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1.
Kiridaran Kanagaretnam Jimmy Lee Chee Yeow Lim Gerald Lobo 《Review of Accounting Studies》2018,23(4):1588-1628
Using an international sample of firms from 25 countries and a country-level index for societal trust, we document that societal trust is negatively associated with tax avoidance, even after controlling for other institutional determinants, such as home country legal institutions and tax system characteristics. We explore the effects of two country-level institutional characteristics—strength of legal institutions and capital market pressure—on the relation between societal trust and tax avoidance. We find that the relation between trust and tax avoidance is less pronounced when the legal institutions in a country are stronger and is more pronounced when the capital market pressure is stronger. Finally, we examine the relation between societal trust and tax evasion, an extreme and illegal form of tax avoidance. We show that societal trust is negatively related to tax evasion and the negative relation is less pronounced when legal institutions are stronger. 相似文献
2.
This paper studies the effect of managerial compensation terms on the well-known “underinvestment” incentive. We extend the Mauer and Ott (2000) real-option model of corporate expansion, and show that, when the manager maximizes the value of his compensation package (rather than equity value), the underinvestment problem can be substantially mitigated. Further, by designing an appropriate compensation contract, it is possible to eliminate the underinvestment incentive altogether. This managerial contract, consisting of fixed salary and equity ownership, is explicitly derived in the model. The equity ownership level is found to be an increasing function of the manager's fixed salary and the company's earnings growth rate, and a decreasing function of leverage ratio, earnings volatility, tax rate, bankruptcy costs, and the manager's severance pay at bankruptcy. 相似文献
3.
Kiridaran Kanagaretnam Stuart Mestelman S.M. Khalid Nainar Mohamed Shehata 《Journal of Business Research》2014
In a laboratory-controlled environment we provide experimental evidence on the effects of transparency (complete over incomplete information) and empowerment on trust and trustworthiness. We implement a simple version of the standard two-person investment game in a repeated game context with multiple treatments under two information environments. We find that when principals are empowered by being able to penalize agents who may not act in a way the principal believes is in the principal's best interest, the level of trust and investment increases over that which is realized in the absence of empowerment regardless of the degree of transparency. In transparent environments the effect of empowerment is about the same regardless of whether empowerment is introduced or removed. However, in opaque environments, the loss of empowerment has a substantially greater negative effect on trust than the positive effect associated with the introduction of empowerment. 相似文献
4.
Our model explores the co‐existence of both cooperative and competitive behaviors in an alliance setting. Specifically, when alliance partners cooperatively choose observable contributions given reported costs, their self‐interested behavior may lead to misreporting of costs related to these contributions. We show that truthful cost reporting by an alliance firm is valuable, thereby establishing that accurate cost reports are a determinant of successful alliance performance. Next we show that an alliance firm's cost reporting behavior may depend on the type of payoffs it receives from alliance, i.e., a share of profit or revenue, and also on the type of relationship between contributions, i.e., whether they are technical substitutes or complements. While we have focussed on highlighting factors which underlie cost misreporting, this study also may serve as a basis for investigating ways to design contracts to diminish the loss an alliance suffers from cost misreporting of the firms, thus increasing the chance that an alliance will be successful. Copyright © 2004 John Wiley & Sons, Ltd. 相似文献
5.
CEO stock options and analysts’ forecast accuracy and bias 总被引:1,自引:1,他引:0
Kiridaran Kanagaretnam Gerald J. Lobo Robert Mathieu 《Review of Quantitative Finance and Accounting》2012,38(3):299-322
This paper investigates the relationship between CEO stock options and analysts’ earnings forecast accuracy and bias. A higher
level of stock options may induce managers to undertake riskier projects, to change and/or reallocate their effort, and to
possibly engage in gaming (such as opportunistic earnings and disclosure management). These managerial behaviors result in
an increase in the complexity of forecasting and hence, less accurate analysts’ forecasts. Analysts’ optimistic forecast bias
may also increase as the level of stock options pay increases. Because forecast complexity increases with stock options pay,
analysts, needing greater access to management’s information to produce accurate forecasts, have incentives to increase the
optimistic bias in their forecasts. Alternatively, a higher level of stock options pay may lead to improved disclosure because
it better aligns managers’ and shareholders’ interests. The improved disclosure, in turn, may result in more accurate and
less biased analysts’ forecasts. Our empirical evidence indicates that analysts’ earnings forecast accuracy decreases and
forecast optimism increases as the level of CEO stock options increases. This evidence suggests that the incentive alignment
effects of stock options are more than offset by the investment, effort allocation and gaming incentives induced by stock
options grants to CEOs. 相似文献
6.
Kiridaran Kanagaretnam Robert Mathieu Alex Thevaranjan 《Managerial and Decision Economics》2003,24(1):1-13
In this paper, we develop an analytical model of joint maximizing behavior on the part of students and professors to develop policy rules for universities who use student evaluations as tools for increasing professor effort and, thereby, student knowledge. More precisely, we examine the potential benefits of student evaluations, the consequences of over‐emphasizing them and the optimal level of emphasis that should be placed on them. This exercise allows us to determine conditions under which student evaluations would result in an increase in teaching effort and student knowledge, and environments where it would result in professors manipulating grading schemes to obtain higher student ratings, i.e., grade inflation. Copyright © 2003 John Wiley & Sons, Ltd. 相似文献
7.
Kiridaran Kanagaretnam Gerald J. Lobo Dennis J. Whalen 《Journal of Business Finance & Accounting》2005,32(9-10):1773-1799
Abstract: We study the relationships between three variables which proxy for the ex‐ante level of information asymmetry – forecast dispersion, forecast revision volatility, and the level of analyst coverage, and equity bid‐ask spread and depth changes around quarterly earnings releases. Kim and Verrecchia (1994) suggest that earnings releases increase the level of information asymmetry and lower the level of liquidity in the security market. Using both an OLS regression framework and a simultaneous equations model, we examine whether equity bid‐ask spreads increase and depths decrease as the level of information asymmetry increases. Our results indicate that spreads are higher (relative to a non‐event period) around earnings announcements when information asymmetry is more pronounced; however, depths are lower only on the day following the announcement when there is greater information asymmetry. Relative spreads have a significant positive relation with both forecast dispersion and revision volatility and a significant negative relation with analyst coverage. Relative depths have a significant negative relation with forecast dispersion and a significant positive relation with analyst coverage. Our findings indicate that the equity specialist adjusts both spreads and depths when confronting informed traders around earnings releases and that these adjustments are more pronounced when the level of information asymmetry is greater. 相似文献
8.
Kiridaran Kanagaretnam Abdul-Rahman Khokhar Amin Mawani 《Journal of Business Ethics》2018,151(2):295-317
We examine the association between societal trust and the levels of CEO compensation and the proportion of equity-based compensation of 897 firm-years from 18 countries over the 2007–2013 period. We find both the levels of CEO compensation as well as the proportion of equity-based compensation to be lower in countries with higher levels of societal trust. This suggests that costly regulations on CEO compensation may not be as necessary in jurisdictions with higher levels of societal trust. We also examine the association between pay disparity and societal trust. Consistent with our finding of lower pay at the CEO rank, we find pay disparities are lower in countries with higher levels of societal trust. 相似文献
9.
Kiridaran Kanagaretnam Gopal V. Krishnan Gerald J. Lobo Robert Mathieu 《Accounting Perspectives》2011,10(3):161-193
The recent banking crisis has led market participants to focus on the adequacy and quality of banks’ balance sheet items such as the allowance for loan losses. Beaver and Engel (1996) document that the capital market prices the nondiscretionary component of loan loss allowance negatively and the discretionary component less negatively. Using data from the pre‐crisis period and three measures of audit quality, auditor type (i.e., Big 5 versus non–Big 5), auditor industry specialization/expertise, and audit and nonaudit fees paid to auditors, we examine the effect of audit quality on the market valuation of the discretionary component of the allowance for loan losses. We find that, relative to the nondiscretionary component, the market valuation of the discretionary component of loan loss allowance is higher for banks audited by Big 5 auditors than for banks audited by non–Big 5 auditors. We also find that the relative market valuation of the discretionary component of loan loss allowance is increasing in auditor expertise. Regarding the impact of fees paid to auditors, we find that banks paying higher audit fees have higher relative market valuation of the discretionary component of the allowance for loan losses, but banks that pay higher nonaudit fees do not. 相似文献
10.
Testing the Efficacy of Replacing the Incurred Credit Loss Model with the Expected Credit Loss Model
Mohamed Gomaa Kiridaran Kanagaretnam Stuart Mestelman 《European Accounting Review》2013,22(2):309-334
AbstractWe use a controlled laboratory environment to provide evidence on the potential efficacy of the replacement of the Incurred Credit Loss (ICL) Model of International Accounting Standard (IAS 39) by the Expected Credit Loss (ECL) model of IFRS 9 to account for credit impairment losses. We focus on the simplified version of the ECL model using an uncertain production environment as the context. We induce incentives consistent with the existing rigid rule-based ICL model and the proposed forward-looking principle-based ECL model. Our primary finding is that the combined effects of eliminating the minimum ‘probable’ threshold condition together with allowing managers to incorporate forward-looking information increase both the amount and adequacy of periodic reserve decisions. In addition, we analyze the effects of increased flexibility under the new credit-loss model on earnings management using three different compensation schemes. We find that while the replacement of the ICL model with the ECL model facilitates higher reserves, the resulting increased earnings management varies across compensation schemes, is less than predicted, and does not offset the potential of the ECL model’s positive effects. The results provide ex ante evidence on the likely intended and unintended consequences of implementing the ECL model. 相似文献