Contemporary Accounting Research最新文献

Corporate spinoffs are important events that are accompanied by valuation and credit-risk implications for the parent firm. Among other benefits, spinoffs can improve corporate focus and enhance valuation transparency. In the debt-contracting context, however, spinoffs can also be associated with negative outcomes for the divesting firms. We examine whether banks, due to their timely access to material private information, are able to ascertain the likelihood and the implications of impending spinoffs for the parent firm before a formal public announcement of the spinoff. Our empirical analyses indicate that, in the 365-day pre-spinoff announcement period, banks charge incrementally higher (lower) spreads to borrowers with increased (decreased) post-spinoff riskiness relative to nondivesting firms. This suggests that, while lenders recognize the value- and transparency-enhancing effects of spinoffs, they are also able to foresee potentially negative implications of these divestitures. Cross-sectional analyses indicate that banks charge incrementally lower loan spreads if spinoffs result in high-risk borrowers having either higher reporting quality or lower reporting or operational complexity. These results suggest that the post-spinoff increase in riskiness is compensated by the divestiture benefits typically associated with spinoffs. Similarly, high-risk borrowers incur larger spreads if they do not undergo “focus-increasing” spinoffs. Overall, our findings suggest that banks are able to ex ante determine the implications of important corporate events such as spinoffs.

By conducting in-depth interviews with 40 migrant and local accountants living and working in Dubai, the paper demonstrates how individual accountants draw on the global city as they make sense of and reconstruct professional identities and social boundaries of inclusion/exclusion. The analysis builds on Zygmunt Bauman's three social spacing processes: cognitive, aesthetic, and moral. The findings from lived experiences show that through cognitive spacing, the construction of other nationality groups of accountants as “strangers” is essential to the construction of participants' professional identities. Boundaries between groups of accountants are constructed in professional spaces (e.g., offices, teams, departments, sectors, firms, senior positions) through stereotype-based identity work, stigmatizing accountants from different nationalities, as well as constructing cultures and qualifications as suitable or unsuitable for these spaces. In aesthetic spacing, boundaries and identities are constructed around the extent of freedom to be mobile, travel, and live pleasurably. This gives rise to the “tourist” and “vagabond” categories of accountants, constructing boundaries around who should be included/excluded in senior positions, based on the transitional power of their passports. In moral spacing, some accountants reflect and use their agency to transcend and resist boundaries constructed in cognitive and aesthetic spaces. They enact a moral self, where relationships with “stranger” accountants are based on moral responsibility and care for the Other. Attention to spacing processes in the global city demonstrates how individual accountants are active agents in reconstructing inclusion/exclusion boundaries and divisions in the profession. The findings indicate that if we are to foster a more open and inclusive profession, there is a need to consider spatial/spacing dimensions in both the city and the profession.

Conventional wisdom suggests that audit engagement partner name disclosure benefits investors by informing them about the partners' performance. However, such public disclosure of the identity of the audit partners may also intensify competition for audit talent in the labor market. To examine the economic consequences of audit partner identification, we build a two-period model in which an audit firm matches partners to clients. The audit partner identification broadens a partner's outside options in the labor market, making talent retention more costly. If the talent-retention cost is substantial, audit partner identification may cause an audit firm to adjust its partners' compensation packages and mismatch the partners and clients, which may lead to lower audit quality. Overall, we identify unintended consequences of audit partner identification by examining its impact on the audit labor market, and we provide economic reasons for the mixed empirical findings.

In recent years, firms reporting revisions of prior financial statements outnumber those reporting restatements. Misstatements that are material to prior periods are required to be reported as restatements, whereas immaterial errors can be reported as revisions. Based on SEC guidance and widely used materiality benchmarks, I find a significant percentage (29%) of revisions are suspect in that they meet at least one materiality criterion. These suspect revisions are 15% to 29% more likely to be reported when managers have a strong incentive to avoid restatements—when they face the threat of a compensation clawback for reporting a restatement. This result is especially salient when the clawback policy does not require misconduct for recoupment and when the error correction significantly reduces prior period net income. Overall, this evidence suggests that some managers use materiality discretion opportunistically to report misstatements as revisions instead of restatements.

We investigate the influence of peer quality on subjective performance evaluation using 75,413 ratings of 130 employees from 6,908 raters in a business school setting. We find that subjective performance ratings are lower for employees with higher quality peer groups in both randomized and nonrandomized settings. Using a novel long-window setting, we observe peer effects persisting, but slowly decaying, for several months even when priming raters with the employees' previous performance information. We find that the strength of the peer effects is greater for focal employees with weaker performance, for the peers with higher attribute similarity, and when the performance of peers is more extreme. Overall, we find strong and persistent peer effects in subjective performance evaluation.

The literature on corporate social responsibility (CSR) disclosure focuses on its economic consequences, but little is known about motivations—especially CEO personal incentives—behind such disclosure. Using an array of CSR reporting measures, we find that career concerns of CEOs early in their tenure motivate them to use voluntary CSR reporting as a signaling mechanism. The negative association between CEO tenure and CSR reporting is more pronounced in firms with stronger information intermediaries—that is, a higher level of socially responsible investors, a higher number of analysts following, and a higher level of media coverage. We also find that CEOs early in their tenure receive more personal benefits after voluntary CSR reporting, in terms of higher total compensation, better reputation, and less turnover, than CEOs later in their tenure. Taken together, the findings of our study lend support to the conjecture that CEO career concerns early in their tenure can be an important determinant of firms' voluntary CSR reporting.

Every analyst will experience stock recommendation failures during their career. Unlike many other professions, these pivotal moments occur in the full glare of clients, colleagues, equity-sales teams, and the media. This research explores the practices of analysts up to and beyond the point where, faced with a failing recommendation, they contemplate “throwing in the towel” on their recommendation. Based on empirical evidence gathered from interviews with sell-side analysts and their key interlocutors—equity-sales specialists, investors, and investor relations officers—this paper uncovers several new empirical insights into the recommendation practices of analysts. The main argument made in the paper is that capitulation practices emerge from the specific contextual framework of individual recommendations and the analyst's conduct as a knowledgeable, emotional human agent. We identify several contextual contingencies of stock recommendations that underpin how a capitulation episode unfolds, including the temporal proximity of the capitulation to the original recommendation; the importance and profile of the stock to the analyst's reputation (“franchise intensity”); the level of interest/reaction from clients, equity-sales teams and corporates; the nature/cause of recommendation failure; and recommendation boldness. Our study provides evidence that what an analyst does when faced with a failing recommendation cannot be reduced to a predictable, rational process and informs our understanding of observed practices such as the reluctance of analysts to capitulate and why “recommendation paralysis” often follows a recommendation capitulation.

This study investigates the financial and operational implications of enterprise systems (ESs) in corporate risk management. Using matched difference-in-differences analyses based on ES implementation events, we document a significant reduction in the volatility of operating cash flows following ES implementations. We further show that ES implementers have better post-implementation operational efficiency than matched non-ES firms and better manage sales, costs of sales, working capital, and operating expenses to reduce operating cash flow volatility. Consistent with the benefits of lower cash flow volatility documented in prior literature, we find ES implementers demonstrate higher investment efficiency, lower reliance on external financing, and higher debt capacity post-ES-implementation than the matched non-ES firms. Our study sheds light on the economic benefits of utilizing ESs in corporate risk management and in so doing responds to the paucity of empirical research in this area.

We study the relative efficiency of centralized versus decentralized organizational forms given optimized managerial performance evaluation within an incomplete contracting framework with risk-averse agents under moral hazard. Decentralization and performance evaluation are complementary control choices and the efficiency of an organizational form depends on the design of performance evaluation. Divisions can make relationship-specific investments that not only improve firm performance, but also increase compensation risk. We find that pure divisional performance evaluation is optimal under centralization, whereas under decentralization, optimal compensation contracts include a combination of divisional and firm-wide performance evaluation. When comparing both organizational forms, we find that the optimal form depends on managers’ degree of risk-aversion and the uncertainty of the business environment. Contrary to previous literature, we find that centralization dominates in many situations, particularly at high degrees of risk-aversion and high uncertainty.

Human capital is a major impetus for technological innovation. We examine the relation between the technological dimension of product market competition and the disclosure of skill requirements in job postings. On the one hand, technological competition may raise the urgency of recruiting tech talent and make firms provide more specific skill requirements. On the other hand, technological competition can increase the proprietary costs of skill requirement disclosure. Using technological peer pressure as a measure of technological competition, we find that firms facing intense technological competition provide more specific skill requirements for tech positions, suggesting that the disclosure benefits outweigh the proprietary costs when firms face pressure to innovate. The effect of technological peer pressure is more pronounced among firms that make only incremental innovations and less pronounced among firms that rely on trade secrets or have greater industry peer presence in close geographical proximity. Our study documents a distinct relationship between technological competition and voluntary disclosure targeted to labor market participants.