Pub Date : 2024-09-12DOI: 10.1016/j.jcorpfin.2024.102670
Over the last decades, firms have been incorporating digital technologies into their operations, a process known as digitalization. Nevertheless, understanding the link between digitalization and firm performance remains challenging. We propose a new firm-level measure of digital intensity based on textual analysis of business descriptions and quarterly earnings calls. To overcome endogeneity, we use two quasi-natural experiments: the COVID-19 pandemic and shocks involving suppliers affected by U.S. natural disasters. Non-technological firms with higher pre-shock digital intensity experience higher abnormal returns, higher profitability, and higher revenue growth during the shocks. The supply chain is one of the areas through which digitalization contributes to significantly mitigate the effects of these shocks, thereby enhancing firm resilience.
{"title":"Digitalization and the performance of non-technological firms: Evidence from the COVID-19 and natural disaster shocks","authors":"","doi":"10.1016/j.jcorpfin.2024.102670","DOIUrl":"10.1016/j.jcorpfin.2024.102670","url":null,"abstract":"<div><p>Over the last decades, firms have been incorporating digital technologies into their operations, a process known as digitalization. Nevertheless, understanding the link between digitalization and firm performance remains challenging. We propose a new firm-level measure of digital intensity based on textual analysis of business descriptions and quarterly earnings calls. To overcome endogeneity, we use two quasi-natural experiments: the COVID-19 pandemic and shocks involving suppliers affected by U.S. natural disasters. Non-technological firms with higher pre-shock digital intensity experience higher abnormal returns, higher profitability, and higher revenue growth during the shocks. The supply chain is one of the areas through which digitalization contributes to significantly mitigate the effects of these shocks, thereby enhancing firm resilience.</p></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":null,"pages":null},"PeriodicalIF":7.2,"publicationDate":"2024-09-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S0929119924001329/pdfft?md5=978a1ccc5e3110ea8ae14609a1cf9d9d&pid=1-s2.0-S0929119924001329-main.pdf","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142238119","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-05DOI: 10.1016/j.jcorpfin.2024.102669
We investigate whether and how the public revelation of tax uncertainty affects supply chain relations by utilizing an exogenous shock to tax reporting under FIN 48, which mandates the disclosure of uncertain tax benefits (UTBs). Using a difference-in-differences research design, we find that firms disclosing UTBs experience a significant decrease in sales to major customers after FIN 48 relative to firms without tax uncertainty. Further mechanism analyses suggest a risk perception channel that the disclosure heightens customers' risk perception of the suppliers: the adverse effect is more pronounced for suppliers with higher tax uncertainty or ex ante corporate risk. However, we do not find evidence for a tax morale channel that customers are concerned about sourcing from a “bad corporate citizen.” In cross-sectional analyses, we find a stronger adverse effect when customers and suppliers are less likely to engage in private information sharing or tax coordination, when suppliers disclose higher-quality UTBs, or when customers have lower tax risk tolerance or switching costs. Overall, our findings document an externality of tax disclosure from the perspectives of supply chain partners, suggesting that the disclosure of tax uncertainty provides valuable information to corporate customers and affects a firm's trade relations.
FIN 48 强制要求披露不确定税收优惠(UTBs),我们利用 FIN 48 对税务报告的外生冲击,研究公开披露税收不确定性是否以及如何影响供应链关系。通过差分研究设计,我们发现披露了不确定税收优惠的企业在 FIN 48 后对主要客户的销售额会比没有披露不确定税收优惠的企业显著下降。进一步的机制分析表明,风险感知渠道表明,信息披露提高了客户对供应商的风险感知:对于税收不确定性或事前企业风险较高的供应商,不利影响更为明显。然而,我们并没有发现税收士气渠道的证据,即客户担心从 "不良企业公民 "处采购。在横截面分析中,我们发现当客户和供应商不太可能进行私人信息共享或税务协调时,当供应商披露的UTB质量较高时,或者当客户的税务风险承受能力或转换成本较低时,不利效应会更强。总之,我们的研究结果从供应链合作伙伴的角度记录了税务披露的外部性,表明税务不确定性的披露为企业客户提供了有价值的信息,并影响了企业的贸易关系。
{"title":"Does the mandatory disclosure of suppliers' tax uncertainties affect supply chain relations?","authors":"","doi":"10.1016/j.jcorpfin.2024.102669","DOIUrl":"10.1016/j.jcorpfin.2024.102669","url":null,"abstract":"<div><p>We investigate whether and how the public revelation of tax uncertainty affects supply chain relations by utilizing an exogenous shock to tax reporting under FIN 48, which mandates the disclosure of uncertain tax benefits (UTBs). Using a difference-in-differences research design, we find that firms disclosing UTBs experience a significant decrease in sales to major customers after FIN 48 relative to firms without tax uncertainty. Further mechanism analyses suggest a risk perception channel that the disclosure heightens customers' risk perception of the suppliers: the adverse effect is more pronounced for suppliers with higher tax uncertainty or <em>ex ante</em> corporate risk. However, we do not find evidence for a tax morale channel that customers are concerned about sourcing from a “bad corporate citizen.” In cross-sectional analyses, we find a stronger adverse effect when customers and suppliers are less likely to engage in private information sharing or tax coordination, when suppliers disclose higher-quality UTBs, or when customers have lower tax risk tolerance or switching costs. Overall, our findings document an externality of tax disclosure from the perspectives of supply chain partners, suggesting that the disclosure of tax uncertainty provides valuable information to corporate customers and affects a firm's trade relations.</p></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":null,"pages":null},"PeriodicalIF":7.2,"publicationDate":"2024-09-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142171870","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-30DOI: 10.1016/j.jcorpfin.2024.102641
We study the performance of PE-backed companies during the COVID-19 pandemic. Our findings suggest that, on average, PE-backed firms were more resilient compared to closely matched industry peers during the pandemic. However, this outperformance is of a smaller magnitude than during the pre-pandemic non-crisis period, suggesting that the outperformance is driven by investor selection of target firms ex ante, rather than active support mechanisms. The outperformance during the pandemic is found to be insignificant among firms which were the most vulnerable at the onset of the pandemic, and firms in the most exposed industries. These more vulnerable firms appear to have been less active in obtaining additional financing during the pandemic, and consequently, suffered a significantly higher incidence of distress. However, non-PE-backed firms in distress had a higher incidence of liquidation, while PE-owned firms more often negotiated formally with creditors to continue trading. Our analysis shines light on the role of PE investors during a large, exogenous shock, and suggests that, in the case of the pandemic, their adept target selection may help to explain the outperformance more so than their actions to protect vulnerable firms in a crisis.
{"title":"The performance of private equity portfolio companies during the COVID-19 pandemic","authors":"","doi":"10.1016/j.jcorpfin.2024.102641","DOIUrl":"10.1016/j.jcorpfin.2024.102641","url":null,"abstract":"<div><p>We study the performance of PE-backed companies during the COVID-19 pandemic. Our findings suggest that, on average, PE-backed firms were more resilient compared to closely matched industry peers during the pandemic. However, this outperformance is of a smaller magnitude than during the pre-pandemic non-crisis period, suggesting that the outperformance is driven by investor selection of target firms ex ante, rather than active support mechanisms. The outperformance during the pandemic is found to be insignificant among firms which were the most vulnerable at the onset of the pandemic, and firms in the most exposed industries. These more vulnerable firms appear to have been less active in obtaining additional financing during the pandemic, and consequently, suffered a significantly higher incidence of distress. However, non-PE-backed firms in distress had a higher incidence of liquidation, while PE-owned firms more often negotiated formally with creditors to continue trading. Our analysis shines light on the role of PE investors during a large, exogenous shock, and suggests that, in the case of the pandemic, their adept target selection may help to explain the outperformance more so than their actions to protect vulnerable firms in a crisis.</p></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":null,"pages":null},"PeriodicalIF":7.2,"publicationDate":"2024-08-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S0929119924001032/pdfft?md5=4a2fd20ca1187e199a06d6e1d820de45&pid=1-s2.0-S0929119924001032-main.pdf","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142096975","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-28DOI: 10.1016/j.jcorpfin.2024.102653
We study the value impact of environmental shareholder proposals (ESPs) for Russell 3000 firms from 2006 to 2021. We distinguish between climate-dedicated ESPs and non-climate ESPs covering other environmental topics. We use two approaches to evaluate management's ability and willingness to select value-enhancing ESPs and reject value-destroying ESPs: (i) cumulative abnormal returns around the final proxy filing date and (ii) a regression discontinuity design around the voting threshold at the annual general meeting. Our results suggest that management has screening ability for ESPs, especially for climate proposals, and that investors and managers share common objectives in environmental activism.
{"title":"The value impact of climate and non-climate environmental shareholder proposals","authors":"","doi":"10.1016/j.jcorpfin.2024.102653","DOIUrl":"10.1016/j.jcorpfin.2024.102653","url":null,"abstract":"<div><p>We study the value impact of environmental shareholder proposals (ESPs) for Russell 3000 firms from 2006 to 2021. We distinguish between climate-dedicated ESPs and non-climate ESPs covering other environmental topics. We use two approaches to evaluate management's ability and willingness to select value-enhancing ESPs and reject value-destroying ESPs: (i) cumulative abnormal returns around the final proxy filing date and (ii) a regression discontinuity design around the voting threshold at the annual general meeting. Our results suggest that management has screening ability for ESPs, especially for climate proposals, and that investors and managers share common objectives in environmental activism.</p></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":null,"pages":null},"PeriodicalIF":7.2,"publicationDate":"2024-08-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S0929119924001159/pdfft?md5=178f81adb828914bf57344a95133cb8e&pid=1-s2.0-S0929119924001159-main.pdf","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142096974","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-27DOI: 10.1016/j.jcorpfin.2024.102651
We examine the effect of board members with venture capital experience (VC directors) on executive incentives at non-venture-backed public firms. VC directors serving on the compensation committee are associated with greater CEO risk-taking incentives (vega) and pay-for-performance sensitivity (delta). These effects are more substantial if VC directors are from highly reputable VC firms. Using the change of direct flight availability to VC hub cities caused by major airline mergers and annual estimates of VC dry powder per industry as instruments, we show that these results are causal. In addition, VC directors are more focused on growth performance goals in CEO compensation contracts. We also document that prior finding of greater research intensity and innovation when VC directors serve on boards of public firms is partly explained by stronger CEO incentives instilled by such directors. Lastly, we find that having VC directors on nominating and/or governance committees is associated with a higher likelihood of forced CEO turnover.
{"title":"Venture capitalist directors and managerial incentives","authors":"","doi":"10.1016/j.jcorpfin.2024.102651","DOIUrl":"10.1016/j.jcorpfin.2024.102651","url":null,"abstract":"<div><p>We examine the effect of board members with venture capital experience (VC directors) on executive incentives at non-venture-backed public firms. VC directors serving on the compensation committee are associated with greater CEO risk-taking incentives (vega) and pay-for-performance sensitivity (delta). These effects are more substantial if VC directors are from highly reputable VC firms. Using the change of direct flight availability to VC hub cities caused by major airline mergers and annual estimates of VC dry powder per industry as instruments, we show that these results are causal. In addition, VC directors are more focused on growth performance goals in CEO compensation contracts. We also document that prior finding of greater research intensity and innovation when VC directors serve on boards of public firms is partly explained by stronger CEO incentives instilled by such directors. Lastly, we find that having VC directors on nominating and/or governance committees is associated with a higher likelihood of forced CEO turnover.</p></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":null,"pages":null},"PeriodicalIF":7.2,"publicationDate":"2024-08-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142135981","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-27DOI: 10.1016/j.jcorpfin.2024.102656
In an environment where concentrated share ownership is the norm, we ask whether Majority-of-the-Minority (MoM) votes curb controlling shareholder overreach and investment inefficiency. We consider MoM votes on controller-based related party transactions in China. Such votes give minority parties potential veto power. We report strong association between shareholder disapprovals on controller-based investment related MoM proposals and the underlying entity's investment plans. This association is robust to a battery of tests, including assessment of pre-vote consultation between minority and controlling shareholders and an exogenous regulatory shock. We also report increased likelihood of informal securities enforcements in the year following MoM shareholder disapproval.
{"title":"Majority-of-the-minority shareholder votes and investment efficiency","authors":"","doi":"10.1016/j.jcorpfin.2024.102656","DOIUrl":"10.1016/j.jcorpfin.2024.102656","url":null,"abstract":"<div><p>In an environment where concentrated share ownership is the norm, we ask whether Majority-of-the-Minority (MoM) votes curb controlling shareholder overreach and investment inefficiency. We consider MoM votes on controller-based related party transactions in China. Such votes give minority parties potential veto power. We report strong association between shareholder disapprovals on controller-based investment related MoM proposals and the underlying entity's investment plans. This association is robust to a battery of tests, including assessment of pre-vote consultation between minority and controlling shareholders and an exogenous regulatory shock. We also report increased likelihood of informal securities enforcements in the year following MoM shareholder disapproval.</p></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":null,"pages":null},"PeriodicalIF":7.2,"publicationDate":"2024-08-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142238120","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-27DOI: 10.1016/j.jcorpfin.2024.102655
This paper investigates the information content of insider pledging and the forced sale of pledged shares using U.S. data. Contrary to warnings from proxy advisors and the media about insider pledging and suggestions for its prohibition, our findings show that insider pledging announcements do not negatively impact shareholder wealth. Firms with insider pledging experience positive one-year abnormal stock returns and higher future profitability after the disclosure of pledging, indicating that insider pledging signals a firm's better growth prospects. These positive abnormal returns observed after the disclosure of insider pledging are more pronounced in firms with better corporate governance and are associated with pledging by certain insiders with superior information. In addition, we find that the stock price does not significantly decline following the forced sale of pledged shares, indicating that the forced sale does not pose downside risks for shareholders. Overall, our results suggest that insider pledging is not detrimental to shareholder value in the U.S., contrary to findings reported in the literature on emerging markets.
{"title":"Insider pledging: Its information content and forced sale","authors":"","doi":"10.1016/j.jcorpfin.2024.102655","DOIUrl":"10.1016/j.jcorpfin.2024.102655","url":null,"abstract":"<div><p>This paper investigates the information content of insider pledging and the forced sale of pledged shares using U.S. data. Contrary to warnings from proxy advisors and the media about insider pledging and suggestions for its prohibition, our findings show that insider pledging announcements do not negatively impact shareholder wealth. Firms with insider pledging experience positive one-year abnormal stock returns and higher future profitability after the disclosure of pledging, indicating that insider pledging signals a firm's better growth prospects. These positive abnormal returns observed after the disclosure of insider pledging are more pronounced in firms with better corporate governance and are associated with pledging by certain insiders with superior information. In addition, we find that the stock price does not significantly decline following the forced sale of pledged shares, indicating that the forced sale does not pose downside risks for shareholders. Overall, our results suggest that insider pledging is not detrimental to shareholder value in the U.S., contrary to findings reported in the literature on emerging markets.</p></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":null,"pages":null},"PeriodicalIF":7.2,"publicationDate":"2024-08-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142096876","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-24DOI: 10.1016/j.jcorpfin.2024.102654
We investigate firm corruption in China by extracting a measure of corruption from published financial statements and use this to demonstrate that corruption impacts the trading decisions of insiders. Specifically, we show that insiders in firms that are more corrupt trade more aggressively, and they are more willing to trade on their private information as evidenced by the increased informativeness of their trades, in respect of both purchases and sales. This link between firm corruption and trade informativeness is robust to the inclusion of a number of factors that are known to influence the informativeness of such trades, including trade characteristics, insider characteristics and the firm's information environment. We also consider the effect of the appointment of a new CEO or Chair. Overall, corruption related trade informativeness holds consistently for both purchases and sales. Finally, we show that this measure of corruption is robust to the inclusion of several alternative indicators of corporate misconduct.
{"title":"Corruption and insider trading","authors":"","doi":"10.1016/j.jcorpfin.2024.102654","DOIUrl":"10.1016/j.jcorpfin.2024.102654","url":null,"abstract":"<div><p>We investigate firm corruption in China by extracting a measure of corruption from published financial statements and use this to demonstrate that corruption impacts the trading decisions of insiders. Specifically, we show that insiders in firms that are more corrupt trade more aggressively, and they are more willing to trade on their private information as evidenced by the increased informativeness of their trades, in respect of both purchases and sales. This link between firm corruption and trade informativeness is robust to the inclusion of a number of factors that are known to influence the informativeness of such trades, including trade characteristics, insider characteristics and the firm's information environment. We also consider the effect of the appointment of a new CEO or Chair. Overall, corruption related trade informativeness holds consistently for both purchases and sales. Finally, we show that this measure of corruption is robust to the inclusion of several alternative indicators of corporate misconduct.</p></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":null,"pages":null},"PeriodicalIF":7.2,"publicationDate":"2024-08-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S0929119924001160/pdfft?md5=8f40da7b3891ff79e3a61d9c116bdf1a&pid=1-s2.0-S0929119924001160-main.pdf","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142096973","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-24DOI: 10.1016/j.jcorpfin.2024.102657
We investigate whether options trading activities affect underlying firms' degree of cost stickiness. Using a panel of US companies, we find that options trading activities reduce the underlying firms' level of cost stickiness. Our findings are robust to alternative proxies for options trading activities and cost stickiness, two-stage least-squares regression, and two quasi-natural experiments. Additional analyses indicate that the negative effect of options trading activities on cost stickiness is more pronounced for firms with higher availability of cash flows and lower corporate governance and audit quality. Finally, we implement a mediator analysis and show that higher options trading activities improve underlying firms' investment efficiency as they have more efficient corporate resource allocation via lower levels of cost stickiness. Overall, our results underscore the monitoring and governance role of options trading activities in enhancing underlying firms' information environment and limiting their insiders' opportunistic behaviors, resulting in fewer corporate resource misallocation activities via reduced degrees of cost stickiness.
{"title":"Do options trading activities affect underlying firms' asymmetric cost behavior?","authors":"","doi":"10.1016/j.jcorpfin.2024.102657","DOIUrl":"10.1016/j.jcorpfin.2024.102657","url":null,"abstract":"<div><p>We investigate whether options trading activities affect underlying firms' degree of cost stickiness. Using a panel of US companies, we find that options trading activities reduce the underlying firms' level of cost stickiness. Our findings are robust to alternative proxies for options trading activities and cost stickiness, two-stage least-squares regression, and two quasi-natural experiments. Additional analyses indicate that the negative effect of options trading activities on cost stickiness is more pronounced for firms with higher availability of cash flows and lower corporate governance and audit quality. Finally, we implement a mediator analysis and show that higher options trading activities improve underlying firms' investment efficiency as they have more efficient corporate resource allocation via lower levels of cost stickiness. Overall, our results underscore the monitoring and governance role of options trading activities in enhancing underlying firms' information environment and limiting their insiders' opportunistic behaviors, resulting in fewer corporate resource misallocation activities via reduced degrees of cost stickiness.</p></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":null,"pages":null},"PeriodicalIF":7.2,"publicationDate":"2024-08-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142087015","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-08-22DOI: 10.1016/j.jcorpfin.2024.102652
We investigate the generalizability of widely perceived notions that buy-side analysts try to influence or manipulate a firm’s stock price by praising or criticizing management during a public earnings conference call. Despite two institutional factors that make it difficult to detect empirically, we find some evidence of stock influence behavior by using a combination of data on conference call transcripts and trading by the institutions that employ the buy-side analysts. However, we also find evidence consistent with the null hypothesis that buy-side analysts are acquiring information rather than manipulating the stock price. Subsample analyses suggest that stock influence is more detectable among hedge funds, while information acquisition is the norm among traditional buy-and-hold institutions. The evidence we provide on each behavior should be of interest to firm managers who host conference calls, market participants who use conference calls to collect company information, as well as regulators who monitor for possible market manipulation.
{"title":"Do buy-side analysts in earnings conference calls manipulate stock prices?","authors":"","doi":"10.1016/j.jcorpfin.2024.102652","DOIUrl":"10.1016/j.jcorpfin.2024.102652","url":null,"abstract":"<div><p>We investigate the generalizability of widely perceived notions that buy-side analysts try to influence or manipulate a firm’s stock price by praising or criticizing management during a public earnings conference call. Despite two institutional factors that make it difficult to detect empirically, we find some evidence of stock influence behavior by using a combination of data on conference call transcripts and trading by the institutions that employ the buy-side analysts. However, we also find evidence consistent with the null hypothesis that buy-side analysts are acquiring information rather than manipulating the stock price. Subsample analyses suggest that stock influence is more detectable among hedge funds, while information acquisition is the norm among traditional buy-and-hold institutions. The evidence we provide on each behavior should be of interest to firm managers who host conference calls, market participants who use conference calls to collect company information, as well as regulators who monitor for possible market manipulation.</p></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":null,"pages":null},"PeriodicalIF":7.2,"publicationDate":"2024-08-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S0929119924001147/pdfft?md5=84a4f645e8bd481a6241d78b66727594&pid=1-s2.0-S0929119924001147-main.pdf","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142164617","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}