The Securities and Exchange Commission (SEC) allows firms to redact information from material contracts by submitting confidential treatment requests, if redacted information is not material and would cause competitive harm upon public disclosure. This study examines whether managers use confidential treatment requests to conceal bad news. We show that confidential treatment requests are positively associated with residual short interest, a proxy for managers’ private negative information. This positive association is more pronounced for firms with lower litigation risk, higher executive equity incentives, and lower external monitoring. Confidential treatment requests filed by firms with higher residual short interests are associated with higher stock price crash risk and poorer future performance. Collectively, our results suggest that managers redact information from material contracts to conceal bad news.
{"title":"Do Firms Redact Information from Material Contracts to Conceal Bad News?","authors":"Dichu Bao, Yongtae Kim, L. Su","doi":"10.2308/tar-2020-0255","DOIUrl":"https://doi.org/10.2308/tar-2020-0255","url":null,"abstract":"The Securities and Exchange Commission (SEC) allows firms to redact information from material contracts by submitting confidential treatment requests, if redacted information is not material and would cause competitive harm upon public disclosure. This study examines whether managers use confidential treatment requests to conceal bad news. We show that confidential treatment requests are positively associated with residual short interest, a proxy for managers’ private negative information. This positive association is more pronounced for firms with lower litigation risk, higher executive equity incentives, and lower external monitoring. Confidential treatment requests filed by firms with higher residual short interests are associated with higher stock price crash risk and poorer future performance. Collectively, our results suggest that managers redact information from material contracts to conceal bad news.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"63 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-11-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128737320","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Zachary R. Kaplan, Nathan T. Marshall, Jerry D. Mathis, Hanmeng Ivy Wang
Despite the importance of EPS forecasts as benchmarks, little is known about their denominator: shares outstanding forecasts. Because investing clients have limited demand for accurate share forecasts, we predict that analysts develop share forecasts strategically to facilitate EPS incentives. We divide earnings forecasts by EPS forecasts to infer analysts’ share forecasts and evaluate their properties. Analysts’ forecasts of shares outstanding are significantly less accurate than simple time-series models; however, these same forecasts actually improve EPS forecast accuracy. Additional analysis explains why: analysts use share forecasts to herd EPS toward the consensus. That is, share forecast errors often have the same sign as street earnings forecast errors, moving EPS closer to the consensus and to actual EPS, and significantly reducing EPS dispersion. Analysts also appear to use share forecasts to cater to management. Specifically, bias in share forecasts facilitates firms’ ability to meet or beat (“MB”) EPS benchmarks and is consistent with manager preferences (i.e., deflating EPS forecasts at short horizons and inflating at longer horizons). Much of the MB effect arises because analysts fail to incorporate predictable variation in shares outstanding, such as past repurchases. Interviews with sell-side analysts confirm that clients have limited demand for share forecasts, consistent with the inattention and strategic use of forecasts documented in our study.
{"title":"Forecasting Shares Outstanding","authors":"Zachary R. Kaplan, Nathan T. Marshall, Jerry D. Mathis, Hanmeng Ivy Wang","doi":"10.2139/ssrn.3837487","DOIUrl":"https://doi.org/10.2139/ssrn.3837487","url":null,"abstract":"Despite the importance of EPS forecasts as benchmarks, little is known about their denominator: shares outstanding forecasts. Because investing clients have limited demand for accurate share forecasts, we predict that analysts develop share forecasts strategically to facilitate EPS incentives. We divide earnings forecasts by EPS forecasts to infer analysts’ share forecasts and evaluate their properties. Analysts’ forecasts of shares outstanding are significantly less accurate than simple time-series models; however, these same forecasts actually improve EPS forecast accuracy. Additional analysis explains why: analysts use share forecasts to herd EPS toward the consensus. That is, share forecast errors often have the same sign as street earnings forecast errors, moving EPS closer to the consensus and to actual EPS, and significantly reducing EPS dispersion. Analysts also appear to use share forecasts to cater to management. Specifically, bias in share forecasts facilitates firms’ ability to meet or beat (“MB”) EPS benchmarks and is consistent with manager preferences (i.e., deflating EPS forecasts at short horizons and inflating at longer horizons). Much of the MB effect arises because analysts fail to incorporate predictable variation in shares outstanding, such as past repurchases. Interviews with sell-side analysts confirm that clients have limited demand for share forecasts, consistent with the inattention and strategic use of forecasts documented in our study.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"4 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-10-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116452207","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using a method that avoids the need to specify earnings expectations (Ball and Shivakumar 2008), we demonstrate that the period surrounding the semi-annual announcement of Australian firms’ earnings is, on average, an important source of information. Although there is substantial year-to-year variation, we observe no evidence of any significant time trend, and also conclude that a shift from Australian domestic GAAP to IFRS did not impact the association between earnings announcement windows and stock returns. We also find no evidence that the informativeness of earnings announcements varies systematically with firm size, analyst following or economic news (i.e., positive versus negative stock returns, profits versus losses), although we do observe significant variation across industries. Our conclusion is further supported by contrasting the earnings release date with the days immediately prior to release, or high information days other than earnings announcement windows. Using a more precise event window relative to prior studies (i.e., three hours versus three days), we confirm that earnings announcements contain significant new information about fundamentals.
使用一种避免需要指定盈利预期的方法(Ball and Shivakumar 2008)，我们证明了围绕澳大利亚公司半年一次的盈利公告的时期，平均而言，是一个重要的信息来源。虽然有很大的年度变化，但我们没有观察到任何显著的时间趋势的证据，并且还得出结论，从澳大利亚国内公认会计准则到国际财务报告准则的转变并没有影响盈利公告窗口和股票回报之间的关联。我们也没有发现证据表明盈利公告的信息量会随着公司规模、分析师跟踪或经济新闻(即股票回报是正还是负、利润还是亏损)而系统性地变化，尽管我们确实观察到各行业之间存在显著差异。通过将收益发布日期与发布前几天或收益公告窗口以外的高信息日进行对比，我们的结论得到了进一步的支持。使用相对于先前研究更精确的事件窗口(即三小时与三天)，我们确认收益公告包含有关基本面的重要新信息。
{"title":"How Important Are Semi-Annual Earnings Announcements? An Information Event Perspective","authors":"Stephen L Taylor, Alex Tong","doi":"10.2139/ssrn.3904463","DOIUrl":"https://doi.org/10.2139/ssrn.3904463","url":null,"abstract":"Using a method that avoids the need to specify earnings expectations (Ball and Shivakumar 2008), we demonstrate that the period surrounding the semi-annual announcement of Australian firms’ earnings is, on average, an important source of information. Although there is substantial year-to-year variation, we observe no evidence of any significant time trend, and also conclude that a shift from Australian domestic GAAP to IFRS did not impact the association between earnings announcement windows and stock returns. We also find no evidence that the informativeness of earnings announcements varies systematically with firm size, analyst following or economic news (i.e., positive versus negative stock returns, profits versus losses), although we do observe significant variation across industries. Our conclusion is further supported by contrasting the earnings release date with the days immediately prior to release, or high information days other than earnings announcement windows. Using a more precise event window relative to prior studies (i.e., three hours versus three days), we confirm that earnings announcements contain significant new information about fundamentals.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"48 3","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-08-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120901751","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines whether information extracted via text-based statistical methods applied to employee reviews left on the website Glassdoor.com can be used to develop indicators of corporate misconduct risk. We argue that inside information on the incidence of misconduct as well as the control environments and broader organizational cultures that contribute to its occurrence are likely to be widespread among employees and to be reflected in the text of these reviews. Our results show that information extracted from such text can be used to develop measures with useful properties for measuring misconduct risk. Specifically, the measures we develop clearly discriminate between high- and low-misconduct-risk firms and improve out-of-sample predictions of realized misconduct risk above and beyond other readily observable characteristics, such as Glassdoor firm ratings, firm size, performance, industry risk, violation history, and press coverage. We provide further evidence on the efficacy of our text-based measures of misconduct risk by showing that they are associated with future employee whistleblower complaints even after controlling for these same observable characteristics. This paper was accepted by Brian Bushee, accounting.
{"title":"Tone at the Bottom: Measuring Corporate Misconduct Risk from the Text of Employee Reviews","authors":"Dennis Campbell, Ruidi Shang","doi":"10.1287/mnsc.2021.4211","DOIUrl":"https://doi.org/10.1287/mnsc.2021.4211","url":null,"abstract":"This paper examines whether information extracted via text-based statistical methods applied to employee reviews left on the website Glassdoor.com can be used to develop indicators of corporate misconduct risk. We argue that inside information on the incidence of misconduct as well as the control environments and broader organizational cultures that contribute to its occurrence are likely to be widespread among employees and to be reflected in the text of these reviews. Our results show that information extracted from such text can be used to develop measures with useful properties for measuring misconduct risk. Specifically, the measures we develop clearly discriminate between high- and low-misconduct-risk firms and improve out-of-sample predictions of realized misconduct risk above and beyond other readily observable characteristics, such as Glassdoor firm ratings, firm size, performance, industry risk, violation history, and press coverage. We provide further evidence on the efficacy of our text-based measures of misconduct risk by showing that they are associated with future employee whistleblower complaints even after controlling for these same observable characteristics. This paper was accepted by Brian Bushee, accounting.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"260 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-07-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121443344","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
R. Evans, Miguel A. Ferreira, Pedro Matos, Michael Young
Given the potential for agency conflicts in delegated asset management, and the constant push for disclosure by regulators, we examine a clear potential source of agency conflicts in the mutual fund industry: anonymously managed mutual funds. Using a global sample of mutual funds, we find that 17% of funds worldwide, excluding the US, and 22% of emerging market funds do not disclose the names of their management team. Anonymously managed funds significantly underperform, have lower active share, return gap, tracking error, and higher r2 than funds with named managers. They are more frequent in families with cooperative structures, and in bank affiliated funds. Further examining fund performance and activity around changes in SEC disclosure regulation, we find that both performance and fund activity increases following new regulation that required disclosure of manager names. This is important, as it provides evidence that the underperformance of anonymous teams is related to the disincentive brought on by anonymous management, and not solely due to less skilled managers being kept anonymous.
{"title":"Hiding in Plain Sight: The Global Implications of Manager Disclosure","authors":"R. Evans, Miguel A. Ferreira, Pedro Matos, Michael Young","doi":"10.2139/ssrn.3858045","DOIUrl":"https://doi.org/10.2139/ssrn.3858045","url":null,"abstract":"Given the potential for agency conflicts in delegated asset management, and the constant push for disclosure by regulators, we examine a clear potential source of agency conflicts in the mutual fund industry: anonymously managed mutual funds. Using a global sample of mutual funds, we find that 17% of funds worldwide, excluding the US, and 22% of emerging market funds do not disclose the names of their management team. Anonymously managed funds significantly underperform, have lower active share, return gap, tracking error, and higher r2 than funds with named managers. They are more frequent in families with cooperative structures, and in bank affiliated funds. Further examining fund performance and activity around changes in SEC disclosure regulation, we find that both performance and fund activity increases following new regulation that required disclosure of manager names. This is important, as it provides evidence that the underperformance of anonymous teams is related to the disincentive brought on by anonymous management, and not solely due to less skilled managers being kept anonymous.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"24 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125718700","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The local volatility model is widely used as this is the unique one-factor Markov model perfectly calibrated to a continuum of vanilla options in strike and expiry. It requires unfortunately an arbitrage-free interpolation of implied volatility in expiry and a time-consuming Euler discretization scheme for its simulation. In this paper, we construct a new local volatility model, based on the extension of the Bass construction, which is (1) perfectly calibrated to vanilla options on market expiries and (2) is also a one-factor diffusion which can be discretized exactly as it requires only the simulation of a standard Brownian motion, providing very fast calculations.
{"title":"Bass Construction with Multi-Marginals: Lightspeed Computation in a New Local Volatility Model","authors":"A. Conze, P. Henry-Labordère","doi":"10.2139/ssrn.3853085","DOIUrl":"https://doi.org/10.2139/ssrn.3853085","url":null,"abstract":"The local volatility model is widely used as this is the unique one-factor Markov model perfectly calibrated to a continuum of vanilla options in strike and expiry. It requires unfortunately an arbitrage-free interpolation of implied volatility in expiry and a time-consuming Euler discretization scheme for its simulation. In this paper, we construct a new local volatility model, based on the extension of the Bass construction, which is (1) perfectly calibrated to vanilla options on market expiries and (2) is also a one-factor diffusion which can be discretized exactly as it requires only the simulation of a standard Brownian motion, providing very fast calculations.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"17 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-05-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122058273","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2021-04-30DOI: 10.22789/ihlr.2021.06.24.2.2
Gyeongmi Park
Korean Abstract: 최근 말레이시아의 Top Glove 사업장에서 수 천명의 COVID-19 감염자가 발생하였다. 글로벌 자산운용사 BlackRock의 자회사는 Top Glove의 주주로서, 감염병에 취약한 환경에서 근로자의 노동 안전과 보건 리스크를 선제적으로 파악하여 실효성 있게 개선하려는 이사회의 노력이 부족했으며 감시의무에 소홀하였다는 이유로 이사 재선임에 반대하였다. 이는 최근 기업의 새로운 경영 메커니즘으로 대두되는 ESG 경영으로 수반되는 리스크 관리에 있어 이사회의 실질적 감독이 중요해졌음을 시사한다. 나아가 기업의 지속가능 발전을 위해 ESG 리스크에 대한 유기적이며 경영전략에 연계한 총체적 관리가 비단 경영진에 대한 책임 추궁에 그치는 것이 아니라 회사법상 이사의 감시의무로 연결되는 기업 지배구조상 중요한 쟁점 중 하나임을 확인할 수 있다. 회사법상 이사의 감시의무는 불법행위, 분식회계 등 ‘내부통제’ 범위에서 주로 다루어졌으나 ESG 리스크는 친환경, 건전한 지배구조, 인권과 안전 등 포괄적 경영 리스크라는 점에서 기존 이사의 감시의무 영역과 차이를 보인다. 그럼에도 불구하고 아직까지 ESG 리스크 관리에 대하여 이사의 감시의무를 인정할 수 있을지를 정면으로 다룬 선행연구가 드문 것으로 보인다. 기업의 ESG 경영이 산업 전반에 정착될 경우 향후에는 ESG 리스크에 대한 이사의 감시의무 인정여부가 회사법상 중요 쟁점이 될 것이므로 현 시점에서 관련 논의는 의미가 있을 것이다. 이 글은 이러한 관점에서 논의의 전제로 미국, 일본, 우리나라 법제를 비교법적으로 검토하여 판례 해석론상 ‘경영 리스크’가 이사의 위험관리체계 구축의무인 ‘Caremark Duty’ 적용대상에서 제외됨이 일관된 흐름이라는 점을 살펴보았다. 아울러, 현행 ESG 등급평가제도가 갖는 기관별 편차와 법령 대비 지나치게 엄격한 기준으로 기업의 ESG 리스크 관리실적에 대한 정량화된 측정지표로 인정하기에 한계가 있는 점, 경영 리스크 특성상 통제(관리)와 수용(인수)이 복합적으로 얽혀 있어 준법통제나 회계 건전성과는 결이 다른 점을 근거로 ESG 경영 리스크에 회사법상 이사의 감시의무 이행을 담보함은 바람직하지 않다는 논지를 제시하였다. 그러나, 이사에게 ESG 리스크에 대한 위험성 평가와 통합적 리스크 관리의 진지한 책무를 기대하는 현실을 고려할 때 이사의 감시의무 해태를 정당화하는 입장은 아니다. 회사법상 이사의 감시의무 적용범위는 ESG 경영의 확산 추이에 따른 리스크 발현 양상과 판례법 발전에 따라 가변성을 띨 것으로 보인다. 근본적으로 기업은 경영전략에 관통하는 정교한 리스크 통제활동을 영속적으로 수행하는데 인적, 물적 역량을 집중하는 한편 이사회 차원에서는 위험관리체계에 대한 단편적 모니터링을 넘어 구조적 흠결과 사각지대를 정밀하 포착하고 능동적 개선방안을 주문하는 실질적 감시역할을 강화해야 하는 것이 시대적 요구사항일 것이다. English Abstract: Thousands of COVID-19 infections have recently occurred at Top Glove operations in Malaysia. BlackRock Institutional Trust Co., one of BlackRock’s units, decided against re-election as a board member in its capacity as a shareholder. Because there was a lack of board members’ efforts to identify and improve workers’ safety and health risks, the director’s effective monitoring obligation and responsibility was not fulfilled. This case means that the board’s practical supervision has become important in risk management related to ESG, which has recently been recognized as a new management mechanism and is referred to as the new dress code in the capital markets for companies. Also, for the company’s sustainable development, organic management of ESG risk is not just a management responsibility but one of the important issues in corporate governance related to directors’ monitoring obligations under Corporation Law. Consequently, while trying to restructure their business portfolios, entities are also paying attention to the ESG rating results, which are the basis for determining ESG investments and objective and quantified performance indicators. ESG risk is a comprehensive business area risk such as eco-friendly, sound governance, human rights and safety that is not within the scope of ‘internal control system’ such as illegal activities and accounting fraud. In the future, it is expected that whether directors are required to monitor “ESG risks” under the Corporation Law will be emphasized as an important issue when
Korean Abstract:最近在马来西亚的Top Glove公司发现了数千名COVID-19感染者。全球资产管理公司blackrock的子公司top作为公司的股东,感染病在脆弱的环境中劳动者的劳动安全和保健先发制人,以把握风险,有效地改善理事会努力不足,疏于监督义务”为由,反对再次当选理事。这暗示了在最近作为企业的新经营机制抬头的ESG经营带来的风险管理上，理事会的实质性监督变得非常重要。为企业的可持续发展,esg风险对有机经营战略挂钩的总体管理,不仅停留在对管理层的责任追究,而是根据公司董事的连接到监视义务的企业支配结构上重要的争论焦点之一可以确认。《公司法》规定，董事的监视义务主要涉及非法行为、财务欺诈等“内部控制”范围，但ESG风险是环保、健全的治理结构、人权和安全等全面经营风险，从这一点看，和现有董事的监视义务领域存在差异。尽管如此，到目前为止，正面研究是否承认理事对ESG风险管理的监视义务的先行研究还是很少见的。如果企业的ESG经营在整个产业中扎根，今后董事是否承认对ESG风险的监视义务将成为公司法上的重要争论点，因此从目前来看，相关讨论将具有重大意义。这篇文章从这样的观点出发，对美国、日本、韩国的法制进行了比较法律的研讨，从判例解释论上看，“经营风险”被排除在理事的风险管理体系构筑义务“Caremark Duty”的适用对象之外是一贯的趋势。同时，以现行ESG等级评价制度所具有的各机关偏差和对法令过于严格的标准，认定为对企业ESG风险管理业绩的量化测定指标存在一定的局限性;他以经营风险特性上的控制(管理)和接受(收购)交织在一起，与守法控制和会计健全性完全不同为根据，提出了在ESG经营风险上，保证公司法上理事的监视义务履行是不可取的论旨。但是考虑到期待理事对ESG风险进行危险性评价和综合风险管理的真挚的责任的现实，并不是将理事的监视义务“haitai”正当化的立场。根据《公司法》，董事的监视义务适用范围将随着ESG经营的扩散和判例法的发展，呈现出可变性。从根本上贯穿于企业经营战略的精巧的永续执行风险控制活动,集中人力、物力力量的同时,在董事会层面,对风险管理体系的片断越过监测结构性缺陷和死角精确把握主动的改善方案,订购的实质性监督作用应该加强,这是时代的要求。英语:Thousands of COVID-19 infections have recently occurred at Top Glove operations in Malaysia。BlackRock Institutional Trust Co.， one of BlackRock ' s units, decided against re-election as a board member in its capacity as a shareholder。Because there was a lack of board members ' efforts to identify and improve workers ' safety and health risks, the director ' s effective monitoring obligation and responsibility was not fulfilled。This case means that the board ' s practical supervision has become important in risk management related to ESG，which has recently been recognized as a new management mechanism and is referred to as the new dress code in the capital markets for companies。Also for the company ' s sustainable development，organic management of ESG risk is not just a management responsibility but one of the important issues in corporate governance related to directors ' monitoring obligations under Corporation Law。Consequently, while trying to restructure their business portfolios, entities are also paying attention to the ESG rating results，which are the basis for determining ESG investments and objective and quantified performance indicators。ESG risk is a comprehensive business area risk such as eco-friendly, sound governance，human rights and safety that is not within the scope of ' internal control system ' such as illegal activities and accounting fraud。In the future, it is expected that whether directors are required to monitor " ESG risks " under the Corporation Law will be emphasized as an important issue when establishing ESG managementIn this paper, the United States, Japan, and Korea legislations were examined comparatively, confirming that " management risk " is excluded from the application of " Caremark Duty ";the director ' s risk management obligationin addition,I note that the use of ESG assessment results as a metric for an entity ' s ESG risk management performance is limited because the assessment body ' s criteria for ESG risk are diverse and have muchstricter requirements than legisla
{"title":"ESG리스크와 회사법상 이사의 감시의무 (ESG Risk Management and a Director’s Duty to Monitor)","authors":"Gyeongmi Park","doi":"10.22789/ihlr.2021.06.24.2.2","DOIUrl":"https://doi.org/10.22789/ihlr.2021.06.24.2.2","url":null,"abstract":"Korean Abstract: 최근 말레이시아의 Top Glove 사업장에서 수 천명의 COVID-19 감염자가 발생하였다. 글로벌 자산운용사 BlackRock의 자회사는 Top Glove의 주주로서, 감염병에 취약한 환경에서 근로자의 노동 안전과 보건 리스크를 선제적으로 파악하여 실효성 있게 개선하려는 이사회의 노력이 부족했으며 감시의무에 소홀하였다는 이유로 이사 재선임에 반대하였다. 이는 최근 기업의 새로운 경영 메커니즘으로 대두되는 ESG 경영으로 수반되는 리스크 관리에 있어 이사회의 실질적 감독이 중요해졌음을 시사한다. 나아가 기업의 지속가능 발전을 위해 ESG 리스크에 대한 유기적이며 경영전략에 연계한 총체적 관리가 비단 경영진에 대한 책임 추궁에 그치는 것이 아니라 회사법상 이사의 감시의무로 연결되는 기업 지배구조상 중요한 쟁점 중 하나임을 확인할 수 있다. 회사법상 이사의 감시의무는 불법행위, 분식회계 등 ‘내부통제’ 범위에서 주로 다루어졌으나 ESG 리스크는 친환경, 건전한 지배구조, 인권과 안전 등 포괄적 경영 리스크라는 점에서 기존 이사의 감시의무 영역과 차이를 보인다. 그럼에도 불구하고 아직까지 ESG 리스크 관리에 대하여 이사의 감시의무를 인정할 수 있을지를 정면으로 다룬 선행연구가 드문 것으로 보인다. 기업의 ESG 경영이 산업 전반에 정착될 경우 향후에는 ESG 리스크에 대한 이사의 감시의무 인정여부가 회사법상 중요 쟁점이 될 것이므로 현 시점에서 관련 논의는 의미가 있을 것이다. 이 글은 이러한 관점에서 논의의 전제로 미국, 일본, 우리나라 법제를 비교법적으로 검토하여 판례 해석론상 ‘경영 리스크’가 이사의 위험관리체계 구축의무인 ‘Caremark Duty’ 적용대상에서 제외됨이 일관된 흐름이라는 점을 살펴보았다. 아울러, 현행 ESG 등급평가제도가 갖는 기관별 편차와 법령 대비 지나치게 엄격한 기준으로 기업의 ESG 리스크 관리실적에 대한 정량화된 측정지표로 인정하기에 한계가 있는 점, 경영 리스크 특성상 통제(관리)와 수용(인수)이 복합적으로 얽혀 있어 준법통제나 회계 건전성과는 결이 다른 점을 근거로 ESG 경영 리스크에 회사법상 이사의 감시의무 이행을 담보함은 바람직하지 않다는 논지를 제시하였다. 그러나, 이사에게 ESG 리스크에 대한 위험성 평가와 통합적 리스크 관리의 진지한 책무를 기대하는 현실을 고려할 때 이사의 감시의무 해태를 정당화하는 입장은 아니다. 회사법상 이사의 감시의무 적용범위는 ESG 경영의 확산 추이에 따른 리스크 발현 양상과 판례법 발전에 따라 가변성을 띨 것으로 보인다. 근본적으로 기업은 경영전략에 관통하는 정교한 리스크 통제활동을 영속적으로 수행하는데 인적, 물적 역량을 집중하는 한편 이사회 차원에서는 위험관리체계에 대한 단편적 모니터링을 넘어 구조적 흠결과 사각지대를 정밀하 포착하고 능동적 개선방안을 주문하는 실질적 감시역할을 강화해야 하는 것이 시대적 요구사항일 것이다. English Abstract: Thousands of COVID-19 infections have recently occurred at Top Glove operations in Malaysia. BlackRock Institutional Trust Co., one of BlackRock’s units, decided against re-election as a board member in its capacity as a shareholder. Because there was a lack of board members’ efforts to identify and improve workers’ safety and health risks, the director’s effective monitoring obligation and responsibility was not fulfilled. This case means that the board’s practical supervision has become important in risk management related to ESG, which has recently been recognized as a new management mechanism and is referred to as the new dress code in the capital markets for companies. Also, for the company’s sustainable development, organic management of ESG risk is not just a management responsibility but one of the important issues in corporate governance related to directors’ monitoring obligations under Corporation Law. Consequently, while trying to restructure their business portfolios, entities are also paying attention to the ESG rating results, which are the basis for determining ESG investments and objective and quantified performance indicators. ESG risk is a comprehensive business area risk such as eco-friendly, sound governance, human rights and safety that is not within the scope of ‘internal control system’ such as illegal activities and accounting fraud. In the future, it is expected that whether directors are required to monitor “ESG risks” under the Corporation Law will be emphasized as an important issue when","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-04-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128150874","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Jeremiah W. Bentley, Kyle M. Stubbs, Yushi Tian, Robert L. Whited
The SEC published A Plain English Handbook (PEH) with suggestions for making disclosures easier to process. We construct measures of GAAP metric (earnings and revenue) emphasis and readability in earnings announcements (EAs) that reflect the suggestions in the PEH. Using these measures, we find that managers make more favorable and more informative metrics easier to process (i.e., more prominent and readable), but that metric favorability plays a larger role than metric informativeness in explaining disclosure choices, suggesting managerial opportunism. Next, we test whether these relations differ for firms that disclose non-GAAP (NG) earnings versus firms that do not disclose NG earnings. We find that the relations between GAAP earnings favorability/informativeness and GAAP earnings Plain English measures weaken for NG disclosers. The weakened relations suggest that strategic use of Plain English in the discussion of GAAP metrics may substitute for NG earnings disclosures, which are subject to relatively greater regulatory scrutiny. Collectively, our evidence suggests that managers use the PEH tactics intended to clarify value-relevant information to clarify favorable information.
{"title":"Manipulating the Narrative: Managerial Discretion in the Use of Plain English in Earnings Announcements","authors":"Jeremiah W. Bentley, Kyle M. Stubbs, Yushi Tian, Robert L. Whited","doi":"10.2139/ssrn.3497739","DOIUrl":"https://doi.org/10.2139/ssrn.3497739","url":null,"abstract":"The SEC published A Plain English Handbook (PEH) with suggestions for making disclosures easier to process. We construct measures of GAAP metric (earnings and revenue) emphasis and readability in earnings announcements (EAs) that reflect the suggestions in the PEH. Using these measures, we find that managers make more favorable and more informative metrics easier to process (i.e., more prominent and readable), but that metric favorability plays a larger role than metric informativeness in explaining disclosure choices, suggesting managerial opportunism. Next, we test whether these relations differ for firms that disclose non-GAAP (NG) earnings versus firms that do not disclose NG earnings. We find that the relations between GAAP earnings favorability/informativeness and GAAP earnings Plain English measures weaken for NG disclosers. The weakened relations suggest that strategic use of Plain English in the discussion of GAAP metrics may substitute for NG earnings disclosures, which are subject to relatively greater regulatory scrutiny. Collectively, our evidence suggests that managers use the PEH tactics intended to clarify value-relevant information to clarify favorable information.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"328 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-03-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116441274","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Building on previous work of Kolm and Ritter (2019) and Cao et al. (2019), this paper explores the novel application of Deep Reinforcement Learning for Delta Hedging of options in an utility based framework where an agent is faced with a trade-off between hedging error and transaction costs while aiming at maximizing the expected profit and loss and minimizing its variance. In the presence of transaction costs we compare the performance of two state-of-the-art Reinforcement Learning algorithms with two simple benchmark strategies widely used in practice. We perform the analysis on synthetic data for different market characteristics, transaction costs, option maturities and hedging frequencies, and find that the agents deliver a strong performance in markets characterized by stochastic volatility and jumps in asset prices, as well as for high transaction costs, high hedging frequency and for options with long maturities. Furthermore, we apply trained algorithms to similar (but not seen before) options and present a way of improving the robustness of the algorithms to different levels of volatility. Finally, we transfer the hedging strategies learned on simulated data to empirical option data on the S&P500 index, and demonstrate that transfer learning is successful: hedge costs encountered by reinforced learning decrease by as much as 30% compared to the Black- Scholes hedging strategy. Our results indicate that the hedging strategies based on Reinforcement Learning outperform the benchmark strategies and are suitable for traders taking real-life hedging decisions, even when the networks are trained on synthetic (but versatile) data.
{"title":"Delta Hedging of Derivatives using Deep Reinforcement Learning","authors":"Alexandru Giurca, S. Borovkova","doi":"10.2139/ssrn.3847272","DOIUrl":"https://doi.org/10.2139/ssrn.3847272","url":null,"abstract":"Building on previous work of Kolm and Ritter (2019) and Cao et al. (2019), this paper explores the novel application of Deep Reinforcement Learning for Delta Hedging of options in an utility based framework where an agent is faced with a trade-off between hedging error and transaction costs while aiming at maximizing the expected profit and loss and minimizing its variance. In the presence of transaction costs we compare the performance of two state-of-the-art Reinforcement Learning algorithms with two simple benchmark strategies widely used in practice. We perform the analysis on synthetic data for different market characteristics, transaction costs, option maturities and hedging frequencies, and find that the agents deliver a strong performance in markets characterized by stochastic volatility and jumps in asset prices, as well as for high transaction costs, high hedging frequency and for options with long maturities. Furthermore, we apply trained algorithms to similar (but not seen before) options and present a way of improving the robustness of the algorithms to different levels of volatility. Finally, we transfer the hedging strategies learned on simulated data to empirical option data on the S&P500 index, and demonstrate that transfer learning is successful: hedge costs encountered by reinforced learning decrease by as much as 30% compared to the Black- Scholes hedging strategy. Our results indicate that the hedging strategies based on Reinforcement Learning outperform the benchmark strategies and are suitable for traders taking real-life hedging decisions, even when the networks are trained on synthetic (but versatile) data.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"80 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-03-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125874734","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
H. Berkman, Jonathan Jona, Gladys Lee, N. Soderstrom
While it is widely acknowledged that companies face increasing cybersecurity risk stemming from hackers stealing customer information, a relatively unknown cybersecurity risk is from information leakage and subsequent trading by digital insiders – hackers who target corporations to obtain non-public corporate information for illegal trading. We use a firm-specific measure of cybersecurity risk mitigation based on textual analysis of 10-Ks to proxy for the organization’s ability to reduce the probability of digital insider trading. We find that a larger share of new earnings information is incorporated into prices prior to earnings announcements for firms with low cybersecurity risk mitigation scores. We also find that pre-announcement trading by short sellers is more predictive of earnings surprises for firms with low cybersecurity risk mitigation. Further, on days closer to earnings announcements, firms with relatively low cybersecurity risk mitigation scores experience a larger increase in bid-ask spreads, particularly the adverse selection component. These results suggest that weak cybersecurity risk mitigation provides opportunities for acquisition of private information and that trading by privately informed traders is more likely in stocks of firms with higher exposure to cybercrimes.
{"title":"Digital Insiders and Informed Trading Before Earnings Announcements","authors":"H. Berkman, Jonathan Jona, Gladys Lee, N. Soderstrom","doi":"10.2139/ssrn.3180531","DOIUrl":"https://doi.org/10.2139/ssrn.3180531","url":null,"abstract":"While it is widely acknowledged that companies face increasing cybersecurity risk stemming from hackers stealing customer information, a relatively unknown cybersecurity risk is from information leakage and subsequent trading by digital insiders – hackers who target corporations to obtain non-public corporate information for illegal trading. We use a firm-specific measure of cybersecurity risk mitigation based on textual analysis of 10-Ks to proxy for the organization’s ability to reduce the probability of digital insider trading. We find that a larger share of new earnings information is incorporated into prices prior to earnings announcements for firms with low cybersecurity risk mitigation scores. We also find that pre-announcement trading by short sellers is more predictive of earnings surprises for firms with low cybersecurity risk mitigation. Further, on days closer to earnings announcements, firms with relatively low cybersecurity risk mitigation scores experience a larger increase in bid-ask spreads, particularly the adverse selection component. These results suggest that weak cybersecurity risk mitigation provides opportunities for acquisition of private information and that trading by privately informed traders is more likely in stocks of firms with higher exposure to cybercrimes.","PeriodicalId":181062,"journal":{"name":"Corporate Governance: Disclosure","volume":"54 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132909062","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：