Pub Date : 2025-01-20DOI: 10.1016/j.jacceco.2025.101767
Benjamin Golez, Peter Kelly, Ben Matthies
A growing body of evidence suggests that Federal Open Market Committee (FOMC) announcements can affect private sector beliefs about near-term macroeconomic conditions. We measure the impact of central bank policy on index option trader beliefs about near-term economic conditions using the return of short-term dividend strips around each FOMC announcement (we term this short-term dividend strip return, “SDR”). Consistent with the idea that these announcements contain valuable information about macroeconomic conditions, we find that SDR predicts both future firm-level earnings and firm-level earnings announcement returns. Furthermore, using analyst earnings forecasts, we provide evidence of belief underreaction to FOMC announcements. We discuss how investor specialization and segmented markets can generate our empirical results.
{"title":"FOMC news and segmented markets","authors":"Benjamin Golez, Peter Kelly, Ben Matthies","doi":"10.1016/j.jacceco.2025.101767","DOIUrl":"https://doi.org/10.1016/j.jacceco.2025.101767","url":null,"abstract":"A growing body of evidence suggests that Federal Open Market Committee (FOMC) announcements can affect private sector beliefs about near-term macroeconomic conditions. We measure the impact of central bank policy on index option trader beliefs about near-term economic conditions using the return of short-term dividend strips around each FOMC announcement (we term this short-term dividend strip return, “SDR”). Consistent with the idea that these announcements contain valuable information about macroeconomic conditions, we find that <ce:italic>SDR</ce:italic> predicts both future firm-level earnings and firm-level earnings announcement returns. Furthermore, using analyst earnings forecasts, we provide evidence of belief underreaction to FOMC announcements. We discuss how investor specialization and segmented markets can generate our empirical results.","PeriodicalId":42721,"journal":{"name":"International Journal of Economics Management and Accounting","volume":"12 1","pages":""},"PeriodicalIF":1.2,"publicationDate":"2025-01-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143049704","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 : 2024-12-28DOI: 10.1016/j.jacceco.2024.101763
Bok Baik, Alex G. Kim, David S. Kim, Sangwon Yoon
We study the economic consequences of managers’ vocal delivery quality during earnings conference calls. We introduce a novel measure, vocal delivery quality, that captures the acoustic comprehensibility of audio information for an average listener. Our measure relies on a deep-learning algorithm applied to a large sample of earnings call audio files. Consistent with predictions from the psychology and accounting literatures, we find evidence that the quality of managers’ vocal delivery deteriorates when they deliver negative news, such as a decrease in earnings or negative narrative information, and positive but transitory earnings news. We show that the stock market reacts in real time to managers’ vocal delivery quality. We also document that the vocal delivery quality has an effect on information intermediaries such as analysts and the media. Overall, our findings underscore the role of vocal dimensions in corporate oral disclosures.
{"title":"Vocal delivery quality in earnings conference calls","authors":"Bok Baik, Alex G. Kim, David S. Kim, Sangwon Yoon","doi":"10.1016/j.jacceco.2024.101763","DOIUrl":"https://doi.org/10.1016/j.jacceco.2024.101763","url":null,"abstract":"We study the economic consequences of managers’ vocal delivery quality during earnings conference calls. We introduce a novel measure, vocal delivery quality, that captures the acoustic comprehensibility of audio information for an average listener. Our measure relies on a deep-learning algorithm applied to a large sample of earnings call audio files. Consistent with predictions from the psychology and accounting literatures, we find evidence that the quality of managers’ vocal delivery deteriorates when they deliver negative news, such as a decrease in earnings or negative narrative information, and positive but transitory earnings news. We show that the stock market reacts in real time to managers’ vocal delivery quality. We also document that the vocal delivery quality has an effect on information intermediaries such as analysts and the media. Overall, our findings underscore the role of vocal dimensions in corporate oral disclosures.","PeriodicalId":42721,"journal":{"name":"International Journal of Economics Management and Accounting","volume":"27 1","pages":""},"PeriodicalIF":1.2,"publicationDate":"2024-12-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142929393","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 : 2024-12-12DOI: 10.1016/j.jacceco.2024.101761
Adrienne DePaul, Frank Murphy, Mary E. Vernon
In 2017, the European Commission (EC) published a list of non-cooperative tax havens. We study whether country-level tourism and foreign direct investment (FDI) change as a result of this list. Consistent with a reputational cost of the EC's “name and shame” campaign, there is a modest reduction in EU tourism among listed countries compared to unlisted ones. This relative reduction is concentrated among tourists from countries that view cheating on taxes as less justifiable. In contrast, listed countries experience a general increase in FDI following the list, a benefit potentially offsetting the costs of reduced tourism.
{"title":"Tax havens and reputational costs","authors":"Adrienne DePaul, Frank Murphy, Mary E. Vernon","doi":"10.1016/j.jacceco.2024.101761","DOIUrl":"https://doi.org/10.1016/j.jacceco.2024.101761","url":null,"abstract":"In 2017, the European Commission (EC) published a list of non-cooperative tax havens. We study whether country-level tourism and foreign direct investment (FDI) change as a result of this list. Consistent with a reputational cost of the EC's “name and shame” campaign, there is a modest reduction in EU tourism among listed countries compared to unlisted ones. This relative reduction is concentrated among tourists from countries that view cheating on taxes as less justifiable. In contrast, listed countries experience a general increase in FDI following the list, a benefit potentially offsetting the costs of reduced tourism.","PeriodicalId":42721,"journal":{"name":"International Journal of Economics Management and Accounting","volume":"24 1","pages":""},"PeriodicalIF":1.2,"publicationDate":"2024-12-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142874774","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 : 2024-12-10DOI: 10.1016/j.jacceco.2024.101762
Jerold L. Zimmerman
{"title":"Reflections on the founding of the journal of accounting andeconomics","authors":"Jerold L. Zimmerman","doi":"10.1016/j.jacceco.2024.101762","DOIUrl":"https://doi.org/10.1016/j.jacceco.2024.101762","url":null,"abstract":"","PeriodicalId":42721,"journal":{"name":"International Journal of Economics Management and Accounting","volume":"2 1","pages":""},"PeriodicalIF":1.2,"publicationDate":"2024-12-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142874776","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 : 2024-12-07DOI: 10.1016/j.jacceco.2024.101760
Minkwan Ahn, Theodore E. Christensen, Ryan G. Johnson, Melissa F. Lewis-Western
We investigate whether consistent non-GAAP reporting is associated with investment efficiency. Prior research finds a positive association between non-GAAP reporting and investment levels, concluding that it represents overinvestment. We corroborate this positive association, but additional tests are not consistent with the conclusion of inefficient overinvestment. Specifically, we explore the relation between investment and future cash flows as a proxy for the realization of investments in positive net present value projects. We find that the investments of firms that consistently report non-GAAP metrics are associated with similar or higher future cash flows than the investments of firms reporting only GAAP earnings, which is consistent with efficient investment. We observe similar associations in multiple specifications, performance horizons, and outcome variables, including future returns and earnings. Given the prevalence of non-GAAP reporting and the SEC's ongoing concern with the consequences of non-GAAP disclosure, our analyses offer timely evidence relevant to this important discussion.
{"title":"The future performance implications of Non-GAAP firms’ investments","authors":"Minkwan Ahn, Theodore E. Christensen, Ryan G. Johnson, Melissa F. Lewis-Western","doi":"10.1016/j.jacceco.2024.101760","DOIUrl":"https://doi.org/10.1016/j.jacceco.2024.101760","url":null,"abstract":"We investigate whether consistent non-GAAP reporting is associated with investment efficiency. Prior research finds a positive association between non-GAAP reporting and investment levels, concluding that it represents overinvestment. We corroborate this positive association, but additional tests are not consistent with the conclusion of inefficient overinvestment. Specifically, we explore the relation between investment and future cash flows as a proxy for the realization of investments in positive net present value projects. We find that the investments of firms that consistently report non-GAAP metrics are associated with similar or higher future cash flows than the investments of firms reporting only GAAP earnings, which is consistent with efficient investment. We observe similar associations in multiple specifications, performance horizons, and outcome variables, including future returns and earnings. Given the prevalence of non-GAAP reporting and the SEC's ongoing concern with the consequences of non-GAAP disclosure, our analyses offer timely evidence relevant to this important discussion.","PeriodicalId":42721,"journal":{"name":"International Journal of Economics Management and Accounting","volume":"1 1","pages":""},"PeriodicalIF":1.2,"publicationDate":"2024-12-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142874777","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 : 2024-11-19DOI: 10.1016/j.jacceco.2024.101755
Yue Rio Wu, Sterling Huang, Albert Tsang, Kun Tracy Wang
We examine how generalist CEOs influence innovation outcomes across 25 countries from 2001 to 2019. We assemble a novel, extended dataset of generalist CEOs and find that generalist CEOs positively affect innovation, particularly in countries with abundant innovation resources. This finding aligns with the notion that generalist CEOs leverage their broad knowledge and cross-industry experience to integrate resources across institutional environments, thereby fostering innovation activities. However, in countries with stricter patent systems, the increased need for specialized knowledge and resources limits the value that generalist CEOs can contribute, leading to decreased innovation activities. Our research highlights how institutional environments shape the efficacy of CEO human capital in driving innovation, thus offering insights for the design of innovation policies that maximize leadership potential across different institutional contexts.
{"title":"Generalist managers and firm innovation worldwide: The role of innovation-specific institutions","authors":"Yue Rio Wu, Sterling Huang, Albert Tsang, Kun Tracy Wang","doi":"10.1016/j.jacceco.2024.101755","DOIUrl":"https://doi.org/10.1016/j.jacceco.2024.101755","url":null,"abstract":"We examine how generalist CEOs influence innovation outcomes across 25 countries from 2001 to 2019. We assemble a novel, extended dataset of generalist CEOs and find that generalist CEOs positively affect innovation, particularly in countries with abundant innovation resources. This finding aligns with the notion that generalist CEOs leverage their broad knowledge and cross-industry experience to integrate resources across institutional environments, thereby fostering innovation activities. However, in countries with stricter patent systems, the increased need for specialized knowledge and resources limits the value that generalist CEOs can contribute, leading to decreased innovation activities. Our research highlights how institutional environments shape the efficacy of CEO human capital in driving innovation, thus offering insights for the design of innovation policies that maximize leadership potential across different institutional contexts.","PeriodicalId":42721,"journal":{"name":"International Journal of Economics Management and Accounting","volume":"209 1","pages":""},"PeriodicalIF":1.2,"publicationDate":"2024-11-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142758707","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 : 2024-10-30DOI: 10.1016/j.jacceco.2024.101744
Fotis Delis, Manthos D. Delis, Luc Laeven, Steven Ongena
We provide estimates of profit shifting for over 2 million firm-year observations in 100 countries over the period 2009–2020. Employing nonparametric estimation techniques within a mainstay model of profit shifting, we examine how the profits of both parent and subsidiary firms within a multinational group respond to marginal changes in the composite tax indicator. The key advantage of this approach is that it yields firm-year estimates of profit shifting. Multinational firms engage in extensive profit shifting by maintaining affiliates in low-tax countries and zero-tax havens. Multinational groups with an ultimate tax-haven owner exhibit the largest profit response to tax incentives. Our new database opens important avenues for analyzing the sources and effects of profit shifting.
{"title":"Global evidence on profit shifting within firms and across time","authors":"Fotis Delis, Manthos D. Delis, Luc Laeven, Steven Ongena","doi":"10.1016/j.jacceco.2024.101744","DOIUrl":"https://doi.org/10.1016/j.jacceco.2024.101744","url":null,"abstract":"We provide estimates of profit shifting for over 2 million firm-year observations in 100 countries over the period 2009–2020. Employing nonparametric estimation techniques within a mainstay model of profit shifting, we examine how the profits of both parent and subsidiary firms within a multinational group respond to marginal changes in the composite tax indicator. The key advantage of this approach is that it yields firm-year estimates of profit shifting. Multinational firms engage in extensive profit shifting by maintaining affiliates in low-tax countries and zero-tax havens. Multinational groups with an ultimate tax-haven owner exhibit the largest profit response to tax incentives. Our new database opens important avenues for analyzing the sources and effects of profit shifting.","PeriodicalId":42721,"journal":{"name":"International Journal of Economics Management and Accounting","volume":"13 1","pages":""},"PeriodicalIF":1.2,"publicationDate":"2024-10-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142670431","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 : 2024-10-28DOI: 10.1016/j.jacceco.2024.101743
Kai Wai Hui, Jun Oh, Guoman She, P. Eric Yeung
We study contingencies written in firms' material product market contracts, focusing on the theoretical prediction of uncertainty as an important determinant. We identify contract contingencies from firms’ public regulatory filings and examine the effects of general business uncertainty and specific innovation-related uncertainty. To enhance causal inference, we utilize two major business shocks (i.e., the 2008 Financial Crisis and the COVID pandemic) and the diffusion of 29 disruptive innovation shocks (Bloom et al., 2021). We also explore the effects of re-negotiation costs and writing costs. Overall, our empirical results are consistent with predictions from dynamic models of incomplete contracting.
{"title":"Contract contingencies and uncertainty: Evidence from product market contracts","authors":"Kai Wai Hui, Jun Oh, Guoman She, P. Eric Yeung","doi":"10.1016/j.jacceco.2024.101743","DOIUrl":"https://doi.org/10.1016/j.jacceco.2024.101743","url":null,"abstract":"We study contingencies written in firms' material product market contracts, focusing on the theoretical prediction of uncertainty as an important determinant. We identify contract contingencies from firms’ public regulatory filings and examine the effects of general business uncertainty and specific innovation-related uncertainty. To enhance causal inference, we utilize two major business shocks (i.e., the 2008 Financial Crisis and the COVID pandemic) and the diffusion of 29 disruptive innovation shocks (Bloom et al., 2021). We also explore the effects of re-negotiation costs and writing costs. Overall, our empirical results are consistent with predictions from dynamic models of incomplete contracting.","PeriodicalId":42721,"journal":{"name":"International Journal of Economics Management and Accounting","volume":"13 1","pages":""},"PeriodicalIF":1.2,"publicationDate":"2024-10-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142670433","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 : 2024-09-12DOI: 10.1016/j.jacceco.2024.101740
Travis Dyer, Nicholas Guest, Elisha Yu
We examine quantitative investors’ ability to navigate a common and occasionally material change to the financial data generating process: new accounting standards. Returns of quantitative mutual funds temporarily decrease relative to funds that rely more heavily on human discretion following the implementation of a few standards that significantly change key financial statement variables; however, other standards do not appear to have a differential effect. Our result is stronger for quantitative funds using more accounting terminology in their prospectuses and using value strategies, which leverage accounting signals. Excess portfolio turnover following the implementation of accounting standards appears to be a driving factor of the quant underperformance. Additional evidence connects the fund-level results to the specific stocks that were affected by the accounting standards. Overall, our results suggest quant funds are generally proficient at adapting to accounting changes, although material changes occasionally put them at a temporary disadvantage relative to discretionary investors.
{"title":"New accounting standards and the performance of quantitative investors","authors":"Travis Dyer, Nicholas Guest, Elisha Yu","doi":"10.1016/j.jacceco.2024.101740","DOIUrl":"https://doi.org/10.1016/j.jacceco.2024.101740","url":null,"abstract":"We examine quantitative investors’ ability to navigate a common and occasionally material change to the financial data generating process: new accounting standards. Returns of quantitative mutual funds temporarily decrease relative to funds that rely more heavily on human discretion following the implementation of a few standards that significantly change key financial statement variables; however, other standards do not appear to have a differential effect. Our result is stronger for quantitative funds using more accounting terminology in their prospectuses and using value strategies, which leverage accounting signals. Excess portfolio turnover following the implementation of accounting standards appears to be a driving factor of the quant underperformance. Additional evidence connects the fund-level results to the specific stocks that were affected by the accounting standards. Overall, our results suggest quant funds are generally proficient at adapting to accounting changes, although material changes occasionally put them at a temporary disadvantage relative to discretionary investors.","PeriodicalId":42721,"journal":{"name":"International Journal of Economics Management and Accounting","volume":"102 1","pages":""},"PeriodicalIF":1.2,"publicationDate":"2024-09-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142231925","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 : 2024-08-23DOI: 10.1016/j.jacceco.2024.101737
Prasanna Tantri, Nitin Vishen
We study the impact of transparency about banks’ costs on loan interest rates. The Indian Central Bank required banks to disclose a cost-based benchmark interest rate instead of the prime rate. The banks could price loans using any spread to the cost-based benchmark. We find that this change, which made banks’ cost structures more transparent, lowers the interest rates charged and leads to increases in debtor firms’ total borrowings and investments. We hypothesize that increased cost transparency reveals relationship rents to competitor banks and makes it difficult for incumbent banks to maintain high relationship rents because of increased threat of entry.
{"title":"Does transparency about banks’ lending costs lower firms’ borrowing costs? Evidence from India","authors":"Prasanna Tantri, Nitin Vishen","doi":"10.1016/j.jacceco.2024.101737","DOIUrl":"https://doi.org/10.1016/j.jacceco.2024.101737","url":null,"abstract":"We study the impact of transparency about banks’ costs on loan interest rates. The Indian Central Bank required banks to disclose a cost-based benchmark interest rate instead of the prime rate. The banks could price loans using any spread to the cost-based benchmark. We find that this change, which made banks’ cost structures more transparent, lowers the interest rates charged and leads to increases in debtor firms’ total borrowings and investments. We hypothesize that increased cost transparency reveals relationship rents to competitor banks and makes it difficult for incumbent banks to maintain high relationship rents because of increased threat of entry.","PeriodicalId":42721,"journal":{"name":"International Journal of Economics Management and Accounting","volume":"9 1","pages":""},"PeriodicalIF":1.2,"publicationDate":"2024-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142101879","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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