This study examines the impact of CEO overconfidence on the level of short-selling activity, as proxied by the short interest ratio. This research employs 19,300 listed firm-year observations from the US market for the period 1998–2017. After controlling for firm and institutional characteristics, empirical results show that short interest is positively associated with CEO overconfidence. The findings

We extend the research on how CEOs address career concerns during their early tenure in firms and we argue that CEOs use a forecast precision strategy to highlight or obfuscate information in a way that may help them convey favorable signals on their abilities. Our findings show that new CEOs are more likely to increase forecast precision when the underlying forecast news is better to highlight positive

This study examines whether a stronger corporate governance enforcement regime influences the investment decisions of foreign portfolio investors in an emerging market context. Using a natural experiment provided by an Indian corporate governance regulatory reform introduced in 2000, but for which stricter sanctions for non-compliance were imposed in 2004 our results provide strong evidence that governance

We document that diversified firms experience less negative seasoned equity offering (SEO) announcement returns than focused firms. The relatively better SEO announcement stock performance of diversified firms is more pronounced among issuers with operations across unrelated industries. Furthermore, following the SEO announcement, diversified firms’ stock returns exhibit post-announcement drift, suggesting

This paper provides evidence on the impact of European Banking Union (BU) and the associated Single Supervisory Mechanism (SSM) on the risk disclosure practices of European banks. The onset of BU and the associated rules are considered as an exogenous shock that provides the setting for a natural experiment to analyze the effects of the new supervisory arrangements on bank risk disclosure practices

The literature is rich with examples of price clustering in financial markets. This study focuses on the relation between mutual fund ownership (both active and passive) and stock price clustering. To the extent that mutual funds are sophisticated investors, we posit that their trades are associated with lower levels of price clustering. We find support for this hypothesis as total, active, and passive

We examine the impact of board characteristics on the speed of adjustment and the capital structure dynamics of firms in bank-based economies. Using 3927 firm-year observations over a 10-year (2009–2019), we find that board characteristic influences firms' speed of adjustment in a bank-based (stakeholder-oriented) system. We also find some evidence that board characteristics have varying impacts on

We find that stocks with low investor attention show a more substantial return-idiosyncratic volatility puzzle than stocks with high investor attention. We also document that high idiosyncratic volatility stocks with high investor attention at the end of the month when portfolios are formed are responsible for the puzzle, but they lose investor attention and have negative returns at the beginning of

Past evidence generally suggests that the presence of female directors on corporate boards tends to improve earnings quality due to these directors’ superior monitoring abilities. However, it is not clear which characteristics and skills of female directors drive such abilities. In this paper, we focus on the financial background of female directors, an area which remains largely unexplored in existing

This study examines whether audit firm office size affects auditors’ risk tolerance in making client acceptance decisions. Analyzing publicly traded client portfolios of the Big 4 audit firms from 2003 to 2012, we find that large Big 4 offices are less likely to accept clients with high audit risk. This is particularly true when auditors face temporary capacity constraints arising from the exogenous

In this paper, we estimate coefficients of bankruptcy forecasting models, such as logistic and neural network models, by maximizing their discriminatory power as measured by the Area Under Receiver Operating Characteristics (AUROC) curve. A method is introduced and compared with traditional logistic and neural network models, using out-of-sample analysis, in terms of discriminatory power, information

This study aims to investigate not only Narrative Disclosure Tone predictive power, but also who has this power within companies to predict future performance in the UK context (executive vs. governance). We conduct a computerized textual analysis to measure the tone of UK annual reports narratives. Our results contribute to accounting and financial reporting literature by showing that corporate narrative

Management quality is known to influence depository institution performance, but less understood are the characteristics of managers that influence performance. We empirically examine how the political ideology of a credit union’s CEO influenced decision making and performance during the financial crisis. Our results indicate that the return on assets of credit unions run by conservative CEOs are 22

We examine the change in the level and significance of accrual and real earnings management over the period 1996–2018. Our univariate results show that both accrual and real earnings management continue to persist, although they have significantly decreased over time. After controlling for significant factors that have been shown to affect earnings management, we find that both accrual and real-activities

This paper proposes analytically vulnerable vanilla option pricing formulae that simultaneously consider the premature default, the correlation between the underlying asset and the issuer’s asset, and other outstanding debts of the issuer. Our pricing formulae can be easily extended to solve the problem of pricing vulnerable barrier options, which has been rarely studied before. We show that previous

In this paper, we examine firms’ motivation to conduct an Accelerated Share Repurchase (ASR) comparing to an OMR. ASRs have become the second most popular method of share repurchases in the US. Based on a comprehensive sample of ASR contracts, we find that the cumulative abnormal stock returns surrounding ASR announcements are positive and significantly higher than those for OMR, and ASR market reaction

We investigate the effect of the Troubled Asset Relief Program (TARP) on the shares of lead banks in syndicated loans by using quarterly data for the period from 2008 to 2011. We find that TARP capital injections to lead banks have a significantly positive effect on their shares of syndicated loans. Specifically, we estimate that the effect of TARP on the lending of lead banks increases their shares

Using five empirical methodologies to account for endogeneity issues, this study investigates the effects of board independence and managerial pay on the performance of 169 Saudi listed firms between 2007 and the end of 2014. Studying board independence and managerial pay utilises the main internal governance mechanism in relation to firm performance; therefore, the effect of the 2009 exogenous regulatory

The market for corporate control offers a rich framework to study the interaction between investment and financing decisions. Do corporations have specific preferences for the means of financing acquisitions, such using cash or equity to pay the claims of the target firm’s shareholders? This study builds a unique sample of 1041 corporate acquisitions over the period 2000–2018 in India, a major emerging

For a panel of 1880 firms across 21 countries from 2004 to 2008, the impact of firm-level and country-level governance on payout policy is consistent with the La Porta et al. (J Finance 60(1):1–33, 2000) outcome model. In weak legal regimes, dividends increase in firm-level governance. In strong legal regimes, dividends decrease in firm-level governance while share repurchases increase, substituting

Default risk increases substantially during financial stress times due to mainly the two reasons: volatility clustering and investors’ desire to protect themselves from such increases in volatility. It manifested in the aftermath of the Global Financial Crisis of 2008–2009 with unpleasant outcomes of many bankruptcies and severe financial distress. To account for these features, we adapted the structural

We produce the first systematic study of the determinants and implications of in-person banking. Using survey data from the U.S., we show that firms which are informationally opaque or operate in rural areas are liable to contact their primary bank in-person. This tendency extends to older, less educated, and female business owners. We find that a relationship based on face-to-face communication, on

We assess the value of frequent issuers to investors in securitization markets by examining the initial yield spread of 6132 European mortgage-backed securities (MBS), covering a 20-year period between 1999 and 2018. We find that frequent issuers have certification value, and it increases as the credit cycle approaches its peak, as lending standards loosen, and information asymmetries in securitization

We investigate the extent to which a parsimonious measure of maximum likely loss that captures the tail risk of returns—known as value-at-risk (VaR)—explains the relationship between accruals and the cross-sectional dispersion of expected stock returns. We construct portfolios based on Sloan’s (Account Rev 71(3):289–315, 1996) total accruals (TA) measure and individual asset-level VaR, which reflects

This study investigates the impact of both social and news sentiments indices on the dynamic stock–bond correlation across wavelet-based time-scales over the period 1998–2016. Our results show that the news sentiments namely unemployment, tsunami and sanctions exhibit significant effects during expansion at the shortest time-scale of [2–4] days. These predictors remain significant with reverse signs

Using a customer–supplier matched sample of US-listed firms from 1980 to 2016, we study the corporate cash-holding relationship between suppliers and their major customers. The key findings suggest that the cash-holding levels of suppliers are positively affected by those of their major customers, consistent with the liquidity argument. The effects are more pronounced when the major customers are in

This paper presents a data-driven complex network approach, to show similarities and differences—in terms of financial risks—between the companies involved in organized crime businesses and those who are not. At this aim, we construct and explore two networks under the assumption that highly connected companies hold similar financial risk profiles of large entity. Companies risk profiles are captured

Under Accounting Standards Update 2011-05, firms can present comprehensive income (CI), defined as the sum of net income (NI) and other comprehensive income (OCI), in a single continuous statement or two separate, consecutive statements. We identify whether firms use the one- or two-statement approach for the years 2012–2015 and assess the value relevance of CI, NI, and OCI under the alternative approaches

We examine the effect of the U.S. Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 on the credit card lending rate pass-through. Our findings show that the Act had no impact on the long-term relationship between the lending rate and funding costs. However, in the short-term, banks were quicker to raise rates in response to an increase in funding costs after the implementation

This study investigates the changes in the marginal cost, revenue, and profit efficiencies after a series of deals by US acquiring banks for the period from 1992 to 2007 using the nonparametric data envelopment analysis (DEA) method and the market reaction model. All the efficiency measures show increases in the first two deals but show significant decreases in the next two to three deals and substantial