Journal of Corporate Accounting and Finance最新文献

Japanese Government Bonds (JGBs) and swap markets in the maturities of 10, 15, 20, and 30 years increased in volatility volatilities after the Bank of Japan (BOJ) expanded the upper limit of yield curve control (YCC) from .2% to .25% on March 19, 2021. The entire sample period is divided in half. Market segmentation is observed between JGB and swap markets in the first half of the YCC. They are integrated except for the maturity of 10 years in the second half of the YCC. In other words, arbitrage works between two markets. After the BOJ expanded the upper limit of the YCC to .25%, structural change occurred in the super long term in relation to JGB and swap markets. The decision by the BOJ has contributed to the normalization of the market function because there has been more room for the benchmark JGB yield of 10 years to move more actively.

This study examines how financial constraints relate to firm-level investment efficiency. Prior research theorizes that corporate borrowing by issue of risky debt induces suboptimal capital investment spending. We extend this research to examine whether firm-level financial constraints and internal investment efficiency are significantly related. We measure firms’ degree of overall financial constraint following the procedure developed by Whited and Wu. Our results indicate that among highly financially constrained firms, overall financial constraints are positively associated with investment, and higher financial constraints are more likely to result in greater investment inefficiency. Furthermore, we find that this relationship is more prominent for companies with high free cash flow, high bankruptcy likelihood, and high growth potential. Our findings that financial constraints have significant influence on corporate investment efficiency should be of interest to company managers, investors, and regulators alike.

This study provides empirical evidence about the impact of granting trade credit to customers on the profitability of EU-based SMEs over 2012–2019. Results show an inverted U-shaped relationship between corporate performance and trade credit – proxied by receivables, meaning a positive relationship between creditors and customers for low levels and a negative relationship for high levels of trade credit. This evidence is concentrated on firms with less financial flexibility, for which any deviation from the maximum point of investment in trade credit represents a negative impact on its performance due to payment delay or even a default event. Results are robust to potential endogeneity issues.

Using the setting of Hong Kong, we examine how the linguistic properties of financial disclosure differ across languages. We exploit the requirement that firms listed on the Hong Kong Stock Exchange publish annual reports in two languages, English and Chinese. We find that for the same firm, English reports are more positive, convey more uncertainty, and focus more on the past and present and less on the future, than Chinese reports. We also find that English (Chinese) reports are more likely to manage their tone by varying the frequency of positive (negative) words. Finally, the stock market only reacts positively to tone management in Chinese reports. Overall, the results suggest that there are significant and fundamental differences in the linguistic properties of English and Chinese reports and that such differences have material implications for how investors perceive the reports.

Matrix-variate distribution theory has been instrumental across various disciplines for the past seven decades. However, a comprehensive examination of financial literature reveals a notable gap concerning the application of matrix-variate extensions to Value-at-Risk (VaR). However, from a mathematical perspective, the core requirement for VaR lies in determining meaningful percentiles within the context of finance, necessitating the consideration of matrix c.d.f. This paper introduces the concept of “matrix-variate VaR” for both Wishart and Gamma distributions. To achieve this, we leverage the theory of hypergeometric functions of matrix argument and integrate over positive definite matrices. Our proposed approach adeptly characterizes a company's exposure by into a comprehensive risk measure. This facilitates a readily computable estimation of the total incurred risk. Notably, this approach enables efficient computation of risk measures under Wishart, exponential, Erlang, gamma, and chi-square distributions. The resulting risk measures are expressed in closed analytic forms, enhancing their practical utility for day-to-day risk management.

We examine whether firms with high organizational capital produce more (less) financial statement comparability. We use firm-level data from the U.S. and apply regression analyses to a sample of 56,459 firm-year observations from 1987 to 2019. Organizational capital encompasses the processes, systems, knowledge, culture, and technology of a firm, playing a crucial role in securing competitive advantages, which leads to enhanced profitability and growth prospects. It has been observed that companies rich in organizational capital experience better financial outcomes. However, these companies also face significant agency issues, as both shareholders and crucial employees have stakes in the cash flows generated by organizational capital. We propose that managers of companies with substantial organizational capital tend to produce financial statements that are less comparable. This strategy allows them to obscure the firm's economic performance from shareholders, aiming to retain a larger portion of the cash flows. The discovery that companies modify comparability in reaction to organization processes, culture and business models captures the attention of regulators and policymakers, who highlight the significance of comparability in enhancing the utility of information for users. The findings extend the literature on the effect of organizational capital on accounting choices.

The objective of this paper is to explore the impact of two CEO characteristics, gender diversity and narcissism, on disclosure quality through an examination of the joint effect of gender diversity in management and CEO narcissism. Based on 452 shareholder letters (CEO letters in the annual report) issued by French firms, our results suggest that female CEOs enhance the readability level of corporate disclosures. Our findings provide evidence that narcissism mediates women CEOs’ positive effect on the readability of CEO letters. This study extends previous studies on gender diversity by providing new insights into how women CEOs affect the quality of disclosures.

We study the role and influence of Chief Accounting Officers (CAOs) by examining the relation between the presence of a CAO on the top management team and asymmetric timely loss recognition (ATLR). Using large-sample data from 10-Ks and proxy statements of S&P 1500 firms, we find that the presence of a CAO is positively associated with the level of ATLR and that this positive relation is more pronounced when the Chief Financial Officer (CFO) does not have an accounting background. Our difference-in-differences analysis further indicates that the level of ATLR increases significantly following the initial appointments of CAOs. The results are robust to propensity score matching, alternative ATLR models, and various control variables. Collectively, our findings suggest that adding an accounting chief to the C-suite has a significant impact on financial reporting practices.

This study evaluates whether Latin American multinational corporations (MNCs) report higher quality of accounting reports than companies with only operations in their home countries. In addition, it explores whether the impact of internationalization on the quality of accounting information has changed since the implementation of the International Financial Reporting Standards (IFRS) in the region. An emerging area of research studies the effect of firms’ internationalization on accounting and finance. Nevertheless, evidence of the impact of internationalization on the quality of earnings quality is scarce. Based on a sample of public organizations listed on the main stock exchanges of Brazil, Mexico, Peru, and Chile from 2000 to 2020, this study finds that companies with international operations present higher-quality accounting reports than firms with only local operations. The impact of IFRS implementation on the quality of financial reports is significant only for companies with operations in their home countries. Latin American MNCs show a decline in the quality of accounting reports after adopting IFRS.

This paper examines whether securities litigation and sell-side equity analysts play a substitutive versus complementary role as an external governance mechanism. We expect the 1999 ruling on the stricter interpretation of the Private Securities Litigation Reform Act to make it easier for firms headquartered in the Ninth Circuit to defend against securities class actions filed by shareholders, resulting in weaker protection from a litigation channel and stronger demand for analyst activity. Using a difference-in-differences research design, we find that analyst coverage increases as litigation risk decreases in the Ninth Circuit firms. Moreover, we find that analyst earnings forecast accuracy increases for firms in the Ninth Circuit following the ruling, consistent with analysts exerting greater efforts to perform their monitoring role. In cross-sectional tests, we find that the substitution relation between litigation risk and analyst research is more pronounced in firms with a high level of ex-ante litigation risk. We conduct extensive robustness tests, including another legal event exogenously increasing the risk of litigation, to gain confidence in our interpretations. We contribute to the literature by documenting causal evidence that analysts have greater incentives to provide meaningful equity research as gatekeepers in times of weaker investor protection by securities litigation.