Journal of Corporate Accounting and Finance最新文献

Corporate social responsibility is increasingly considered a business imperative, with research routinely finding a positive relation between CSR and future financial performance. This study furthers this line of research by considering the role equity method investments play as a moderating factor in the firm's ability to derive financial performance benefits from CSR. I find that the extent of equity method investments as a percentage of a firm's asset mix moderates the overall positive relation between CSR and future financial performance. Further, while CSR strengthens the link between consolidated earnings and future earnings, CSR does not significantly impact the link between equity method earnings and future earnings. These results are consistent with CSR being associated only with the operations of the parent company that directly engages in the CSR activities and the reputational benefits not extending to the parent company's equity method investments. Firms and investors deciding whether there is a business case for CSR activities should consider that the extent of their equity method investments moderates the positive financial performance benefits the firm may receive from CSR and adjust expectations accordingly.

Japanese Government Bonds (JGBs) increased in volatility after the Bank of Japan (BOJ) expanded the upper limit of the yield curve control (YCC) from .2% to .25% on March 19, 2021. The entire sample period is divided in half. The JGB yield curve from 20 to 40 years is driven by three common trends in the first half of the YCC. On the other hand, the JGB yield curve from 20 to 40 years is driven by two common trends in the second half. JGBs in the maturities of 20, 30, and 40 years move independently in the first half. On the other hand, the JGBs of 30 and 40 years move together in the second half. The maturities of 20, 30, and 40 years are segmented in the first half, but those of 30 and 40 years are integrated in the second half. The JGBs in the super long term began to recover their market function after the BOJ decided to move the upper limit of the YCC to .5%. The decision made by the BOJ contributed to rectifying the malfunctioning JGB market.

We revisit the literature on using the economic policy uncertainty index (EPU) to estimate macroeconomic uncertainty¹. The extant literature has shown mixed evidence on whether macroeconomic uncertainty affects accounting quality. The EPU reflects unrepresentative political risks and thus is expected to substantially mismeasure economic uncertainty. This study investigates the association between macro uncertainty and earnings management by utilizing a novel and more unbiased measure of macro uncertainty, the gross domestic product (GDP) dispersion, and the volatility index (VIX). We find that firms engage more in earnings management when macroeconomic uncertainty is high, consistent with the notion that investors’ attention is limited due to information asymmetry providing earnings management opportunities. We also document that managers’ earnings management not only involves discretionary accruals but also real earnings management. The results are robust to controlling for firm characteristics, to an alternative measure of macroeconomic uncertainty, and to the endogeneity concern.

This research diverges from the existing literature on cost stickiness by examining the relationship between a firm's geographic proximity to industry peers, termed industry co-location, and its asymmetrical cost behavior. We propose that managerial decisions regarding resource adjustment are influenced by the state of resource markets in the firm's vicinity, hypothesizing that a high concentration of industry peers triggers downward asset price spirals during simultaneous resource liquidation. Additionally, we anticipate that industry-wide demand exceeding fixed capacity exacerbates congestion costs, thereby diminishing bargaining power in local resource markets. We predict that heightened resource adjustment costs linked to industry co-location discourage managers from reducing capacity commitments, thereby increasing cost stickiness. Our findings support this prediction, demonstrating a positive association between industry co-location and cost stickiness. Moreover, we observe that cost stickiness intensifies when closely located industry peers experience declines in sales. This paper provides initial evidence illuminating the impact of industry co-location on cost stickiness and suggests managerial implications to prevent costlier capacity adjustment through local resource markets.

In compliance with legislation from the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd–Frank), the Office of the Comptroller of the Currency (OCC) passed a final rule in June 2012 which requires banks and savings associations to actively monitor and assess their debt investments rather than passively relying on credit ratings. The OCC specifically directs these institutions to examine default risk by focusing on “operating and financial performance.” We utilize this regulatory change to examine how greater demand for information by major institutions impacts the corporate disclosures of issuers. We focus on forward looking management earnings forecasts (MEFs) and find greater bond market reaction to MEFs after the OCC rule. These results suggest that greater demand for information by bondholders has a significant impact on the quality of issuer's forward looking corporate disclosures.

This paper investigates investor reactions to corporate disclosures of crypto assets. We find that investor reactions are negative and insignificant in the 3-day event window, while the reactions become positive afterward in the 5-day event window. This suggests V-shaped reverse reactions to the disclosures. We further investigate investor reactions to the different types and information quality of disclosures. The V-shaped reverse-reactions are statistically significant in 8-K, 10-Q, and 10-K filings. In addition, investors are likely to react to Form 8-K disclosures and disclosures with greater information quality. Our results have important implications for regulators and managerial practices regarding the disclosure of corporate investment decisions.

We examine empirically the relationship between the dynamics of firm value and their financing and debt maturity choices. Theoretical studies show that the actual drift of firm value is a key determinant of firms’ leverage and debt maturity by incorporating the conflicts between undiversified insiders (managers) and well-diversified outside investors. We empirically analyze firms’ incremental leverage and debt maturity choice important determinants of firms’ leverage and debt maturity, we find that the drift, or the expected return of total assets, does affect the firms’ choices of incremental leverage and debt maturity, as predicted by theoretical studies. Our results provide the evidence that the divergence of interests between undiversified managers and well-diversified shareholders has significant impact on firms’ financing policies that are generally controlled by managers, and the resulting leverage and maturity choices may deviate from maximizing shareholders’ value.

Cross-listed firms natively operate in countries where regulations are less enforced, disclosure requirements and the legal environment are laxer than in the US. Thus, cross-listed firms typically pay lower audit fees than US peer groups. Based on reported audit data of the cross-listed firms in the US, this study explores how their home country's regulatory environment affects audit fees when they cross-list on US stock exchanges. The empirical results indicate that the cross-listed firms pay lower audit fees than their US counterparts. However, other regulatory environments in the home country, like disclosure requirements or anti-director dictatorship, may require more audit efforts. Further, the cross-listed firms that prepare reconciliation to US GAAP pay lower audit fees than other ADR firms that are using IFRS or US GAAP. However, still most of ADR firms pay lower audit fees than US counterpart firms.

This study reexamines the information content and market price discovery associated with individual analysts' earnings forecast revisions. We refine the definition of high-innovation revisions as high-innovation consistent forecast revisions and high-innovation reversal forecast revisions. Cross-sectional analysis shows that high-innovation reversal good (bad) news revisions, although having larger forecast changes, cause fewer upward (downward) post-revision price shifts than high-innovation consistent good (bad) news revisions. We also find that the market can distinguish which group of analysts provides more useful information about firms’ true value, but it takes some time for the market to digest this useful information.

In this study, we analyze a sample of accelerated filers that have reported material weaknesses (MWs) in their internal controls for multiple consecutive years. The recent emphasis by the Securities and Exchange Commission on improving accounting and controls within public companies has led to heightened scrutiny of firms with ongoing MW disclosures. Analyzing data from 2004 to 2021, we find that approximately one-third of MW observations are for 2 or more consecutive years, with the longest duration being 12 years. Our research shows that these firms face progressively higher audit fees and longer audit report lags for each additional year of MW disclosure. Firm–years with long-standing MW disclosures (5 or more consecutive years) have the highest audit fees and the longest audit report lags. Our findings also reveal a significant increase in the likelihood of misstatements during the first and second consecutive years of MW disclosures, and a consistent and notable rise in discretionary accruals over the initial 4 consecutive years of MW reporting for these firms. Overall, our results highlight the financial repercussions for firms that do not promptly address MWs in their internal controls. These consequences include higher audit fees, extended audit report lags, and declining financial reporting quality.