Working for patients: Making the internal market effective

To be effective, the internal market for health care involves a recognition that there are different types of market, each with its own characteristics. Written contracts can only go so far. There is also a need to create administrative infrastructures which will ensure that the different markets function effectively.     

The hidden costs of being public: Evidence from multinational firms operating in an emerging market

I study how firms deal with business regulations that limit their operations. I first show that the ownership structure of a firm affects its degree of compliance with regulations, with publicly listed firms complying more than privately held ones. This differential compliance imposes a burden on listed firms that helps explain mergers and acquisitions patterns. When regulatory levels increase, private firms acquire listed ones and listed firms stop acquiring private ones. These results uncover an additional cost faced by listed companies, identify a new driver of M&A transactions, and show that high levels of regulation lead to opaque corporate structures.     

Regulating managed care firms: the Connecticut plan

Virtually every state in the country, as well as the federal government, is either considering or has recently considered legislation to regulate utilization review/managed care companies. Despite the magnitude of this issue, few legislative bodies have expended the resources to study the form that regulation should take. Recently, Connecticut, which has seen considerable growth in utilization review within managed care programs that insure Connecticut residents, funded such a study. This article, authored by two of the study's participants, reviews the issues and explains the study's recommendations.     

事务所做强做大的两个内部条件

在全球经济一体化迅速发展的今天,中国注册会计师行业也在不断的努力融入国际注册会计师行业。新会计审计准则与国际接轨,为注册会计师行业     

Competing for underwriting market share: The case of commercial banks and securities firms

This study analyzes changes in the underwriting market share of securities firms and commercial banks over a 20-year period that encompasses the deregulation period of 1989–1999. The study finds that, after controlling for firm combination effects, there is no evidence that commercial banks gained share at the expense of ranked traditional underwriters. There is strong evidence that market breadth helps both securities firms and commercial banks to gain market share, whereas greater share in the underwriting of a specific security has the opposite effect on next year's market share. There is supportive but limited evidence that high-volume years favor commercial banks, whereas low-volume years favor prestigious underwriters. The influence of firm-specific factors is limited to a few markets, which may explain the stickiness of underwriting market share of ranked firms over time.     

Motives for partial acquisitions between firms in the spanish stock market

The paper analyses the motivations for inter-company investment on the Spanish Stock Market through the study of a sample of significant acquisitions reported to the CNMV (the Spanish Securities and Exchange Commission) by quoted firms. By analysing the sign of the cumulative abnormal returns (CAR) and of the correlations among the gains produced by the operation, an attempt is made to find out which motives predominate of the three most important ones suggested by the literature for takeovers: synergy, agency and hubris. Empirical evidence is presented that in the Spanish Stock Market the main motive for acquiring a holding is similar to synergy, especially in partial acquisitions with positive total gains. However, in the samples with negative total gains a main motive similar to hubris always appears. The analysis takes into account the size of the investment and distinguishes between the first report and subsequent ones. Results are similar to those obtained by other authors for takeovers in the US Stock Market, except that in this sample, agency motives do not appear clearly.     

Private market impact investing firms: Ownership structure and investment style

Impact investing and ESG investing are specific “ethical” investing types integrating social, environmental, and moral values with financial goals. Despite receiving heightened scholarly attention, the difference between impact and ESG investing is largely unexamined, and it is not clear how they differ from conventional investment. To explain the differences between ESG, impact, and conventional investing, this paper draws on a dataset of over 8000 private market investment (PMI) firms. It compares impact, ESG, and conventional investment across firm characteristics, investment preference, and ownership. Results show that impact investors are more likely to be owned by the government, focusing on agriculture, cleantech, and education while avoiding “sin” industries like gambling and tobacco.     

Internal control and internal capital allocation: evidence from internal capital markets of multi-segment firms

We investigate the impact of internal control over financial reporting on management decisions in directing corporate resources to alternative investment projects in multi-segment firms. Results from cross-sectional and inter-temporal analyses indicate that internal control weaknesses (ICWs) are associated with distortionary internal capital allocations. The adverse impact on internal capital markets is more pronounced for firms with company-level ICWs. Our analyses also show that firms with weak existing governance mechanisms benefit more from maintaining effective internal control. We further document that the negative impact of ICWs on firms’ internal capital transfers manifests in a lower excess value of diversification.     

The market premium for the option to close: evidence from Australian gold mining firms

This study shows the market value of gold mining firms contains a premium for the option to close. The sample uses 41 gold mining producers listed on the Australian Stock Exchange from 1987 to 2013. The premium of the market price over the present value of cash flows is isolated and a pooled cross‐sectional regression tests the degree of association between that premium and theoretical option premiums. The results show market prices incorporate a premium reflecting the option to temporarily close operations. The magnitude of the option premium to close depends on whether firms are out or in the money options.     

建立和完善内部治理机制 推动事务所和谐健康发展

中注协在《会计师事务所内部治理指南》中指出:为了加强会计师事务所内部决策和管理机制,提高事务所风险和质量控制能力,为事务所做大做强奠定坚实的微观基础。据此,我们联系实际,建立和完成诚信执业、质量控制、开拓创新、民主法治、公平分配和所企互动等内部治理机制,推动事务所和谐健康发展,为做强做大创造条件。     

Public market staging: The timing of capital infusions in newly public firms

We examine financing activities of newly public firms for evidence on capital staging in the public equity market. Staging (sequential financing) can increase issuance costs but can limit costs associated with overinvestment. We find evidence consistent with the hypothesis that staging is employed to help control the overinvestment problem in public firms. Initial public offering (IPO) proceeds, relative to external financing requirements, are smaller for firms with more intangible assets and more research and development (R&D)-intensive firms. Asset intangibility and R&D intensity are also both negatively related to the length of time from a firm's IPO to its first post-IPO capital infusion.     

Cross-market information transfers of ADR firms: An investigation of emerging market economies

Level II and III ADRs permit issuers to be listed on the major U.S. exchanges with the stipulation that they comply with extensive SEC disclosure requirements. Foreign private issuers are compelled to file a set of audited financial statements prepared in accordance with U.S. GAAP, or alternatively, IFRS or Home Country Accounting Principles with attendant reconciliation to U.S. GAAP prior to 2008. Although the Form 20-F reconciliation is discontinued in 2008 for IFRS filers, non-U.S. issuers are required to satisfy other Form 20-F stipulations such as expanded Item 17 and Item 18 disclosures. We conjecture that non-U.S. firms choosing to be listed on the major U.S. exchanges will incur the added costs associated with the supplemental disclosure requirements in order to attract sufficient investor attention as to have the disclosures impounded in the home country equity share price in the manner described by Fishman et al. (1989). Because a prominent attribute of ADR firms is that they benefit from multiple-market trading, we investigate whether the Form 20-F disclosure cross-market information transfers are associated with emerging market economy status. We employ models of the cross-market ADR and equity security share returns and trading volume controlling for the emerging economy status and incremental firm-specific SEC Form 20-F accounting principles disclosures. Preliminary results indicate that (1) U.S. listed ADR firms from emerging economies experience greater cross-market information transfers associated with the SEC Form 20-F filing, and (2) that the increased cross-market information transfers associated with the SEC Form 20-F filing are proportional to the difference in quality of accounting principles employed for home country reporting purposes vis-à-vis the accounting principles employed for SEC Form 20-F reporting purposes. Results are consistent with a feedback process through which the new information disclosed by the SEC Form 20-F reporting requirements in the ADR market attenuates the price discovery process in the home country equity market when the difference in information environment quality is large.     

Bilateral investment treaties and foreign direct investment: Evidence from emerging market firms

Bilateral investment treaties (BITs) help developing countries attract foreign direct investment (FDI) from developed countries. However, whether BITs matter for emerging market firms’ (EMFs) FDI is unclear. This paper investigates how BITs affect EMFs’ FDI locations using conditional logit models with firm-level panel data from 2003 to 2015. The results show that BITs can help host countries attract FDI from emerging market countries. BITs work alongside good institutions to increase the attractiveness of FDI, irrespective of a host country being developed or not.     

The bright side of the internal labor market: Evidence from the labor cost stickiness of firms affiliated with privately owned business groups in China

We examine whether having an internal labor market can help a firm affiliated with a privately owned business group (POBG) reduce labor cost stickiness. Our findings suggest that, when a POBG-affiliated firm experiences a decrease in sales, it has lower labor cost stickiness than an otherwise equivalent firm that is not affiliated with a POBG. Specifically, we find that, on average, a POBG-affiliated firm entirely mitigates labor cost stickiness when it has a decrease in sales. In addition, we document that, to adjust its labor cost downward, a POBG-affiliated firm hires fewer employees, rather than paying lower wages. We show that the lower labor cost stickiness is due to movement of employees from the focal firm to other firms within the same POBG. When sales fall, the POBG reallocates excess employees at the focal firm to other firms within the business group via an internal labor market, and the focal firm thereby increases its per capita profit. Moreover, we find that agency cost mediates the impact of a POBG on labor cost stickiness. When the external market is less effective or the POBG headquarters have strong incentives, the effect of POBG affiliation on the reduction in an affiliated firm's labor cost stickiness is more salient.     

The anomalous stock market behavior of small firms in January: Empirical tests for tax-loss selling effects

Small firms experience large returns in January and exceptionally large returns during the first few trading days of January. The empirical tests indicate that the abnormally high returns witnessed at the very beginning of January appear to be consistent with tax-loss selling. However, tax-loss selling cannot explain the entire January seasonal effect. The small firms least likely to be sold for tax reasons (prior year ‘winners’) also exhibit large average January returns, although not unusually large returns during the first few days of January.     

Family entrenchment and internal control: evidence from S&P 1500 firms

Review of Accounting Studies - We examine whether family owners exploit internal control weaknesses for entrenchment purposes and whether the public disclosure requirement under SOX 404 helps...     

Financing obstacles and growth: an analysis for euro area non-financial firms

This paper investigates the determinants of financing obstacles (FOs) and their impact on firm growth. For this purpose, we rely on both balance sheet data and survey data for a sample of non-financial firms in the euro area. The latter allows us to devise a direct measure of the firms’ probability of facing FOs. First, our results indicate that FOs are linked to characteristics such as the age of the firm, its size, its sales level or the sector in which it operates. Second, we find that, though based on few variables, our measure of FOs appears to be relevant in explaining firm growth in four out of the five countries considered; likewise, growth is found to be positively linked to cash flow.