Expert reports in Australian takeovers: fees and quality

Target firms in Australian takeovers are required to commission the preparation of an independent expert report in circumstances where there is a perceived conflict of interest with the bidder. As approximately half of these reports are prepared by firms with which the target has other business dealings, concern has been expressed over the quality of these reports due to the suggestion that such reports are provided at lower fees. We examine the 191 independent expert reports provided in all 649 Australian takeover bids initiated in the period 1990 to 2000 inclusive. Using an expert-fee model, we find that the fees for reports by experts with other business dealings with the target are not lower than those of unrelated experts. In addition, the results indicate that experts with other dealings with the target provide reports with a significantly smaller valuation range, consistent with these reports being of higher, rather than lower, quality. Our findings are inconsistent with the U.S. and New Zealand experience of prohibiting audit firms from providing valuation advice in takeovers.     

Profits and Principles: Four Perspectives

This article clarifies the relationship between profits and principles by distinguishing four alternative perspectives: the win-win perspective in which ethical behaviour generates the highest profits; a licence-to-operate perspective in which a minimum ethical performance is required to receive legitimation from the society; an acceptable profits perspective, in which an acceptable profitability is required to assure the financial continuity; and an integrated perspective. These four perspectives are illustrated by statements from Shell reports and from interviews with managers of a large European retail company.     

怎样读懂产品质量检验报告

文章在介绍了怎样了解产品质量检验报告的基础上,探讨了作为一名普通的消费者如何通过检验报告的信息来判断产品的质量优劣。     

黑龙江省上市公司财务报告透明度现状研究

通过对黑龙江省27家上市公司2004年-2012年期间的241个公司-年度样本进行研究,发现黑龙江省上市公司的财务报告透明度较低,呈逐年下降趋势,多数样本公司存在着较为明显的利用应计项目平滑上市公司会计盈余的行为,导致投资者无法充分了解黑龙江省上市公司真实的财务状况和经营成果,这对提升黑龙江省上市公司的形象极为不利。黑龙江省应完善上市公司的信息披露制度,提高财务报告透明度,以吸引更多投资者。     

Tax Loss Carryovers in a Competitive Environment*

The fact that incumbent firms can immediately deduct research and development (R&D) investments from taxable income is generally believed to give them a strategic advantage over new firms that cannot deduct the investment cost, but instead generate a net operating tax loss carryover. Using an analytical model, we show that this conventional wisdom need not hold in a competitive environment. We examine operating and investment decisions in a duopolistic industry in which an initial investment in R&D yields an immediate tax benefit for one firm, but creates a net operating loss carryover for the other firm. If both firms invest in R&D, the firm with the net operating loss carryover makes more aggressive capital investment decisions following successful R&D. This may deter the incumbent firm from investing in R&D despite the lower aftertax costs of this investment. Changing the tax loss carryover rules would thus not only affects start‐up or loss firms, but would also affect the investment decisions of profitable firms in the same industry.     

Shareholder voting in mergers and acquisitions: evidence from the UK

This paper examines the determinants and consequences of shareholder voting on mergers and acquisitions using a sample of resolutions approved by shareholders of UK publicly listed firms from 1997 to 2015. We find that dissent on M&A resolutions is negatively related to bidder announcement returns and positively related to shareholders’ general dissatisfaction towards the management. Shareholder dissent is an important predictor of the announcement returns of subsequent M&A deals. We also report an increase in shareholder dissent after the 2007–2008 financial crisis.     

Politically Connected Governments

This paper examines the consequences of powerful political connections for local governments. We find that governments located within the constituencies of, and thus connected to, powerful congressional members reduce their stewardship over public resources. Using plausibly exogenous declines in the power of congressional representation, we show that the effect is causal. To better understand why connected local governments can reduce stewardship, we study electoral characteristics. Our findings suggest that the increased resources that come with powerful congressional representation allow local-government officials to reduce stewardship without material adverse effects on their reelection prospects. In sum, we provide evidence of a cost of political connections: they weaken local governments' incentives to act in a socially optimal manner.     

Information Quality of Interim Financial Statements

Expressing concern about the Canadian capital market environment, Boritz (2006) suggested that the accounting and auditing profession may be paying limited attention to quarterly reports. This study investigates whether fourth‐quarter adjustments are significantly different from the previous three, thereby limiting the reliability or faithful representation of the firms' results for each quarter. This study includes four years (2003–2006) of quarterly financial information of 353 Canadian public companies. Our results indicate that the volatility of net income in each of the first three quarters is considerably lower than in the final quarter. While lower volatility can improve predictability, the resulting relevance may be limited. The low volatility of reported earnings in the first three quarters suggests that either earnings management is taking place or that management may not be exercising sufficient care at the end of each of the first three quarters on the measurements that generally accepted accounting principles call for and readers of financial statements expect. This could result in quarterly financial statements that do not faithfully represent the underlying resources and obligations of the reporting firms at the end of the quarter, or the firm's performance during the quarter. Our findings support Boritz's proposition for increased audit requirements for interim reports and changes in the approach to the annual audit to integrate it more closely with interim financial reporting.     

Stock returns after major price shocks: The impact of information

This paper focuses on stocks that experience major price changes. Using analyst reports as a proxy, I find that price events accompanied by information are followed by drift, while no-information ones result in reversals. One interpretation of these results is that investors underreact to news about fundamentals and overreact to other shocks that move stock prices. Consistent with this hypothesis, information-based price changes are more strongly correlated with future earnings surprises than no-information ones. Furthermore, drift exists only when the direction of the price move and of the change in analyst recommendations have the same sign. Finally, the ratio of no-information to information-based price shocks is strongly correlated with aggregate implied volatility and also forecasts momentum returns.