Pub Date : 2024-12-16DOI: 10.1016/j.bar.2024.101542
Yi Hong, Maochun Xu, Conghua Wen
This study proposes an algorithmic framework that integrates the dynamic modelling of the term structure of treasury bond yields with the generation of market-consistent economic scenarios. The unscented Kalman filter (UKF) that works as a non-linear learning instrument for historical bond yields under the multi-factor models can facilitate the in-sample yield curve modelling, underpinned by statistical inferences, and further enhance the performance of the out-of-sample bond pricing and yield predictability. Moreover, market views that gauge the holistic assessments of macroeconomic prospects are incorporated into our framework. As such, the market-consistent economic scenarios are driven primarily by the dynamics of the term structure of bond yields and aggregate market sentiments among investors, offering a new instrument for interest rate risk management.
{"title":"On the dynamics of treasury bond yields: From term structure modelling to economic scenario generation","authors":"Yi Hong, Maochun Xu, Conghua Wen","doi":"10.1016/j.bar.2024.101542","DOIUrl":"https://doi.org/10.1016/j.bar.2024.101542","url":null,"abstract":"This study proposes an algorithmic framework that integrates the dynamic modelling of the term structure of treasury bond yields with the generation of market-consistent economic scenarios. The unscented Kalman filter (UKF) that works as a non-linear learning instrument for historical bond yields under the multi-factor models can facilitate the in-sample yield curve modelling, underpinned by statistical inferences, and further enhance the performance of the out-of-sample bond pricing and yield predictability. Moreover, market views that gauge the holistic assessments of macroeconomic prospects are incorporated into our framework. As such, the market-consistent economic scenarios are driven primarily by the dynamics of the term structure of bond yields and aggregate market sentiments among investors, offering a new instrument for interest rate risk management.","PeriodicalId":501001,"journal":{"name":"The British Accounting Review","volume":"48 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-12-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142887374","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Labor litigation involves disputes between a firm and its employees over the latter's rights and obligations, and it may increase the uncertainty of firms' business operations and thus affect their financial decisions. Using textual analysis of judicial documents on labor and personnel disputes obtained from a specialized dataset, we find that labor litigation prompts firms to increase their cash holdings. Further analysis indicates that this effect mainly occurs in firms with higher labor adjustment costs, in regions where labor regulations and labor protection are strongly enforced, and in firms with high corporate social responsibility and high financial constraints. Finally, we find that increasing corporate cash holdings after labor litigation improves both firm performance and the market value of cash.
{"title":"Labor litigation and corporate cash holdings: Insights from the textual analysis of judicial documents","authors":"Xu Feng, Mingya Hu, Cong Luo, Jiaquan Yao, Kunpeng Zhang","doi":"10.1016/j.bar.2024.101541","DOIUrl":"https://doi.org/10.1016/j.bar.2024.101541","url":null,"abstract":"Labor litigation involves disputes between a firm and its employees over the latter's rights and obligations, and it may increase the uncertainty of firms' business operations and thus affect their financial decisions. Using textual analysis of judicial documents on labor and personnel disputes obtained from a specialized dataset, we find that labor litigation prompts firms to increase their cash holdings. Further analysis indicates that this effect mainly occurs in firms with higher labor adjustment costs, in regions where labor regulations and labor protection are strongly enforced, and in firms with high corporate social responsibility and high financial constraints. Finally, we find that increasing corporate cash holdings after labor litigation improves both firm performance and the market value of cash.","PeriodicalId":501001,"journal":{"name":"The British Accounting Review","volume":"373 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-12-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142816561","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-26DOI: 10.1016/j.bar.2024.101530
Yi Cao, Yi Luo, Peng Wei, Jia Zhai, Shimeng Shi
We introduce an innovative Ensemble model for predicting firm bankruptcy. This model enhances prediction performance by integrating Boosted Tree, Random Forest, k-Nearest Neighbor, and Neural Network models within a stacking structure. Our model incorporates an extensive set of asset-pricing factors, extending beyond traditional financial ratios. The empirical results highlight that market information measuring the equity return, volatility, dividend, downside co-movement, and liquidity demonstrates the strongest predictive power for firm bankruptcy. Our findings offer strong empirical insights for Merton’s credit risk modelling framework. Further, our model notably outperforms benchmarks in the one-, two-, and three-year-ahead testing-sample forecasting of firm bankruptcy for U.S. public companies.
{"title":"Bankruptcy forecasting — Market information with ensemble model","authors":"Yi Cao, Yi Luo, Peng Wei, Jia Zhai, Shimeng Shi","doi":"10.1016/j.bar.2024.101530","DOIUrl":"https://doi.org/10.1016/j.bar.2024.101530","url":null,"abstract":"We introduce an innovative Ensemble model for predicting firm bankruptcy. This model enhances prediction performance by integrating Boosted Tree, Random Forest, <mml:math altimg=\"si1.svg\" display=\"inline\"><mml:mi>k</mml:mi></mml:math>-Nearest Neighbor, and Neural Network models within a stacking structure. Our model incorporates an extensive set of asset-pricing factors, extending beyond traditional financial ratios. The empirical results highlight that market information measuring the equity return, volatility, dividend, downside co-movement, and liquidity demonstrates the strongest predictive power for firm bankruptcy. Our findings offer strong empirical insights for Merton’s credit risk modelling framework. Further, our model notably outperforms benchmarks in the one-, two-, and three-year-ahead testing-sample forecasting of firm bankruptcy for U.S. public companies.","PeriodicalId":501001,"journal":{"name":"The British Accounting Review","volume":"260 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-11-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142756225","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-23DOI: 10.1016/j.bar.2024.101529
Jaana Kettunen, Pasi Leppänen, Hannu Ojala, Jani Saastamoinen
This paper examines if financial distress and/or peer influence predict local governments' earnings management in the context of municipal healthcare expense reporting in Finland. Our statistical analyses use data hand-collected from all Finnish municipalities between 2016 and 2021. We document peer influence on earnings management by understating healthcare expenses in the public sector: Our results show that a municipality's decision to manage earnings upwards is positively associated with the healthcare district's central municipality's choice to understate its expenses. However, we do not find support for financial distress predicting earnings management. In our setting, peer influence appears to be a stronger motivation for financial reporting choice than municipality-specific characteristics.
{"title":"Earnings management in local government healthcare reporting: Financial distress vs. peer influence?","authors":"Jaana Kettunen, Pasi Leppänen, Hannu Ojala, Jani Saastamoinen","doi":"10.1016/j.bar.2024.101529","DOIUrl":"https://doi.org/10.1016/j.bar.2024.101529","url":null,"abstract":"This paper examines if financial distress and/or peer influence predict local governments' earnings management in the context of municipal healthcare expense reporting in Finland. Our statistical analyses use data hand-collected from all Finnish municipalities between 2016 and 2021. We document peer influence on earnings management by understating healthcare expenses in the public sector: Our results show that a municipality's decision to manage earnings upwards is positively associated with the healthcare district's central municipality's choice to understate its expenses. However, we do not find support for financial distress predicting earnings management. In our setting, peer influence appears to be a stronger motivation for financial reporting choice than municipality-specific characteristics.","PeriodicalId":501001,"journal":{"name":"The British Accounting Review","volume":"249 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-11-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142816553","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-16DOI: 10.1016/j.bar.2024.101528
Tyler K. Jensen, Marlene A. Plumlee, Jared I. Wilson
Prior evidence of the impact of governance on disclosure credibility is inconclusive. In particular, prior studies are unable to document a significant association between board of director characteristics and analyst reactions to management guidance. By isolating exogenous variation in director monitoring in a large, post-Regulation Fair Disclosure (Reg-FD) sample, we find that increased monitoring is associated with stronger analyst reactions to news in management guidance. We also document cross-sectional differences, consistent with monitoring being particularly impactful when the role of external verification is most important (e.g., good news forecasts, low analyst following). We identify exogenous shocks to monitoring associated with (1) director deaths, (2) mandated independence required by Sarbanes-Oxley (SOX), and (3) changes in director attention due to M&A activities that eliminate board positions at other firms. Overall, our findings provide strong support for director monitoring influencing the perceived credibility of management guidance, especially in settings where external validation is needed.
{"title":"Does more effective director monitoring make management guidance more credible?","authors":"Tyler K. Jensen, Marlene A. Plumlee, Jared I. Wilson","doi":"10.1016/j.bar.2024.101528","DOIUrl":"https://doi.org/10.1016/j.bar.2024.101528","url":null,"abstract":"Prior evidence of the impact of governance on disclosure credibility is inconclusive. In particular, prior studies are unable to document a significant association between board of director characteristics and analyst reactions to management guidance. By isolating exogenous variation in director monitoring in a large, post-Regulation Fair Disclosure (Reg-FD) sample, we find that increased monitoring is associated with stronger analyst reactions to news in management guidance. We also document cross-sectional differences, consistent with monitoring being particularly impactful when the role of external verification is most important (e.g., good news forecasts, low analyst following). We identify exogenous shocks to monitoring associated with (1) director deaths, (2) mandated independence required by Sarbanes-Oxley (SOX), and (3) changes in director attention due to M&A activities that eliminate board positions at other firms. Overall, our findings provide strong support for director monitoring influencing the perceived credibility of management guidance, especially in settings where external validation is needed.","PeriodicalId":501001,"journal":{"name":"The British Accounting Review","volume":"10 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-11-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142789915","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-15DOI: 10.1016/j.bar.2024.101527
Pei-Chi Kelly Hsiao, Mary Low, Tom Scott
This study explores the sustainability performance indicators (SPIs) universities disclose, and how institutional and resource dependence pressures influence the institutionalisation of sustainability performance measurement and reporting. We assess performance indicators (PIs) with quantitative or qualitative results reported against established targets and conducted a longitudinal cross-jurisdiction assessment of over 25,000 PIs reported by 16 Victorian (Australia) and New Zealand (NZ) universities from 2012 to 2021. Results from content and regression analyses provide evidence that SPI reporting is influenced by coercive, normative, and resource dependence pressures, with universities adopting an acquiescence strategy towards disclosure. SPIs account for a substantial proportion (54%) of total PIs and focus on economic and social performance. Environmental SPIs are typically absent unless mandated and SPIs that indicate the embedding of sustainability practices into core university activities are uncommon. Despite some innovative universities that voluntarily adopted sustainability reporting guidelines or disclosed SPIs beyond reporting mandates, these disclosure practices may not represent an improvement over currently accepted practices as they have not become widely diffused and institutionalised. Our study provides new insights on the state of university sustainability reporting and is relevant to standard-setters and regulators in advancing public sector sustainability reporting.
本研究探讨了大学披露的可持续发展绩效指标（SPI），以及机构和资源依赖压力如何影响可持续发展绩效衡量和报告的制度化。我们评估了根据既定目标报告定量或定性结果的绩效指标（PIs），并对澳大利亚维多利亚州（Victorian）和新西兰（NZ）的16所大学在2012年至2021年期间报告的25,000多项PIs进行了跨辖区纵向评估。内容和回归分析的结果证明，SPI 报告受到强制、规范和资源依赖压力的影响，大学对披露采取默许策略。SPI 占 PI 总量的很大比例（54%），重点关注经济和社会绩效。环境方面的 SPI 通常不存在，除非有强制要求，而表明可持续发展实践已融入大学核心活动的 SPI 也不常见。尽管一些创新型大学自愿采用了可持续发展报告指南或披露了报告授权之外的 SPI，但这些披露做法可能并不代表对当前公认做法的改进，因为它们尚未得到广泛传播和制度化。我们的研究为了解大学可持续发展报告的现状提供了新的视角，对标准制定者和监管者推进公共部门可持续发展报告具有借鉴意义。
{"title":"Institutionalisation of sustainability performance measurement and reporting: Insights from Victoria (Australia) and New Zealand universities","authors":"Pei-Chi Kelly Hsiao, Mary Low, Tom Scott","doi":"10.1016/j.bar.2024.101527","DOIUrl":"https://doi.org/10.1016/j.bar.2024.101527","url":null,"abstract":"This study explores the sustainability performance indicators (SPIs) universities disclose, and how institutional and resource dependence pressures influence the institutionalisation of sustainability performance measurement and reporting. We assess performance indicators (PIs) with quantitative or qualitative results reported against established targets and conducted a longitudinal cross-jurisdiction assessment of over 25,000 PIs reported by 16 Victorian (Australia) and New Zealand (NZ) universities from 2012 to 2021. Results from content and regression analyses provide evidence that SPI reporting is influenced by coercive, normative, and resource dependence pressures, with universities adopting an acquiescence strategy towards disclosure. SPIs account for a substantial proportion (54%) of total PIs and focus on economic and social performance. Environmental SPIs are typically absent unless mandated and SPIs that indicate the embedding of sustainability practices into core university activities are uncommon. Despite some innovative universities that voluntarily adopted sustainability reporting guidelines or disclosed SPIs beyond reporting mandates, these disclosure practices may not represent an improvement over currently accepted practices as they have not become widely diffused and institutionalised. Our study provides new insights on the state of university sustainability reporting and is relevant to standard-setters and regulators in advancing public sector sustainability reporting.","PeriodicalId":501001,"journal":{"name":"The British Accounting Review","volume":"95 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-11-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142684385","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-12DOI: 10.1016/j.bar.2024.101519
Florian Kiesel, Kevin Riehl
We analyze corporate acquisition announcements and the feedback of credit rating agencies by placing the acquirer’s issuer rating under formal review for a potential change. We show that acquisitions are 42.8% more likely to be withdrawn if the firm’s rating is placed on review for downgrade. Focusing on completed acquisitions, deals associated with reviews for downgrade need approximately 40% more time to be completed, and acquirers are twice as likely to be downgraded in the first year (13.4% versus 25.2%). The stock market considers the probability of an acquirer’s downgrade as deals with increased downgrade risk show lower abnormal announcement returns. We do not find evidence that reviews of rating agencies are anticipated by firms.
{"title":"Do acquirers care about credit rating consequences? Evidence from credit rating watches","authors":"Florian Kiesel, Kevin Riehl","doi":"10.1016/j.bar.2024.101519","DOIUrl":"https://doi.org/10.1016/j.bar.2024.101519","url":null,"abstract":"We analyze corporate acquisition announcements and the feedback of credit rating agencies by placing the acquirer’s issuer rating under formal review for a potential change. We show that acquisitions are 42.8% more likely to be withdrawn if the firm’s rating is placed on review for downgrade. Focusing on completed acquisitions, deals associated with reviews for downgrade need approximately 40% more time to be completed, and acquirers are twice as likely to be downgraded in the first year (13.4% versus 25.2%). The stock market considers the probability of an acquirer’s downgrade as deals with increased downgrade risk show lower abnormal announcement returns. We do not find evidence that reviews of rating agencies are anticipated by firms.","PeriodicalId":501001,"journal":{"name":"The British Accounting Review","volume":"38 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-11-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142637431","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine the effect of state-level data breach disclosure mandates (DBN laws) on the cost of private debt. Using the staggered passage of DBN laws across the U.S. states, we document an increase in the cost of private debt for firms affected by these laws. These findings suggest that DBN laws increase lenders’ anticipation of cash flow risk from potential future costs related to data breach disclosures. We further document that the increase in the cost of private debt is more pronounced for firms that (i) belong to industries that are susceptible to data breaches, (ii) report internal control weaknesses, or (iii) disclose cyber security risks in their risk factor disclosures. Additionally, we find that the increase in the cost of private debt is less pronounced in firms that focus on cyber security measures, such as investing in cyber security or appointing a technology officer on their board. We contribute to the debt contracting and disclosure literature by focusing on the proactive response of private lenders after the passage of DBN laws to mitigate ex-ante the risk resulting from potential future data breach disclosures while also shedding light on the cost (financing cost) associated with mandatory disclosure practices.
{"title":"Data breach notification laws and the cost of private debt","authors":"Nishant Agarwal, Swetha Agarwal, Chandrani Chatterjee","doi":"10.1016/j.bar.2024.101518","DOIUrl":"https://doi.org/10.1016/j.bar.2024.101518","url":null,"abstract":"We examine the effect of state-level data breach disclosure mandates (DBN laws) on the cost of private debt. Using the staggered passage of DBN laws across the U.S. states, we document an increase in the cost of private debt for firms affected by these laws. These findings suggest that DBN laws increase lenders’ anticipation of cash flow risk from potential future costs related to data breach disclosures. We further document that the increase in the cost of private debt is more pronounced for firms that (i) belong to industries that are susceptible to data breaches, (ii) report internal control weaknesses, or (iii) disclose cyber security risks in their risk factor disclosures. Additionally, we find that the increase in the cost of private debt is less pronounced in firms that focus on cyber security measures, such as investing in cyber security or appointing a technology officer on their board. We contribute to the debt contracting and disclosure literature by focusing on the proactive response of private lenders after the passage of DBN laws to mitigate ex-ante the risk resulting from potential future data breach disclosures while also shedding light on the cost (financing cost) associated with mandatory disclosure practices.","PeriodicalId":501001,"journal":{"name":"The British Accounting Review","volume":"16 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-11-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142684386","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-04DOI: 10.1016/j.bar.2024.101516
Lisa Powell, Alessandro Ghio, Nicholas McGuigan
This article suggests new possibilities to nurture diversity, disrupt heteronormativity and create space for voices of LGBTIQA+ people in accounting. Whilst past research focuses on and challenges heteronormativity in the accounting workplace, we argue that accounting education plays a key role in shaping sexual norms in accounting. We begin by providing insights into how current accounting education largely neglects LGBTIQA+ perspectives, shaping a discourse around sexuality that reflects heteronormative accounting workplaces. We then build upon the theoretical backdrop of queer theory and critical pedagogy to develop LGBTIQA+ perspectives in accounting education. In doing so, we conceptually advance five lenses through which to design modes of education based on queer pedagogy. These lenses include question and deconstruction of normality, critical reflexivity, discomfort, imagination, and activism. Queering accounting pedagogy in this way can assist educators and students in addressing the concealment of LGBTIQA+ perspectives, thereby critically challenging the hidden curriculum of heteronormativity in accounting. The paper concludes by contending that queering accounting pedagogy can bring possibilities for broader classroom inquiry, democratic participation, social justice, meaningful dialogue, and mutually respectful educational practices in accounting.
{"title":"Nurturing diversity in accounting through “Queering” accounting pedagogy","authors":"Lisa Powell, Alessandro Ghio, Nicholas McGuigan","doi":"10.1016/j.bar.2024.101516","DOIUrl":"https://doi.org/10.1016/j.bar.2024.101516","url":null,"abstract":"This article suggests new possibilities to nurture diversity, disrupt heteronormativity and create space for voices of LGBTIQA+ people in accounting. Whilst past research focuses on and challenges heteronormativity in the accounting workplace, we argue that accounting education plays a key role in shaping sexual norms in accounting. We begin by providing insights into how current accounting education largely neglects LGBTIQA+ perspectives, shaping a discourse around sexuality that reflects heteronormative accounting workplaces. We then build upon the theoretical backdrop of queer theory and critical pedagogy to develop LGBTIQA+ perspectives in accounting education. In doing so, we conceptually advance five lenses through which to design modes of education based on queer pedagogy. These lenses include question and deconstruction of normality, critical reflexivity, discomfort, imagination, and activism. Queering accounting pedagogy in this way can assist educators and students in addressing the concealment of LGBTIQA+ perspectives, thereby critically challenging the hidden curriculum of heteronormativity in accounting. The paper concludes by contending that queering accounting pedagogy can bring possibilities for broader classroom inquiry, democratic participation, social justice, meaningful dialogue, and mutually respectful educational practices in accounting.","PeriodicalId":501001,"journal":{"name":"The British Accounting Review","volume":"21 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-11-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142637391","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-04DOI: 10.1016/j.bar.2024.101515
Douglas Cumming, My Nguyen
Our findings reveal that asset specificity significantly enhances corporate tax avoidance, with firms exhibiting lower cash effective tax rates. Firms with higher asset specificity also engage in more aggressive tax avoidance strategies, including tax dodging and long-term tax planning. Additionally, our analysis indicates that the positive impact of asset specificity on tax avoidance is less pronounced in firms with lower ESG performance but is more pronounced in those facing negative demand shocks or operating during periods of economic policy uncertainty. We also find that financial constraints and product market power mediate the relationship between asset specificity and tax avoidance, with financial constraints serving as the dominant economic channel. These findings offer new insights into the factors driving corporate tax avoidance and highlight the complex interplay between asset specificity, financial constraints, product market power, and tax planning strategies.
{"title":"The impact of asset specificity on corporate tax avoidance: Do financial constraints and product market power matter?","authors":"Douglas Cumming, My Nguyen","doi":"10.1016/j.bar.2024.101515","DOIUrl":"https://doi.org/10.1016/j.bar.2024.101515","url":null,"abstract":"Our findings reveal that asset specificity significantly enhances corporate tax avoidance, with firms exhibiting lower cash effective tax rates. Firms with higher asset specificity also engage in more aggressive tax avoidance strategies, including tax dodging and long-term tax planning. Additionally, our analysis indicates that the positive impact of asset specificity on tax avoidance is less pronounced in firms with lower ESG performance but is more pronounced in those facing negative demand shocks or operating during periods of economic policy uncertainty. We also find that financial constraints and product market power mediate the relationship between asset specificity and tax avoidance, with financial constraints serving as the dominant economic channel. These findings offer new insights into the factors driving corporate tax avoidance and highlight the complex interplay between asset specificity, financial constraints, product market power, and tax planning strategies.","PeriodicalId":501001,"journal":{"name":"The British Accounting Review","volume":"246 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-11-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142637397","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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