Analyst coverage,earnings management and financial development: An international study

Using data from 21 countries, this paper analyzes the relation among analyst coverage, earnings management and financial development in an international context. We document that the effectiveness of financial analysts as monitors increases with a country’s financial development (FD). We find that in high-FD countries, increased within-firm analyst coverage results in less earnings management. Such is not the case in low-FD countries. Our results are economically significant and robust to reverse causality checks. Our findings illustrate one mechanism through which financial development mitigates the cost of monitoring firms and curbs earnings management.     

Openness,financial structure,and bank risk: International evidence

Using panel data from a large cross-country sample covering 97 countries over the period 1996–2017, we combine 2SLS procedure with system GMM estimation to study the relationship between openness, financial structure and bank risk. The main contribution of the paper is that we identified a new channel, i.e. the financial structure channel, through which financial openness reduces bank risk. In particular, we find that as financial openness increases, a country's financial system tends to be more market-based, and a more market-based financial system is associated with higher bank market power, better information sharing and more revenue diversification, all of which contribute to the reduction in bank risk. We also find that the effect of inflow restrictions on bank risk is more pronounced than that of outflow restrictions. These results highlight the importance of an appropriate design of a country's opening-up strategy to match the evolution of its financial structure to increase bank stability.     

Banking system control,capital allocation,and economy performance

We observe less efficient capital allocation in countries whose banking systems are more thoroughly controlled by tycoons or families. The magnitude of this effect is similar to that of state control over banking. Unlike state control, tycoon or family control also correlates with slower economic and productivity growth, greater financial instability, and worse income inequality. These findings are consistent with theories that elite-capture of a country’s financial system can embed “crony capitalism.”     

Bank stock returns and economic growth

Previous research has established (i) that a country’s financial sector influence future economic growth and (ii) that stock market index returns affect future economic growth. We extend and tie together these two strands of the growth literature by analyzing the relationship between banking industry stock returns and future economic growth. Using dynamic panel techniques to analyze panel data from 18 developed and 18 emerging markets, we find a positive and significant relationship between bank stock returns and future GDP growth that is independent of the previously documented relationship between market index returns and economic growth. We also find that much of the informational content of bank stock returns is captured by country-specific and institutional characteristics, such as bank-accounting-disclosure standards, banking crises, enforcement of insider trading law and government ownership of banks.     

Contraste de la ley de Gibrat en la banca comercial brasileña

In recent years Brazil has been one of the countries with major changes in the banking sector. The deregulation process that has taken place since 2002 has brought an increased presence of foreign banks and higher competition, among other aspects. In this context, the objective of this study is to analyze Gibrat's law on Brazilian commercial banks over the period 2002-2013 with the aim of providing evidence for the construction of a banking growth model which guide the country's financial policy. To that end, we employ a methodology based on quartile regressions as a contribution to previous literature. Our overall results reveal the existence of a non-lineal relationship between growth and banks size with an inverted U-shape. These findings allow us to affirm that the relative dispersion of banks size, as well as the sector's concentration, will be reduce in the future years.     

Minority shareholders’ wealth effects and stock market development: Evidence from increase-in-ownership M&As

This paper examines, using a global M&A data set, the relationship between the target firm’s minority shareholders’ returns and a country’s stock market development in deals in which large shareholders increase their ownership stakes. For the purpose of this study, we use two measures of stock market development: (1) turnover over GDP, and (2) turnover over market capitalization. We provide evidence supporting the view that minority shareholders in target firms gain significantly more in countries with high stock market development than their counterparts in less-developed markets. Our results are robust to several firm and deal characteristics and provide evidence to policy makers that the degree of stock market development is a key determinant in improving minority shareholders’ welfare.     

Assessing the effectiveness of financial reporting harmonization for emerging market banks: The case of Banco Serfin

In the last decade there has been a proliferation of financial crises in emerging markets. To some extent, the suddenness and magnitude of some of these crises have been blamed on poor financial reporting standards for bank loan losses. As a result, prior to providing countries with “financial bailout” funds, international investors and international financial organizations have increasingly required that countries harmonize their bank financial reporting standards with international financial reporting standards.Given this trend, this case requires students to assess the effectiveness of efforts to harmonize loan financial reporting (with International Financial Reporting Standards) for Mexican banks during (and after) the country’s financial crisis of the late 1990s. Students are required to assess the extent to which both pre-crisis standards as well as new, post-crisis standards complied with international financial reporting standards. They are also required to assess the impact of the new standards on the reporting practices for loans of one particularly troubled financial institution. Through the examination of this institution’s accounting practices for loans, students obtain a familiarity of the shortcomings of emerging markets’ banks’ loan financial reporting as well as the factors which influence the adoption of international financial reporting standards by emerging market banks.     

能源工业发展与金融支持——基于面板数据的实证分析

利用2002～2008年中国能源工业发展与金融支持的面板数据，综合考察融资的规模、结构与能源工业的产值增长、能耗强度之间的关系，并基于79家上市能源企业的角度进行拓展和再证实。研究结果显示，融资规模扩大有利于能源工业的产值增长，但融资的开放程度和利用效率不断降低；不同的融资结构对产值增长的贡献率和能源消耗存在明显差异；国内贷款不仅对能源产业产值增长的贡献相对较低，还提高了单位增加值的能耗；相反，利用外资却能二者兼得；此外，增加股票和债券融资有助于促进自筹资金对能源产业产值增长的拉动作用.     

Cross-country determinants of bank income smoothing by managing loan-loss provisions

This paper studies the determinants of income smoothing by management of loan-loss provisions in banks around the world. Using a panel database of 3221 bank-year observations from 40 countries and controlling for unobservable bank effects and for the endogeneity of explanatory variables, we find that bank income smoothing depends on investor protection, disclosure, regulation and supervision, financial structure, and financial development. Results suggest there is less bank income smoothing not only with the strength of investor protection, but also with the extent of accounting disclosure, restrictions on bank activities, and official and private supervision, while there is more income smoothing with market orientation and development of a country’s financial system.     

Substitution or complementary effects between banking and stock markets: Evidence from financial openness in Taiwan

This study uses quarterly data from 1973 to 2007 to investigate the influence of financial institutions on economic growth in Taiwan. We find that the breakpoint obtained by Gregory and Hansen (1996) appears in the third quarter of 1982, which coincides with the period of financial openness. In addition, the substitution effect between credit and equity markets is improved following financial openness. The negative impact of volatility on real output before financial openness turned positive after financial openness, suggesting that appropriate volatility enhances Taiwan's economic growth under the circumstance of more matured stock market following financial openness. However, the beneficial influence of liquidity on real output before financial openness turned negative afterward, suggesting openness generated the undesirable side effect of excess liquidity that impeded economic growth. Our long-run results are essentially the same even if we take the role of the private bond market into account.