Coping with International Accounting Diversity: Fund Managers' Views on Disclosure,Reconciliation, and Harmonization*

In this paper we examine the practices of representative samples of U.S.- and U.K.-based international investment managers in order to determine whether and how they are affected by accounting diversity and, therefore, by the presence or absence of quantitative reconciliation, and what their views are towards greater disclosure, reconciliation, or harmonization. We find that all three forms of reduced diversity-more uniform disclosure, quantitative reconciliation to U.S. GAAP, and international harmonization are viewed as good things by managers. None, however, appears to be critical in the investment process. Reconciliation is a costly requirement and we conclude that the SEC's insistence on reconciliation is not well-founded and that other means, especially greater emphasis on mutual recognition subject to certain minimum standards of disclosure and presentation, would be more effective.     

Acquisitions and the Information Environment of Firms

This paper investigates how acquisitions affect analyst following of firms. Analyst following increases as a result of a merger. However, all of that increase can be attributed to the changes in firm-specific characteristics resulting from the merger. Changes in analyst following around mergers are positively related to changes in firm size, expenditures on R&D, and the ratio of book to the market value of equity. Finally, the relatedness of merger appears to be an important determinant of analyst following of firms engaged in acquisitions.     

Trading costs, liquidity, and asset holdings

In this article I develop a model that accounts for interdependencebetween trading costs in various asset markets arising fromthe optimizing behavior of liquidity traders. The model suggeststhat noise trading is an important determinant of the liquidityof asset markets and provides a positive theory for diversifiedasset holdings by risk-neutral liquidity traders.     

Innovations in financing: The impact of anchor investors in Indian IPOs

In 2009, the Securities Exchange Board of India allowed qualified institutional investors to anchor initial public offerings (IPOs) by participating in the issue at a price and allocation publicly disclosed preceding the issue. We study anchor investors (AIs) in Indian IPOs during 2009–2017. We find the share allotment and the number of AIs separately have significant impacts on valuation and underpricing; however, the net effect is nonsignificant. Further, AIs significantly influence other institutional investors' participation in the IPO and induce lower aftermarket volatility. Overall, our evidence suggests that AIs boost demand for and mitigate ex ante information uncertainty of IPOs.