Asia-Pacific Journal of Financial Studies最新文献

We investigate corporate bond defaults from 1995 to 2020 using hand-collected data from hard-copy publications in Korea. Using an under-sampling method, we construct default prediction models based on machine learning models as well as a logistic model. The empirical results show that the random forest model outperforms the others. However, regardless of the models used, model performance in financial crisis periods is significantly worse than it is in non-crisis periods. This finding suggests the need for additional information to improve model performance during crises when the default prediction is the most relevant. Furthermore, the dominant predictor of defaults before the global financial crisis was the debt ratio, while subsequently, the coverage ratio has become the most important predictor.

We investigate the relationship between CEO risk incentives and the innovation premium (IP) proposed by Forbes. We suggest that compared to traditional proxies of innovation, the IP is a comprehensive measure of a firm's overall innovation and, therefore, can measure innovation effectiveness in broader industries. We find that both option vega and vega-to-delta ratio, as measures of CEO risk incentives, have a positive relationship with the IP. Additional tests reveal that the traditional patent-related outputs are also motivated by CEO risk incentives, but only in the IT industry. Overall, our findings are consistent with (1) the empirical evidence of Coles et al. (2006, Journal of Financial Economics 79, 431) that a higher vega after controlling for delta motivates managers to implement riskier policy choices and (2) the argument (Dittmann et al. 2017, Review of Finance 21, 1805) that the strength of the risk-taking incentive relative to the performance-based incentive, the vega-to-delta ratio, captures CEO risk-taking incentives more accurately.

Family structure and characteristics are important factors that affect both economic development and CEOs' decision-making. Corporate risk-taking reflects the overall risk choices and preferences of decision-makers in relation to various decisions. Using data for Chinese non-state-owned enterprises between the years 2000 and 2019, we examine the association between CEO offspring gender and corporate risk-taking. We find that CEOs who have daughters are associated with a lower level of corporate risk-taking than CEOs who have sons only. Raising daughters significantly stimulates cautious attitudes and behaviors in CEOs and reduces firm overinvestment, thereby lowering the level of corporate risk-taking. Moreover, raising daughters has a more significant inhibitory effect on corporate risk-taking for female CEOs and CEOs who were born in regions with a strong patriarchal culture. Our findings also show that CEOs with daughters can help companies effectively avoid financial crises. Focusing on both parenting behavior and corporate financial behavior, we suggest that the parent–child relationship extends far beyond the scope of the family, providing a broader perspective for understanding corporate decision-making and financial behavior.

The paper explores how agency behavior of insiders within a company influences the risk of a stock price crash in the context of a continued expansion of the performance expectation gap. A panel data analysis of 10 727 observations of Chinese A-share listed companies over the period 2003–2020 shows that as the negative performance aspiration gap widens, stock price crashes are more likely to occur. Furthermore, the separated role of top management and chairperson and an increase in the ownership proportion of major shareholders significantly amplifies the positive effect, whereas the increase in managerial shareholding and the equity balance diminish the main relationship.

This paper investigates whether and how controlling shareholders' value (i.e., the concentration of controlling shareholders' wealth within a business group) affects corporate tax planning using Korean chaebols. We find that firms with high controlling shareholders' value engage in a lower level of tax avoidance than other affiliates in the business group. We also find that controlling shareholders' concern about the costs of tax avoidance (i.e., regulatory penalties and reputational damages) are potential mechanisms that prevent firms with high controlling shareholders' value from aggressive tax planning. Lastly, we provide the value implication of tax avoidance for firms with high controlling shareholders' value.

This study examines the announcement effect of a green bond on the issuer's stock returns in the Indian Stock Market. The event study methodology for data analysis and abnormal returns were calculated using the market model for the 16-day event window that includes the 5 days prior and 10 days after the issuance of the green bonds. The findings of this study show that green bond announcements do not create any significant abnormal returns, thus suggesting investors' irrationality toward environmental factors. This study informs policymakers that investor education relating to the environment is needed in India.

This study examines the relationship between a hospitality and tourism (HT) firm's business strategy and the level and structure of compensation for its chief executive officer (CEO). Using the ordinary least square (OLS) estimation method, we find that firms in the HT industry that adopt an innovation-oriented business strategy increase their CEOs' total compensation. The increased compensation is not derived from a cash-based component but from an equity-based component of the total CEO compensation. The higher levels of risk exposure that HT firms encounter when adopting an innovation-oriented business strategy motivate these compensation dynamics. Further, HT firms that implement an innovation-oriented business strategy and possess a higher firm value are those that remunerate their CEOs using equity-based compensation. We find no such evidence for cash-based compensation. Therefore, we advocate for a strategy-induced compensation premium in the CEOs' compensation contracting for the HT industry.

This study investigates the impact of comment letter reviews on reporting quality in terms of financial restatements, using comment letters from the Chinese market between 2013 and 2020. The baseline results indicate that although receiving a comment letter increases the next year's (year t + 1) restatements, it reduces later years' (year t + 2 onwards) restatements. Moreover, this effect is more pronounced among firms with lower external auditor quality, poorer information transparency, and those located in less marketized provinces. The mechanism analyses show that comment letter reviews improve financial reporting quality because of deterrent effects in the form of increased litigation risk.

Open-book accounting is a practice to disclose the full cost structure of suppliers to customers to achieve cost efficiency in supply chains. However, the dominant market power of customers could interfere with this goal in practice. Using unique data on the suppliers of large Korean business groups, we find that open-book accounting is associated with profit rate regulation by customers. Suppliers' price growth is capped despite the increase in supplied goods. Profit rates of suppliers significantly co-move in times of low average profitability. Using an exogenous regulatory reform that outlawed coercive open-book accounting, we find the tendencies significantly reversed post-reform.

Previous studies show that institutional investors play an important role in shaping corporate social responsibility (CSR). The role of non-investor institutions such as media firms is largely unexplored, especially in China. This study examines the impact of site visits by non-investor institutions on visited firms' CSR ratings (excluding corporate governance (CG)) in China. The baseline result shows that site visits are associated with improved CSR ratings. The result is robust after controlling for potential endogeneity issues. It is also robust with alternative CSR ratings by different data providers. The channel test suggests that non-investor institutions' site visits improve CSR ratings by increasing both CSR disclosure and actual CSR activities. To highlight the difference between our study and recent research on corporate site visits by institutional investors, we perform a further test to show that non-investor institutions' visits improve the non-CG aspect but not the CG aspect of CSR ratings while institutional investors' visits improve the CG aspect but not the non-CG aspect of CSR ratings.