated with annual reports to explore the strategies some bank managers need to improve their understanding of the role of corporate governance in preventing bank failures in Zimbabwe. The 7 study participants were purposefully recruited from a larger population of 19 bank managers responsible for corporate governance and compliance operating in Zimbabwe between …

Three Essays On Bailout Banks During 2007-2009 Financial Crisis, Daphne Shu Nu Wang

Theses and Dissertations - UTB/UTPA

In the wake of this financial crisis 2007-2009, the government injected approximately $604 billion into financial sector to increase liquidity and improve capital base for the bailout banks, which in order to restore market confidence and to prevent bank runs and possible contagion effects.

The main purpose of this dissertation is to assess the appropriateness and effects of the bailout program between 2008 and 2009. Chapter 1 introduces the causes and the effects of the recent financial crisis. Chapter 2 explains the bailout program-Capital Purchase Program (CPP) in details and discusses the sample section method used in this dissertation. There …

Institutional Change Versus Resilience: A Study Of An Incorporation Of Independent Directors In Singapore Banks, Lai Si Tsui-Auch, Toru Yoshikawa

Research Collection Lee Kong Chian School Of Business

We examine how Anglo-American capital market logic penetrated into Singapore where relational logic tends to guide business activities and illustrate how domestic banks reacted to this imported logic in the corporate governance field. We argue that the banks’ ability to accommodate competing logics was enhanced by state agencies’ willingness to modify Anglo-American standards to fit the local context. Given the resulting institutional ambiguities in rules, local banks, while incorporating higher outside representation on their boards, reinterpreted the meaning of independence and emphasized the resource provision role rather than the monitoring function of outside directors. The resultant institutional change has been …

Strategically Camouflaged Corporate Governance In Ipos: Entrepreneurial Masking And Impression Management, David F. Benson, James C. Brau, James Cicon, Stephen P. Ferris

Faculty Publications

Entrepreneurs attempt to persuade potential investors that their new ventures are both credible andworthy of funding. A long line of research on entrepreneurial impressionmanagement establishes that the ability to present their ventures in a favorable light is a key attribute of successful entrepreneurs. In this study, we examine the opposite side of the issue and test to determine if some entrepreneurs obscure corporate governance information.We create a newmetric tomeasure the level of camouflage used in governance documents for initial public offerings (IPOs). We find that entrepreneurs are less likely to use camouflage during periods of high scrutiny, as measured by …

Correlations Between Corporate Governance, Financial Performance, And Market Value, Mohamed Saleh Darweesh

Walden Dissertations and Doctoral Studies

Corporate governance can play a significant role in financial market stability and economic development. Corporate governance scholars have provided controversial results with respect to the relationships between corporate governance and both corporate financial performance and market value. Based on agency theory and institutional theory, the purpose of this correlational study was to investigate the relationship between corporate governance mechanisms, financial performance, and market value in Kingdom of Saudi Arabia's 116 firms from 2010 to 2014. Financial performance was measured by return on assets and return on equity, while market value was measured by Tobin's q. Corporate governance mechanisms involved in …