Corporate Political Activities and the SEC's Oversight Role in the IPO Process

We study how a regulator (Securities and Exchanges Commission; SEC) responds to IPOs that have a higher political profile. We find that IPOs with issuers (intermediaries) that actively pursue political strategies receive more (less) SEC comment letters than IPOs without such actors. Cross-sectional analysis reveals that the IPO's political environment moderates the relationship between social pressure for more corporate transparency and SEC scrutiny. Additional tests indicate that the political activities of issuers (intermediaries) contribute to a less (more) efficient IPO process. Overall, our findings suggest that politically active intermediaries have stronger incentives to accurately portray the IPO financial reporting environment than politically active issuers because they have greater reputational and political capital at stake; quite simply, the former have more to lose. We draw out the implications for theory, in terms of agency and reputation.     

European common stochastic long-run trends

The paper examines convergence on the European level by using production functions which include capital and labor as factors of production. The methodology is based on principal-components analysis of common trends appropriate for heterogeneous panels. Using data for the 1960–1997 period and alternative specifications, it is found that convergence can be decisively rejected, although the number of common trends is relatively low (about four or five).     

The effect of board composition on the informativeness and quality of annual earnings: Empirical evidence from Greece

This study examines how the informational quality of annual accounting earnings, varies according to the size and composition of the board of directors of publicly listed firms within the Greek capital market. Data analysis over a period of five years (2000-2004) revealed that the informativeness of annual accounting earnings is positively related to the fraction of outside directors serving on the board, but it is not related to board size. Additionally, firms with a higher proportion of outside board members proved to be more conservative when reporting bad news but on the contrary they do not display greater timeliness on the recognition of good news. Finally, firms with a higher proportion of outside directors report earnings of higher quality compared to firms with a low proportion of outside directors. Our results are robust to several sensitivity tests controlling for endogeneity, firm's fixed effects and alternative models for the estimation of discretionary accruals.     

Audit pricing, quality of earnings and board independence: The case of the Athens stock exchange

Prior research has pointed to the importance of the determinants of audit pricing. This paper examines empirically the effect of both audit independence and earnings management on the audit pricing by companies listed on the Athens Stock Exchange. This test is performed in an institutional setting with excessive earnings management and poor corporate governance mechanisms. The results based on a sample of 97 Greek companies for a five-year period (2000-2004), show that there is a positive association between audit independence and auditing pricing. Our results also indicate a positive association between audit pricing and earnings management for the small size companies. Taken together our results suggest that strong governance is related to increased needs for quality assurance services and that the relation between earnings management and audit pricing might indicate potential red flags. Finally, limitations, suggestions for further research and policy implications for regulatory agencies are offered.     

Cash holdings of listed and unlisted firms: new evidence from the euro area

This paper examines the cash holdings behavior of listed and unlisted firms. We argue that unlisted firms, which are smaller, face a greater wedge between the cost of external and internal finance and as a result they need to rely more on the later. Relying on internal funds means that firms have a precautionary motive to hold cash. We test our theory using an unbalanced panel of mainly small medium enterprises within the euro area over the period 2003–2017 paying special attention to the role of financial pressure, financial constraints and the recent financial crisis. Our findings reveal that unlisted firms hold more cash than their listed counterparts due to precautionary motives. In addition, when considering the effect of financial pressure, the results show that the difference in cash holdings between listed and unlisted firms exhibit a ‘U-shaped’ relationship. Finally, unlisted firms have a higher sensitivity to save cash out of cash flow than listed firms. Our results are robust to using different specifications and different financial pressure measures.     

Foreign Exchange Risk,Equity Risk Factors and Economic Growth

This paper examines the information content of the equity risk factors that explain cross variation of stock returns and predicting future macroeconomic growth. For the first time we incorporate a new foreign exchange risk factor, providing important insights into the relationship between risk factors and the business cycle. The methodology involves the performance of a stepwise regression analysis of future macroeconomic growth against the lagged returns of five risk factors (market risk premium, size, value, momentum and foreign exchange risk). The results are validated with Granger causality tests and out-of-sample dynamic forecasting. They show that the foreign exchange risk factor contains strong, stable and statistically significant incremental information concerning future macroeconomic growth. Firms that are sensitive to the foreign exchange risk thrive when an economic upturn is anticipated and firms that are insensitive to the foreign exchange risk will have larger returns when an economic downturn is anticipated.     

Mentoring receipt and personality: Evidence for non-linear relationships

The research investigates the relationship of the Big-Five of personality with mentoring receipt with the use of two independent studies. The findings of the studies show substantial consistency. Equations of quadratic form describe half of the tested relationships better than linear equations. The association of openness to experience and agreeableness with mentoring receipt is of inverted U-shape. The benefits of being open and agreeable for mentoring receipt cease to exist at high values of these traits. On the other hand, emotional stability and conscientiousness demonstrate exclusively positive linear relationships with mentoring receipt. The form of the relationship of extraversion differs between the two studies, but the overall trend is positive. The substantial quadratic component in the association of personality with receipt of mentoring means that research hitherto may be grossly underestimating the effects of personality on developmental relationships because earlier studies assume strictly linear associations. Parts of the results also imply that the associations of certain personality traits with mentoring receipt may depend upon the occupational context.     

Productivity Trends and the Sterling Real Exchange Rates*

This paper provides favorable econometric evidence for a productivity‐based model of the pound/euro real exchange rate. We find that a 1% increase in UK productivity is consistent with a 3.5% real depreciation of sterling. Likewise, a 1% increase in euro area productivity is compatible with a 5.16% real appreciation of sterling. The asymmetric response of UK and foreign productivity shocks corresponds well with our model if UK labor supply is more elastic than euro area labor supply. Estimates of equilibrium exchange rates suggest that sterling was not overvalued at its 2004Q3 level vis‐à‐vis the euro.