{"title":"Shadow Trading and Corporate Investments","authors":"Yoonsik Lee, Lawrence S. Liu, A. Romano","doi":"10.1561/108.00000063","DOIUrl":"https://doi.org/10.1561/108.00000063","url":null,"abstract":"","PeriodicalId":51955,"journal":{"name":"Journal of Law Finance and Accounting","volume":"1 1","pages":""},"PeriodicalIF":0.9,"publicationDate":"2023-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"67077717","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}
{"title":"Do Heads Roll?: An Empirical\u0000Analysis of CEO Turnover and Pay\u0000When the Corporation is Federally\u0000Prosecuted","authors":"Brandon L. Garrett, Nan Li, Shivaram Rajgopal","doi":"10.1561/108.00000036","DOIUrl":"https://doi.org/10.1561/108.00000036","url":null,"abstract":"","PeriodicalId":51955,"journal":{"name":"Journal of Law Finance and Accounting","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2019-12-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1561/108.00000036","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46860939","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}
{"title":"Does Parenting Matter? U.S. Parents,\u0000Non-U.S. Parents, and Global Firm\u0000Taxes","authors":"Eric J. Allen, S. Morse","doi":"10.1561/108.00000038","DOIUrl":"https://doi.org/10.1561/108.00000038","url":null,"abstract":"","PeriodicalId":51955,"journal":{"name":"Journal of Law Finance and Accounting","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2019-12-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1561/108.00000038","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41962444","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}
{"title":"Good Buffer, Bad Buffer: Smoothing\u0000in Banks’ Loan Loss Provisions and the\u0000Response to Credit Supply Shocks","authors":"Sudarshan Jayaraman, B. Schonberger, Joanna S. Wu","doi":"10.1561/108.00000037","DOIUrl":"https://doi.org/10.1561/108.00000037","url":null,"abstract":"","PeriodicalId":51955,"journal":{"name":"Journal of Law Finance and Accounting","volume":"1 1","pages":""},"PeriodicalIF":0.9,"publicationDate":"2019-12-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1561/108.00000037","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41624199","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}
{"title":"Tax Enforcement and Income\u0000Diversion: Evidence after Putin’s\u0000election in 2000","authors":"J. Gómez, M. Mironov","doi":"10.1561/108.00000033","DOIUrl":"https://doi.org/10.1561/108.00000033","url":null,"abstract":"","PeriodicalId":51955,"journal":{"name":"Journal of Law Finance and Accounting","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2019-10-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1561/108.00000033","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42850031","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}
Jengfang Chen, Woody M. Liao, Guan-Syun Wu, Yanjie Yang
Information Transfers and Insider Trading in Stock Substitutes: Evidence from Economically Linked Firms in the Supply Chain
股票替代品的信息传递与内幕交易:来自供应链经济关联企业的证据
{"title":"Information Transfers and Insider\u0000Trading in Stock Substitutes: Evidence\u0000from Economically Linked Firms in the\u0000Supply Chain","authors":"Jengfang Chen, Woody M. Liao, Guan-Syun Wu, Yanjie Yang","doi":"10.1561/108.00000035","DOIUrl":"https://doi.org/10.1561/108.00000035","url":null,"abstract":"Information Transfers and Insider Trading in Stock Substitutes: Evidence from Economically Linked Firms in the Supply Chain","PeriodicalId":51955,"journal":{"name":"Journal of Law Finance and Accounting","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2019-10-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1561/108.00000035","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47397610","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}
The law and finance literature characterizes debt covenants as a means to manage agency conflicts between creditors and shareholders. While both banks and bondholders make use of these covenants, they do so in quite different ways. Banks typically monitor their debtors closely and rely on financial maintenance covenants to protect their interests. When these covenants get triggered, banks can use the leverage of accelerating the loan to achieve their governance goals. This ability to monitor and renegotiate suggests that tailoring precise ex ante contract restrictions is not of paramount importance because a bank and a debtor can negotiate around those restrictions based on ex post contract conditions. Bondholders, in contrast, face substantial barriers to monitoring and renegotiating with their debtors because these bondholders tend to be large groups of passive investors who face substantial collective action problems. As a consequence, ex ante restrictive terms in the contract are likely to be the primary means through which bondholders can address potential conflicts with shareholders. These differences in contracting technologies suggest that the restrictions in bond contracts are more likely to respond to changes in background legal rules. This paper tests this theory by treating two Delaware decisions that limited the default duties that the directors of Delaware corporations owe to creditors as a shock to the contracting conditions for Delaware firms. Difference-in-difference and triple difference tests suggest that restrictive terms in bond contracts for Delaware firms increased in reaction to this change, while there was not a detectable shift in the strictness of loan agreements.
{"title":"Debt Contract Terms and Creditor\u0000Control","authors":"Adam B. Badawi","doi":"10.1561/108.00000032","DOIUrl":"https://doi.org/10.1561/108.00000032","url":null,"abstract":"The law and finance literature characterizes debt covenants as a means to manage agency conflicts between creditors and shareholders. While both banks and bondholders make use of these covenants, they do so in quite different ways. Banks typically monitor their debtors closely and rely on financial maintenance covenants to protect their interests. When these covenants get triggered, banks can use the leverage of accelerating the loan to achieve their governance goals. This ability to monitor and renegotiate suggests that tailoring precise ex ante contract restrictions is not of paramount importance because a bank and a debtor can negotiate around those restrictions based on ex post contract conditions. Bondholders, in contrast, face substantial barriers to monitoring and renegotiating with their debtors because these bondholders tend to be large groups of passive investors who face substantial collective action problems. As a consequence, ex ante restrictive terms in the contract are likely to be the primary means through which bondholders can address potential conflicts with shareholders. These differences in contracting technologies suggest that the restrictions in bond contracts are more likely to respond to changes in background legal rules. This paper tests this theory by treating two Delaware decisions that limited the default duties that the directors of Delaware corporations owe to creditors as a shock to the contracting conditions for Delaware firms. Difference-in-difference and triple difference tests suggest that restrictive terms in bond contracts for Delaware firms increased in reaction to this change, while there was not a detectable shift in the strictness of loan agreements.","PeriodicalId":51955,"journal":{"name":"Journal of Law Finance and Accounting","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2019-10-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1561/108.00000032","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42661061","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 study the impact of SEC enforcement on information leakage by corporate insiders. We find, for the first time, that SEC enforcement has a significant and immediate deterrent effect on insider leakage. Furthermore, enforcement actions undertaken after a long period of SEC enforcement inactivity display a more significant effect on leakage, consistent with predictions that insiders adapt their behavior depending on how active they perceive the regulator to be. We also study SEC escalations in sanctioning and find that they have a particularly notable deterrent effect, changing insider leakage behavior for approximately 24 months. Our results suggest that capital markets regulators need to intervene on a regular basis in order to maintain deterrence of undesirable behavior.
{"title":"Short Memories? The Impact of SEC Enforcement on Insider Leakage","authors":"Sid Ghoshal, Martin Bengtzen, S. Roberts","doi":"10.1561/108.00000048","DOIUrl":"https://doi.org/10.1561/108.00000048","url":null,"abstract":"We study the impact of SEC enforcement on information leakage by corporate insiders. We find, for the first time, that SEC enforcement has a significant and immediate deterrent effect on insider leakage. Furthermore, enforcement actions undertaken after a long period of SEC enforcement inactivity display a more significant effect on leakage, consistent with predictions that insiders adapt their behavior depending on how active they perceive the regulator to be. We also study SEC escalations in sanctioning and find that they have a particularly notable deterrent effect, changing insider leakage behavior for approximately 24 months. Our results suggest that capital markets regulators need to intervene on a regular basis in order to maintain deterrence of undesirable behavior.","PeriodicalId":51955,"journal":{"name":"Journal of Law Finance and Accounting","volume":"1 1","pages":""},"PeriodicalIF":0.9,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"67077703","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}
Clawback policies are compensation recovery policies that provide companies with the ability to recoup incentive-based compensation in the event of a financial fraud. We investigate whether the mandatory clawback provision in the Dodd-Frank Act is necessary or whether existing provisions under the Sarbanes-Oxley Act (SOX) are sufficient in inducing problematic firms to voluntarily adopt clawbacks. Specifically, we examine the relation between financial expertise on audit committees and voluntary adoption of clawback policies in the pre-Dodd-Frank period, separating audit committee financial expertise into accounting- and non-accounting financial expertise and classifying clawbacks into fraud-based- and non-fraud based clawbacks. While firms with restatement history are more likely to adopt fraud-based clawbacks due to SOX Section 304, the financial expertise on audit committees has a mitigating effect on the voluntary adoption of clawback policies. Greater accounting financial expertise is more likely to result in voluntary adoption of fraud-based clawbacks for firms without prior restatements. On the contrary, accounting and non-financial expertise are less likely to result in the voluntary adoption of fraud-based clawbacks for firms with prior restatements. Consistent with the signaling hypothesis, this suggests that accounting experts are more in favor of adopting fraud-based clawbacks when they are not associated with any previous accounting scandals, whereas both accounting experts and non-financial experts are against adopting fraud-based clawbacks when they could be implicated by prior financial frauds. Since non-fraud based clawbacks do not serve as signals, neither accounting- nor non-accounting financial expertise is related to the adoption of non-fraud based clawbacks. Our results suggest that the mandatory clawback requirement in Dodd-Frank can eliminate the mitigating effect of audit committee financial expertise on the voluntary adoption of clawback policies.
{"title":"The Mitigating Effect of Audit\u0000 Committee Financial Expertise\u0000 on the Voluntary Adoption\u0000 of Clawback Policies","authors":"Yan Zhang, Nan Zhou","doi":"10.1561/108.00000024","DOIUrl":"https://doi.org/10.1561/108.00000024","url":null,"abstract":"Clawback policies are compensation recovery policies that provide companies with the ability to recoup incentive-based compensation in the event of a financial fraud. We investigate whether the mandatory clawback provision in the Dodd-Frank Act is necessary or whether existing provisions under the Sarbanes-Oxley Act (SOX) are sufficient in inducing problematic firms to voluntarily adopt clawbacks. Specifically, we examine the relation between financial expertise on audit committees and voluntary adoption of clawback policies in the pre-Dodd-Frank period, separating audit committee financial expertise into accounting- and non-accounting financial expertise and classifying clawbacks into fraud-based- and non-fraud based clawbacks. While firms with restatement history are more likely to adopt fraud-based clawbacks due to SOX Section 304, the financial expertise on audit committees has a mitigating effect on the voluntary adoption of clawback policies. Greater accounting financial expertise is more likely to result in voluntary adoption of fraud-based clawbacks for firms without prior restatements. On the contrary, accounting and non-financial expertise are less likely to result in the voluntary adoption of fraud-based clawbacks for firms with prior restatements. Consistent with the signaling hypothesis, this suggests that accounting experts are more in favor of adopting fraud-based clawbacks when they are not associated with any previous accounting scandals, whereas both accounting experts and non-financial experts are against adopting fraud-based clawbacks when they could be implicated by prior financial frauds. Since non-fraud based clawbacks do not serve as signals, neither accounting- nor non-accounting financial expertise is related to the adoption of non-fraud based clawbacks. Our results suggest that the mandatory clawback requirement in Dodd-Frank can eliminate the mitigating effect of audit committee financial expertise on the voluntary adoption of clawback policies.","PeriodicalId":51955,"journal":{"name":"Journal of Law Finance and Accounting","volume":"1 1","pages":""},"PeriodicalIF":0.9,"publicationDate":"2018-05-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1561/108.00000024","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43116936","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}
{"title":"Corporate Governance and Ownership:\u0000 Evidence from a Non-Mandatory\u0000 Regulation","authors":"Sridhar Arcot, Valentina Bruno","doi":"10.1561/108.00000023","DOIUrl":"https://doi.org/10.1561/108.00000023","url":null,"abstract":"","PeriodicalId":51955,"journal":{"name":"Journal of Law Finance and Accounting","volume":" ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2018-05-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1561/108.00000023","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43814372","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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