Journal of Corporate Accounting and Finance最新文献

This study examines whether companies listed in Fortune’s ranking of the Most Admired (MA) Companies behave more responsibly compared to companies that are not on the list. Specifically, we investigate tax avoidance, environmental, social, and governance (ESG) practices, and financial reporting quality among the MA companies and a matched set of non-listed companies. We find that, compared to their counterparts, MA companies (1) exhibit higher cash and GAAP effective tax rates and smaller book-tax differences; (2) are more likely to be included in the 100 Best Corporate Citizens list, which recognizes firms for their superior ESG disclosure and performance; and (3) demonstrate more effective internal control and pay higher audit fees. Our study offers both research and practical implications by contributing to the literature on corporate reputation and social responsibility, and by guiding stakeholders who rely on the MA list to assess firms’ performance across a broad spectrum of socially responsible activities.

In this study, we examine whether the choice between International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting Principles (US GAAP) affects financial analysts’ forecast behavior as reflected in the coverage, accuracy, and dispersion of earnings forecasts. Based on a hand-collected dataset from SEC filings (Form 20-F or 40-F) and a sample of 408 unique cross-listed firms (1,699 firm-year observations) from 2005 to 2015, our findings indicate that both analyst location and home-country institutional characteristics are important factors in affecting the association between the choice of IFRS versus US GAAP and analyst behavior in the US market. Specifically, for the US-based analysts, we have no evidence of significant differences in analyst coverage, forecast accuracy, or forecast dispersion between IFRS and US GAAP users. Within the group of non-US analysts, however, IFRS users tend to attract fewer analysts and have more accurate earnings forecasts. Additionally, for firms from countries with strong enforcement regimes, IFRS users are associated with lower analyst coverage and greater forecast accuracy. These effects, however, do not exist for firms from weak enforcement countries. This study contributes to the literature on IFRS and cross-listing by offering insights into the role of accounting standards in shaping analyst forecast behavior. Our findings are relevant to policymakers, standard setters, and financial analysts, highlighting the broader implications of accounting standard choices on market participants.

We investigate the moderating effect of foreign ownership on the relationship between economic policy uncertainty (EPU) and accounting conservatism. It is known that an increase in EPU is likely to deteriorate Korean firms’ conservatism largely due to the weak corporate governance and inefficient information environment. In contrast, the presence of foreign ownership would improve the financial reporting quality of Korean firms because foreign shareholders are expected to actively monitor and restrict managers’ opportunistic behaviors. Therefore, we posit that foreign investors are likely to demand more conservatism when EPU increases in Korean capital market. This study adopts C-score as suggested by Khan, Watt, and Basu (1997) based on Basu (1997)’s asymmetric timeliness test model to measure Korean firms’ accounting conservatism. This study uses panel dataset with a total of 22,882 firm-year observations during the sample period from 2000 to 2018. Consistent with our reasoning, we find that foreign ownership positively moderate on the relationship between EPU and conservatism in Korean firms. But this positive moderating effect is not found in business group-affiliated firms, in which a small number of controlling shareholders exert huge influence, exceeding their voting power. Also, this positive moderating effect becomes more pronounced when the foreign shareholders are the largest shareholders. The results are robust with alternative conservatism measures, alternative economic uncertainty measures, and more control variables.

Although there is broad consensus on a robust momentum effect in Australia, the interaction between momentum and capital structure has been underexplored in the literature. This paper explicitly examines whether capital structure promotes momentum trading in the Australian stock market. The data sample includes over 1800 stocks listed on the Australian Stock Exchange from 2000 to 2023. We construct momentum portfolios using the monthly rolling and overlapping techniques. Two ratios are calculated to measure the firms’ capital structure: the book-value and market-value financial leverages. Irrespective of the capital structure measure, the superior returns of the Winner quintile are concentrated in highly leveraged stocks. In contrast, the high-leverage Loser performs worst among the Loser quintile. The return of momentum strategy enhanced with capital structure is more than 1.5 times the original momentum profit. The risk-adjusted analysis paints a similar return pattern. Additionally, we observe high volatility in earnings and cash flows for highly leveraged stocks, leading to significant mispricing. Thus, the interaction between momentum and capital structure may stem from increased misvaluation, consistent with a behavioral explanation.

We develop machine learning models that incorporate both external (deterministic) and internal (voluntaristic) factors affecting firm failure and survival. Using structured and unstructured data, we empirically investigate the external and internal factors that affect the US manufacturing firms’ business failure. We also examine how the interactions between external shocks and firm responses impact business failure. Our findings indicate that while external factors can significantly impact the likelihood that firms fail, specific management responses to these challenges can effectively mitigate the negative effects and contribute to firm survival.

This study empirically analyzes the effects of banking deregulation on corporate investment efficiency in China. By introducing the first deregulation on city commercial bank entry and exploiting a staggered difference-in-difference regression model, we find that the entry of city commercial banks significantly promoted the overall investment efficiency of firms located in cities that implemented this deregulation. It mainly alleviated the underinvestment problem and, however, had little impact on the overinvesting firms. The cross-sectional analysis indicates that the effects were more pronounced for financially constrained firms, including non-SOEs, SMEs, and firms with strong dependence on external finance. We explain these findings by investigating whether the entry of city commercial banks alleviated the financing constraints of firms and find that following the deregulation, the financially constrained firms experienced a substantial increase in their access to long-term bank loans, as well as a drop in the investment-cash flow sensitivity.

This study applies a partial-adjustment model to test how well trade-off theory explains net working capital management decisions and examines working capital management dynamics. The results indicate that firms have long-run NWC targets and tend to gradually converge to the target from the firm's initial net working capital level within each period. We estimate that typical firms close approximately 50% of the gap between their actual and target net working capital each year. Such high adjustment speed implies that a typical firm closes half of a deviation from the target in about 13 months. Our results show that the trade-off theory can explain the management decisions regarding working capital holdings.

This study examines the misrepresentation of solvency at Lehman Brothers, focusing on a pivotal moment in financial history. The analysis reveals that a closer evaluation of the components of the accounting equation indicates significant leverage, which is critical to understanding Lehman's overall solvency. In contrast, liquidity pertains only to short-term solvency. The findings are viewed through the lens of agency theory and insights from positive accounting theory, particularly about managers’ self-interest and the role of corporate governance in mitigating managerial opportunism that led to significant misstatements in financial reports. It was noted that Lehman's CEO withdrew considerable amounts through bonus compensations and equity sales. Testing the debt-equity hypothesis showed that Lehman manipulated solvency figures to obscure excessive leverage resulting from substantial debts. This investigation highlights how deceptive financial practices can have extensive repercussions, underscoring the need for transparency and accountability within the banking sector. Understanding these misstatements is essential to prevent future crises and foster a more ethically sound financial environment. Additionally, ineffective governance and inadequate audits manipulated accounting transactions that obscured Lehman's solvency risks.

This study examines the effects of international diversification on the operating and market performance of US multinationals, using foreign fixed assets as a proxy for the degree of international diversification. We measure performance on multiple dimensions: stock price, stock returns, operating income, and operating cash flows. We posit a nonlinear association between diversification and our financial performance measures and test this by conducting two complementary analyses: an initial test based on a linear model and a second test based on a quadratic specification. Our results suggest a negative association in the quadratic model, consistent with prior work that suggests overexpansion of foreign investment decreases operating performance and lowers firm value. Overall, the evidence suggests that the assumed linear dynamics used in prior research appear to be an incomplete tool to describe the relation between firms’ foreign expansion and firm performance.