Aborted stock repurchases and earnings quality

2014 ◽  
Vol 40 (9) ◽  
pp. 846-863
Author(s):  
Qian Sun ◽  
Kenneth Yung ◽  
Hamid Rahman
Keyword(s):  
Stock Price ◽  
Earnings Quality ◽  
Probit Model ◽  
Probit Analysis ◽  
Share Repurchase ◽  
Probit Regression ◽  
Content Type ◽  
Instrumental Variable Probit

Purpose – The purpose of this paper is to try to identify the motivation of firms that announce share repurchase but do not follow it up with the actual purchase. The authors conjecture that the long-term earnings quality of such firms is low, which makes them poor candidates for actual stock repurchase. Their intention is to mimic actual repurchasers and their motivation appears to be just to get a bounce in their stock price normally associated with such announcements. Design/methodology/approach – The authors use probit analysis to ascertain whether earnings quality can predict the subsequent repurchase behavior of firms that announce share repurchase. As Gong et al. point out, the relationship between earnings management and the percentage of shares repurchased may be endogenous. In order to mitigate the potential endogeneity bias, the authors use a two-stage instrumental variable probit model adapted for this study from Lee and Masulis (2009). Findings – The results show that non-carry-through firms have lower earnings quality than carry-through firms in the pre-announcement period in all of the metrics the authors use to measure earnings quality. In the post-announcement period, the earnings quality of the non-carry-through firms declines still further and the difference in the quality becomes more pronounced. The results of probit regression show that lower earnings quality increases the likelihood of becoming a non-carry-through company. Research limitations/implications – The finding has interesting implications for investment management as investors can differentiate non-carry-through firms from carry-through repurchasers by examining the firm's earnings quality. Originality/value – The analysis shows that poor long-term earnings quality increases the chance of not carrying through on the repurchase announcement. The authors also find that the poor earnings quality of non-carry-through firms limits their ability to manage earnings downward prior to the repurchase announcement.

The UK Stewardship Code and investee earnings quality

2018 ◽  
Vol 31 (3) ◽  
pp. 388-404 ◽  
Author(s):  
Chun Lu ◽  
Jacqui Christensen ◽  
Janice Hollindale ◽  
James Routledge
Keyword(s):  
Institutional Investors ◽  
Design Methodology ◽  
Earnings Quality ◽  
Institutional Investor ◽  
Content Type ◽  
Accruals Quality ◽  
The Uk ◽  
Code Compliance

Purpose The UK Stewardship Code was the first voluntary governance code specifically for institutional investors. The Code sets out the principles of effective stewardship by institutional investors toward their investee companies with the aim of improving long-term risk-adjusted returns to shareholders. This paper aims to examine whether compliance by institutional investors with UK Stewardship Code is related to the earnings quality of their investee companies. Design/methodology/approach The association between institutional investor Code compliance and Code compliance quality and investee company accruals quality is investigated. Findings For a sample of large UK listed companies from 2013, the authors find reasonably high levels of compliance with the Code by institutional investors. The analysis does not suggest that Code compliance is positively related to investee company earnings quality. Rather, the finding is that substantial or long-term investments are more likely to result in effective stewardship regardless of Code compliance. Originality/value This study offers valuable insights regarding the efficacy of the Stewardship Code’s policy approach to improving corporate governance by institutional investors.

scholarly journals Opportunities and challenges of using socially intelligent agents: increasing interaction and school participation for children suffering from a long-term illness

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Eva Mårell-Olsson ◽  
Thomas Mejtoft ◽  
Sofia Tovedal ◽  
Ulrik Söderström
Keyword(s):  
Intelligent Agents ◽  
Design Methodology ◽  
Holistic Approach ◽  
Negative Effects ◽  
Content Type ◽  
Medical Needs ◽  
Societal Benefits ◽  
School Participation

PurposeChildren suffering from cancer or cardiovascular disease, who need extended periods of treatment in hospitals, are subjected to multiple hardships apart from the physical implications, for example, experienced isolation and disrupted social and academic development. This has negative effects long after the child's recovery from the illness. The purpose of this paper is to examine the non-medical needs of children suffering from a long-term illness, as well as research the field of artificial intelligence (AI) – more specifically, the use of socially intelligent agents (SIAs) – in order to study how technology can enhance children's interaction, participation and quality of life.Design/methodology/approachInterviews were performed with experts in three fields: housing manager for hospitalized children, a professor in computing science and researcher in AI, and an engineer and developer at a tech company.FindingsIt is important for children to be able to take control of the narrative by using an SIA to support the documentation of their period of illness, for example. This could serve as a way of processing emotions, documenting educational development or keeping a reference for later in life. The findings also show that the societal benefits of AI include automating mundane tasks and recognizing patterns.Originality/valueThe originality of this study concerns the holistic approach of increasing the knowledge and understanding of these children's specific needs and challenges, particularly regarding their participation and interaction with teachers and friends at school, using an SIA.

Study on the quality improvement on black land in Northeast China under the environment of sustainable agricultural development

Kybernetes ◽  
2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yun Teng ◽  
Boyuan Pang ◽  
Xiangyu Guo
Keyword(s):  
Soil Quality ◽  
Environmental Quality ◽  
Northeast China ◽  
Agricultural Development ◽  
Ecological Quality ◽  
Content Type ◽  
Management Quality ◽  
Black Land

PurposeThe authors are committed to providing the Chinese government with a foundation for making decisions that will protect black land and ensure long-term agricultural development.Design/methodology/approachUsing the grounded theory approach, this study investigates the influencing factors affecting the quality of black land in Northeast China and proposes a hypothetical model for the mechanism of the influencing factors on the quality of black land in Northeast China.FindingsThe factors influencing the quality of black land include not only soil quality, ecological quality and environmental quality, but also economic quality and management quality, and can be classified into five categories. There are complex influence relationships between various factors and black land quality, with soil quality, ecological quality, environmental quality and management quality having a positive influence on economic quality. Soil quality, ecological quality and environmental quality are all improved as a result of good management. Black land quality is influenced positively by environmental quality, economic quality and management quality.Research limitations/implicationsThe quality of black land is a major concern in terms of food production and long-term agricultural development. The black land in Northeast China was chosen as the subject of this study, and the research findings have some limitations. The next step will be to expand from studying the black land in Northeast China to the black land worldwide.Originality/valueIn Northeast China, the quality of the five dimensions of black land must be improved in a coordinated and consistent manner.

Does negative information in MD&A can reduce stock crash risk?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jianmai Liu
Keyword(s):  
Information Asymmetry ◽  
Information Disclosure ◽  
Stock Price ◽  
Negative Information ◽  
Bad News ◽  
Practical Significance ◽  
Crash Risk ◽  
Content Type ◽  
The Impact

Purpose As an important part of the disclosure of listed companies' annual reports, MD&A will disclose some "bad news" about the company. The purpose of this paper is to study whether such "bad news" can reduce information asymmetry and alleviate the risk of stock price crash remains to be seen. Design/methodology/approach Based on the sample of A-share listed companies from 2007 to 2016, the authors examine whether the negative information in MD&A could reduce stock price crash risk. Findings It is found that the negative information in MD&A does not reduce future crash, which indicates that the negative information in MD&A does not alleviate the information asymmetry. Further, it is also found this is due to the low readability of negative information which leads to the negative information not successfully released into the market timely. Only highly readable negative information can alleviate information asymmetry and suppress crash risk. In addition, the authors also find in the companies with more investor surveys negative tone is negatively correlated with crash risk, which means that investor surveys could help investors interpret the negative information in MD&A and alleviate stock price crash risk. Practical implications The practical significance of this article: this paper suggests that investors should carefully identify the quality of negative information in MD&A and pay attention to other quality characteristics besides credibility. This paper suggests that the regulator should pay attention not only to whether to disclose and the amount of disclosure but also to the quality of information disclosure, such as readability, so as to restrict management's strategic behavior in information disclosure. Originality/value First, different from previous studies on the impact of information disclosure on crash risk, this paper directly explores the impact of information in MD&A on stock price crash risk from the perspective of negative information disclosure that management most want to hide. It supplements the literature on the impact of information disclosure on stock price crash risk. Second, this paper studies the interaction between information tone and readability and its impact on the risk of stock price crash. Some studies believe that the credibility of negative news is higher and investors' reaction may be stronger. However, this paper finds that the disclosure of negative information may not be absorbed by the market because of the low readability. Third, this paper finds that investor surveys can help information users to interpret negative information and alleviate the risk of stock price crash, which shows that information disclosure of different channels will complement each other and improve information efficiency. Therefore, it advocates different information disclosure channels which has important practical significance for improving market pricing efficiency and reducing investment decision-making risk.

The impact of the global economic crisis of 2008 on earnings quality in Mexico

2019 ◽  
Vol 9 (3) ◽  
pp. 407-421
Author(s):  
Jose Miranda-Lopez ◽  
Ivan Valdovinos-Hernandez
Keyword(s):  
Earnings Management ◽  
Economic Crisis ◽  
Earnings Quality ◽  
Accounting Standards ◽  
Previous Literature ◽  
Income Smoothing ◽  
Accounting Quality ◽  
Content Type ◽  
Global Economic Crisis

Purpose The purpose of this paper is to examine the earnings quality of companies listed on Mexico’s primary stock market, the Bolsa Mexicana de Valores (Bolsa) before and during the global economic crisis of 2008. Previous research has shown that these economic events can have potentially conflicting effects on the quality of earnings of listed companies in capital markets around the world. Design/methodology/approach This paper operationalizes earnings quality based on earnings management. Therefore, four constructs to proxy for earnings quality are developed from previous literature, and multiple regression analysis along with tests of differences across two time periods, 2005–2007 and 2008–2010, are used to determine if there is a significant change in the accounting quality of companies listed on the Bolsa before and after the start of the global economic crisis. Findings Results indicate a statistically significant decrease of earnings quality on three out of the four constructs used to proxy for earnings management. There is only one construct in this category that shows a significant increase of earnings quality. Research limitations/implications There are different number of constructs and methodologies used to test for earnings quality. This study draws on four different constructs on two dimensions of earnings quality from previous literature, but other methodologies and constructs can potentially be used as well, such as discretionary accruals. Furthermore, there is a chance that there can be confounding factors affecting the results of this study besides the effects of the global economic crisis. Finally, the sample used in this study comprises non-financial public companies listed on the Bolsa, which can affect the generalization of the results to countries other than Mexico. Practical implications The results of this study can be of interest to Mexican and foreign investors, standard setters and regulators of the Bolsa, as the results show a strong incentive to manage companies’ earnings using income smoothing in an emerging economy during an economic crisis even after converging to a higher-quality set of accounting standards. Results can also be of interests to investors and regulators in other Latin-American countries with economies similar to that of Mexico. Originality/value This is the first study to test the quality of earnings of Mexican companies before and during the global economic crisis of 2008. Thus, this study contributes to the accounting quality literature by offering evidence showing a significant increase of income smoothing during the global economic crisis for companies listed in a developing economy with a relevant history of economic crises, even when these companies were using recently converged, higher-quality accounting standards.

scholarly journals Forecasting bank credit ratings

2014 ◽  
Vol 15 (2) ◽  
pp. 195-209 ◽  
Author(s):  
Periklis Gogas ◽  
Theophilos Papadimitriou ◽  
Anna Agrapetidou
Keyword(s):  
Credit Ratings ◽  
Financial Statements ◽  
Bank Credit ◽  
Probit Regression ◽  
Content Type ◽  
Explanatory Variables ◽  
Financial Variables ◽  
Annual Frequency ◽  
Available Information

Purpose – This study aims to present an empirical model designed to forecast bank credit ratings using only quantitative and publicly available information from their financial statements. For this reason, the authors use the long-term ratings provided by Fitch in 2012. The sample consists of 92 US banks and publicly available information in annual frequency from their financial statements from 2008 to 2011. Design/methodology/approach – First, in the effort to select the most informative regressors from a long list of financial variables and ratios, the authors use stepwise least squares and select several alternative sets of variables. Then, these sets of variables are used in an ordered probit regression setting to forecast the long-term credit ratings. Findings – Under this scheme, the forecasting accuracy of the best model reaches 83.70 percent when nine explanatory variables are used. Originality/value – The results indicate that bank credit ratings largely rely on historical data making them respond sluggishly and after any financial problems are already known to the public.

A method for predicting the Actual Percentage of Dissatisfied (APD) through a simple proposition of thermal comfort zones in a working environment

Work ◽  
2020 ◽  
Vol 67 (3) ◽  
pp. 599-609
Author(s):  
Evandro Eduardo Broday ◽  
Antonio Augusto de Paula Xavier
Keyword(s):  
Energy Efficiency ◽  
Air Temperature ◽  
Probit Analysis ◽  
Work Environments ◽  
Working Environment ◽  
Probit Regression ◽  
Point Scale ◽  
Increase Energy Efficiency ◽  
Sedentary Activities

BACKGROUND: Over the last few decades, there has been a concern to improve the quality of indoor work environments and increase energy efficiency as people spend much of their time in such settings. OBJECTIVE: This study analyzed a group of women developing sedentary activities to determine the Actual Percentage of Dissatisfied (APD) in the environment, considering that all people who voted any value other than zero on the seven-point scale are deemed dissatisfied. METHODS: After this analysis, using the probit regression model, hot and cold air temperature curves were plotted so as to determine in which situation the number of people dissatisfied with the environment is minimal. RESULTS: The results showed an APD of 52.31%, which is different from the ADP recommended by ISO 7730 (2005) [–0.5 < PMV < + 0.5, PPD < 10% ]. The probit analysis using the cut of 10% as dissatisfied, according to category B of ISO 7730 (2005), showed a comfort temperature of 21.1°C, with a comfort temperature range from 19.61 to22.61°C. CONCLUSIONS: Using the fraction of people dissatisfied with the environment (52.31%) as the cutoff, when the air temperature is equivalent to 20.2°C, the lowest percentage dissatisfied by the cold and heat in the environment occurs simultaneously.

Peer support in community settings: getting back to our roots

2017 ◽  
Vol 21 (3) ◽  
pp. 184-190 ◽  
Author(s):  
David Crepaz-Keay
Keyword(s):  
Mental Health ◽  
Peer Support ◽  
Community Settings ◽  
Community Based ◽  
Community Benefit ◽  
Content Type ◽  
Mental Health Foundation ◽  
The Impact

Purpose The purpose of this paper is to look at peer support in the context of broader communities. Design/methodology/approach It builds on the author’s experience working with the Mental Health Foundation of developing delivering and evaluating several self-management and peer support initiatives in a variety of settings with a range of different peer groups. It will consider what constitutes a peer and a community, and explore the notion of community solutions for community problems. Findings Peer support in community settings has the capacity to address social isolation, build skills and self-esteem and give individuals a better quality of life – it can also add value to whole communities and reframe the way entire groups are considered within them. It has the ability to be both more accessible and less stigmatising and thus reach more people. This also offers community based peer support as a contributor to preventing the deterioration of mental health and potentially reducing the impact of mental ill-health. Social implications The author needs to think more in terms of whole community and get better at improving how the author measures and articulates this community benefit. This will allow us to make better decisions about how best to apply resources for long term whole community gain. Peer support and peer leadership needs to be at the heart of this process. Originality/value This paper places a familiar approach in a different setting placing peer support firmly outside services and within comunities.

Choice of governance structure and earnings quality

2016 ◽  
Vol 29 (4) ◽  
pp. 372-390 ◽  
Author(s):  
Pamela Kent ◽  
Richard Anthony Kent ◽  
James Routledge ◽  
Jenny Stewart
Keyword(s):  
Cluster Analysis ◽  
Corporate Governance ◽  
Firm Size ◽  
Design Methodology ◽  
Best Practice ◽  
Earnings Quality ◽  
Governance Structure ◽  
Governance Mechanisms ◽  
Content Type

Purpose The purpose of this paper is to examine the effectiveness of voluntary governance mechanisms in Australia. Design/methodology/approach This study identifies similar choices of corporate governance by Australian firms and tests the effectiveness of the choices made based on the earnings quality of reported firms. Cluster analysis is conducted using governance best practice variables, firm size and an earnings quality variable. Findings This paper’s results support the voluntary governance approach for smaller firms, but suggest that mandatory governance requirements could be beneficial for larger firms. Evidence suggests that a benefit accrues for larger firms with the adoption of governance best practice. Cluster analysis indicates that larger firms tend to exhibit higher levels of adoption of governance best practice than smaller firms. Originality/value This paper adds to the literature by providing important information regarding the suitability of adoption of voluntary governance mechanisms in Australia.

Mexico tourism plan rides on success of Maya Train

2019 ◽  
Keyword(s):  
Social Inclusion ◽  
Economic Benefits ◽  
Quintana Roo ◽  
Infrastructure Investment ◽  
Content Type ◽  
The Government ◽  
Healthy Growth ◽  
Tourism Potential

Significance The news follows years of healthy growth in the sector and comes as the government launches a new tourism plan. President Andres Manuel Lopez Obrador (AMLO) announced the National Tourism Strategy 2019-24 in Chetumal on February 24, highlighting the government’s intention to use the sector as a vehicle for regional development, job creation, social inclusion and equality. Within this framework, the construction of a ‘Maya Train’ in the relatively poor south of the country will be the sector’s priority. Impacts The lack of a formal environmental impact assessment for the Maya Train puts the environment, and its long-term tourism potential, at risk. Business’s mistrust of AMLO, and the potential downgrading of Mexico’s sovereign ratings, threaten infrastructure investment hopes. SECTUR’s move to Quintana Roo feeds into the government’s decentralisation rhetoric but will not necessarily help boost sectoral growth. Plans to incentivise domestic travel by the poor may increase tourism numbers and quality of life but will bring few economic benefits.

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