Dual-listing firms are subject to the relevant regulations of both their home country and cross-listing country. Existing research has not paid enough attention to the potential influence of home country institutional factors (e.g. unique disclosure policies) either on dual-listing firms ’ or local foreign firms ’ voluntary disclosure. With more than 30 % market capitalization of Chinese dual-listing firms under different profit warning rules from local firms, Hong Kong equity markets provide us with the opportunity to investigate whether these Chinese dual-listing firms influence other local players to make “warn or not warn” decision. We find that local players are more likely to issue profit warnings if the Chinese dual-listing peers have warned. We further find that this impact is varying with the type of news, the market capitalization of AH firms, and the market shares of AH counterparts in the industries. In addition, such spillover effect diminishes with the increase in earnings surprises of non-dual-listing firms, due to an underlying duty of non-dual-listing firms to the markets to disclose the material information.

Some CEOs decide to voluntarily issue warnings when they expect a negative earnings surprise. Prior research suggests that warnings have incremental information beyond actual earnings and warning firms tend to experience permanent, instead of transitory, earnings decreases. This paper investigates whether boards of directors consider the issuance of warnings when evaluating CEO performance. In particular, this study examines the effect of warnings on CEO compensation (annual bonus and option grants) and turnover. We find that warnings are significantly negatively associated with CEO bonus, but positively associated with option grants. This finding indicates that boards of directors adjust CEO compensation toward a more future-oriented structure after warnings are issued. We also find that after warnings are issued, the sensitivity of bonus to stock returns increases significantly, although the sensitivity of option grants to stock returns does not differ from that of non-warning firms. Furthermore, we provide evidence that both CEOs bonus and option grants incorporate peer firms ‟ performance (i.e., stock returns and warnings) to filter out the external shocks that are common to the industry peers. Lastly, we show that as another potential direct benefit for CEOs, issuing warnings reduces CEO turnover. Overall, these findings suggest that the signal from warnings is used in determining CEO compensation and job retention

Standard principal-agent theory is generally based on gross performance measures (i.e., before compensation expense), yet boards in practice also determine incentive compensation using net performance measures (i.e., after deducting compensation expense). In a multi-principal, multi-agent model where relative performance evaluation arises endogenously, we derive theoretically optimal incentive weights based on net performance and show that they yield substantially different economic determinants relative to incentive weights based on gross performance. Extending our model to an empirical context, we then show analytically that the conventional practice of including net performance in compensation regressions creates a bias in estimating pay-for-performance sensitivity (PPS). However, including gross performance yields an unbiased estimate of PPS irrespective of whether boards actually determine managerial compensation using net or gross performance. We provide empirical evidence of underestimated PPS when including net (relative to gross) performance in compensation regressions, suggesting a possible explanation for surprisingly weak CEO incentives interpreted in prior studies. Applying our insights to tests for relative performance evaluation, we also investigate biases created by using net versus gross performance.

Using Internet traffic patterns from the Securities and Exchange Commission Electronic Data-Gathering, Analaysis, and Retrieval (EDGAR) website, we show that firms appearingin chronologically adjacent searches by the same individual are fundamentally similar on multiple dimensions. In fact, traffic-based peer firms identified by our algorithm significantly outperform peer firms based on six-digit Global Industry Classification Standard (GICS) groupings in explaining cross-sectional variations in base firms ’ stock returns, valuation multiples, forecasted and realized growth rates, research and development expenditures, and various other key financial ratios. Our results highlight the usefulness of EDGAR data, as well as the latent intelligence in search traffic patterns.

journal homepage: www.elsevier.com/locate/cplett First-principles study of the B- or N-doping effects on chemical bonding

Abstract: This paper revisits the topic of relative performance evaluation (RPE) of top management using a large panel of community banks. We show that penalizing executives for poor performance arising from economic downturns is not necessarily inconsistent with the theory. Our empirical results indicate that weak downturn-linked performance is strongly related to increased executive turnover. Furthermore, this relationship is more pronounced in bettergoverned banks, which are more likely to engage in value-enhancing disciplinary actions. Our analysis suggests that executive dismissals during adverse economic conditions are not necessarily a result of bad luck; rather, the analysis implies that bad times are informative about management quality. 2 I.

Abstract: This paper revisits the topic of relative performance evaluation (RPE) of top management using a large panel of community banks. We show that penalizing executives for poor performance arising from economic downturns is not necessarily inconsistent with the theory. Our empirical results indicate that weak downturn-linked performance is strongly related to increased executive turnover. Furthermore, this relationship is more pronounced in bettergoverned banks, which are more likely to engage in value-enhancing disciplinary actions. Our analysis suggests that executive dismissals during adverse economic conditions are not necessarily a result of bad luck; rather, the analysis implies that bad times are informative about management quality. 2 I.

This dissertation is composed of three chapters in which I use both reduced-form approach and structural approach to study executive compensation in S&P1500 …rms from 1993 to 2005. Chapter 1 provides the literature and methodology background of this dissertation. I summarize existing accounting empirical studies on executive compensation under two tasks, that is, (1) testing contract theory and (2) analyzing policies. I compare struc-tural approach with reduced-form approach in terms of their scopes, execution, and comparative advantages. Also, I briey introduce the steps of implementing structural analysis and close this chapter with a high level plan for the following two chapters. Chapter 2 focuses on the …rst task and is based on my job market paper entitled "Mutual Monitoring within Top Management Teams: A Structural Modeling Investi-gation". I study whether executive compensation reects that shareholders take advan-tage of top managersmutual monitoring. Mutual monitoring as a solution to moral hazard has been extensively studied by theorists, but the empirical results are few and

This paper is based on my dissertation at the University of Wisconsin-Madison. I gratefully