Can Shareholders Be at Rest after Adopting Clawback Provisions? Evidence from Stock Price Crash Risk

Using a propensity score matched sample and a difference‐in‐differences research design, we find that stock price crash risk increases after a firm voluntarily incorporates clawback provisions in executive officers' compensation contracts. This heightened crash risk is concentrated in adopters that increase upward real activities‐based earnings management and those that reduce the readability of 10‐K reports. Based on cross‐sectional analyses, we also find that the increased crash risk is more pronounced for adopters with high ex ante fraud risk, low‐ability managers, high CEO equity incentives, and low dedicated institutional ownership. Collectively, our results suggest that the clawback adoption per se does not curb managerial opportunism but rather induces managers to use alternative channels for concealing bad news, which may contribute to a greater stock price crash risk; and the increase in crash risk is more likely in cases where incentives are strong or monitoring is weak. Our results should be of interest to regulators and policymakers considering the effects of clawback adoption on the investing public.     

Co-opted directors,gender diversity,and crash risk: evidence from China

Review of Quantitative Finance and Accounting - This study examines how the composition of the board of directors at Chinese firms affects crash risk. The results indicate that co-opted directors...     

Exogenous and Endogenous Attention and the Convergence of Analysts’ Forecasts

The propensity of the forecasts of sell-side financial analysts to converge (or diverge) is a function of their exogenous and endogenous selective attention and overconfidence. When returns are negative, the endogenous form of selective attention—a static measure of analysts’ goal-driven attention at a particular point in time—has a positive association with convergence. The exogenous form of selective attention—a relatively involuntary dynamic process of exogenous attentional shift driven by external changes in the market over time—is associated with a tendency for forecasts to diverge.     

Market Reaction to Corporate Social Responsibility Announcements： Evidence from China

This study uses an event study methodology to examine how the Chinese market reacts to announcements of involvement in corporate social responsibilitY （CSR） by Southern Weekend （a Chinese newspaper）for Chinese firms from 2008 to 2012. Our results show significant and pcsitive market reactions, supporting the instrumental stakeholder theory. We attribute the positive market response to social capital development and real growth options related to the CSR involvement by the Chinese firms.     

Firm Size and Performance of Manufacturing Enterprises in P.R. China: The Case of Shanghai's Manufacturing Industries

This paper studies the relationship between firm size and technical efficiency of manufacturing enterprises in Shanghai's manufacturing sector from 1989 to 1992. Although our empirical results show that technical efficiency is increasing in the firm size, the group of the smallest enterprises (0–99 workers) have very high technical efficiency. The group of enterprises with size of 100–249.9 workers have the lowest technical efficiency while the largest size (1000 workers or above) group usually have the highest technical efficiency. Finally, technical efficiency computed from net industrial product has large upward biases compared with that computed from gross industrial product.     

Europe,Germany and “The German Model”: Economic Links and Implications for China

Abstract

In this paper, I examine the economic links first between the European Union (EU) and China and then I focus on the economic relationships between Germany and China. The links I will consider include international trade and direct investment. Lastly I highlight some elements of the so-called “German Model” or the “Berlin Way” and examine if they can be of policy relevance to China. There are four main results: first, EU-China trade and investment relationships are strong, deepening rapidly but they are somewhat unbalanced and asymmetric. Second, the economic relationships between Europe and China are focused on manufacturing. Third, the EU-China relationships are primarily Deutschland-centric. Lastly, elements of the “German Model” such as Mitbestimmung, Mittelstand and the German apprenticeship system can have important structural and policy implications as China continues to grow and experiment with reforms aiming at combining stability, harmony and competitiveness.     

Application of an environmental psychology model to in-store buying behaviour

Although the influence of the environment on behaviour has long been acknowledged by many environmental psychologists, not many studies have been done in a retailing context, and so far no study can provide a framework to determine how environmental cues might impact on store patronage. The main objective of this study is to explore the relationship between environment and human behaviour in a retailing context by adopting the Mehrabian Russell Model (M-R Model) so as to test the predictability and applicability of the model through measurement of the information load, the emotional states induced and the approach-avoidance behaviour of shoppers in two types of CD stores in Hong Kong. The findings show that in-store environment stimuli (expressed in terms of information rate) are positively related to the level of pleasure experienced in the store. In turn, environment-induced emotional states in the store are positively related to in-store shopping behaviour. Therefore, shopping behaviour favourable to retailers can be induced through manipulation of the store's atmospheric elements. The findings show that the in-store environment is dynamic in nature and the model is not as simple as that predicted by Mehrabian and Russell in a one-way direction. In-store behaviour also has positive effects on the pleasure felt in the store and the in-store rating of environmental stimuli.     

Assessing financial market integration in Asia – Equity markets

Financial integration has strong implications for financial stability. On the one hand, financial integration among economies helps to improve their capacity to absorb shocks and foster development. On the other hand, intensified financial linkages in a world of increasing capital mobility may also harbour the risk of cross-border financial contagion. This paper provides a survey of high-frequency indicators to monitor the development of equity market integration in Asia. The results show that after slowing down between 2002 and 2006, the equity market integration process picked up again in 2007–08. Nevertheless, the process is not complete and the degrees of integration between mature and emerging equity markets are different. The divergence may be attributed to the difference in the political, economic and institutional aspects across jurisdictions in Asia.     

The Information Content of Model‐Free Implied Volatility

This study examines the information content of model‐free implied volatility (MFIV) estimates with respect to the options and futures markets in Hong Kong. In this study, the volatility forecasting performance of MFIV is compared, using different prediction horizons, to IV estimates based on Black's futures option pricing model (BIV) and time‐series forecasts based on historical volatility (TS‐HV). The results show that the BIV prediction is unbiased for different horizon forecasts. MFIV outperforms TS‐HV forecasts and, most importantly, BIV subsumes the information content of both MFIV and TS‐HV forecasts. The results are largely maintained for next‐day forecasts but the forecasting quality of the two IV measures declines as expiration day approaches. The information contents of MFIV and TS‐HV forecasts are complementary. © 2012 Wiley Periodicals, Inc. Jrl Fut Mark 32:792‐806, 2012