Contracting and Reporting Conservatism around a Change in Fiduciary Duties*

We exploit an influential 1991 Delaware court ruling to examine simultaneously two types of conservatism that play important roles in resolving creditor–owner agency conflicts: contracting conservatism and reporting conservatism. The ruling expanded managerial fiduciary duties in favor of creditors for Delaware-incorporated firms in the vicinity of insolvency. In those firms, following the ruling, debt contracts are less likely to include conservative adjustments to accounting numbers used for covenant compliance (i.e., contracting conservatism decreases), while public financial reporting becomes more conservative (i.e., reporting conservatism increases). The decrease in contracting conservatism is concentrated in firms that exhibit a greater increase in reporting conservatism, suggesting that reporting conservatism is more cost-effective in resolving agency conflicts. In addition, the substitution effect is more pronounced in firms facing greater business uncertainty and firms with greater board independence.     

Asymmetric information consolidation and price discovery: Inferring bad news from insider sales

Due to the paucity of sources of negative firm‐specific information, US capital markets have more difficulty identifying and incorporating bad news into stock prices than they do good news. Even though insider selling is a potentially important proxy for undisclosed bad news, researchers have difficulty ex ante identifying information‐based sales due to an inability to separate liquidity‐motivated from information‐based insider trades. We hypothesize that when insiders in multiple firms sell shares of one firm in which they are insiders and at the same time buy shares of other insider portfolio firms, the sale is more likely to be information‐based, since the proceeds are reinvested. Conversely, when an insider sells one firm without purchasing others or sells multiple insider firms the sale is likely liquidity‐motivated. We find that insider sales identified as information‐based using this algorithm are followed by significant negative abnormal returns. Information‐based sales are also more likely to be associated with delistings, earnings declines and earnings restatements. Analysts are also more likely to revise their earnings forecasts downwards for these firms. It is thus possible to ex ante identify insider sales with information content. Our results will be of interest to investors and also to regulators designing insider trading rules.     

Muddling through cybersecurity: Insights from the U.S. healthcare industry

The U.S. healthcare sector is inadequately prepared to deal with the reality of cyber threats. The increasing use of smart medical equipment and mobile devices is making healthcare organizations more susceptible to ransomware and other types of malware. The size and complexity of operations, coupled with the presence of numerous legacy and incompatible systems, make it difficult to implement effective cybersecurity measures. The daunting nature of the problem often results in an if-it-ain’t-broke-don’t-fix-it stance among senior healthcare leaders. The preponderance of healthcare-related laws, compliance regulations, and security guidance frameworks serve to complicate the cybersecurity challenge further and too often results in senior leadership assuming a state of blissful ignorance. This study sheds light on the key factors contributing to the chaotic state of affairs and presents a roadmap to a more deliberate and proactive approach to cybersecurity risk management.     

Commemorating the 50‐Year Anniversary of Ball and Brown (1968): The Evolution of Capital Market Research over the Past 50 Years

We commemorate the 50th anniversary of Ball and Brown [1968] by chronicling its impact on capital market research in accounting. We trace the evolution of various research paths that post–Ball and Brown [1968] researchers took as they sought to build on the foundation laid by Ball and Brown [1968] to create a body of research on the usefulness, timeliness, and other properties of accounting numbers. We discuss how those paths often link back to the groundwork laid and questions originally posed in Ball and Brown [1968].     

Ownership discrimination and private firms financing in China

This study examines the financing/funding of private firms in China. Our results show that private firms are significantly less funded through formal financing channels such as bank loans than state-owned firms, and hence have to resort to alternative financing such as trade credit. Consistent with the theoretical expectation and literature, there is a substitution effect between trade credit and bank loans for private firms, but this effect is much weaker compared to that of state-owned firms. Moreover, while the univariate comparisons indicate that private firms obtain more notes payable than state-owned firms, the multivariate regression analyses show that the relation between bank loan and notes payable is positive and indifferent between private and state-owned firms.     

Predicting the equity market with option-implied variables

We comprehensively analyze the predictive power of several option-implied variables for monthly S&P 500 excess returns and realized variance. The correlation risk premium (CRP) and the variance risk premium (VRP) emerge as strong predictors of both excess returns and realized variance. This is true both in- and out-of-sample. Our results also reveal that statistical evidence of predictability does not necessarily lead to economic gains. However, a timing strategy based on the CRP leads to utility gains of more than 5.03% per annum. Forecast combinations provide stable forecasts for both excess returns and realized variance, and add economic value.     

工业体系和民营企业兴起——基于252家中国最大民营制造业企业的经验研究

主流经济学家把改革开放后民营企业的大规模兴起，主要归因为市场经济条件下发挥企业家精神和遵循比较优势的必然结果。但是这无法解释为什么民营企业在兴起之初就广泛和快速地进入到各个工业，尤其是技术和资本密集型工业。基于中国工业史和252家中国最大民营制造业企业创业发展史的历史证据，文章找回"工业体系"这一被主流所忽略的重大历史现象和学术概念，从而首次提出一种理解中国民营企业发展独特性的结构性解释。文章发现：从计划经济时期继承而来的门类齐全和独立完整的工业体系，是解释民营企业创业和发展独特性的关键变量；已有的由国有企业和科研院所组成的工业体系，从市场机会、技术能力和组织资源等方面塑造了民营企业的创业选择和发展路径。所以，中国民营企业的快速发展不是仅凭自由市场就会自动出现的普遍现象，而是在市场条件下充分利用工业体系提供的技术和市场条件才得以出现的特殊现象。     

信息技术提高企业组织敏捷性的作用机理

从考察企业组织的敏捷性与交易成本的相互关系入手,对企业组织敏捷性的影响因素进行了剖析。详细分析了信息技术(IT)对提高企业组织敏捷性的作用机理。指出IT正是通过降低企业内、外部的交易成本、缩短流程时间、提高人的认识理性、扼制机会主义、促进企业组织结构、决策方式     

谈高校资料室网上信息资源的开发利用

面对浩如烟海的网络信息资源丰富又无序、新颖又形象、急需开发利用。本文探讨了开发利用网上信息资源的必要性,介绍了如何开发利用网上信息资源,为用户充当网络信息导航员,发掘网上信息,丰富现有信息源等几种方法。