Ownership structure,board composition and the market for corporate control in the UK: an empirical analysis

This paper analyses the board composition and ownership structures of a sample of companies that have been acquired and those of a matching control sample that have not. We find significant governance differences between acquired firms and the control sample. Firms with the following characteristics were more likely to be acquired: they had the same person acting as CEO and chair, a higher proportion of non-executive directors, larger institutional shareholdings and higher director shareholdings. An analysis of small firms also found evidence of higher CEO shareholdings. We also find that treating all take-overs as a single group leads to a model mis-specification which does not identify the incentive effects of board and CEO shareholdings present in non-hostile acquisitions. These results are consistent with two agency-derived hypotheses, financial incentives and effective monitoring. We also find that targets exhibit lower growth potential but do not have worse accounting performance.     

INSTITUTIONAL INVESTORS,CORPORATE GOVERNANCE AND FIRM PERFORMANCE IN JAPAN

Since the beginning of the 2000s, institutional investors in Japan have become active in strengthening corporate governance, with the aim of achieving long‐term corporate value. The present paper examines the relationship between institutional investors and corporate governance, and also the relationship between institutional investors' shareholdings and firm performance. The results suggest that corporate governance has been enhanced by institutional investors. However, it is found that there is not a statistically significant difference between institutional investors' shareholdings and firm performance.     

机构投资者持股和会计盈余质量

本文从会计盈余质量的角度来研究机构投资者(’在公司治理中的作用。我们从盈余管理程度、盈余信息含量和盈余稳健性等三个方面来衡量会计盈余的质量。三方面的研究结果显示,机构投资者持股有助于改善会计盈余的质量:机构投资者持股公司的会计盈余质量显著高于其他公司,并且会计盈余的质量随着机构投资者持股比例的增加而增加。进一步研究发现,机构投资者还能够缓解大股东对会计盈余信息含量的恶化,起到一定的制衡作用。本文的研究表明,机构投资者能够在一定程度上改善上市公司的盈余质量,其快速成长有助于公司治理结构的改善,也有助于资本市场信息披露环境的良性发展。     

Main banks’ influence on financial reporting quality in Japan

This study investigated main banks’ influence on the quality of accounting firms’ audits and corporate firms’ earnings, focusing on companies on Japan’s Nikkei 500 index. We posed three questions in this research study about main banks’ influence on corporate clients’ earnings management. First, does a weakened main bank relationship influence corporate clients’ financial reporting quality? Second, does Japan’s firewall deregulation influence firms’ earnings quality? Finally, does the relationship between accounting firms and main banks affect client firms’ earnings quality? Our main findings were that main banks are not related to client firms’ earnings management; however, main banks mitigate client firms’ earnings management after firewall deregulation. On the other hand, firewall deregulation does motivate firms to manipulate their earnings management. Finally, using Pong and Kita’s (2006) study as a framework, we found that main banks and client firms using the same accounting firms had no influence on earnings management. Based on these evidences presented, our findings suggest that the quality of corporate clients’ financial reporting changes before and after firewall deregulation.     

Applying digital analysis to detect fraud: an empirical analysis of US marine industry

Firms have tendency to window dress their financial statements by reporting earnings to achieve reference points represented by N × 10 ^k . Such practice of reporting rounded earnings is likely due to (1) firms may believe that investors perceive a reported earnings of $1.99 million to be significantly less than $2.0 million; and/or (2) contracts between firms and stakeholders are likely to express earnings in round numbers. Auditors have employed more sophisticated digital analysis such as Benford's law, as part of their fraud detection processes. This study investigated the window dressing behaviour among firms in the US marine industry. The findings of the study suggest that window dressing is a significant practice among the marine firms. However, the extent of the pervasiveness of such behaviour is less severe among marine firms than among all publicly-listed firms in the entire US economy, suggesting that the quality of financial statements of marine companies is higher than the overall population of public companies.     

The impact of COVID-19 on seasoned equity offering: Evidence from China

This study examines the impact from the COVID-19 pandemic on the association between Chinese firms' SEO announcements and market reaction afterwards. Our findings indicate that market investors would respond more negatively to the SEO announcements and undergo more SEO underpricing for firms from regions significantly affected by the pandemic than those from the less-affected regions. Furthermore, higher CSR scores and more involvements in accounting conservatism could mitigate these effects. The main mechanism of the moderating effect from CSR performance and accounting conservatism is that CSR investment and accounting conservatism could lessen information asymmetry between the SEO announced firms and outside investors. Finally, we document that the main motivation of SEO issuance during the pandemic is market timing.     

Professionals inside the board room: accounting expertise of directors and dividend policy

Directors’ personal attributes have significant impacts on governance effectiveness. We study whether directors’ accounting expertise affects corporate financial policy and investigate dividend in specific. We construct a dataset of audit committee directors’ accounting expertise for Standard & Poor 500 firms from 2005 to 2012. We first verify directors’ monitoring roles by showing that firms with accounting expert sitting on their audit committees demonstrate stronger accounting conservatism. In our main tests, we find that these firms maintain lower dividend payment level, which are less sensitive to earnings volatility. This suggests directors’ advisory roles in financial policy. We further show that our accounting expertise cannot be subsumed by management ability. In additional test, we further examine the baseline results conditional on analyst forecast error. Our findings highlight the importance of directors’ professional expertise in fulfilling their governance roles.     

Does the market care about investor protection practices in China?

This study develops a scorecard with which to measure the investor protection practices of major listed firms in China during 2007–2010. We use time-series data to examine the relationship between the change in firm investor protection practices and market performance. Our results show that firms exhibiting improvements in investor protection practices manifest a subsequent increase in buy-and-hold abnormal returns. The results further indicate that the changes in the sub-index have different effects on a firm’s future performance. Shareholder rights to be rewarded seem to have the most significant and positive effect on a firm’s future performance for both local and international investors. Moreover, international investors pay attention to their rights to information. Our results provide evidence in support of the notion that the market does care about firm’s investor protection practices. The findings are robust to other measures of firm performance.     

机构投资者"分心"与公司杠杆操纵

本文以机构投资者在其投资组合中注意力分配差异而产生的不同“分心”程度作为识别监督外在变化的手段,验证了其对企业杠杆操纵的重要影响。研究发现,上市公司会趁机构投资者“分心”而监督弱化时实施更多杠杆操纵行为,经稳健性检验后该结论依然成立。影响机制分析发现,机构投资者“分心”通过弱化其监督治理效应、降低公司股价信息含量进一步加剧企业杠杆操纵现象,使得企业得以隐藏真实杠杆水平,误导债权人以更低的资本成本借出资金,但也为企业的未来埋下隐患,致使企业潜在债务违约风险与财务风险增大。此外,在机构投资者“分心”加剧企业杠杆操纵的关系中,“去杠杆”政策实施和去杠杆压力发挥了正向调节作用。本文丰富了机构投资者“分心”经济后果研究,也为监管部门强化对企业监管提供了重要启示。     

家族创始人职业经历与企业财务保守行为研究

基于创始人自身特征的异质性,文章研究了家族创始人职业经历与企业财务保守行为的关系。研究发现,与家族创始人具有企业部门职业经历的企业相比,创始人具有公共部门职业经历的企业财务杠杆更低,短期借款占比更小,现金持有更多,且连续三年采用低杠杆的可能性更高。进一步地,企业所处行业的产品市场不确定性越高,家族创始人公共部门职业经历与企业财务保守行为的正相关关系越强。此外,家族创始人具有公共部门职业经历的企业会计及市场业绩均更好。研究表明,家族创始人具有公共部门职业经历的企业财务决策更为保守,原因在于这类家族创始人的风险厌恶程度较高,使企业更易形成相对保守的文化氛围。文章从创始人职业经历异质性的角度发展了家族企业财务保守成因的研究,以及管理者个人特征与企业财务决策关系的研究,同时有助于投资者识别企业财务风险。     

The frequency and magnitude of earnings management in China

Earnings management is an indicator of the corporate governance quality and investor protection standard. We study the frequencies and magnitudes of earnings management under two different thresholds, zero earnings and prior earnings, in the Chinese market from 1997 to 2004. We model earnings as a mixed-normal distribution and obtain parameter estimators that measure the frequency and magnitude of earnings management. We show that the practice of earnings management has gone up both in frequency and magnitude during the post-2000 period. We also find that the frequency and magnitude of earnings management are higher when firms try to avoid negative earnings than when firms try to report earnings increase. Our findings reflect the current economic environment in China and caution investors on the low-disclosure quality in the Chinese stock market.     

市场化进程、机构投资者与薪酬激励

本文以沪深两市A股上市公司2003—2010年的数据作为研究样本,探讨了市场化进程、机构投资者与高管薪酬激励三者之间的关系。研究发现,压力抵制型机构投资者与高管薪酬—绩效敏感性显著正相关;市场化进程是影响机构投资者治理作用发挥的重要外部因素,在市场化进程相对较快的地区,压力抵制型机构投资者持股能够对上市公司高管薪酬—绩效敏感性起到促进作用;在市场化进程较慢的地区,压力抵制型机构投资者与高管薪酬—绩效敏感性无显著相关性。研究结果表明,压力抵制型机构投资者有利于公司治理的改善,但是,其积极治理效应的发挥受到市场化进程因素的限制。本文的政策含义在于,解决中国上市公司的治理问题,不仅要继续大力发展机构投资者,还要相应改善其所处的制度环境。     

中国证券市场机构投资者与上市公司盈余管理关联性的研究

本研究从中国证券市场机构投资者与上市公司盈余管理之间关系这一视角出发,来说明机构投资者在公司治理中的作用,通过对相关理论的归纳和分析,构建了研究假设,在此基础上,利用中国上市公司数据,设计实证模型,对研究假设进行了论证.研究发现了在中国证券市场当机构投资者持股比例高时抑制盈余管理,机构持股比例低时加剧盈余管理,即倒U型的关系。研究应用截面数据分析、面板数据分析、单变量分析等方法,从2005年和2007年的数据验证出倒U型的拐点在机构持股6%,说明机构持股6%以后,在公司治理中发挥了抑制操纵盈余的盈余管理的积极作用。利用2004～2007年的数据,进一步的研究发现,随着近年机构投资者的发展和国家的政策导向,机构投资者对盈余管理的抑制作用越来越强,在公司治理中越来越显示出重要的作用。     

国有机构投资者持股能提升企业投资效率吗?

具有国资背景的机构投资者,对于资本市场平稳发展具有重要意义。本文基于我国2015—2019年A股上市公司样本,考察持股对企业投资效率的影响。研究发现,持股显著提升了企业投资效率,并且该影响在代理冲突更严重和所处信息环境更不透明的公司中更加显著。机制检验表明,降低企业内外部信息不对称和代理成本是持股提升企业投资效率的重要渠道。进一步研究发现,国有机构投资者持股时间越长,对企业非效率投资的治理效果越好;细分国有机构投资者类型后发现,致力于长期维护资本市场稳定和上市公司长期健康发展的证金公司和汇金公司对企业投资效率的提升作用显著,但没有发现“救市”基金和外管局旗下的投资平台对企业投资效率有提升作用。研究结论从企业投资效率视角为国有机构投资者持股在微观企业日常经营中发挥的治理作用提供了新颖的经验证据,对进一步提高我国上市公司质量具有启示意义。     

ASSET RETURNS UNDER PERIODIC REVELATIONS OF EARNINGS MANAGEMENT

The article investigates stock return dynamics in an environment where executives have an incentive to maximize their compensation by artificially inflating earnings. A principal–agent model with financial reporting and managerial effort is embedded in a Lucas asset‐pricing model with periodic revelations of the firm's underlying profitability. The return process generated from the model is consistent with a range of empirical regularities observed in the return data: volatility clustering, asymmetric volatility, and high idiosyncratic volatility. The calibration results further indicate that earnings management can be quantitatively important in accounting for the dynamic patterns of stock returns.     

Market revaluations of foreign listings' reconciliations to U.S. financial reporting

The Securities and Exchange Commission requires foreign firms wishing to list their securities on the U.S. exchanges to convert their financial statements to U.S.-based generally accepted accounting principles (GAAP) in a reconciliation filing known as Form 20-F. This paper extends prior research analyzing the importance of the SEC requirement by examining the value relevance to U.S. capital markets of Form 20-F reconciliation information under two additional hypotheses: investors' anticipation of the reconciliation, and investors' perception of foreign countries' enforcement and reliability in applying local accounting rules. It is argued that the information content of the Form 20-F reconciliation data is preempted (at least partially) on the date of foreign earnings announcements because of investor anticipation of these reconciliations. Therefore, only significant unanticipated reconciliations exhibit value relevance on the date of filing. In addition, investor perception of the reliability of the reconciliations and the degree of confidence in foreign authorities enforcing local GAAP also affect the value relevance of the reconciliation data. This study hypothesizes that reconciliations made by firms from countries with mature and developed capital markets should be more value relevant to U.S. investors. The results show that both unexpected foreign earnings and anticipated reconciliations to U.S. GAAP are significantly associated with unexpected market returns during the week of earnings announcements. The region of the foreign country is also significantly associated with market returns. However, unexpected reconciliations are not significantly associated with unexpected market returns during the week of Form 20-F filing.     

Googling Investor’s Sentiment: Powerful Measure in Conventional and Islamic MENA Financial Markets

ABSTRACT

The objective of this paper is to investigate whether investors' sentiment measured by the Internet search behavior constitutes a valid measure of investor’s sentiment on Islamic and conventional indexes of emerging and frontier financial markets in MENA countries. In fact, we examine the relation between googling investor’s sentiment and monthly Islamic and conventional index returns during the period 2004–2016. Using the Dynamic Conditional Correlation, the BEKK-GARCH and the wavelet coherence models, we confirm that googling investor’s sentiment is a perfect indicator of investor’s sentiment measure. Indeed, we find that this measure has the ability to reflect major events such as subprime financial crisis, oil crisis and Arab spring revolution affecting MENA Islamic and conventional index markets. Our finding indicates that investors can use googling investor’s sentiment as an indicator to predict returns and volatility of emerging and frontier markets since it reflects the behavior and emotions of investors in MENA financial markets.     

Financial Market Data Versus Accounting Data: Which Better Explains Stock Returns?

This paper presents the comparison of how financial market and accounting data affect stock prices and returns. The goal was to ascertain whether financial information or accounting data dominate in evaluating stock prices. Most valuation techniques used by firms are based on models using either accounting variables (earnings, book value, cash flows, research and development expenses) or financial market data (e.g. beta, market value, interest). The answer is of great importance for valuators and investors as it will help them focus on the most important variables and make better valuations and choices. This answer is also important for accounting standard setters as the preferred method will serve as an indicator for the quality of financial statements and their importance to users. The paper contributes to the existing literature in the fields of value relevance of accounting information and firm valuation and accounting standards (e.g. International Financial Reporting Standards, United States General Accepted Accounting Principles). To answer this question, share prices were estimated based on financial data using the capital asset pricing model and for accounting data, using Ohlson’s model. The results were tested for both methodologies by comparing estimated share prices with actual ones. The greater the correlation between the two variables the better the explanatory power of the model. The focus was on S&P 500 firms for the period 2002–2017.

     

Security analyst firm reputation and investors’ response to forecasted stocks in the biotechnology sector

ABSTRACT

Stock analyst reputation bridges the gap between technical knowledge of the high-technology and the investor's response to its stock, implying that the reputation of the stand-alone analyst serves this purpose. However, global firms have a stronger influence on their stock analysts than do small firms with 2 personnel. Does firm reputation affect the individual analyst and attract investor attention to forecasted stocks? Evidence from SAFs (security analyst firms) in the biotechnology sector supports this question and proposition. Four moderators (interactive predictors of organisational reputation) show positive correlations. They are the SAF's age, size, performance, and media coverage. These organisational level measures contribute to the institutional theory compared to the literature that focuses on the individual analyst without their organisations. In line with institutional theory, we make three explicit points. First, high uncertainty in the biotechnology sector turns investors to the organisational legitimacy and reputation of the analyst. Second, the organisational age, size, performance and media coverage of the security firm reduces uncertainty of the investor in the biotechnology sector. Third, the reputation of security firm flow to its individual analysts as well as from the individual analyst to the security firm. Thus, the organisational context matters in a social setting.     

证券分析师的盈余预测和股票评级是否具有独立性?

本文通过构建理论模型和实证检验全面分析了证券分析师所面临的利益关系对其所发布的信息质量的影响,结果表明:证券分析师为了维护与基金等机构投资者以及公司内部投资银行部门的关系,倾向于发布偏乐观的盈余预测和股票评级;声誉较高的分析师也同样不能在各种利益关系的漩涡中保持独立.这些结果揭示了我国证券分析师独立性缺失的利益根源,并为监管层规范和发展证券分析师行业提供了重要的理论依据.