Mandatory and voluntary information disclosure and the effects on financial analysts

2015 ◽  
Vol 9 (3) ◽  
pp. 425-440 ◽  
Author(s):  
Shengnian Wang ◽  
Liang Han ◽  
Weiting Gao
Keyword(s):  
Information Disclosure ◽  
Fixed Effects ◽  
Panel Data Analysis ◽  
Empirical Evaluation ◽  
Financial Analysts ◽  
Earnings Forecasts ◽  
Content Type ◽  
Public Firms ◽  
Earnings Surprise ◽  
Ex Post

Purpose – This paper aims to make a comparison, different from existing literature solely focusing on voluntary earnings forecasts and ex post earnings surprise, between the effects of mandatory earnings surprise warnings and voluntary information disclosure issued by management teams on financial analysts in terms of the number of followings and the accuracy of earnings forecasts. Design/methodology/approach – This paper uses panel data analysis with fixed effects on data collected from Chinese public firms between 2006 and 2010. It uses an exogenous regulation enforcement to minimise the endogeneity problem. Findings – This paper finds that financial analysts are less likely to follow firms which mandatorily issue earnings surprise warnings ex ante than those voluntarily issue earnings forecasts. Moreover, ex post, they issue less accurate and more dispersed forecasts on former firms. The results support Brown et al.’s (2009) finding in the USA and suggest that the earnings surprise warnings affect information asymmetries. Practical implications – This paper justifies the mandatory earnings surprise warnings policy issued by Chinese Securities Regulatory Commission in 2006. Originality/value – Mandatory earnings surprise is a unique practical regulation for publicly listed firms in China. This paper, for the first time, provides empirical evaluation on the effectiveness of a mandatory information disclosure policy in China. Consistent with existing literature on information disclosure by public firms in other countries, this paper finds that, in China, voluntary information disclosure captures more private information than mandatory information disclosure on corporate earnings ability.

Confidentiality in loan credit agreements

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ca Nguyen ◽  
Alejandro Pacheco
Keyword(s):  
Fixed Effects ◽  
Market Competition ◽  
Least Square ◽  
Loan Pricing ◽  
Product Markets ◽  
Content Type ◽  
Public Firms ◽  
Loan Contracts ◽  
Loan Spreads ◽  
Corporate Loan

PurposeThis study has two primary objectives. First, it analyzes the information content of confidentiality strictness in corporate loan credit agreements. Second, it examines how confidentiality strictness impacts covenant design, lending syndicate structure and loan pricing.Design/methodology/approachUsing a sample of 6,327 loan credit agreements originated by US public firms in the period of 1996–2017, this study measures the confidentiality strictness in loan contracts using textual analyses that capture the appearance of confidentiality-related words and the length of confidentiality provision. All regressions include relevant loan characteristics, firm-specific accounting variables, industry and year fixed effects. To address the endogeneity concern, the paper uses borrowing firms' rival cash holdings and R&D expenditures to instrument for confidentiality strictness in two-staged least square regressions.FindingsBorrowers which have higher R&D and operate in more competitive product markets have tighter confidentiality policies. Furthermore, this study reveals that confidentiality strictness is negatively associated with the imposition of financial covenants, especially performance covenants. Loan contracts for borrowers with stricter confidentiality on average have more relaxed covenant intensity, measured by the number of covenants. The study also shows that stricter confidentiality attracts finance companies, which have strong expertise in product markets of their parent firms, into the lending syndicate. However, confidentiality-conscious borrowers with higher degree of information asymmetry are subject to higher loan spreads.Originality/valueThis study provides the first examination of confidentiality policies in loan contracts and supports the idea that loan provisions are not simply made of “boilerplate” language. The results suggest that, for confidentiality-sensitive borrowers, the greater exposure to product market competition helps control managerial slack and substitute monitoring from financial markets.

The relationship between poor CSR performance and hard, negative CSR information disclosures

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Maher Jeriji ◽  
Waël Louhichi
Keyword(s):  
Information Disclosure ◽  
Corporate Social Performance ◽  
Social Performance ◽  
Panel Data Analysis ◽  
Content Type ◽  
Csr Reporting ◽  
Opportunistic Behaviour ◽  
Corporate Social ◽  
The Relationship

Purpose The purpose of this paper is to investigate the relationship between hard, negative corporate social responsibility (CSR) information disclosure and corporate social performance. Design/methodology/approach This study uses a generalised least squares panel data analysis based on a sample of firms ranked in the Fortune Global 500 for the period 2013–2016. Robustness check tests were conducted to limit endogeneity concerns. Findings The results show that in line with strategic legitimacy theory, agency theory and organisational stigma theory, poor sustainability performers disclose a low quality of hard, negative CSR information. Practical implications This paper provides guidance for stakeholders to identify good and poor CSR performers by better understanding whether corporate CSR reports are more likely to be symbolic or substantive when considering the amount of hard, negative content in their CSR stand-alone reports. Social implications The research highlights the opportunistic behaviour of CSR reporting, which is used more as a legitimation device than as an accountability mechanism. Thi Originality/value Although numerous studies have investigated the association between the level of corporate social disclosure (CSD) and corporate social performance, no research has focussed on hard, negative CSD. Also, an index that captures the disclosure quality rather than the quantity of negative CSR information was constructed.

Do Supplementary Sales Forecasts Increase the Credibility of Financial Analysts’ Earnings Forecasts?

2010 ◽  
Vol 85 (6) ◽  
pp. 2047-2074 ◽  
Author(s):  
Edmund C. Keung
Keyword(s):  
Financial Analysts ◽  
Earnings Forecasts ◽  
Earnings Persistence ◽  
Earnings Forecast ◽  
Time Effects ◽  
Forecast Revisions ◽  
Sales Forecast ◽  
Sales Forecasts ◽  
Ex Post ◽  
Incremental Information

ABSTRACT: This study examines whether the market reacts more strongly to earnings forecast revisions when financial analysts supplement their earnings forecasts with sales forecasts. I find that earnings forecast revisions supplemented with sales forecast revisions have a greater impact on security prices than do stand-alone earnings forecast revisions, controlling for the incremental information content in sales forecasts. Supplemented earnings forecasts are more accurate ex post, controlling for other individual analyst characteristics. Results are robust to controlling for earnings persistence and time effects. Taken as a whole, financial analysts are more likely to supplement their earnings forecasts with sales forecasts when they have better information. Supplementary sales forecasts appear to lend credibility to earnings forecasts because financial analysts provide sales forecasts when they are more informed.

scholarly journals Gender longevity gap and socioeconomic indicators in developed countries

2019 ◽  
Vol 47 (1) ◽  
pp. 127-144
Author(s):  
Igor Fedotenkov ◽  
Pavel Derkachev
Keyword(s):  
Peer Review ◽  
Fixed Effects ◽  
Panel Data Analysis ◽  
Developed Countries ◽  
Labor Policy ◽  
Socioeconomic Indicators ◽  
Content Type ◽  
Real Gdp Per Capita ◽  
Per Capita ◽  
Gender Based

Purpose The purpose of this paper is to explain relations between socioeconomic factors and gender longevity gap and to test a number of contradicting theories. Design/methodology/approach Fixed effects models are used for cross-country panel data analysis. Findings The authors show that in developed countries (Organization for Economic Cooperation and Development and European Union) a lower gender longevity gap is associated with a higher real GDP per capita, a higher level of urbanization, lower income inequality, lower per capita alcohol consumption and a better ecological environment. An increase in women’s aggregate unemployment rate and a decline in men’s unemployment are associated with a higher gap in life expectancies. There is also some evidence that the effect of the share of women in parliaments has a U-shape; it has a better descriptive efficiency if taken with a four-year lag, which approximately corresponds to the length of political cycles. Research limitations/implications Findings are valid only for developed countries. Practical implications The findings are important for policy discussions, such as designs of pension schemes, gender-based taxation, ecological, urban, health and labor policy. Social implications The factors that increase male and female longevities also reduce the gender longevity gap. Originality/value The results contradict to a number of studies for developing countries, which show that lower economic development and greater women discrimination result in a lower gender longevity gap. Peer review The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-02-2019-0082

The long-term effects of section transfers on return volatility: Intraday and overnight periods

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rodrigue Majoie Abo
Keyword(s):  
Information Disclosure ◽  
Fixed Effects ◽  
Stock Return ◽  
Control Variable ◽  
Return Volatility ◽  
Long Term Effects ◽  
Macroeconomic Factors ◽  
Content Type ◽  
Stock Return Volatility

Purpose Studies on transfers to a more regulated section show an increase in information disclosure and stocks’ liquidity levels. Classical theories suggest that volatility should also be reduced. This study aims to analyse the long-term effects of a section transfer to a more regulated section (TSE 1/TSE 2) on stock return volatility. Design/methodology/approach This study uses an empirical framework relying on two-sample t-tests and panel regressions. These use robust standard errors and control for fixed effects, day effects and macroeconomic factors. The return variance of comparable stocks’ benchmark sample, instead of market variance, is used as a control variable. Comparable stocks operate within the same industry and do not transfer during the sample period. The authors test our results’ robustness using generalized autoregressive conditional heteroskedasticity estimates. Findings The study’s main findings show that pre-transferred stocks are more volatile than the stocks’ benchmark sample. The transfer to a more regulated section leads to a gradual decrease in the total daily stock return volatility, intraday return volatility and overnight return volatility. Originality/value To the best of my knowledge, this study is the first to empirically address the volatility change caused by the stocks’ transfer to a more regulated section. This study highlights the benefits of choosing section transfers to reduce volatility.

Intellectual capital and dividend policy: the effect of CEO characteristics

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Enrico Battisti ◽  
Niccolò Nirino ◽  
Michael Christofi ◽  
Demetris Vrontis
Keyword(s):  
Intellectual Capital ◽  
Fixed Effects ◽  
Dividend Policy ◽  
Positive Impact ◽  
Panel Data Analysis ◽  
Chief Executive ◽  
Moderator Effect ◽  
Content Type ◽  
The Impact ◽  
Ceo Characteristics

PurposeThe paper aims to empirically test the impact of intellectual capital (IC) on a firm's dividend policy. Further, the authors investigate the moderator effect of Chief Executive Officer's (CEO) characteristics (gender, age and education) on this relationship.Design/methodology/approachThe research was carried out on the main Chinese listed companies reported on the CSI 100 Index from 2016 to 2018. To assess the impact of IC on the dividend policy and then the moderating effect of the characteristics of the CEOs, the authors used a fixed effects panel data analysis.FindingsThe results suggest a positive impact of IC on dividend policies. In addition, this relationship is enhanced when the CEO is a woman, and the lower the age the higher the effect is.Originality/valueTo the best of the authors' knowledge, this is the first empirical study that explores the effect of IC on a firm's dividend policy in an emerging country. Specifically, this paper demonstrates the impact that IC has on the creation of shareholder value. Furthermore, considering the characteristics of the CEOs, this study tests new moderating effects in the relationship between IC and value creation and highlights how IC, dividends and CEO characteristics can be useful in aligning interests between ownership and management, enriching the debate on agency theory.

The information content of managerial insider trading: evidence from analyst forecasts

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Omar Esqueda ◽  
Thanh Ngo ◽  
Daphne Wang
Keyword(s):  
Insider Trading ◽  
Fixed Effects ◽  
Information Dissemination ◽  
Forecast Accuracy ◽  
Earnings Forecasts ◽  
Ordinary Least Squares ◽  
Content Type ◽  
Forecast Bias ◽  
Forecast Precision ◽  
Insider Trades

PurposeThis paper examines the effect of managerial insider trading on analyst forecast accuracy, dispersion and bias. Specifically, the authors test whether insider-trading information is positively associated with the precision of earnings forecasts. In addition, this relationship between Regulation Fair Disclosure (FD) and the Galleon insider trading case is examined.Design/methodology/approachPooled ordinary least squares (Pooled OLS) rregressions with year-fixed effects, firm-fixed effects, and firm-level clustered standard errors are used. Our proxies for forecast precision are regressed on alternative measures of insider trading activities and a vector of control variables.FindingsInsider-trading information is positively associated with the precision of earnings forecasts. Analysts provide better forecast accuracy, less forecast dispersion and lower forecast bias among firms with insider trading in the six months leading to the forecast issues. In addition, bullish (bearish) insider trades are associated with increased (decreased) forecast bias. Insider trading information complements analysts' independent opinion and increases the precision of their forecast.Practical implicationsRegulators may pursue rules that promote the rapid disclosure of managerial insider trades, particularly given the increasing availability of Internet tools. Securities regulators may attempt to increase transparency and enhance the reporting procedures of corporate insiders, for example, using Internet sources with direct release to the public to ensure more timely information dissemination.Originality/valueThe authors document a positive association between earnings forecast precision and managerial insider trading up to six months prior to the forecast issue. This relationship is stronger after the Securities and Exchange Commission (SEC) prohibited the selective disclosure of material nonpublic information through Regulation FD. In addition, the association between insider trading and forecast accuracy has weakened after the Galleon insider trading case.

The informativeness of impression management − financial analysts and rhetorical style of CEO letters

2019 ◽  
Vol 31 (3) ◽  
pp. 462-496 ◽  
Author(s):  
Beibei Yan ◽  
Walter Aerts ◽  
James Thewissen
Keyword(s):  
Impression Management ◽  
Financial Analysts ◽  
Forecast Accuracy ◽  
Earnings Forecasts ◽  
Earnings Forecast ◽  
Management Communication ◽  
Self Presentation ◽  
Content Type ◽  
Rhetorical Features ◽  
Occurrence Patterns

Purpose This paper aims to investigate the informativeness of rhetorical impression management patterns of CEO letters and examines whether these rhetorical features affect financial analysts’ forecasting behaviour. Design/methodology/approach The authors use textual analysis on a sample of 526 CEO letters of US firms and apply factor analysis on individual linguistic style measures to identify co-occurrence patterns of style features. Findings The authors identify three holistic style patterns (assertive acclaiming, cautious plausibility-based framing and logic-based rationalizing) and find that assertive rhetorical feature in CEO letters is negatively related with the dispersion of financial analysts’ earnings forecasts and positively associated with earnings forecast accuracy. CEOs’ use of a rationalizing rhetorical pattern tends to decrease the dispersion of financial analysts’ earnings, whereas a cautious plausibility-based rhetorical position is only marginally instrumental in getting more accurate earnings predictions. Practical implications Whilst impression management communication is often theorized as manipulative and void of real information content, the findings suggest that impression management serves both self-presentation and information-sharing purposes. Originality/value This paper elaborates on the co-occurrence of style characteristics in management communication and is a first attempt to validate the external ramifications of holistic style profiles of corporate narratives by focusing on an economic target audience.

scholarly journals The extent of audit report lag and governance mechanisms

2020 ◽  
Vol 11 (1) ◽  
pp. 70-89
Author(s):  
Mohamed Ahmed Kaaroud ◽  
Noraini Mohd Ariffin ◽  
Maslina Ahmad
Keyword(s):  
Fixed Effects ◽  
Audit Committee ◽  
Panel Data Analysis ◽  
Control Variable ◽  
Islamic Banking ◽  
Audit Report ◽  
Governance Mechanisms ◽  
Financial Reports ◽  
Content Type ◽  
Banking Institutions

Purpose The purpose of this study is to examine the extent of audit report lag and its association with governance mechanisms in the Islamic banking institutions in Malaysia. Design/methodology/approach The extent of audit report lag is defined by the number of days from a company’s financial year-end to the signature date on its audit report. The sample of the study comprises 112 observations of Islamic banking institutions’ financial reports for the period 2008-2014. A balanced panel data analysis is performed to analyse the association between the extent of audit report lag and governance mechanisms. Findings The findings show that the extent of audit report lag for the sample selected ranges from a minimum period of 7 days to a maximum period of 161 days, and the extent of audit report lag is approximately two months on average. A fixed effects analysis indicates that audit committee expertise and audit committee meeting have significant association with the extent of audit report lag. On the other hand, board independence, audit committee size and Shari’ah board expertise have insignificant association with the extent of audit report lag. In addition, one control variable (Islamic bank size) is found to be significantly associated with longer audit report lag. Practical implications The findings provide useful feedback for Malaysian policymakers on the past and current practices of financial reports and of governance mechanisms. The findings of the study would help the policymakers in monitoring the Islamic banking institutions’ compliance with financial reports submission requirements. The policymakers perhaps could relook into governance mechanisms that reduce the extent of audit report lag in the Islamic banking institutions and implement regulations to strengthen them. Originality/value Unlike the majority of prior studies that investigated the association between the extent of audit report lag and governance mechanisms, this study provides two contributions. First, to the authors’ knowledge, this study is the first piece of research that examined the association between governance mechanisms and the extent of audit report lag in Islamic banking institutions. Second, the study examined the association of new governance variable, namely, Shari’ah committee expertise which has not been previously examined in the literature of audit report lag.

Data hiding the truth for the last few years: a panel data analysis of crimes against women

2019 ◽  
Vol 5 (2) ◽  
pp. 132-143
Author(s):  
Aarthee Ragunathan ◽  
Ezhilmaran Devarasan
Keyword(s):  
Data Analysis ◽  
Panel Data ◽  
Violence Against Women ◽  
Fixed Effects ◽  
Panel Data Analysis ◽  
Ordinary Least Squares ◽  
Content Type ◽  
Thomson Reuters ◽  
Crime Types ◽  
Crimes Against Women

PurposeThe offence against femininity has not only destroyed India’s development but also its future. When it comes down to the most important factor like sex, the social evils like “sati” and “dowry” that had been plaguing our country have been banned in India. India is the most dangerous nation in regard to sexual violence against women, according to the summary of the Thomson Reuters Foundation, 2018. The purpose of this paper is to determine the relationship between the total populations of women with other different types of women crime in all states in India.Design/methodology/approachThis paper will review existing panel data analysis literature and apply this knowledge in finding the highly occurred women crimes in India. Using R software the following models are analysed: pooled ordinary least squares, fixed effects models and random effects models for analysing the women crimes in India.FindingsIn this paper, the authors identify that the fixed effects model is more appropriate for the analysis of women crimes in India.Practical implicationsViolence against women is a social, economic, developmental, legal, educational, human rights and health issue. This paper can be used to find the importance of women crime types. Moreover, the police or legal department can take actions according to the crime types.Originality/valueThere is a lack of literature considering the crimes against women. This will help the society to understand women crime types because the only type of violence that has received much attention by the media is rape. But, through our panel data analysis, we conclude that kidnapping, abduction and dowry death are the most occurred crimes against women in India.

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