CEO/CFO characteristics and financial reporting quality: A review

This study reviews the literature on the association between different facets of CEO/CFO characteristics and the properties of accounting information. The review is organized around three broad themes, namely, the association between financial reporting quality and CEO/CFO turnover, the effect of managerial overconfidence on financial reporting outcomes, and finally the effect of CEO/CFO gender on reporting outcomes. This review illustrates the importance of considering CEO/CFO characteristics as an important determinant of financial reporting outcomes. This study offers insights to policy makers interested in enhancing the governance function to enhance the credibility of financial reporting. The review informs regulators that designing governance structure disregarding CEO/CFO characteristics may not bring desired benefits.     

Gender Differences in Managerial Attitudes Towards Unearned Privilege and Favoritism in the Retail Sector

This paper describes the concepts of unearned privilege and favoritism and tests if there are differences in managerial attitudes towards the use of these behaviors based on respondent gender. Respondents included 180 managers employed with a large retail organization located in the southern part of the United States. The results indicate that female managers more strongly disapproved of the use of unearned privilege in making promotion decisions and more strongly disapproved of the decision to use favoritism in decision making related to customer relations. The results also indicated that male managers were less likely to disapprove of the use of unearned privilege when they had greater years of management experience. In addition, the most experienced female managers reported disapproval levels for the use favoritism in decision making related to customer relations equal to that of the most experienced male managers.     

When it Rains,it Pours: Estimating the Spatial Spillover Effect of Rainfall

Environmental and Resource Economics - A large fraction of the world’s poor rely on rain-fed agriculture, which makes them vulnerable to changes in rainfall patterns. In this paper, we...     

Corporates' strategic responses to economic policy uncertainty in China

Using a novel news‐based index of economic policy uncertainty, this paper studies the impact of economic policy uncertainty on corporate strategic positioning and corporate risk in China from 2009 to 2015. The study also investigates the impact of corporate strategic positioning on corporate risk. The results show that corporate strategic positioning and economic policy uncertainty have a significant positive impact on corporate risk. The results also explain that economic policy uncertainty increases the market risk of the firms irrespective of their corporate strategy. However, it increases the business risk of prospector firms and decreases the business risk of defensive firms. The study may help the firms to formulate and improve their strategic positioning while considering economic policy uncertainty. Our results are robust to alternate proxies of economic policy uncertainty and corporate risk.     

Fair Value Exposure,Changes in Fair Value and Audit Fees: Evidence from the Australian Real Estate Industry

This paper investigates the relationship between audit fees and both fair value exposure and changes in fair value of investment properties. The study is motivated by the limited and inconclusive evidence on the effect on audit fees of full fair value reporting for illiquid assets. Using hand‐collected data from the Australian real estate industry, we find a negative (positive) association between audit fees and fair value exposure (changes in fair value of investment properties). Our findings also indicate that the use of unobservable inputs in fair value estimates for investment properties does not significantly increase audit risk and audit fees. Further, we find that audit fees are higher for firms with fair values of investment – properties estimated by external and mixed valuers – compared to firms with fair values estimated by directors alone. This study enriches the audit fee literature by documenting auditors’ pricing decisions in an area that involves significant estimation and valuation risks.     

Can information alone change behavior? Response to arsenic contamination of groundwater in Bangladesh

We study how effectively information induces Bangladeshi households to avoid a health risk. The response to information is large and rapid; knowing that the household's well water has an unsafe concentration of arsenic raises the probability that the household changes to another well within one year by 0.37. Households who change wells increase the time spent obtaining water fifteen-fold. We identify a causal effect of information, since incidence of arsenic is uncorrelated with household characteristics. Our door-to-door information campaign provides well-specific arsenic levels without which behavior does not change. Media communicate general information about arsenic less expensively and no less effectively.     

Ownership concentration, voluntary disclosures and information asymmetry in New Zealand

This paper investigates the impact of different classes of ownership concentration on information asymmetry conditional upon corporate voluntary disclosures in New Zealand. The current paper attempts to extend this stream of research by incorporating three mutually exclusive ownership structures and considering the interactive relationship between such ownership structures and corporate voluntary disclosures. Results reveal that ownership concentration in general is significantly positively associated with bid-ask spreads (proxy for information asymmetry) observed around annual report release dates. This finding supports the adverse selection hypothesis and importantly this effect is found to be most pronounced for financial institutions and management-controlled ownership categories. When voluntary disclosure is taken into account, the findings demonstrate that disclosures significantly attenuate information asymmetry risk associated with ownership concentration. This effect is particularly pronounced for firms with management-controlled ownership structures. The findings highlight the importance of corporate disclosures under concentrated ownership structures especially management-controlled ownership structures in reducing information asymmetry and enhancing market efficiency in New Zealand.     

Optimum allocation in multivariate stratified random sampling with overhead cost

The problem of allocating the sample numbers to the strata in multivariate stratified surveys, where, apart from the cost involved in enumerating the selected individuals in the sample, there is an overhead cost associated with each stratum, has been formulated as a non-linear programming problem. The variances of the posterior distributions of the means of various characters are put to restraints and the total cost is minimized. The main problem is broken into subproblems for each of which the objective function turns out to be convex. When the number of subproblems happens to be large an approach has been indicated for obtaining an approximate solution by solving only a small number of subproblems.     

Political Connections and Related Party Transactions: Evidence from Indonesia

This paper examines whether politically connected firms use related party transactions as a tunneling mechanism in Indonesia. We further investigate whether the presence of tunneling compels managers to manage earnings to conceal such expropriation of resources. Our study is motivated by conflicting evidence in the extant literature about the role of political connections and related party transactions. Using data from Indonesia, we document that politically connected firms use related party loans to tunnel resources, and that this effect is more pronounced for firms with government connections. We further document that politically connected firms manage earnings to conceal their tunneling activities. By documenting the role of related party transactions as a specific channel through which connected firms expropriate resources, we enrich the political connection and related party transactions literature.     

The value of combining the information content of analyst recommendations and target prices

In assessing the usefulness of the analysts’ stock picking advice, the extant literature has largely focused on the profitability of either their stock recommendations or target prices in isolation. In this paper, we examine the profitability of investment strategies that exploit the information analysts convey through revisions in both their stock recommendations and target prices. We find that these strategies significantly outperform the comparable strategies that make use of only one analyst output.