Journal of Contemporary Accounting & Economics最新文献

This study examines whether dividend changes signal future earnings growth in non-US markets following the Ham et al. (2020) methodology and whether the strength of the earnings signal varies with the level of investor protection. Based on the notion that weak investor protection reduces the cost of cutting dividends and as such increases managers’ discretion to change dividends, we expect that the strength of the earnings signal in dividend increases becomes weaker as investor protection decreases. In a sample drawn from 38 different markets, our results indicate while dividends can signal future earnings in non-US markets, the strength of the signal is weaker than that in the US. In line with our predictions, we find that for firms in a strong investor protection environment, dividend changes are correlated more strongly with subsequent earning changes than is the case for firms in weak investor protection environments.

This paper examines the impact of the MD&A (Management’s Discussion and Analysis) tone on cross-sectional stock returns in the unique context of Chinese A-share companies. We find a significant and positive relationship between the MD&A tone and Chinese stock returns after controlling for quantitative financial metrics. Our results suggest that the MD&A tone provides additional value that further enhances the information quality in MD&A disclosures and market responses. Furthermore, we observe that the textual tone effect is more pronounced for firms with lower institutional ownership, lower financial transparency, in less competitive market environments, and both the information factor and the sentiment factor of MD&A tone positively affect stock returns. Thus, we provide convincing evidence that MD&A narratives can serve as an effective communication tool to facilitate disclosure and mitigate information asymmetry between corporations and investors.

Using U.S. data from 1983 to 2015, we document that firms with staggered boards exhibit greater labor investment efficiency, measured as less abnormal net hiring, including over-investment (over-hiring and under-firing) and under-investment (under-hiring). A path analysis shows that 8.3% of the total effect of staggered boards on labor investment efficiency is explained by the positive effect of staggered boards on institutional ownership. Overall, our results support the view that staggered boards strengthen managers’ commitment to long-term shareholders’ interests, thereby encouraging managerial efforts to boost labor investment efficiency.

Corporate governance research documents that outside directors are not penalised in the director labour market for engaging in value-destroying acquisitions (M&A) as they obtain additional directorships regardless of M&A performance. This result is puzzling as it suggests that the director labour market does not provide sufficient ex post settling-up incentives for outside directors to mitigate agency concerns in the M&A context. We further investigate this issue by examining the prestige of directorships received by independent directors after engaging in an M&A. Using US data, we find that acquiring firm directors are awarded more prestigious directorships, regardless of whether the acquisition resulted in value destruction or value creation. Overall, our findings reinforce the notion that, in the director labour market, acquisition experience holds more value than acquisition ability.

Cooperatives conform to a model that is different to what is normally understood to be an enterprise, with distinctive interpretations of property rights, governance, and values. A unique characteristic of cooperatives’ corporate reporting is it essentially addresses member-owners, and not shareholders. Despite this, most research has been performed from the perspective of investor-owned firms. The aim of this study is to obtain an understanding of the nature and extent of the adoption of corporate reporting conventions, and to identify the determinants of such adoptions by cooperatives, by means of ordinal regression and binary logistic models on a sample drawn from the Global Top 300 cooperatives. Despite the expectations implicit in the differences in the users of financial reports (cooperative members), there was a lack of cooperative-specific reporting in that the most common categories of published corporate reports are still annual reports and annual financial statements. Approximately half of the cooperatives publish environmental and social reports, governance reports and/or management reports, while only a miniscule number publish integrated reports. Results also suggest the stakeholder, legitimacy, institutional, transaction cost and agency theories help to explain the determinants for the of adoption of corporate reporting. We have identified common determinants (market, country and institutional factors) for the adoption of cooperative reporting, as well as idiosyncratic determinants that are unique to cooperative entities. We found that cooperatives with external shareholders are more likely to adopt environmental and social, management and governance reporting. Idiosyncratic determinants indicated that cooperatives who more assertively draw their attention to their identity are more likely to adopt annual reporting. Cooperatives who limit the distribution of profits to members only are also more likely to adopt management reporting.

In this paper, we examine whether human capital quality affects firms’ cash holdings. Using a sample of U.S. firms from 1980 to 2022, we find that a one standard deviation increase in human capital quality is associated with an increase of 0.053 in the cash-to-total assets ratio. We also explore two channels—skilled labour risk and agency costs—through which human capital quality affects cash holdings. Further, using the hiring of a chief diversity officer as a proxy for a diverse and inclusive workforce, we find that firms that hire chief diversity officers have higher cash holdings.

This study investigates the effect of environmental and social (E&S) disclosure and managerial entrenchment on investment efficiency. E&S disclosure increases not only capital accessibility but also external monitoring of entrenched managers’ actions. We develop a theoretical model that demonstrates how these benefits and costs of firms’ voluntary E&S disclosure affect investment efficiency. Using a large sample of U.S.-listed firms over the period 2016–2022, we test the model’s predictions and provide empirical evidence suggesting that E&S disclosure is positively associated with investment efficiency and that this effect is stronger for firms with lower managerial entrenchment or those disclosing more financially material E&S information. Our study contributes to the investment efficiency literature by demonstrating the relevance of an incentive-compatible mechanism reflecting managers’ choice of E&S voluntary disclosure to the efficient capital allocation.

As an important institutional reform in the Chinese capital market, the registration system reform aims to improve the disclosure quality of public companies. Using the exogenous shock from the registration system reform as a quasi-natural experiment, we probe the effect of the registration system on disclosure in two stages: IPO admission and post-IPO supervision. We find that the registration system reform significantly reduces the performance deterioration of “incremental” companies in the IPO admission stage and improves the disclosure quality of “existing” companies in the post-IPO supervision stage. In addition, curbing earnings manipulation is a possible channel the registration system reform affects disclosure. Furthermore, these effects are more pronounced in firms with lower internal governance levels and less external media attention. Collectively, these findings respond to the theoretical controversy over whether the registration system will improve or worsen disclosure quality and confirm the reform has positive effects.

This study examines the association between corporate carbon performance (CCP) and firm risk using a sample of 9,212 firm-year observations from 13 countries in the Asia-Pacific region over the period 2002–2021. We also examine the moderating role of the quality of country-level governance in the association between CCP and firm risk. We find that CCP is negatively associated with a firm’s total, idiosyncratic and systematic risk and that country-level governance quality accentuates the negative association between CCP and firm risk. We also find that country-level business culture, emissions trading schemes, climate change performance and attention to carbon emissions accentuate the negative association between CCP and firm risk. Given the growing demands from regulatory bodies for increased transparency on carbon performance, the insights gained from our research hold significant relevance for regulators, policy makers, investors, financial analysts, scholars and businesses.

We investigate the joint effect of competitive strategies and the pay gap on ESG performance. We employ the Principal Component Analysis (PCA) to derive the two competitive strategies, namely product differentiation and cost leadership. Based on data from firms listed in S&P1500 from 2000 to 2022, and using the Three Stage Least Square (3SLS) model, we hypothesize and find that cost leadership companies have a negative relationship with ESG performance, and the pay gap exacerbates this negative relationship. In contrast, we predict and find that product differentiation companies have a positive relationship with ESG performance, and the pay gap makes this positive relationship more pronounced. Overall, we contribute to the literature and managerial practices in three ways. First, we contribute to the literature on the pay gap by considering the company’s competitive strategy, an important variable that previous studies tend to ignore. The findings of our study suggest that researchers need to consider competitive strategy when investigating the relationship between the pay gap and ESG performance. Second, our study uses ESG performance rather than financial performance as the dependent variable. As such, our study contributes to the limited literature on the relationship between the pay gap and ESG performance. Finally, for practice, our study sheds an important light on understanding the strategic reasons underlying managers’ motivation to invest in ESG activities.