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What determines corporate transparency
, 2002
"... We develop a framework for conceptualizing and measuring corporate transparency at the country level. We perform factor analysis to explore the structure underlying the measures of countries ’ firm-specific information environments from our transparency framework. Our factor analysis isolates two fa ..."
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Cited by 130 (7 self)
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We develop a framework for conceptualizing and measuring corporate transparency at the country level. We perform factor analysis to explore the structure underlying the measures of countries ’ firm-specific information environments from our transparency framework. Our factor analysis isolates two factors. The first factor, interpreted as financial transparency, primarily captures the intensity and timeliness of financial disclosures, and their interpretation and dissemination by analysts and the media. The second factor, interpreted as governance transparency, primarily captures the intensity of governance disclosures (the identity, remuneration, and shareholdings of officers and directors, identity and holdings of other major shareholders) and, to a lesser extent, the intensity and timeliness of financial disclosures. We estimate multivariate, cross-country regressions to investigate hypothesized determinants of the financial and governance transparency factors. Our results suggest that, after controlling for the general level of economic development as measured by per capita GNP, financial transparency is lower in countries characterized by high risk of expropriation of the firms ’ assets or profits by the State, consistent with firms suppressing the availability of financial
Assessing empirical research in managerial accounting: a value-based management perspective
- Journal of Accounting and Economics
, 2001
"... This paper applies a value-based management framework to critically review empirical research in managerial accounting. This framework enables us to place the exceptionally diverse set of managerial accounting studies from the past several decades into an integrated structure. Our synthesis highligh ..."
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Cited by 98 (0 self)
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This paper applies a value-based management framework to critically review empirical research in managerial accounting. This framework enables us to place the exceptionally diverse set of managerial accounting studies from the past several decades into an integrated structure. Our synthesis highlights the many consistent results in prior research, identifies remaining gaps and inconsistencies, discusses common methodolo-gical and econometric problems, and suggests fruitful avenues for future managerial
Corporate governance, accounting outcome, and organization performance. The Accounting Review 82
, 2007
"... We would like to thank David Chun of Equilar Inc., J. Thomas Quinn of TrueCourse Inc., and Joseph Floyd and Liz Bonacci of Huron Consulting for their considerable help on this research project. The paper has benefited from comments from presentations at the ..."
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Cited by 70 (6 self)
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We would like to thank David Chun of Equilar Inc., J. Thomas Quinn of TrueCourse Inc., and Joseph Floyd and Liz Bonacci of Huron Consulting for their considerable help on this research project. The paper has benefited from comments from presentations at the
Economic Consequences of SEC Disclosure Regulation
- 2004) http://papers.ssrn.com/paper.taf?abstract_id=307821 W Cary, “Federalism and Corporate Law: Reflections upon Delaware” (1974) 83 Yale Law Journal
"... of Mergent, and Gerry Cooke of Datastream International for their assistance with institutional details and data issues. Finally, we thank Brian Lempel, Darwin Rodriguez, and Richard Clattenburg for their research assistance. Economic Consequences of SEC Disclosure Regulation: The Case of the OTC Bu ..."
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Cited by 66 (6 self)
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of Mergent, and Gerry Cooke of Datastream International for their assistance with institutional details and data issues. Finally, we thank Brian Lempel, Darwin Rodriguez, and Richard Clattenburg for their research assistance. Economic Consequences of SEC Disclosure Regulation: The Case of the OTC Bulletin Board This paper examines the economic consequences of SEC disclosure requirements using a recent regulatory change in the OTC Bulletin Board. Starting in 1999, all firms trading on the OTCBB have to comply with the “eligibility rule ” requiring firms to provide SEC disclosure filings. For firms that previously did not file with the SEC, this rule is similar to the introduction of the Securities Exchange Act of 1934. In this unique setting, we document both significant costs and benefits to firms from the imposition of SEC disclosure requirements in terms of firms ’ listing choices, shifts in market liquidity and stock returns. Specifically, newly compliant firms experience permanent increases in liquidity and positive returns, whereas the reverse is true for noncompliant firms forced off the OTCBB. Using firms already filing with the SEC prior to the rule change, we provide evidence consistent with the existence of positive externalities from SEC disclosure regulation. JEL classification:
Financial accounting information, organizational complexity and corporate governance systems
- Journal of Accounting and Economics
, 2004
"... We posit that limited transparency of firms ’ operations to outside investors increases demands on governance systems to alleviate moral hazard problems. We investigate how ownership concentration, directors ’ and executive’s incentives, and board structure vary with: 1) earnings timeliness, and 2) ..."
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Cited by 63 (1 self)
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We posit that limited transparency of firms ’ operations to outside investors increases demands on governance systems to alleviate moral hazard problems. We investigate how ownership concentration, directors ’ and executive’s incentives, and board structure vary with: 1) earnings timeliness, and 2) organizational complexity measured as geographic and/or product line diversification. We find that ownership concentration, directors ’ and executives ’ equity-based incentives, and outside directors’ reputations vary inversely with earnings timeliness, and that ownership concentration, and directors’ equity-based incentives increase with firm complexity. However, board size and the percentage of inside directors do not vary significantly with earnings timeliness or firm complexity.
Corporate disclosures by family firms.
- Journal of Accounting and Economics
, 2007
"... We gratefully acknowledge the support from Standards and Poor's in providing the Transparency and Disclosure (T&D) dataset. We would also like to thank Ian Byrne and Bruce Hamann in S&P for assistance with the T&D survey. ABSTRACT Compared to non-family firms, family firms face les ..."
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Cited by 59 (4 self)
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We gratefully acknowledge the support from Standards and Poor's in providing the Transparency and Disclosure (T&D) dataset. We would also like to thank Ian Byrne and Bruce Hamann in S&P for assistance with the T&D survey. ABSTRACT Compared to non-family firms, family firms face less severe agency problems due to the separation of ownership and management, but more severe agency problems that arise between controlling and non-controlling shareholders. These characteristics of family firms affect their corporate disclosure practices. We show that for U.S. family firms and non-family firms in the S&P 500, reported earnings of family firms are of better quality. Also, the likelihood of family firms issuing management earnings forecasts increases more rapidly with the magnitude of bad news. However, family firms make less voluntary disclosures about their corporate governance practices. Consistent with family firms making better financial disclosure, we find that family firms have larger analyst following, lower dispersion in analysts' earnings forecasts, smaller forecast errors, less volatile forecast revisions, and smaller bid-ask spreads.
Is there a link between executive compensation and accounting fraud
- Journal of Accounting Research, Forthcoming
, 2006
"... This study investigates the association between the structure of executive compensation and accounting fraud. We study 50 firms accused of accounting fraud by the Securities and Exchange Commission (SEC) during the period 1996-2003 as compared to firms not accused of accounting fraud during the same ..."
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Cited by 49 (3 self)
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This study investigates the association between the structure of executive compensation and accounting fraud. We study 50 firms accused of accounting fraud by the Securities and Exchange Commission (SEC) during the period 1996-2003 as compared to firms not accused of accounting fraud during the same period. We find that the probability of accounting fraud is increasing in the percent of total executive compensation that is stock-based (termed stock-based mix) after controlling for governance characteristics, financial performance, financial distress, firm size, and the likelihood of management wanting to obtain external financing. We find that while the unconditional likelihood of accounting fraud is small, a one standard deviation increase in the proportion of compensation that is stock-based increases the probability of an accounting fraud by approximately 68%. For managers to undertake fraud they must perceive positive benefits from it. We examine the extent to which managerial wealth was overstated prior to the alleged fraud by measuring the decline in managerial wealth once the alleged fraud was made public. We find
2006. Determinants of the informativeness of analyst research
- Journal of Accounting and Economics
"... Abstract Analyst research helps prices reflect information about a security's fundamentals. However, analysts' private incentives potentially contribute to misleading research and it is possible that the market fixates on such misleading and/or optimistic reports. We examine cross-section ..."
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Cited by 42 (2 self)
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Abstract Analyst research helps prices reflect information about a security's fundamentals. However, analysts' private incentives potentially contribute to misleading research and it is possible that the market fixates on such misleading and/or optimistic reports. We examine cross-sectional determinants of the informativeness of analyst reports, i.e., their effect on security prices, controlling for endogeneity among the factors affecting informativeness. Analysts are more informative when the potential brokerage profits are higher (e.g., high trading volume and high volatility) and when they reveal 'bad news.' Analyst informativeness is reduced in circumstances of increased information processing costs. We fail to find evidence that informativeness of analyst reports is due to market's fixation or over-or under-reaction to analyst reports. We are grateful to Wayne Guay for helpful comments.
How do legal differences and learning affect financial contracts? Working paper
"... We analyze venture capital (VC) investments in twenty-three non-U.S. countries and compare them to VC investments in the U.S. We describe how the contracts allocate cash flow, board, liquidation, and other control rights. In univariate analyses, contracts differ across legal regimes. At the same tim ..."
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Cited by 32 (2 self)
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We analyze venture capital (VC) investments in twenty-three non-U.S. countries and compare them to VC investments in the U.S. We describe how the contracts allocate cash flow, board, liquidation, and other control rights. In univariate analyses, contracts differ across legal regimes. At the same time, however, more experienced VCs implement U.S.-style contracts regardless of legal regime. In most specifications, legal regime becomes insignificant controlling for VC sophistication. VCs who use U.S.style contracts fail significantly less often. Financial contracting theories in the presence of fixed costs of learning, therefore, appear to explain contracts along a wide range of legal regimes.
Transparency, financial accounting information, and corporate governance
- FRBNY Economic Policy Review
, 2003
"... ibrant public securities markets rely on complex systems of supporting institutions that promote the governance of publicly traded companies. Corporate governance structures serve: 1) to ensure that minority shareholders receive reliable ..."
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Cited by 30 (1 self)
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ibrant public securities markets rely on complex systems of supporting institutions that promote the governance of publicly traded companies. Corporate governance structures serve: 1) to ensure that minority shareholders receive reliable
