Audit regulators and commentators propose prompting auditors to more fully take an investor's perspective as a remedy to their concern that auditors underreact to material misstatements. By contrast, we predict that prompting auditors in this manner will backfire, making them less (more) heavily weight indicia that misstatements are (not) material. We further predict auditors will apply this asymmetric

This study investigates the influence of three interest groups—businesses, the tax profession, and civil society—on tax rules in the context of the Organization for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) project. Our study is important as prior research has not examined the direct influence of various interest groups on the content of tax rules by means

We analyze how foreign ownership relates to the short-term pricing efficiency of common stocks listed on the Korea Stock Exchange. We find that stocks with greater foreign holdings are priced less efficiently. This result is robust to different efficiency measures, estimation methods, and reverse causality concerns. Our evidence suggests that foreign trading deters price corrections, at least in the

We present a method for evaluating performance of global equity funds that decomposes excess returns versus market indices into contributions from six equity and three currency factors plus alpha. We apply the method to a sample of institutional fund mandates, and uncover outperformance stemming from stock selection while finding that both equity and currency factor exposures detract from returns.

This paper explores the links between policy support, export destinations and product quality. Depending on the export industry and target destination (policy support, income level), the theories suggest a competing relationship between policy support and high-income exporting on quality upgrading. Consistent with the notion that policy support only matters when exporting to low-income destinations

We examine the effect of the CEO’s network centrality on a firm’s future stock price crash risk with a longitudinal dataset of S&P 1500 companies from 1999 to 2019. We find that firms with more central CEOs are less likely to show bad news hoarding behavior, leading to lower future stock price crash risk. Our results hold even after controlling for other CEO characteristics and the social connectedness

We investigate if the perceived attractiveness of mutual fund managers influences mutual fund flows. We hand-collect professional photographs of managers and use machine learning algorithms to develop two objective proxies of attractiveness. We find that, after controlling for fund characteristics, performance measures and manager characteristics, mutual funds managed by ‘attractive’ managers receive

We describe how accounting and other business professors can add blockchain as a separate course or an addition to an existing course. Based upon a popular, online course at Wayne State University (WSU), we provide examples of a course syllabus, suggested readings, group and individual assignments materials, and student comments. This course addresses two key features that Iansiti & Lakhan (2017) identified

We find that the relation between activeness and future fund performance significantly weakens after the passage of Regulation Fair Disclosure (FD). The ability of Active Share to predict four-factor alpha is more than five times smaller after FD. More active funds embed a higher degree of private information into prices of traded stocks, and the extent to which these funds affect price informativeness

Firms and CEOs are linked in the factor market because CEO talents are transferable across different firms. Shareholder activism increases the non-target firm's outside option and reduces the non-target CEO's outside option. This leads to higher profit and lower CEO compensation at the non-target firm. Due to this positive spillover, the activist's intervention is inefficiently low. As CEO talents

Studies show that incumbents reduce prices in response to higher entry threats in consumer industries. We provide new insights on the importance of an incumbent firm's reputation to the limit-pricing decision by examining a professional service industry where the supplier's reputation serves as an existing barrier. The recent staggered passage of mergers of three Canadian accounting certification bodies

We study the interplay between stock price stability and the information environment following periods of institutional distraction. Using a large panel dataset over the years 1982–2016, we find that the level of ownership by distracted institutions significantly explains crash risk independent of additional determinants identified in prior research. Distraction has a pronounced effect on crash risk

The recent financial crisis proved that financial contagion could spread among countries resulting in disruptive effects. In this paper, by modeling and simulating banking system behavior and linkages across countries, we assess, based on data from the BIS and IMF, the possible outcome of domestic crises and how contagion spreads over countries. Results allow detailing the role of a “lighter” or of

This paper explores the links between policy support, export destinations and product quality. Depending on the export industry and target destination (policy support, income level), the theories suggest a competing relationship between policy support and high-income exporting on quality upgrading. Consistent with the notion that policy support only matters when exporting to low-income destinations

The study of the effectiveness of the currency market is one of the most important research problems in the field of finance. The paper aims to assess the efficiency of the Polish zloty exchange rate market. We test the market efficiency by applying two independent approaches, one based on the Uncovered Interest Parity theory, and another based on the fractal analysis of exchange rates series. The

This study investigates how deposit insurance, especially in terms of its design features, affects the sources of banking systemic risk. We do so by decomposing a bank's contribution to systemic risk into idiosyncratic tail risk (Alpha), the exposure to fundamental macroeconomic and finance factors (Beta) and bank interconnectedness (Gamma). Our results indicate that while deposit insurance may increase

Purpose This paper aims to examine whether conditional conservatism is affected by chief financial officer (CFO) attributes as this issue is understudied in Malaysia. Given that CFOs have a direct responsibility for financial reporting, therefore, their individual attributes are important in influencing conservatism in financial reporting. Design/methodology/approach This study uses non-financial listed

We examine the Kondor theoretical explanation of an enduring puzzle: trading volumes and stock return volatility peak after the release of public information. Using a comprehensive data set of institutional holdings and earnings announcements, we find supporting evidence that the proportion of short-term investors is positively associated with post-announcement spikes in trading volume and return volatility

We investigate how bond market development shapes banks’ risk taking in terms of portfolio structure, liquidity risk, and overall bank risk. Exploiting a bank-level database of 26 emerging markets, we find that larger bond markets are associated with stronger bank liquidity positions, lower portfolio risk of banks, and higher overall stability of banks. The effect of bond market development on bank

Although consumption-based asset pricing constitutes a solid body of work for the purpose of relating asset prices and macroeconomics, most empirical tests put into question the representative investor perspective. Furthermore, most approaches accounting for untraded risks, such as the Constantinides-Duffie model, face the problem of correctly quantifying idiosyncratic risk. In this paper we exploit

In this paper, we examine whether corporate social responsibility (CSR) is value-enhancing in the presence of product market competition. Using a comprehensive sample of 22,527 firm-year observations from 62 countries, we find that the value-enhancing effect of CSR is prevalent in the non-competitive industries. We examine the channels through which firms earn positive benefits of CSR and document

I use the staggered adoption of state-level antitakeover laws to provide causal evidence that managerial agency problems reduce the allocative efficiency of con- glomerate firms. I find that increases in control slack following the passage of antitakeover laws reduces q-sensitivity of investment by 64%. The ad- verse impact of the laws appears mostly at conglomerate firms that benefited from disciplinary

Firm managers of defined-benefit (DB) pension plan sponsors reveal their primary motives — risk-shifting or risk-management — through their assumed expected rates of return (ERRs) on the plan assets. Managers with risk-shifting motives choose high ERRs to exploit flexible internal financing from employees via pension underfunding. Those with risk-management motives choose low ERRs to reduce future

We investigate the influences of local product market competition on the cost of private debt. Our evidence suggests that the cost of bank loans is significantly higher for firms headquartered in states with greater local product market competition measured by the Herfindahl-Hirschman Index for resident industries. To establish causality, we examine the recognition of the Inevitable Disclosure Doctrine

This paper investigates volatility spillovers between energy and stock markets during periods of crises. Our main findings reveal that transmissions of volatilities among these markets during the Covid-19 pandemic crisis exceeded the ones recorded throughout the 2008 global financial crisis. All stock markets are net transmitters of volatility to energy markets during the 2008 global financial crisis

This study examines the impact of financial inclusiveness on economic growth using a sample of 60 countries from 2010 to 2017. A new Index of Financial Inclusion (IFI) has been constructed for each country to determine their level of financial inclusiveness across time. The main findings using a dynamic panel threshold estimation technique revealed a threshold effect in the financial inclusiveness-growth

Purpose Empirical evidence suggests that many triggers influence poor cost performance in highway projects, whereas previous studies about the cost overrun triggers stem from a positivist standpoint supported by conventional statistical techniques, thus disregarding the sophisticated interactions and overall dynamics of the triggers. This study contends for a paradigm shift in investigating and understanding

This paper compares the degree of cryptocurrency market efficiency during the pre- and post COVID-19 pandemic with the bubble and non-bubble periods of cryptocurrency markets. Furthermore, it examines and clusters eighteen cryptocurrencies by exploring their market efficiency similarity. Comparing the cryptocurrency bubble periods with the COVID-19 pandemic, the results indicate that this pandemic

We present a method for evaluating performance of global equity funds that decomposes excess returns versus market indices into contributions from six equity and three currency factors plus alpha. We apply the method to a sample of institutional fund mandates, and uncover outperformance stemming from stock selection while finding that both equity and currency factor exposures detract from returns.