Using a neural network, we develop novel measures of conservatism that fits non-linearities and interactions absent in prior literature. The machine-learning measures exhibit (i) fewer economically anomalous observations, (ii) economic associations consistent with existing studies, (iii) less unexplained year-over-year instability, and (iv) higher economic magnitudes consistent with reduced attenuation bias. The measure further reveals intuitive trends toward a secular decline in conservatism in the US. In simulations, linear models perform honorably even in the presence of a complex data-generating process but causal inference based on machine learning is the most robust to misspecification. The approach offers the promise of reducing noise in measurements and design more powerful tests to assess theories of conservatism.
{"title":"Using Machine Learning to Measure Conservatism","authors":"J. Bertomeu, E. Cheynel, Yifei Liao, Mario Milone","doi":"10.2139/ssrn.3924961","DOIUrl":"https://doi.org/10.2139/ssrn.3924961","url":null,"abstract":"Using a neural network, we develop novel measures of conservatism that fits non-linearities and interactions absent in prior literature. The machine-learning measures exhibit (i) fewer economically anomalous observations, (ii) economic associations consistent with existing studies, (iii) less unexplained year-over-year instability, and (iv) higher economic magnitudes consistent with reduced attenuation bias. The measure further reveals intuitive trends toward a secular decline in conservatism in the US. In simulations, linear models perform honorably even in the presence of a complex data-generating process but causal inference based on machine learning is the most robust to misspecification. The approach offers the promise of reducing noise in measurements and design more powerful tests to assess theories of conservatism.","PeriodicalId":408879,"journal":{"name":"Corporate Governance & Economics eJournal","volume":"37 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"116194512","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}
Micro, small and medium enterprises (MSMEs) the forerunners of the Indian economy equipped with the greatest potential of growth and employment opportunities are the focus of this paper. By examining firm-level data for years 2007-2008 and 2017-2018, this paper captures the simultaneous expenditure on insurance premium and export earnings on the technical efficiency of firms. On applying stochastic frontier production function, results reveal that Indian MSMEs although being labour intensive have high average technical efficiency in the two comparative years. Results also indicate that factors such as firm size, age, ownership, technological imports both embodied and disembodied, expenditure on R&D, and export guarantees contribute to the technical efficiency of MSMEs. The top 25 percent of efficient MSMEs in 2017-2018 rely more on exports, have higher forex earnings with higher expenditure on marketing & advertising, and expenditure on export guarantees. This thus warrants a further improvement in technical efficiency through access to financial services, skilled labour, training of labour, enhancing and attracting foreign investment for operational collaborations, and incentives for easier and risk-free penetration in the world market
{"title":"Export Guarantees and Firm Performance in the Context of Corporate Governance","authors":"K. Arora, A. Siddiqui","doi":"10.22495/COCV18I3ART11","DOIUrl":"https://doi.org/10.22495/COCV18I3ART11","url":null,"abstract":"Micro, small and medium enterprises (MSMEs) the forerunners of the Indian economy equipped with the greatest potential of growth and employment opportunities are the focus of this paper. By examining firm-level data for years 2007-2008 and 2017-2018, this paper captures the simultaneous expenditure on insurance premium and export earnings on the technical efficiency of firms. On applying stochastic frontier production function, results reveal that Indian MSMEs although being labour intensive have high average technical efficiency in the two comparative years. Results also indicate that factors such as firm size, age, ownership, technological imports both embodied and disembodied, expenditure on R&D, and export guarantees contribute to the technical efficiency of MSMEs. The top 25 percent of efficient MSMEs in 2017-2018 rely more on exports, have higher forex earnings with higher expenditure on marketing & advertising, and expenditure on export guarantees. This thus warrants a further improvement in technical efficiency through access to financial services, skilled labour, training of labour, enhancing and attracting foreign investment for operational collaborations, and incentives for easier and risk-free penetration in the world market","PeriodicalId":408879,"journal":{"name":"Corporate Governance & Economics eJournal","volume":"13 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-09-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128286604","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 recent COVID-19 pandemic produced an extensive array of creative responses to confront the adverse results of the crisis. Many companies worldwide were required to adopt innovative thinking by altering their business activities and revising their entire supply chain. This article is devoted to exploring the implications of this fundamental change on central theoretical assumptions of corporate governance by focusing on the company purpose debate. It advocates a novel contingent interpretation for formulating a purpose that acknowledges the dynamic nature of business needs and incorporates the life-cycle and the industry aspects for generating value for the company as an independent and separate legal entity.
{"title":"Innovation in Times of Global Pandemic and the Debate on the Company Purpose","authors":"Leon Yehuda Anidjar PhD","doi":"10.2139/ssrn.3901390","DOIUrl":"https://doi.org/10.2139/ssrn.3901390","url":null,"abstract":"The recent COVID-19 pandemic produced an extensive array of creative responses to confront the adverse results of the crisis. Many companies worldwide were required to adopt innovative thinking by altering their business activities and revising their entire supply chain. This article is devoted to exploring the implications of this fundamental change on central theoretical assumptions of corporate governance by focusing on the company purpose debate. It advocates a novel contingent interpretation for formulating a purpose that acknowledges the dynamic nature of business needs and incorporates the life-cycle and the industry aspects for generating value for the company as an independent and separate legal entity.","PeriodicalId":408879,"journal":{"name":"Corporate Governance & Economics eJournal","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-08-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126168423","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}
We examine gender differences in the language of CFOs that participate in quarterly earnings calls. Female executives are more concise, less optimistic, are clearer, use fewer idioms or clichés, and provide more numbers in their speech. These differences are particularly strong in the more spontaneous Questions and Answers (QA) section of the calls. The tone of female CFOs is positively associated with future earnings surprises, while for male CFOs it is more related to future firm expansion. Finally, firms with female CFOs earn higher abnormal returns around the call date than those with male CFOs after controlling for variables that are related to the contents of the call.
{"title":"Benefits of Having a Female CFO","authors":"Julia Klevak, J. Livnat, Kate Suslava","doi":"10.2139/ssrn.3887025","DOIUrl":"https://doi.org/10.2139/ssrn.3887025","url":null,"abstract":"We examine gender differences in the language of CFOs that participate in quarterly earnings calls. Female executives are more concise, less optimistic, are clearer, use fewer idioms or clichés, and provide more numbers in their speech. These differences are particularly strong in the more spontaneous Questions and Answers (QA) section of the calls. The tone of female CFOs is positively associated with future earnings surprises, while for male CFOs it is more related to future firm expansion. Finally, firms with female CFOs earn higher abnormal returns around the call date than those with male CFOs after controlling for variables that are related to the contents of the call.","PeriodicalId":408879,"journal":{"name":"Corporate Governance & Economics eJournal","volume":"22 5 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-07-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134067254","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 provides a full characterization of the price effects of horizontal mergers in the Cournot model with heterogeneous firms and constant returns to scale. We show that the price change brought about by a merger only depends on the smaller merging firm's share and the number of firms, but is independent of the distribution of shares among other firms. Price effects are determined by factors that are either directly observable by competition authorities or can be bounded under relatively mild assumptions on demand curvature or pass-through. Estimates based on concentration measures can instead be seriously misleading. We also provide closed-form solutions for calibration that approximate merger effects on the basis of simple pre-merger parameters.
{"title":"The Competitive Effects of Mergers with Cournot Competition","authors":"Markus Reisinger, Hans Zenger","doi":"10.2139/ssrn.3881145","DOIUrl":"https://doi.org/10.2139/ssrn.3881145","url":null,"abstract":"This paper provides a full characterization of the price effects of horizontal mergers in the Cournot model with heterogeneous firms and constant returns to scale. We show that the price change brought about by a merger only depends on the smaller merging firm's share and the number of firms, but is independent of the distribution of shares among other firms. Price effects are determined by factors that are either directly observable by competition authorities or can be bounded under relatively mild assumptions on demand curvature or pass-through. Estimates based on concentration measures can instead be seriously misleading. We also provide closed-form solutions for calibration that approximate merger effects on the basis of simple pre-merger parameters.","PeriodicalId":408879,"journal":{"name":"Corporate Governance & Economics eJournal","volume":"96 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-07-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120949162","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}
I review the research on master limited partnerships (“MLPs”) in the accounting, economics, and finance literature. I begin by outlining the scope of the review and providing a brief background on the structure, taxation, and governance of master limited partnerships. Next, I describe the various sources from which MLP data is derived. I then review the research, aggregating it into four broad categories: (1) taxes and organizational form; (2) taxes, capital structure, and payout policy; (3) valuation; and (4) governance research. Within each section, I present possible avenues for future research in accounting, economics, and finance.
{"title":"Master Limited Partnership Research in Accounting, Economics, and Finance","authors":"A. Mandell","doi":"10.2308/jata-2020-012","DOIUrl":"https://doi.org/10.2308/jata-2020-012","url":null,"abstract":"I review the research on master limited partnerships (“MLPs”) in the accounting, economics, and finance literature. I begin by outlining the scope of the review and providing a brief background on the structure, taxation, and governance of master limited partnerships. Next, I describe the various sources from which MLP data is derived. I then review the research, aggregating it into four broad categories: (1) taxes and organizational form; (2) taxes, capital structure, and payout policy; (3) valuation; and (4) governance research. Within each section, I present possible avenues for future research in accounting, economics, and finance.","PeriodicalId":408879,"journal":{"name":"Corporate Governance & Economics eJournal","volume":"183 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-06-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124618815","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 civil service is the engine room of modern government. It comprises an assemblage of career officials, recruited in a civil capacity to serve the citizenry. By their training, they are equipped to champion the course of development by faithful implementation and evaluation of government polices and programmes. They are expected to do this in a transparent and accountable manner. Over the past decades, accountability which is a core feature of good governance has been central in public sector management. Accountability is important for effective performance in the public sector because both elected and non-elected officials need to show the public that they are performing their responsibilities in the best possible way and using the resources provided them effectively and efficiently. This paper is aimed at examining good governance and the impediments to public accountability in Nigeria, and recommends remedial actions for effective public accountability and performance in Nigerian public sector management. The article adopts qualitative method in gathering data from various sources. It traced the absence of accountability in public sector management in Nigeria to the incursion of the military into the Nigerian public administration. It shows with relevant examples how the culture of non accountability and poor performance has eaten deep into the fabric of the society. It therefore proposes some measures to address the malaise of public accountability in Nigeria. The article contends that unless good governance is in place with public accountability carefully observed, effective public sector performance cannot be realized.
{"title":"Good Governance and Civil Service Accountability in Nigeria - Problems and Prospects","authors":"Dr. Matthew F. Bello","doi":"10.2139/ssrn.3860781","DOIUrl":"https://doi.org/10.2139/ssrn.3860781","url":null,"abstract":"The civil service is the engine room of modern government. It comprises an assemblage of career officials, recruited in a civil capacity to serve the citizenry. By their training, they are equipped to champion the course of development by faithful implementation and evaluation of government polices and programmes. They are expected to do this in a transparent and accountable manner. Over the past decades, accountability which is a core feature of good governance has been central in public sector management. Accountability is important for effective performance in the public sector because both elected and non-elected officials need to show the public that they are performing their responsibilities in the best possible way and using the resources provided them effectively and efficiently. This paper is aimed at examining good governance and the impediments to public accountability in Nigeria, and recommends remedial actions for effective public accountability and performance in Nigerian public sector management. The article adopts qualitative method in gathering data from various sources. It traced the absence of accountability in public sector management in Nigeria to the incursion of the military into the Nigerian public administration. It shows with relevant examples how the culture of non accountability and poor performance has eaten deep into the fabric of the society. It therefore proposes some measures to address the malaise of public accountability in Nigeria. The article contends that unless good governance is in place with public accountability carefully observed, effective public sector performance cannot be realized.","PeriodicalId":408879,"journal":{"name":"Corporate Governance & Economics eJournal","volume":"16 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-06-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127342076","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}
We study how ownership structure, in particular public listing status, affects workplace safety and productivity tradeoffs. Theory offers competing hypotheses on how listing related frictions affect these tradeoffs. We exploit detailed asset-level data in the U.S. coal industry and find that workplace safety deteriorates dramatically under public firm ownership, primarily in mines that experience the largest productivity increases. We find evidence consistent with information asymmetry between managers and shareholders of public firms, and ties of private firm ownership with local communities being first-order drivers of workplace safety and productivity tradeoffs.
{"title":"Is Public Equity Deadly? Evidence from Workplace Safety and Productivity Tradeoffs in the Coal Industry","authors":"E. Gilje, Michael D. Wittry","doi":"10.2139/ssrn.3810655","DOIUrl":"https://doi.org/10.2139/ssrn.3810655","url":null,"abstract":"We study how ownership structure, in particular public listing status, affects workplace safety and productivity tradeoffs. Theory offers competing hypotheses on how listing related frictions affect these tradeoffs. We exploit detailed asset-level data in the U.S. coal industry and find that workplace safety deteriorates dramatically under public firm ownership, primarily in mines that experience the largest productivity increases. We find evidence consistent with information asymmetry between managers and shareholders of public firms, and ties of private firm ownership with local communities being first-order drivers of workplace safety and productivity tradeoffs.","PeriodicalId":408879,"journal":{"name":"Corporate Governance & Economics eJournal","volume":"47 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-04-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131395521","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 study investigates a communication game between a CEO and a board of directors where the CEO's career concerns can potentially impede value-increasing informative communication. By adopting a policy of aggressive boards (excessive replacement), shareholders can facilitate communication between the CEO and the board. The results are in contrast to the multitude of models which generally find that management-friendly boards improve communication, and help to explain empirical results concerning CEO turnover. The results also provide the following novel predictions concerning variation in CEO turnover: (i) there is greater CEO turnover in firms or industries where CEO performance is relatively more difficult to assess; (ii) the board is more aggressive in their replacement of the CEO in industries or firms where the board's advisory role is more salient; and (iii) there is comparatively less CEO turnover in firms or industries where the variance of CEO talent is high.
{"title":"Aggressive Boards and CEO Turnover","authors":"Cyrus Aghamolla, Tadashi Hashimoto","doi":"10.2139/ssrn.3760170","DOIUrl":"https://doi.org/10.2139/ssrn.3760170","url":null,"abstract":"This study investigates a communication game between a CEO and a board of directors where the CEO's career concerns can potentially impede value-increasing informative communication. By adopting a policy of aggressive boards (excessive replacement), shareholders can facilitate communication between the CEO and the board. The results are in contrast to the multitude of models which generally find that management-friendly boards improve communication, and help to explain empirical results concerning CEO turnover. The results also provide the following novel predictions concerning variation in CEO turnover: (i) there is greater CEO turnover in firms or industries where CEO performance is relatively more difficult to assess; (ii) the board is more aggressive in their replacement of the CEO in industries or firms where the board's advisory role is more salient; and (iii) there is comparatively less CEO turnover in firms or industries where the variance of CEO talent is high.","PeriodicalId":408879,"journal":{"name":"Corporate Governance & Economics eJournal","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2021-01-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128413629","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}
Temilola Adetona, Oluwatofunmi I Aduloju, A. Fayinka, N. Iheanacho
The economy of every clime requires overwhelming participation from private entities and other individuals. However, as participation grows, the task of regulation equally grows. Hence, regulators in every clime strive to capture the activities of economic participants to avoid abuse and unchecked malpractices in the economy by unscrupulous elements. For Nigeria, the rally by regulators might not have been the same as the regulatory structure has not been the most impressive globally, leading to lesser ease in doing business in the Nigerian clime. However, the signing of the CAMA Act 2020 by President Buhari on the 7th of August, 2020 engineered the beginning of a new era for corporate organizations in Nigeria. Prior to the enactment of the CAMA 2020, the 1990 Act was the relevant law. However, there were a lot of complaints that the 1990 Act had its own defects which prevented it from being at par with international standards. A major reason was that the Act was a borrowed outfit which was not amended for a long time to fit the growing complexities of the corporate world. Based on this, there was a clamor by relevant stakeholders for a new Act to be enacted to fill these loopholes and bring the law up to date with the new methods of doing business globally. This article seeks to examine the new Act and its expected impact on the Nigerian economy. It shall examine the innovations and probe whether the Act will be a breath of fresh air for the Nigerian corporate community or a mere replica of the past.
{"title":"Cama 2020: A Breath of Fresh Air or a Replica of the Past","authors":"Temilola Adetona, Oluwatofunmi I Aduloju, A. Fayinka, N. Iheanacho","doi":"10.2139/ssrn.3738441","DOIUrl":"https://doi.org/10.2139/ssrn.3738441","url":null,"abstract":"The economy of every clime requires overwhelming participation from private entities and other individuals. However, as participation grows, the task of regulation equally grows. Hence, regulators in every clime strive to capture the activities of economic participants to avoid abuse and unchecked malpractices in the economy by unscrupulous elements. For Nigeria, the rally by regulators might not have been the same as the regulatory structure has not been the most impressive globally, leading to lesser ease in doing business in the Nigerian clime. However, the signing of the CAMA Act 2020 by President Buhari on the 7th of August, 2020 engineered the beginning of a new era for corporate organizations in Nigeria. Prior to the enactment of the CAMA 2020, the 1990 Act was the relevant law. However, there were a lot of complaints that the 1990 Act had its own defects which prevented it from being at par with international standards. A major reason was that the Act was a borrowed outfit which was not amended for a long time to fit the growing complexities of the corporate world. Based on this, there was a clamor by relevant stakeholders for a new Act to be enacted to fill these loopholes and bring the law up to date with the new methods of doing business globally. This article seeks to examine the new Act and its expected impact on the Nigerian economy. It shall examine the innovations and probe whether the Act will be a breath of fresh air for the Nigerian corporate community or a mere replica of the past.","PeriodicalId":408879,"journal":{"name":"Corporate Governance & Economics eJournal","volume":"81 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2020-11-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131955222","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}
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