Author: Qiang WuPublisher:
ISBN: 9781124203607
Category :
Languages : en
Pages : 205
Book Description
Three Essays on Corporate Governance and Financial Disclosure
Author: Qiang WuPublisher:
ISBN: 9781124203607
Category :
Languages : en
Pages : 205
Book Description
Essays in Corporate Finance and Corporate Governance
Author: David De AngelisPublisher:
ISBN:
Category :
Languages : en
Pages : 192
Book Description
My dissertation contains three essays in corporate finance and corporate governance. The first essay studies the effect of information frictions across corporate hierarchies on internal capital allocation decisions, using the Sarbanes Oxley Act (SOX) as a quasi-natural experiment. SOX requires firms to enhance their internal controls to improve the reliability of financial reporting across corporate hierarchies. I find that after SOX, the capital allocation decision in conglomerates is more sensitive to performance as reported by the business segments. The effects are most pronounced when conglomerates are prone to information problems within the organization and least pronounced when they still suffer from internal control weaknesses after SOX. Moreover, conglomerates' productivity and market value relative to stand-alone firms increase after SOX. These results support the argument that inefficiencies in the capital allocation process are partly due to information frictions. My findings also shed light on some unintended effects of SOX on large and complex firms. The second essay is co-authored with Yaniv Grinstein and investigates how firms tie CEO compensation to performance. We take advantage of new compensation disclosure requirements issued by the Securities and Exchange Commission in 2006. Firms vary in their choice of performance measures and horizons, and in their reliance on pre-specified goals. Consistent with optimal contracting theories, we find that firms choose performance measures that are more informative of CEO actions, and rely less on pre-specified goals when it is more costly to contract on CEO actions. The third essay investigates the design of division managers (DMs) incentive contracts again taking advantage of the disclosure requirements. I find that firms do not use relative performance evaluation across divisions and that in general most of DM compensation incentives are associated with firm performance instead of division performance. Furthermore, division performance-based incentives tend to be smaller in complex firms, when within-organization conflicts are potentially more severe. I also find that when the probability of promotion to CEO is lower, DM ownership requirements are more stringent and DM compensation incentives are greater. These results support notions that influence costs as well as promotion-based incentives are important considerations in designing DMs contracts.
Three Essays on Privatization and Corporate Governance
Author: Wanrapee BanchuenvijitPublisher:
ISBN:
Category :
Languages : en
Pages : 270
Book Description
This dissertation seeks not only to extend the existing privatization literature but also to provide the association between privatization and corporate governance literatures. It is divided into three essays. The first essay examines changes in the financial and operating performance of 103 firms worldwide that were partially or fully privatized through public share offerings during 1993-2003. The empirical results from the Wilcoxon and proportion tests show increases in profitability, operating efficiency, capital spending, output, and dividend payments as well as decreases in leverage and total employment. A combined result of this essay and the three previous and comparable papers indicates that, for the whole period from 1961 to 2003, privatization helps improve firm performance in a wide variety of countries, industries, and competitive environments. The second essay investigates the impact of macro corporate governance mechanisms (anti-director rights index, enforcement index, and corporate disclosure index) on the subsequent performance of 103 privatized firms around the world during 1993-2003. After controlling for endogeneity, the empirical results exhibit that macro governance mechanisms are important determinants of firm performance following privatization in both developed and developing countries. Finally, the third essay studies how internal control mechanisms (board size, board composition, CEO duality, and financial expertise of boards) affect the subsequent performance of 103 privatized firms around the world during 1993-2003. After controlling for endogeneity, the empirical results demonstrate that internal governance mechanisms (with the concentration on the role of board of directors) are important determinants of firm performance following privatization in only developing countries.
Three Essays on Corporate Disclosure
Author: Elisabeth Pauline KläsPublisher:
ISBN:
Category : Capital market
Languages : en
Pages :
Book Description
Three Essays on Financial Information Disclosure
Author: Bo ZhangPublisher:
ISBN:
Category :
Languages : en
Pages : 129
Book Description
This thesis is comprised of three essays on informational issues that revolve around financial reporting, governance, and disclosure. The first essay focuses on how International Financial Reporting Standards (IFRS) adoption by the Canadian fund industry impacts the funds' reported performance and managers' behavior. When Canada implemented IFRS for publicly accountable enterprises (PAEs) in 2011, it received much attention from international researchers, professionals, and regulators mainly for three reasons: (1) IFRS were more mature when adopted in Canada as nine amendments had been made from 2005 through 2010, and issues and uncertainties faced by earlier adopters such as firms from EU members may or may not exist in Canada; (2) pre-IFRS Canadian accounting standards were very close to that of the US, and thus, the Canadian experience has strong implication to the largest capital market which has not accepted IFRS as primary standards yet; (3) Canadian accounting and financial regulations have been shown to be more effective in controlling risks during the 2008 financial crisis compared to those of other major economies; how IFRS can strengthen such a tight system is to be examined and is important to IFRS proponents and standard setters. In 2014, Canada took the lead by being the first common law jurisdiction mandating IFRS for investment funds while most other countries hold up IFRS adoption in this particular industry due to various complications. This paper shows that IFRS adoption does affect the funds' outcomes and managers' behavior in Canadian closed-end investment funds, and voluntary disclosure of cash flows also strongly affects fund managers' return and valuation discretion. The implication is that if a country is not ready to fully implement IFRS in the fund industry because of complications at the accounting and financial levels, mandatory disclosure of cash flows could lead to better accounting quality as well, since one major difference between IFRS and GAAP is the disclosure of cash flows which constrains manager's discretion on asset appraisals. The second essay studies the implications from outside directors' turnover. Outside directors have been extensively studied as a governance factor, but their behaviors are not well documented in the literature, partly because most agency theory-based research concentrates on the behavior of managers, not that of directors. While the majority of studies in the governance literature analyze characteristics of directors in a static way, I look at this question in a dynamic way which considers directors' behaviors. This paper studies S&P 500 companies that have boardroom turnovers due to outside directors' unexpected departures. The departures of these non-executive directors usually do not trigger investors' concerns. However, our results show that when they do not provide concrete reasons, the firms from which they resigned experience underperformance afterward. This result suggests that directors may have resigned ahead of sub performance because of information they became privy to. The implication is strong to both regulators and investors. While governance regulations require a certain proportion of outside directors on compensation and audit committees with the intention of achieving efficient governance and releasing timely and reliable information, such mechanisms are substantially affected if outside directors do not fulfill their responsibilities when firms face challenges. Investors who take long positions should be alerted about outside directors' unexplained departure, and investors who take short positions may find opportunities when a company has boardroom turnover. The third essay examines a financial question around mergers and acquisitions announcements. In a tender offer, the bidder contacts shareholders of a target firm directly by announcing a public offer to tender their shares. The risk arises because the acquisition may or may not go through. Insiders typically have a better appreciation of the likelihood of a successful acquisition than outsiders, who have very limited access to strategic and private information. As a result, outsiders are at the disadvantageous position during mergers and acquisitions. This paper documents that besides official and public releases, outsiders can also rely on stock returns around announcements to infer private information to reduce information asymmetry. While current regulations and reporting standards do not have effective ways to minimize information asymmetry during mergers and acquisitions, this study highlights an avenue that indirectly mitigates outsiders' information disadvantage.
Essays in Financial Accounting and Corporate Governance
Author: Jun ChenPublisher:
ISBN:
Category :
Languages : en
Pages : 168
Book Description
This dissertation comprises three papers examining several questions in finance and accounting. A common thread is investigating the strategic interactions between public firms and stock market investors. Chapter 1 studies how investors with short-term horizons can impact firms' behaviors. Chapters 2 and 3 examine the impact of corporate disclosure and the market pricing of information. In Chapter 1, I use the unique features of the margin trading system in China to identify the causal impact of transient investors on managerial myopia. Specifically, I employ a regression discontinuity design that exploits the ranking procedure that determines a stock's margin trading eligibility. I find that margin traders are extremely short-term oriented and cause a sharp increase in stock share turnover. Moreover, marginable firms cater to these transient investors by manipulating current earnings and reducing long-term investments. Consistent with managerial myopia, these firms experience a short-term price increase but a long-term decline in operating performance. Chapter 2 is joint work with John Hughes, Jun Liu, and Dan Yang. We reexamine the relation between disclosure indices and cost of equity capital employing an empirical specification similar to that of (botosan97) for a substantially larger sample over an extended time frame made possible by textual analysis. Our results provide no support for a hypothesis of a negative relation between disclosure indices and implied cost of equity capital. Rather, consistent with a bias of implied cost of equity capital as a proxy for expected return depicted by (Hughes2009) we find strong evidence of a positive relation. Chapter 3 is joint work with Yibin Liu. We exploit an earnings-based delisting policy and examine its adverse effect on investor trust in earnings news. Besides providing prominent visual evidence of large-scale earnings management at the required earnings threshold, we find that firms close to this threshold are trusted less by investors, regardless of whether they have manipulated earnings. Moreover, we provide causal evidence by studying firms that approach this threshold due to a plausibly exogenous profitability shock. Our results suggest that earnings-based regulations with harsh punishment may lead to a decline in investor trust.
Author: Nader Younus
Author: Muḥammad Asʿad
Author: Kim Theresa Baumgartner
Author: Marcus Witzky