International Cross-Listing, Firm Performance, and Top Management Turnover: A Test of the Bonding Hypothesis

We examine a primary outcome of corporate governance, namely, the ability to identify and terminate poorly performing CEOs, to test the effectiveness of U.S. investor protections in improving the corporate governance of cross-listed firms. We find that firms from weak investor protection regimes that are cross-listed on a major U.S. Exchange are more likely to terminate poorly performing CEOs than non-cross-listed firms. Cross-listings on exchanges that do not require the adoption of stringent investor protections (OTC, private placements, and London listings) are not associated with a higher propensity to remove poorly performing CEOs.     

Do minority acquisitions transfer better corporate governance practices? An analysis of UK's cross-border minority investments

This study examines the influence of minority shareholders on the transfer of corporate governance practices into companies in other countries where they invest. By analysing UK firms that acquired a minority ownership in foreign firms between 1993 and 2014, we find evidence of better corporate governance in the board structure of target foreign firms following UK firms taking a minority shareholding, the extent and nature of the changes varying depending on the quality of investor protection in the country the foreign target firm is located. Our findings contribute to the on-going debates on the spillover effect of better corporate governance practices via cross-border mergers and acquisitions as well as relationship between internal (board of directors) and external (country's quality of investor protection) corporate governance mechanisms.     

Corporate governance and private placement issuance in Australia

In this study, we examine the effectiveness of corporate governance in mitigating dilution in the economic and voting interests of existing nonparticipating (retail) shareholders in private placements. Based on a sample of 2420 private placements in Australia from 2001 to 2012, we find support for this proposition through the influence of corporate governance on pricing negotiation and firms’ choice of issuing method in private placements. Specifically, firms with better corporate governance offer private placements with a smaller discount, and are more likely to include a share purchase plan, which protects nonparticipating shareholders from ownership dilution in the placement.     

Investor Attention and Earnings Management around the World

This study examines the determinants of earnings management in an international setting using the limited investor attention model of Hirshleifer and Teoh ( 2003 ). The model predicts that investor attention reduces earnings management. I use analyst following, institutional ownership, and Big N auditor choice to proxy for investor attention. I have four key findings. First, I document that financial analysts curb earnings management in U.S. firms but not in non‐U.S. firms. Second, I document that institutional block‐holdings curb earnings management across the world. Third, Big N auditors reduce earnings management in U.S. firms but not in non‐U.S. firms. Fourth, I document that corporate governance mechanisms reduce earnings management in U.S. firms but not in non‐U.S. firms.     

Concentrated Control,Analyst Following,and Valuation: Do Analysts Matter Most When Investors Are Protected Least?

This paper uses a sample of more than 2,500 firms from 27 countries to investigate the relation among ownership structure, analyst following, investor protection, and valuation. We find that analysts are less likely to follow firms with potential incentives to withhold or manipulate information, such as when the family/management group is the largest control rights blockholder. Furthermore, this relation is stronger for firms from low-shareholder-protection countries. Using valuation regressions that take into account potential endogeneity between analyst following and firm value, we find a positive valuation effect when analysts cover firms that have both potentially poor internal governance and weak country-level external governance. Overall, our findings suggest that corporate governance plays an important role in analysts' willingness to follow firms and that increased analyst following is associated with higher valuations, particularly for firms likely to face governance problems.     

Adopting better corporate governance: Evidence from cross-border mergers

Cross-border mergers allow firms to alter the level of protection they provide to their investors, because target firms usually import the corporate governance system of the acquiring company by law. Therefore, cross-border mergers provide a natural experiment to analyze the effects of changes in corporate governance on firm value, and on an industry as a whole. We construct measures of the change in investor protection induced by cross-border mergers in a sample of 7330 ‘national industry years’ (spanning 39 industries in 41 countries in the period 1990–2001. We find that the Tobin's Q of an industry — including its unmerged firms — increases when firms within that industry are acquired by foreign firms coming from countries with better shareholder protection and better accounting standards. We present evidence that the transfer of corporate governance practices through cross-border mergers is Pareto improving. Firms that can adopt better practices willingly do so, and the market assigns more value to better protection.     

Social media information dissemination and corporate bad news hoarding

This paper investigates the role of social media in mitigating corporate bad news hoarding from a stock price crash risk perspective. Using a sample of public listed firms from 2008–2019, we find that social media (Guba) posts could significantly reduce firms’ stock price crash risks in the Chinese stock market. Furthermore, we find that the information intermediation function and complementary corporate governance function enable Guba to achieve such an effect. In addition, investor attention mediates the relationship between Guba posts and management withholding bad news. Our result still holds after a series of robustness checks, including an RDD approach.     

CULTURE,CORPORATE GOVERNANCE,AND DIVIDEND POLICY: INTERNATIONAL EVIDENCE

We find that Hofstede's cultural dimensions—uncertainty avoidance, masculinity, and long‐term orientation—remain significant in the determination of firms’ dividend policies, even after controlling for corporate governance. We also show that this association varies with the strength of corporate governance, measured by the degree of investor protection. Hence, national culture and investor protection independently affect firms’ dividend payouts but also interact with each other, such that strong investor protection induces higher dividend payouts in high uncertainty avoiding and/or highly masculine cultures. Our results provide strong evidence that cultural differences matter and offer additional power in explaining variations in dividend policies.     

卖空与创新:A股公司融券试点的证据

本文依托中国A股市场2010年开始实施的融券试点,在通过多时点双重差分和倾向得分匹配等计量方法控制内生性的基础上,实证检验了卖空对上市公司创新行为的促进作用.结果 表明:(1)加入融券标的后,卖空公司的创新数量和创新质量都有显著提高;(2)对于金融市场欠发达、治理水平较差的公司,这种作用更明显;(3)在使用融券余额作为卖空势力的测度并用ETF基金持股比例作为工具变量进一步控制内生性以后,以上结论仍然成立.卖空有助于降低创新企业的信息不对称性和加强对经理人的薪酬激励,进而促进了企业的创新.因此,取消卖空限制将有助于中国企业的创新和资本市场的健康稳定发展.     

Corporate social responsibility and stakeholder governance around the world

In this paper, we examine the impact of stakeholder governance on corporate social responsibility (CSR) around the world to determine whether CSR is employed as a mechanism to mitigate conflicts of interest between managers and diverse stakeholders, or used as managerial perquisites. To examine this relation properly, we not only employ a large and extensive sample of international firms, but also control for endogeneity by using dynamic panel generalized method of moments (GMM), propensity score matching, and difference-in-difference approach. Our results suggest that stakeholder governance positively influences firms’ CSR engagement with a greater magnitude than board governance after controlling for endogeneity and other confounding factors of traditional corporate governance mechanisms, firm characteristics and national factors. Stakeholders’ influence in CSR engagement is more prevalent when investor protections and board governance are relatively weak.     

How do investors underreact to seasoned equity offerings? Evidence from Taiwan's corporate governance evaluation

This study examines whether long-run stock underperformance following seasoned equity offerings (SEOs) differs with a firm's corporate governance practices. We address this issue by using Taiwan's official annual corporate governance evaluation to represent the quality of firm governance. Results show that firms with better governance exhibit positive long-run post-SEO stock performance, whereas those with poor governance continue to be underperforming after SEOs. Our findings reveal that investor’ underreaction to SEOs varies with the levels of corporate governance.     

The effects of analysts’ tax expense forecast accuracy on corporate tax avoidance: An international analysis

A spotlight has recently been cast on the role of analysts as monitors of corporate tax planning, but investigations beyond the US are rare. After extension to the international setting, I investigate whether the strength of investor protection impacts the relationship between analysts’ tax expense forecast accuracy and tax avoidance. Using a sample from 24 countries, I find that firms with high analysts’ tax expense forecast accuracy engage in lower levels of tax avoidance than firms with low forecast accuracy; this relationship is greater for firms in countries with weaker investor protection. These findings suggest that the extent of country-level investor protection substitutes for firm-level governance in constraining managerial incentives for tax avoidance.     

Postprivatization corporate governance: The role of ownership structure and investor protection

We investigate the role of ownership structure and investor protection in postprivatization corporate governance. Using a sample of 209 privatized firms from 39 countries over the period 1980 to 2001, we find that the government relinquishes control over time to the benefit of local institutions, individuals, and foreign investors, and that private ownership tends to concentrate over time. Firm size, growth, and industry affiliation, privatization method, as well as the level of institutional development and investor protection, explain the cross-firm differences in ownership concentration. The positive effect of ownership concentration on firm performance matters more in countries with weak investor protection.     

Corporate misconduct,media coverage,and stock returns

This study examines the impact of increased investor attention to corporate misconduct (CM) on stock returns. We show that media coverage provides an important channel through which investor awareness of corporate wrongdoings can be enhanced. Using a unique research setting in Korea based on text analysis during the 2008–2020 period, we find that investors exhibit short-term adverse reactions to CM events. More importantly, the increased social awareness of CM issues through media coverage leads investors to penalize firms more severely. We also find that the adverse reaction to CM events is more prominent for firms with a greater negative media tone and surprise. The combined evidence supports the investor attention theory. Furthermore, the negative effects of CM on stock returns are smaller for firms with positive Corporate Social Responsibility (CSR) and Environmental, Social, and Governance (ESG) reputations, consistent with the insurance theory.     

Do ESG ratings promote corporate green innovation? A quasi-natural experiment based on SynTao Green Finance's ESG ratings

Corporate efforts in green technology improvements are critical for enhancing sustainability; consequently, how to promote green innovation has attracted scholarly attention. This study explores whether and how environment, social, and governance (ESG) ratings influence corporate green innovation by using an independent third-party rating agency's (SynTao Green Finance) ESG ratings in China as a quasi-natural experiment. We find companies covered by the ESG rating agency significantly increase green innovation output by 3.9%, mainly as an increase in green invention patents. ESG ratings' positive effects on green innovation are more pronounced for firms whose investors are less short-sighted, non-state-owned enterprises and firms with higher degree of financial constraints. Additionally, we find ESG ratings' impact can also increase the green innovation quality and synergetic green innovation. Thus, ESG ratings from third-party institutions can effectively increase corporate green innovation, which has important implications for companies to achieve green transformation and for emerging markets to improve ESG rating systems.     

Institutional investors and corporate environmental costs: The roles of investment horizon and investor origin

Using an international data set that quantifies corporate environmental costs, we analyze the influence of institutional investor ownership, particularly investment horizon and investor origin, on the monetized environmental impact generated by their investee firms. Institutional investor ownership is negatively related to corporate environmental costs. This effect is driven by long-term foreign institutional investors, especially investors from advanced economies. Corporate environmental costs are negatively correlated with firm valuation and positively correlated with the cost of equity. Since corporate environmental costs are not reflected in environmental, social and governance ratings, our results shed new light on the role of institutional investors in shaping corporate environmental impact.     

Retail investor attention and herding behavior

In this paper, we argue that when individual investors can obtain information from public resources such as Google search, the degree of investor attention to a particular underlying company is positively linked with herding behavior for retail investors. Empirical results confirm that Google Search Volume Index can be a proxy for the information demand of uninformed individual investors. Empirical evidence also shows that reaching the price limit generates an attention-grabbing effect. Further, in general, small cap firms generate more intensive individual investor herding. In addition, we explore the asymmetric impact of abnormal search volume index on individual investor herding behavior for bull and bear markets, and confirm that the individual investor buy herding phenomenon is stronger in bull markets, especially for small capitalization firms. In bear markets, with greater price deterioration for large cap firms, we detect herding behavior on the sell side.     

Contractual corporate governance

Companies have the choice to deviate from their national corporate governance standards by opting into another system. They can do so via contractual devices – such as cross-border mergers and acquisitions, (re)incorporations, and cross-listings – which enable them to choose their preferred level of investor protection and regulation. This paper reviews these three main contractual governance devices, their effect on value, and whether their adoption by firms induces a race to the bottom or a race to the top. Indeed, firms may opt for less shareholder-orientation or investor protection (shareholder-expropriation hypothesis) rather than for more stringent rules that require firms to focus on shareholder value (bonding hypothesis).     

融资融券、终极控制人两权分离与大股东掏空抑制

采用2010-2016年沪深两市A股上市公司数据,考察融资融券机制、终极控制人两权分离对大股东掏空行为的影响.研究发现:两权分离度越高,大股东掏空越严重.而融资融券抑制了终极控制人两权分离引起的大股东掏空.进一步分析发现:在投资者保护环境更差、信息披露质量较低、内部治理机制更差的公司中,融资融券的掏空治理效应更加明显.     

Retail investor attention and firms' idiosyncratic risk: Evidence from China

This paper investigates retail investor attention to firms' idiosyncratic risk in China. We use the Baidu search index as a proxy for attention and test its effect on Chinese firms' idiosyncratic risk from 2011 to 2017. Our empirical results suggest investor attention has a positive impact on firms' idiosyncratic risk. This effect is robust to possible endogeneity issues and alternative channels of effects and is stronger for small firms. Additional analysis finds that the effect of our proxy for attention on firms' idiosyncratic risk is stronger than investor sentiment and traditional attention proxies, including announcements, media news, analyst ratings, and brokerage reports. These findings provide evidence of retail investor attention could increase firms' contemporaneous idiosyncratic risk, and decrease firms' subsequent period risk.