Journal of Business Finance & Accounting最新文献

We identify directors who experience a corporate bankruptcy and examine how this professional experience affects monitoring at the other firms where they concurrently sit on the board. Using a sample of US directors interlocked with firms that file for bankruptcy, we find that directors have a greater tolerance for real earnings management after a low-cost bankruptcy experience. This effect is stronger for independent directors and those who sit on the audit committee, consistent with a ratification and monitoring explanation. We do not find evidence consistent with the competing hypotheses that bankruptcy leads to directors' distraction or incentivizes efficient cost-cutting strategies. We contribute to the research on the influence of directors' corporate experience over corporate outcomes, by providing evidence suggesting that surviving a bankruptcy relatively unscathed lowers directors' perception of the severity of distress costs, with negative consequences for decision control.

We investigate the efficacy of mandated public disclosure to improve firms’ trade credit payment practices. We exploit a regulation adopted by the United Kingdom in 2017 that mandates firms meeting certain size criteria to disclose information about their payment practices toward their trade suppliers. Using a difference-in-differences research design combined with a regression discontinuity approach for a sample of firms just above and below the mandatory disclosure size criteria, we find that firms disclosing supplier payment information reduce the number of days they take to pay their trade credit. Further, this effect is concentrated in firms with higher liquidity and lower leverage. After performing robustness tests, we explore two potential channels that could explain our findings. First, we consider whether firms are responding to pressure from suppliers in competitive industries. Second, we investigate whether firms are managing their external reputations. Using the Herfindahl–Hirschman Index to measure industry competitiveness, and firms that sell to end consumers and their market share to measure reputational exposure, we find evidence consistent with both explanations. Collectively, these findings suggest that disclosure motivates firms to improve their payment practices; however, this effect appears to be limited to firms with the financial flexibility to respond.

Many accounting numbers appear in standard factor models but without a clear explanation. The numbers are generated under accounting principles that deal with risk, providing an explanation but also a critique of how extant models identify accounting-based factors. That leads to a revised factor construction. Accounting numbers are codetermined in a double-entry system, a feature that is exploited in packaging the factors into a model. Rather than entering as the separate, additive factors, adding to the “factor zoo,” they are combined parsimoniously to capture the information they jointly convey about risk and return in the double-entry system. Empirical tests confirm.

This article examines the relationship between carbon risk and future stock price crash risk, focusing on an international sample of firms. Inherently, complex and deep uncertainties of carbon risk limit investors’ ability to fully understand and incorporate carbon risk into equity pricing and create room for opportunistic managers to hide bad news about poor carbon performance. Such pricing uncertainties and information asymmetry can result in significant overpricing of stocks (i.e., underpricing of carbon risks), especially for carbon-intensive firms, thereby exposing these stocks to future stock price crash risks. In line with this argument, we find that carbon risk is positively associated with future stock price crash risk. However, we find that better carbon disclosure quality reduces pricing uncertainties and information asymmetry, which attenuates the positive effect of carbon risk on future stock price crash risk. Similarly, internal monitoring (e.g., corporate governance) and external monitoring (e.g., institutional investors and financial analysts) help alleviate information asymmetry related to carbon risk, thus reducing crash risk. In countries with stakeholder-oriented business cultures, high climate change performance, and financial transparency, as well as for companies that link compensation to climate change performance, the positive association between carbon risk and stock price crash risk is weaker.

This study investigates how the imputation tax system affects investor valuation of corporate tax avoidance. We find that under the full imputation tax system, investors assign a lower value to corporate tax avoidance, compared to the classical tax system, as tax avoidance reduces imputation credits available to shareholders, effectively transferring cash flows from shareholders to firms. Additionally, under the full imputation tax system, this negative valuation effect on corporate tax avoidance is more pronounced in firms with higher dividend payouts. We also find that stronger investor protection and greater firm growth opportunities mitigate the negative valuation of the cash flow transfer induced by tax avoidance, suggesting that investors are concerned about whether the transferred cash is efficiently utilized by the firm. These results challenge the traditional view that corporate tax avoidance enhances shareholder value and highlight the importance of tax system characteristics when evaluating the financial implications of tax avoidance.

We examine the effect of short-selling threats on tax avoidance. To establish causality, we exploit a quasi-experimental setting where the US Securities and Exchange Commission's (SEC's) Regulation SHO (Reg SHO) pilot program relaxed an essential short-selling constraint for a sample of NYSE-listed pilot stocks, thus causing an exogenous increase in short-selling threats in these stocks. Using quantile regression, we find that the relation between tax avoidance and short-selling threats is significantly negative (positive) when tax avoidance is very high (low). This effect is observable for more opaque firms, firms whose managers have more job security concerns, and firms whose managers’ equity portfolios are more sensitive to share prices. Our results suggest that short sellers’ scrutiny of hidden agency problems underlying extreme tax avoidance would dampen stock price inflation and reduce managers’ welfare, thus motivating managers to reduce extreme tax avoidance in the first place.