Information asymmetry and dividend policy of Sarbanes-Oxley Act

2020 ◽  
Vol 47 (6) ◽  
pp. 1507-1532
Author(s):  
Mostafa Harakeh ◽  
Ghida Matar ◽  
Nagham Sayour
Keyword(s):  
Asymmetric Information ◽  
Information Asymmetry ◽  
Financial Economics ◽  
Dividend Policy ◽  
Potential Effect ◽  
Control Group ◽  
Reverse Causality ◽  
Publicly Traded ◽  
Content Type ◽  
Sarbanes Oxley

PurposeThe literature of financial economics documents a causal relationship between the level of information asymmetry in the firm and its dividend policy. Nevertheless, this relationship suffers endogeneity problems arising from reverse causality and omitted variable bias. The purpose of this study is to examine how the dividend policy reacts to changes in asymmetric information in an exogenous research setting.Design/methodology/approachTo overcome endogeneity concerns, the authors employ the enactment of the Sarbanes-Oxley Act (SOX) in the US in 2002 as a source of an exogenous variation in the level of information asymmetry to study the potential effect that this variation might have on the dividend policy. In doing so, we utilize a difference-in-differences research design, in which the treatment group is US publicly traded firms that were exposed to the policy and the control group is publicly traded companies in the UK where SOX was not enacted. Both countries have similar institutional settings and enforcement of laws, which makes them comparable in this research context.FindingsThe authors’ findings show that, compared to UK companies, US firms increase their dividend payments following a reduction in asymmetric information as a result of the SOX enactment.Originality/valueThe study contributes to the literature of financial economics by showing that policy makers can mitigate agency conflicts and protect shareholders by improving the corporate information environment and reducing asymmetric information.

Information asymmetry in CSR reporting: publicly-traded versus privately-held firms

2020 ◽  
Vol 11 (1) ◽  
pp. 207-232 ◽  
Author(s):  
L. Emily Hickman
Keyword(s):  
Information Asymmetry ◽  
Global Reporting Initiative ◽  
Publicly Traded ◽  
Private Companies ◽  
Content Type ◽  
Public Firms ◽  
Csr Reporting ◽  
Reporting Decisions ◽  
Privately Held Firms ◽  
Privately Held

Purpose This paper aims to investigate the motivations behind the publication of corporate social responsibility (CSR) reports, and particularly the effect of information asymmetry between firms and their owners. Design/methodology/approach A natural experiment contrasting the CSR reporting of private vs public firms is used to test whether the degree of information asymmetry is a significant factor in the decision to publish CSR reports. Using a hand-collected sample of the 239 largest US private companies matched with publicly-traded firms, the effect of these inherently different information environments on CSR reporting is tested through logistic regression. Factors suggested by stakeholder and legitimacy theories are tested for their differential impact on private vs public firms’ decisions to publish a CSR report. Findings Results indicate that private firms are less likely to publish a CSR report than similar public firms. Public firms also follow Global Reporting Initiative guidelines more frequently, consistent with signaling report quality to dispersed investors. A subsample of private companies facing greater information asymmetry is found to be similar to public firms in their reporting behavior, reinforcing the link between information asymmetry and CSR disclosure. Further analysis suggests that non-owner stakeholders play an important role in private companies’ CSR reporting decisions. Practical implications In addition to accounting and governance scholars, the findings should interest private firm managers preparing for an initial public offering (IPO), as the evidence suggests that CSR reporting is used to communicate information to dispersed investors. The insight into reporting motivations should be useful to accountants engaged in CSR consultation and assurance. Social implications With the growing attention paid to the CSR performance of firms, demonstrated by the growth in socially responsible investing, the study provides evidence that effective communication of CSR information to investors may play a key role in CSR-engaged firms’ disclosure strategies. Originality/value To the best of the author’s knowledge, this study is the first to analyze the CSR reporting decisions of a large sample of publicly-traded and privately-held firms. The results add to our understanding of what motivates firms to publish CSR reports, highlighting the importance of information asymmetry between the firm and its owners.

Slack in family firms: evidence from Italy (2006-2010)

2014 ◽  
Vol 4 (2) ◽  
pp. 171-193 ◽  
Author(s):  
Giacomo Laffranchini ◽  
Mike Braun
Keyword(s):  
Family Firms ◽  
Least Square ◽  
Curvilinear Relationship ◽  
Board Independence ◽  
Reverse Causality ◽  
Publicly Traded ◽  
Content Type ◽  
Family Enterprises ◽  
The Relationship

Purpose – The purpose of this paper is to examine the relationship between available slack and firm performance in Italian family-controlled public firms (FCPFs) from 2006 to 2010. In addition the authors analyze the moderating effects of specific board structure variables on the relationship between slack resources and firms’ performance. Design/methodology/approach – A pooled cross-section of family and non-family publicly traded firms was drawn from COMPUSTAT global and matched with corporate governance and family firm variables hand-collected from companies’ standard profiles from Italy's primary stock exchange, Borsa Italiana. The hypotheses were tested using the feasible generalized least square method in order to analyze the data from 583 firms-observations, controlling for self-selection bias and reverse causality. Findings – The study shows that FCPFs with available slack experience less than proportionate increases in performance, suggesting a concave curvilinear slack-performance relationship. However, the slack-performance relationship is contingent on board independence and board size: greater board independence and larger boards in FCPFs relate to higher performance when the firm lacks or has too much slack available. The findings suggest that a balanced approach of oversight and stewardship helps families to make better resources allocation, to the benefit of outside shareholders as well. Research limitations/implications – The slack measure was restricted to available slack. Future studies can expand this research inquiry with other forms of slack, including potential and recoverable slack. The sample included only publicly traded family and non-family firms, thereby limiting the generalizability of the findings to other types of family enterprises. Lastly, the results only attend to the slack-performance relationship by controlling whether the firm's performance is below or above the industry average. Practical implications – Policy makers and non-family stakeholders may rely on the findings better understand the factors that can alter the family's propensity for risks and its related strategic decisions in the Italian context. Procedures to fully monitor family management's decision making or, at the other extreme, to give the family free reign are likely to disadvantage families, their business, and their outside stakeholders. Originality/value – The study reconciles the debate on the role of slack on firms’ performance by proposing a curvilinear relationship. The study is one of only a handful of research inquiries centrally addressing the role of slack in family-owned businesses, and the only analysis focussed on Italian FCPFs.

Information Asymmetry and Corporate Governance

2015 ◽  
Vol 05 (03) ◽  
pp. 1550014 ◽  
Author(s):  
Jie Cai ◽  
Yixin Liu ◽  
Yiming Qian ◽  
Miaomiao Yu
Keyword(s):  
Corporate Governance ◽  
Asymmetric Information ◽  
Information Asymmetry ◽  
Pay For Performance ◽  
Market Discipline ◽  
Monitoring Cost ◽  
Sarbanes Oxley ◽  
Ceo Pay ◽  
Board Monitoring ◽  
The Impact

We examine the impact of a firm’s asymmetric information on its choice of three mechanisms of corporate governance: The intensity of board monitoring, the exposure to market discipline, and CEO pay-for-performance sensitivity. We find that firms facing greater asymmetric information tend to use less intensive board monitoring but rely more on market discipline and CEO incentive alignment. These results are consistent with the monitoring cost hypothesis. In addition, we find that high information-asymmetry firms that have to substantially increase board monitoring intensity after the Sarbanes–Oxley Act suffer poor stock performance. Our evidence therefore suggests that regulators should use caution when imposing uniform corporate governance requirements on all firms.

Privacy as a secondary goal problem: an experiment examining control

2015 ◽  
Vol 23 (4) ◽  
pp. 382-393 ◽  
Author(s):  
Thomas Hughes-Roberts
Keyword(s):  
Social Network ◽  
Treatment Group ◽  
Personal Information ◽  
Low Cost ◽  
Statistical Significance ◽  
Potential Effect ◽  
Control Group ◽  
Content Type ◽  
Wide Range ◽  
The Impact

Purpose – The purpose of this paper is to report on results of an investigation into the impact of adding privacy salient information (defined through the theory of planned behaviour) into the user interface (UI) of a faux social network. Design/methodology/approach – Participants were asked to create their profiles on a new social network specifically for Nottingham Trent University students by answering a series of questions that vary in the sensitivity of personal information requested. A treatment is designed that allows participants to review their answers and make amendments based on suggestions from the treatment. A dynamic privacy score that improves as amendments are made is designed to encourage privacy-oriented behaviour. Results from the treatment group are compared to a control group. Findings – Participants within the treatment group disclosed less than those in the control with statistical significance. The more sensitive questions in particular were answered less when compared to the control, suggesting that participants were making more privacy-conscious decisions. Practical implications – Work within this paper suggests that simple UI changes can promote more privacy-conscious behaviour. These simple changes could provide a low-cost method to ensuring the Internet safety of a wide range of users. Originality/value – This study provides a clear definition of privacy salient UI mechanisms based on a well-established theory of behaviour and examines their potential effect on end-users through a novel experiment. Results and methods from this work can enable researchers to better understand privacy behaviour.

Service outsourcing contract design under asymmetric information

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yu Xia ◽  
Jiqing Xie ◽  
Guangsi Zhang ◽  
Weijun Zhu
Keyword(s):  
Supply Chain ◽  
Asymmetric Information ◽  
Information Asymmetry ◽  
Service Provider ◽  
Service Providers ◽  
Demand Forecasting ◽  
Third Party ◽  
Incentive Mechanisms ◽  
Content Type ◽  
The Third

PurposeUpstream suppliers attempt to outsource product after-sales services to midstream third-party service providers while selling the product directly to downstream sellers, forming a networked supply chain. However, a problem of information asymmetry in the market demand among supply chain members exists. The authors investigate the impact of demand information asymmetry among third-party service providers, upstream suppliers and downstream sellers in the supply chain on the supplier's contract selection under the networked framework.Design/methodology/approachThe authors establish a model in which the supplier can use a wholesale price contract and facilitate a signaling game between the third-party service provider and the seller. Conversely, the supplier could use a menu contract to establish an incentive mechanism to solve information asymmetry. The authors propose heuristic algorithms to quickly estimate a supplier's optimal profit.FindingsThe results show that when the demand forecasting bias is relatively small, the use of a menu contract by the supplier could eliminate information asymmetry; when the demand forecasting bias is large enough, the signaling mechanism between the third-party service provider and the seller could alleviate the double marginalization effect in the supply chain. Although it is common to solve the asymmetric information problem by establishing incentive mechanisms, the authors found that in the latter case, the supplier is better off when no incentive mechanisms are implemented in the networked supply chain.Originality/valueThis study compares screening and signaling effects and compares firms' profits in both cases.

The corporate governance of banks

2006 ◽  
Vol 14 (4) ◽  
pp. 375-382 ◽  
Author(s):  
Andy Mullineux
Keyword(s):  
Corporate Governance ◽  
Asymmetric Information ◽  
Information Asymmetry ◽  
Deposit Insurance ◽  
Design Methodology ◽  
Bank Regulation ◽  
Fiduciary Duty ◽  
Content Type

PurposeTo consider the implications of the banks fiduciary duty to their depositors (as well as the shareholders) and the government's fiscal duty to taxpayers (in the presence of deposit insurance) for the corporate governance (CG) of banks.Design/methodology/approachRecent contributions to the literature are outlined and assessed in the context of the asymmetric information literature relating to banking.FindingsThe good CG of banks requires regulation to balance the interests of depositors and taxpayers with those of the shareholders.Originality/valueLinking the bank regulation in literature based on information asymmetry to the CG literature.

Big data investments in knowledge and non-knowledge intensive firms: what the market tells us

2017 ◽  
Vol 21 (3) ◽  
pp. 623-639 ◽  
Author(s):  
Tingting Zhang ◽  
William Yu Chung Wang ◽  
David J. Pauleen
Keyword(s):  
Big Data ◽  
Knowledge Management ◽  
Stock Market ◽  
Value Chain ◽  
Stock Prices ◽  
Economic Value ◽  
Information Value ◽  
Publicly Traded ◽  
Content Type ◽  
Knowledge Intensive

Purpose This paper aims to investigate the value of big data investments by examining the market reaction to company announcements of big data investments and tests the effect for firms that are either knowledge intensive or not. Design/methodology/approach This study is based on an event study using data from two stock markets in China. Findings The stock market sees an overall index increase in stock prices when announcements of big data investments are revealed by grouping all the listed firms included in the sample. Increased stock prices are also the case for non-knowledge intensive firms. However, the stock market does not seem to react to big data investment announcements by testing the knowledge intensive firms along. Research limitations/implications This study contributes to the literature on assessing the economic value of big data investments from the perspective of big data information value chain by taking an unexpected change in stock price as the measure of the financial performance of the investment and by comparing market reactions between knowledge intensive firms and non-knowledge intensive firms. Findings of this study can be used to refine practitioners’ understanding of the economic value of big data investments to different firms and provide guidance to their future investments in knowledge management to maximize the benefits along the big data information value chain. However, findings of study should be interpreted carefully when applying them to companies that are not publicly traded on the stock market or listed on other financial markets. Originality/value Based on the concept of big data information value chain, this study advances research on the economic value of big data investments. Taking the perspective of stock market investors, this study investigates how the stock market reacts to big data investments by comparing the reactions to knowledge-intensive firms and non-knowledge-intensive firms. The results may be particularly interesting to those publicly traded companies that have not previously invested in knowledge management systems. The findings imply that stock investors tend to believe that big data investment could possibly increase the future returns for non-knowledge-intensive firms.

Modulation effects of hexamethylene bisacetamide on growth and differentiation of cultured human malignant glioma cells

1996 ◽  
Vol 84 (5) ◽  
pp. 831-838 ◽  
Author(s):  
Xiao-Nan Li ◽  
Zi-Wei Du ◽  
Qiang Huang
Keyword(s):  
Cell Cycle ◽  
Cell Proliferation ◽  
Malignant Glioma ◽  
Culture Media ◽  
Morphological Changes ◽  
Control Group ◽  
Cell Cycle Distribution ◽  
Content Type ◽  
Hexamethylene Bisacetamide ◽  
Human Malignant Glioma

✓ The modulation effects of hexamethylene bisacetamide (HMBA), a differentiation-inducing agent, on growth and differentiation of cells from human malignant glioma cell line SHG-44 were studied. At cytostatic doses (2.5 mM, 5 mM, 7.5 mM, and 10 mM for 15 days), HMBA exerted a marked inhibitory effect on cell proliferation. Exposure to HMBA (5 mM and 10 mM for 12 days) also resulted in an accumulation of cells in G0/G1 phase and a decrease of cells in S phase as analyzed by flow cytometry. The reversible effects of 7.5 mM HMBA and 10 mM HMBA on cell proliferation and 10 mM HMBA on disruption of cell cycle distribution were observed when HMBA was removed from culture media on Day 6 and replaced with HMBA-free media. Colony-forming efficiency (CFE) in soft agar was remarkably decreased by HMBA (2.5 mM, 5 mM, 7.5 mM, and 10 mM for 14 days), and in 7.5 mM HMBA— and 10 mM HMBA—treated cells, the CFEs were reduced to 25% and 12.5%, respectively, of that in untreated cells. Cells treated with HMBA (5 mM and 10 mM for 15 days) remained tumorigenic in athymic nude mice, but the growth rates of the xenografts were much slower than those in the control group. The effects of HMBA on cell proliferation, cell cycle distribution, CFE, and growth of xenografts were dose dependent. A more mature phenotype was confirmed by the morphological changes from spindle shape to large polygonal stellate shape and remarkably elevated expression of glial fibrillary acidic protein in cells exposed to HMBA (5 mM, 10 mM for 15 days). Our results showed that a more differentiated phenotype with marked growth arrest was induced in SHG-44 cells by HMBA.

An alternative evaluation: online puzzle as a course-end activity

2015 ◽  
Vol 12 (3) ◽  
pp. 169-182 ◽  
Author(s):  
Zülfü Genç ◽  
Emrah Aydemir
Keyword(s):  
Student Achievement ◽  
Information Technologies ◽  
Traditional Instruction ◽  
Control Group ◽  
Content Type ◽  
Learning Retention ◽  
Alternative Evaluation ◽  
Usability Tests ◽  
Positive Attitudes ◽  
Experimental Group

Purpose – The purpose of this study is to determine whether the use of online puzzles in the instructional process has an effect on student achievement and learning retention. This study examined students ' perception and experiences on use of puzzle as an alternative evaluation tool. To achieve this aim, the following hypotheses were tested: using puzzle activities in lessons increases student achievement, using puzzle activities in lessons increases retention of information learned by the students and students have positive attitudes toward using puzzle activities in lessons. This study uses an online puzzle system (OPS) by which instructors can prepare puzzle activities for students to solve online. The technical and functional properties of the OPS developed and used are beyond the scope of this study. Design/methodology/approach – A pre- and post-test with control group experimental research design was implemented. Study participants were tenth-grade students in the Information Technologies Department of Gazi Anatolia Technical and Industrial Vocational School in Elazig during the 2011-2012 year. Thirty students each were chosen for the experimental and control groups, totaling 60 students. During the study, a traditional instruction method was used for the control group, while the experimental group received both traditional instruction and performed activities using the OPS. The subject Fundamentals of Networking was chosen, and the implementation period lasted six weeks. Four weeks after completion of the study, the achievement level of students was calculated again to test learning retention. Findings – The first hypothesis of the study is, “Using puzzle activities in the lessons increases the achievement of the students”. In the teaching of the Networking Fundamentals Module of Information Technologies Course for tenth graders, a significant difference in favor of the experimental group was seen, where online puzzle activities were used in terms of student achievement. The second hypothesis of the study is, “Using puzzle activities in the lessons increase the retention of the information learned by the students”. Four weeks after completion of the study, the achievement levels of the students were calculated again to test learning retention. The learning retention of the students in the experimental group is higher than that of the students in the control group. In addition, students in the experimental group had positive attitudes toward online puzzle activities. Doing online puzzle activities accelerates learning for students and helps them learn networking terms by creating an enjoyable environment. Research limitations/implications – The current study was limited to six weeks of implementation during the 2011-2012 school year at Gazi Anatolia Technical and Industrial Vocational High School in Elazig. Similar studies could be conducted in other schools for longer periods and at different levels, so the findings can be compared with those of the current study. This study is further limited to an Information Technologies Course. Studies can be conducted with various courses using appropriate online puzzle activities. Puzzle types other than the crossword used in the OPS of the current study should be developed and added. The system should also be developed by visual multimedia objects, allowing it to be more interactive. Moreover, in the development process of such an OPS, educators, software designers, psychologists and scholars from other fields should work together. Usability tests should be conducted to improve user-friendliness of the system by adding various features related to functionality and visuality. Practical implications – From the findings of the study, it can be concluded that online puzzle activities help students understand subjects better and aid in exam preparation. Moreover, these activities are effective for students in terms of increasing understanding and retention of learned terms in and outside class, forming valuable learning experiences. Doing online puzzle activities in class as a course-end activity can be said to be more effective in students’ learning than doing them outside of class. Crossword puzzles offer opportunities for students to accelerate learning by quickly mastering new words and phrases and by directing students to more actively interact with computer-related vocabulary and terminology as compared with the rote learning method. Originality/value – Paper-based puzzles are frequently used, and there are few Web-based puzzles. Despite their frequent use, preparing and evaluating paper-based puzzles can require a significant time investment; another disadvantage is the lack of immediate feedback. Based on the literature review, there is no dynamic OPS used for educational purposes. This study uses an OPS by which instructors can prepare puzzle activities for students to solve online. The originality of this study is OPS features and puzzle generation mechanism. The system presents a user-friendly interface with Turkish character (or any language) support and number-writing properties.

How Moroccan institutional investors view dividend policy

2017 ◽  
Vol 43 (12) ◽  
pp. 1332-1347 ◽  
Author(s):  
H. Kent Baker ◽  
Imad Jabbouri
Keyword(s):  
Institutional Investors ◽  
Stock Prices ◽  
Dividend Policy ◽  
Stock Exchange ◽  
Mail Survey ◽  
High Response Rate ◽  
Content Type ◽  
Listed Firms ◽  
Dividend Policies ◽  
Dividend Payments

Purpose The purpose of this paper is to examine how Moroccan institutional investors view dividend policy. It discusses the importance these investors attach to the dividend policy of their investee firms, how much influence they exercise in shaping investee firms’ dividend policies, their reactions to changes in dividends, and their views on various explanations for paying dividends. Design/methodology/approach A mail survey provides a respondent and firm profile and responses to 28 questions involving various explanations for paying dividends and 30 questions on different dividend issues. Findings Institutional investors attach substantial importance to dividend policy and prefer high dividend payments. Although liquidity needs are a major driver, taxes play little role in shaping dividend preferences. Respondents agree with multiple explanations for paying dividends giving the strongest support to catering, bird-in-the-hand, life cycle, signaling, and agency theories. Research limitations/implications Despite a high response rate, the number of respondents limits partitioning the sample and testing for significant differences between different groups. Practical implications The lack of communication between Casablanca Stock Exchange (CSE) listed firms and institutional investors may depress stock prices and increase volatility. The results suggest agency problems and a weak governance environment at the CSE. Originality/value This study documents the importance that institutional investors place on dividend policy, their reactions to changes in their investees’ dividend policy, and the methods used to influence these firms. It extends previous research by reporting the level of support Moroccan institutional investors give to various explanations for paying dividends.

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