Essays On Corporate Finance And Disclosure
Download Essays On Corporate Finance And Disclosure full books in PDF, epub, and Kindle. Read online free Essays On Corporate Finance And Disclosure ebook anywhere anytime directly on your device. Fast Download speed and no annoying ads. We cannot guarantee that every ebooks is available!
| Author | : Brian Gibbons |
| Publisher | : |
| Total Pages | : |
| Release | : 2021 |
| Genre | : |
| ISBN | : |
This dissertation contains three essays. In the first essay, I document that disclosure of financially immaterial environmental and social (E&S) information has material effects on firms' investment and financing decisions using the staggered introduction of 87 country-level regulations that mandate firms report such information. Firms domiciled in countries that mandate E&S transparency increase R&D expenditures and patenting activity after disclosing. Transparent non-financial disclosure reduces financing frictions, resulting in more innovation for equity-dependent firms and increased reliance on external equity. It also improves shareholders' contracting and monitoring abilities, incentivizing managers to invest in innovation. Fixed capital investment, which is less sensitive to information frictions, does not change following E&S disclosure. Additionally, I only observe changes to investment and financing decisions when E&S disclosure is mandatory--highlighting the unique value of consistent and comparable disclosure. In the second essay, I study venture capital firms (VCs) use of public market information and how attention to this information relates to their private market investment outcomes. I link web traffic to public disclosure filings hosted on the Security and Exchange Commission's (SEC's) EDGAR server to individual VCs. VCs analyze public information before most deals. An increase in EDGAR filing views relates positively to the probability of an exit through acquisition, suggesting that public information helps identify paths to acquisition. The effect is stronger when the VC has less access to private information. I conclude that policymakers should consider spillover effects on private markets when setting public disclosure requirements. In the third essay, we identify analysts' information acquisition patterns by linking EDGAR server activity to analysts' brokerage houses. Analysts rely on EDGAR in 24% of their estimate updates, with an average of eight filings viewed. We document that analysts' attention to public disclosure is driven by the demand for information and the analysts' incentives and career concerns. We find that information acquisition via EDGAR is associated with a significant reduction in analysts' forecasting error relative to their peers. This relationship is likewise present when we focus on the intensity of analyst research. Attention to public information further enables analysts to provide forecasts for more time periods and more financial metrics. Informed recommendation updates are associated with substantial and persistent abnormal returns, even when the analyst accesses historical filings. Analysts' use of EDGAR is associated with longer and more informative analyses within recommendation reports.
| Author | : David De Angelis |
| Publisher | : |
| Total Pages | : 192 |
| Release | : 2012 |
| Genre | : |
| ISBN | : |
My dissertation contains three essays in corporate finance and corporate governance. The first essay studies the effect of information frictions across corporate hierarchies on internal capital allocation decisions, using the Sarbanes Oxley Act (SOX) as a quasi-natural experiment. SOX requires firms to enhance their internal controls to improve the reliability of financial reporting across corporate hierarchies. I find that after SOX, the capital allocation decision in conglomerates is more sensitive to performance as reported by the business segments. The effects are most pronounced when conglomerates are prone to information problems within the organization and least pronounced when they still suffer from internal control weaknesses after SOX. Moreover, conglomerates' productivity and market value relative to stand-alone firms increase after SOX. These results support the argument that inefficiencies in the capital allocation process are partly due to information frictions. My findings also shed light on some unintended effects of SOX on large and complex firms. The second essay is co-authored with Yaniv Grinstein and investigates how firms tie CEO compensation to performance. We take advantage of new compensation disclosure requirements issued by the Securities and Exchange Commission in 2006. Firms vary in their choice of performance measures and horizons, and in their reliance on pre-specified goals. Consistent with optimal contracting theories, we find that firms choose performance measures that are more informative of CEO actions, and rely less on pre-specified goals when it is more costly to contract on CEO actions. The third essay investigates the design of division managers (DMs) incentive contracts again taking advantage of the disclosure requirements. I find that firms do not use relative performance evaluation across divisions and that in general most of DM compensation incentives are associated with firm performance instead of division performance. Furthermore, division performance-based incentives tend to be smaller in complex firms, when within-organization conflicts are potentially more severe. I also find that when the probability of promotion to CEO is lower, DM ownership requirements are more stringent and DM compensation incentives are greater. These results support notions that influence costs as well as promotion-based incentives are important considerations in designing DMs contracts.
| Author | : Mengbing Ren |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2020 |
| Genre | : Corporations |
| ISBN | : |
| Author | : Yibin Liu |
| Publisher | : |
| Total Pages | : 204 |
| Release | : 2021 |
| Genre | : |
| ISBN | : |
This dissertation addresses several questions in corporate finance. A common thread is the study of stock market investors' processing of disclosure by public firms. The first chapter studies the effect of public scrutiny on financial misreporting. I exploit the staggered implementation of the EDGAR system, which provides all investors with free and instant access to financial reports. Firms phased into EDGAR received higher public scrutiny and stronger stock market reaction to earnings announcements. A plausibly exogenous increase in public scrutiny incentivizes firms to substitute between different methods of earnings management. Moreover, the increase in public scrutiny impacts firms differently depending on the ex-ante level of scrutiny that firms already have, consistent with theoretical predictions. The second chapter models investors' allocation of attention to financial disclosures and its impact on firms' voluntary disclosure. We jointly solve investors' optimal allocation of limited attention and managers' choice to disclose their privately observed signals (e.g., forecasts of future earnings). We predict an inverse-U-shaped relation between firms' likelihood of disclosure and investor attention, supported by our empirical tests. The third chapter also studies investors' reactions to financial reports. In particular, we examine whether earnings management by manipulating firms distorts investors' response to financial reports by (similar) non-manipulating firms. We exploit a unique setting in China's stock market that de-lists firms if they report consecutive negative annual earnings. We find that non-manipulating firms suffer from significant adverse capital market effects, resulting from investors' distrust.
| Author | : Philipp Horsch |
| Publisher | : |
| Total Pages | : |
| Release | : 2016 |
| Genre | : |
| ISBN | : |
This dissertation consists of three independent papers dealing with three different research questions in the area of corporate finance. Despite the different topics all three papers have one main commonality: their focus on empirical identification. In the first paper, Competing with Superstars, we investigate the effect of superstar CEOs on their competitors. Exploiting shocks to CEO status due to prestigious media awards, we document a significant positive stock market performance of competitors of superstar CEOs subsequent to an award. The effect is more pronounced for competitors who have not received an award themselves, who are geographically close to an award winner and who are not entrenched. We observe an increase in risk-taking, operating performance and innovation activity of superstars' competitors as potential channels for this positive performance. Our results suggest a positive overall welfare impact of corporate superstar systems due to the incentivizing effect on superstars' competitors. The second paper, Unionization and Corporate Disclosure: Evidence from a Natural Experiment, investigates the effect of unionization on financial reporting quality. We establish causality by applying a regression discontinuity design exploiting the discontinuity generated by labor union elections that pass or fail by a small margin. Unionized firms improve their financial reporting quality by 2.6% the year after the election compared to nonunionized firms. The effect is mainly attributable to companies which understate their income. The effect is more pronounced in states with right to work laws and for companies with higher information asymmetry. Our results suggest that unions monitor companies if it potentially increases their rent seeking profits. In the third paper, Are There Peer Effects In Innovation?, we investigate how companies react to their peers' innovation activities, such as new patents. Exploiting exogenous.
| Author | : Michael Furchtgott |
| Publisher | : |
| Total Pages | : 115 |
| Release | : 2013 |
| Genre | : Business failures |
| ISBN | : 9781303429330 |
This dissertation consists of three chapters that lie at the intersection where corporate finance meets law and economics. The first chapter (co-authored with Frank Partnoy) is a study on the relationship between shareholder litigation risk and the tactics that firms use for disclosing negative news. The empirical approach uses a natural experiment that arose from a Supreme Court decision that changed the policies used by the lower courts in certain jurisdictions. The main findings are that firms that were differentially impacted by the policy change were more likely to change their disclosure tactics. This result shows that firms respond to the litigation-risk environment in choosing their disclosure strategies. Although the court's policy decision was meant to protect firms from frivolous litigation, our evidence indicates that many firms responded by releasing information in a less timely and less transparent manner. The second chapter, which uses a unique dataset of out-of-court restructurings of Japanese firms, examines CEO turnover during the distress-resolution process. Taking into account the selection process behind CEO turnover, the empirical evidence indicates that all else equal, replacing the CEO during a restructuring leads to worse operating performance. This result suggests that in Japan's thin market for experienced executives, firing the CEO can have negative consequences for the firm's future performance. However, there is evidence that equity funds---which have become a more significant force in Japan in recent years---are better at recruiting skilled managers than other types of restructuring leaders. The third chapter presents an empirically-motivated theoretical model that explores bankruptcy law in the context of distress externalities. The model describes industries in which one firm's liquidation can have negative effects on other firms that use similar assets as collateral in their own financing. The main result of the model is that courts can produce efficiency gains by using debtor-friendly bankruptcy laws that may violate the usual priority of claims on a distressed firm.
| Author | : Danil A. Borilo |
| Publisher | : |
| Total Pages | : |
| Release | : 2016 |
| Genre | : |
| ISBN | : |
This thesis studies how a firm's disclosure decisions are affected by the interaction between prevailing financial reporting regulation and managerial incentives. Chapter 1 summarizes studies related to this thesis. I focus on rules that require a firm to issue regular financial statements. As a result, the release of some information about a firm's performance and financial condition is inevitable. However, since financial statements do not fully reflect all value-relevant information, a firm's manager can still affect the interpretation of this information via voluntary disclosure. In Chapter 2, I study how reputational concerns of a firm's manager affect her voluntary disclosure decisions. I show that interpretation of both the firm's report and voluntarily disclosed information depend on the timing of the disclosure relative to disclosures made by other firms in the same industry. In Chapter 3, I consider the case when private information of the firm's manager cannot be credibly communicated to outside investors and a mandatory financial report is the only available information channel about firm value. As a result, the noisiness of a financial report will lead investors to overvalue some firms and undervalue others. I show that allowing for misreporting can increase social welfare if a firm must rely on external capital in order to finance its investment opportunities. Overall, my results emphasize the importance of taking into account strategic disclosure decisions of managers for regulators, investors, and analysts.
| Author | : Tianze Li |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2017 |
| Genre | : |
| ISBN | : |
The thesis consists of three essays on corporate finance. In the first essay, we test the hypothesis that the stock market tends to overvalue initial public offerings (IPOs), assuming that IPO issuers can value their own firms more accurately. Using the lower limit of initial file price range as issuers' reservation price, we estimate the premiums of IPO first day closing price and first month closing price over the reservation price. We find that the price premiums are positively associated with proxies for market over-optimism and uncertainty. IPOs with higher price premiums have worse stock performance in the long run. The results are robust to various economic specifications. The findings are consistent with the argument that the stock markets get over-optimistic about IPOs from time to time. In the second essay we investigate insider selling activities for IPO firms. We find that insiders in 31.3% of IPOs sell shares prior to lock-up expiration (early sales). Consistent with the IPO over-optimism hypothesis, IPO price premium is positively correlated with early sales as well as sales following lock-up expiration (late sales), which suggests that insiders of overvalued IPOs tend to opportunistically liquidate their holdings. In addition, empirical evidences show that insiders may exploit IPO mispricing in the primary market to sell secondary shares and revise up total share offered. In the third essay, we explore why many firms disclose internal control (IC) deterioration under section 404 of Sarbanes-Oxley Act after previously reporting effective IC. We find empirical evidences suggesting that many of the reported IC deteriorations result from detection of previously undetected weaknesses. Restated or not, the reported deterioration in IC is associated with increase in audit fee, increase in management turnover and auditor turnover, decline in Altman Z score decile, and increase in loss. Consistent with an agency hypothesis that managers try to manipulate the IC process when firm performance declines, the reported deterioration in IC is also associated with poor stock returns in the year before disclosure. ICW disclosure is more likely when poor stock return is combined with higher sensitivity of executive compensation to stock price change.
| Author | : Daniel Paravisini |
| Publisher | : |
| Total Pages | : 116 |
| Release | : 2005 |
| Genre | : |
| ISBN | : |
The first essay provides evidence that banks are liquidity constrained and hold private information about borrowers that hinders substitution of financing sources. Using loan level data from a public credit bureau and exploiting an exogenous shock to bank liquidity, I show that adverse selection prevents full arbitrage of profitable opportunities by competing lenders and thus liquidity constraints propagate to bank-dependent borrowers. The second essay evaluates a government program that targeted credit to small firms through existing financial intermediaries. Using the program eligibility rule to identify the effect on target firms, I find that target firms' total bank debt increased by 8 cents for every dollar of program financing provided to the banks. This effect is larger when the intermediary bank is more likely to lend to smaller firms according to observable bank characteristics. The third essay evaluates empirically the effect of credit history disclosure on the financial position of a sample of manufacturing firms in Argentina. Results indicate that credit history disclosure has a negative impact in the ability of firms to raise external finance when firms are exposed to a high liquidity risk.
| Author | : Philip Brown |
| Publisher | : Routledge |
| Total Pages | : 506 |
| Release | : 2013-06-19 |
| Genre | : Business & Economics |
| ISBN | : 1135077576 |
Philip Brown is one of the most admired and respected accounting academics alive today. He was a pioneer in capital markets research in accounting, and his 1968 article, co-authored with Ray Ball, "An Empirical Evaluation of Accounting Income Numbers," arguably had a greater impact on the course of accounting research, directly and indirectly, than any other article during the second half of the twentieth century. Since that time, his innovative research has focused on issues that bridge accounting and finance, including the relationships between net profit reports and the stock market, the long-run performance of acquiring firms, statutory sanctions and voluntary corporate disclosure, and the politics and future of national accounting standards to name a few. This volume brings together the greatest hits of Brown’s career, including several articles that were published in out-of-the-way places, for easier use by students and researchers in the field. With a foreword written by Stephen A. Zeff, and an introduction that discusses the evolution of Brown’s research interests and explains the context for each of the essays included in the volume, this book offers the reader a unique look inside this remarkable 50-year career.
