Evidence of the adaptive market hypothesis in shares traded by B3 listed banking companies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Paulo Vitor Souza de Souza ◽  
César Augusto Tibúrcio Silva ◽  
Fabiano Guasti Lima
Keyword(s):  
Earnings Management ◽  
Stock Prices ◽  
Design Methodology ◽  
Institutional Factors ◽  
Content Type ◽  
Intrinsic Factors ◽  
Management Efficiency ◽  
Management Of Resources ◽  
Resilience Management ◽  
Unbalanced Panel Data

PurposeThe authors aim to verify the indicators that influence the efficiency reported by Brazilian listed financial companies.Design/methodology/approachThe sample consists of companies in the financial segment that have shares traded in B3, comprising nine institutions from 2000 to 2018 were selected. The authors adopted the regression model with unbalanced panel data to analyze the data. The dependent is the efficiency, which the authors calculated using Hurst Exponent. As independent variables, we used the sector-specific indicators: earnings management, banking resilience, management efficiency, and profitability. The authors controlled the models by size and type of control.FindingsThe findings indicate that the efficiency of financial companies' securities is affected by aspects related to management, resilience, and efficiency in administration. The lower the earnings management, the greater the banking resilience, the efficiency in the management of resources, and the efficiency of stock prices of these companies. These results show that efficiency is affected by intrinsic factors of the entities, corroborating the hypothesis that markets adapt, among others, to institutional factors.Originality/valueMany users of financial institutions understand whether their stock prices reflect the information provided by accounting. The findings are original because they provide evidence that institutional factors affect the efficiency of companies in the Brazilian financial segment.

What determines the adoption of employee empowerment practices by MNE subsidiaries in China?

2020 ◽  
Vol 14 (4) ◽  
pp. 871-894
Author(s):  
Yishuai Yin
Keyword(s):  
Multinational Enterprises ◽  
Design Methodology ◽  
Large Body ◽  
Employee Empowerment ◽  
Institutional Factors ◽  
Hierarchical Regression ◽  
Content Type ◽  
Hrm Practices ◽  
Institutional Forces ◽  
Mne Subsidiaries

Purpose This paper aims to explore how institutional factors determine the adoption of employee empowerment practices by multinational enterprises (MNEs) subsidiaries in China. Design/methodology/approach This paper examines the effects of MNE subsidiaries’ external and internal institutional factors on the degree of employee empowerment practices adopted by these subsidiaries. Using hierarchical regression analysis, hypotheses were tested with a sample of 99 MNE subsidiaries operating in China. Findings The results show that both the informal institutions of the host country and the subsidiary’s characteristics play an important role in shaping the degree of empowerment practices adopted by MNE subsidiaries in China. Originality/value Employee empowerment practices have been increasingly used by MNEs to leverage human resources for organizational competitive advantage. Although a large body of work has studied a bundle of HRM practices as a whole adopted in MNE subsidiaries, there is a paucity of research on the specific empowerment practices in MNE subsidiaries. This research fills this important gap in the literature by investigating the institutional forces that influence the empowerment practices in MNE subsidiaries in China.

Nonprofit expense management and the zero-profit threshold

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Stephanie Monteiro Miller
Keyword(s):  
Earnings Management ◽  
Design Methodology ◽  
Social Implications ◽  
Profit Motive ◽  
Management Behavior ◽  
Content Type ◽  
Nonprofit Firms

Purpose In a wide variety of settings, individuals target round-numbered thresholds, relaxing effort when they are out of reach. This paper aims to investigate whether this phenomenon occurs in nonprofits as well. Design/methodology/approach The paper empirically examines nonprofits’ propensity to cut expenses relative to the attainability of the zero-profit threshold. Findings This paper finds nonprofit firms are more likely to cut expenses when faced with small expected losses than with larger losses, and this pattern varies predictably with incentives to reach the zero-profit threshold. Research limitations/implications This suggests managers are motivated by desire to reach the zero-profit threshold rather than to improve firms’ economic situations, as the propensity to cut expenses is lower when the threshold is out of reach. Social implications Additionally, the results suggest that even the lack of explicit profit motive may not quell earnings management behavior. Originality/value These results begin to close the gap in our understanding of expense management in nonprofit firms, showing how operating expenses can be used to manage earnings.

Earnings management and goodwill impairment

2016 ◽  
Vol 17 (1) ◽  
pp. 120-147 ◽  
Author(s):  
Giuseppe Davide Caruso ◽  
Elisa Rita Ferrari ◽  
Vincenzo Pisano
Keyword(s):  
Earnings Management ◽  
Design Methodology ◽  
Income Smoothing ◽  
Financial Accounting ◽  
Current Debate ◽  
Managerial Behavior ◽  
Content Type ◽  
Listed Firms ◽  
Goodwill Impairment ◽  
Research Questions

Purpose – The purpose of this paper is to understand whether managerial behavior in impairing goodwill arising from M & As has changed after the adoption of IAS/IFRS, searching for evidences of earnings management (EM) practices. Thus, our goal is to provide a response to the following research questions. Are goodwill impairments used by listed firms’ managers to manipulate earnings? If so, what kind of EM practice is mostly used? Design/methodology/approach – In this paper the authors tested the following hypothesis: H1. In the year of the deal’s closure and in the following four years, the management detects impairment of goodwill in difformity with the previous Italian regulations and related accounting practices. Moreover, the authors tried to determine, for each considered firms, potential symptoms of typical DEM practices widely debated in the financial accounting literature (income smoothing, income minimization, income minimization, or big bath accounting). Findings – Our analysis does not prove evidence of certain EM practices, but it highlights very clearly that, after the adoption of IAS/IFRS, managers’ behavior has deeply changed. Moreover, the analysis shows that there is no univocal choice in favor of a specific EM practice and that every firm pursues its own “strategy.” Originality/value – Considering the importance of the topic from both the perspectives of managerial (with regard to M & As valuation processes) and financial accounting (with regard to intangibles valuation fulfilled by applying the impairment test instead of the amortization), this work aims to provide a multi-dimensional contribution to the current debate.

The effect of the imposition of a public reprimand on the stock price of companies in Malaysia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Emie Famieza Zainudin ◽  
Hafiza Aishah Hashim ◽  
Shahnaz Ismail
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Design Methodology ◽  
Negative Impact ◽  
Abnormal Returns ◽  
Investment Decisions ◽  
Market Model ◽  
Market Reactions ◽  
Content Type ◽  
A Company

Purpose This paper aims to examine the effect of the imposition of public reprimands on the underlying stock prices of companies in Malaysia. Design/methodology/approach Data on 148 companies that received public reprimands during the period from 2007 to 2013 were collected from the Bursa Malaysia website to analyse the market reactions to the imposition of public reprimands. Findings Based on a market model of abnormal returns, the empirical result showed that the imposition of a public reprimand had a negative impact on a company’s stock price. Moreover, when a market model of average abnormal returns (AAR) was used, the result indicated that companies that had received a public reprimand had a negative AAR value. Research limitations/implications The findings from this study have implications for shareholders in making their investment decisions because they can switch their investments to other companies and markets after a company in which they are interested or have made an investment has received a public reprimand. Originality/value There is limited research on the imposition of public reprimands and the effect that it has on companies in developing countries. Hence, this study contributes to research in this area by providing evidence on the effect of public reprimand on stock price reactions in the context of a developing country, namely, Malaysia.

The impact of the Chinese stimulus program on earnings management

2019 ◽  
Vol 27 (4) ◽  
pp. 653-670
Author(s):  
Qian Hao ◽  
Xiangyan Shi ◽  
Danlu Bu ◽  
Liaoliao Li
Keyword(s):  
Earnings Management ◽  
Design Methodology ◽  
State Ownership ◽  
Political Factors ◽  
Stimulus Period ◽  
Content Type ◽  
Management Level ◽  
Factors Influencing ◽  
The Impact ◽  
Big Four

Purpose The purpose of this paper is to investigate the impacts of the 2008 Chinese stimulus program on earnings management. Design/methodology/approach Using a sample period from 2004 to 2011 (per-stimulus period: 2004-2007 and post-stimulus period: 2008-2011), the authors compare the change in earnings management between the firms that received the stimulus funds and those that did not receive the stimulus funds. Findings The authors find that from the pre- to post-stimulus period, the recipient firms experienced a greater increase in downward accrual management and a greater decrease in real management than the non-recipient firms did. This result is primarily driven by the non-state-owned enterprises and firms using non-Big-Four auditors. Originality/value The results suggest that the earnings management level is ultimately determined by the underlying economic and political factors influencing managers’ and auditors’ incentives (Cohen, 2008; Ball et al., 2003). Meanwhile, some mechanisms, such as high-quality audit (Eshleman and Guo, 2014) and state ownership (Wang and Yung, 2011) can also play a role in determining the level of earnings management.

scholarly journals Developing evaluation of signage for people with dementia

2019 ◽  
Vol 22 (3) ◽  
pp. 153-161 ◽  
Author(s):  
Meredith Gresham ◽  
Liz Taylor ◽  
Sarah Keyes ◽  
Heather Wilkinson ◽  
Danielle McIntosh ◽  
...  
Keyword(s):  
Design Methodology ◽  
Evaluation Framework ◽  
Prior Work ◽  
Extrinsic Factors ◽  
Content Type ◽  
Intrinsic Factors ◽  
People With Dementia ◽  
World Cafe ◽  
Cent Level ◽  
Level Of Agreement

PurposeThe purpose of this paper is to to describe development of a framework for use in the evaluation of the effectiveness of signage to assist people with dementia.Design/methodology/approachThe study consisted of two parts. Workshops held in both Sydney and Edinburgh using “world café” methodology with 28 knowledgeable participants produced a pool of statements. These were subsequently used in a three-round Delphi process administered to 38 participants in order to generate ideas and develop consensus content for a signage evaluation framework.FindingsThis process resulted in a framework consisting of Delphi statements which had a 70 per cent level of agreement and a series of prompt questions. Both intrinsic factors and wider environmental, extrinsic factors in signage for wayfinding were identified.Research limitations/implicationsLimitations of this study were the small number of participants, including only four people with dementia, and the unresolved problems inherent in designing signage that may simultaneously be universally relevant and readily understood, yet meets the idiosyncratic needs of each individual living with dementia.Originality/valueAs there is little prior work in this field concerning signage use by people with dementia, this framework provides an original preliminary tool that may be used in further research on evaluating signage effectiveness. In designing signage and testing its effectiveness, it was concluded that the direct involvement of people with dementia is essential.

The impact of corporate governance code on earnings management in listed non-financial firms

2017 ◽  
Vol 7 (4) ◽  
pp. 428-444 ◽  
Author(s):  
Erick Rading Outa ◽  
Paul Eisenberg ◽  
Peterson K. Ozili
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Design Methodology ◽  
Explanatory Variable ◽  
Content Type ◽  
Listed Firms ◽  
Financial Firms ◽  
New Institutions ◽  
The Impact ◽  
Practical Implications

Purpose The purpose of this paper is to examine whether voluntary corporate governance (CG) code issued in 2002 constrain earnings management (EM) among listed non-finance companies in Kenya. Design/methodology/approach Using a panel data of 338-firm year’s observations between 2005 and 2014, the authors test the hypothesis that CG constrains EM in non-finance firms listed in Kenya. The authors regress discretionary accruals (DA) against a developed Corporate Governance Index (CGI). Findings The overall results show that DA is not significantly related to CG suggesting the voluntary CG code does not deter EM in non-finance companies in Kenya. Practical implications Evidence of income decreasing\increasing accruals implies EM still exists among the listed firms. This suggests that policymakers may need to consider radical actions including alternative or new CG approaches and new institutions to improve the effectiveness of CG. Originality/value This study extends existing studies by including composite CG as possible explanatory variable for constraining EM. The authors contribute to the debate by demonstrating that the voluntary CG code in Kenya is not effective in constraining DA and therefore the current initiatives by the regulator to change the current CG code are appropriately directed.

Does corporate governance influence earnings management in listed companies in Bahrain Bourse?

2018 ◽  
Vol 12 (4) ◽  
pp. 551-570 ◽  
Author(s):  
Bahaaeddin Alareeni
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Design Methodology ◽  
Empirical Support ◽  
Asian Country ◽  
Listed Companies ◽  
Discretionary Accruals ◽  
Board Independence ◽  
Content Type ◽  
Practical Implications

PurposeThis paper aims to consider data for listed companies in Bahrain Bourse to determine whether companies practice earnings management (EM). Further, the effect of a set of corporate governance characteristics on EM practices is examined.Design/methodology/approachThe EM level was measured using discretionary accruals (DA) [calculated using the Modified Jones (1995) Model]. The study sample consisted of 20 companies listed during the period 2011-2015. Panel regression model was used to test the study hypotheses and achieve the study aims.FindingsEM is negatively correlated with board size, confirming that a larger board is associated with a lower level of EM practices. Further, board independence is positively correlated with EM, suggesting that the larger the number of independent directors, the higher the level of EM practices. In addition, internal ownership is positively related to EM, confirming that the higher level of internal ownership increases EM practices. CEO duality does not appear to have any effect on EM in Bahrain Bourse. More interestingly, the findings reveal that companies practice EM through income-increasing DA.Research limitations/implicationsFinancial data and data related to other corporate governance characteristics are lacking.Practical implicationsThe results of this study provide empirical support for the development of new regulations and amendments and necessary corrective decisions regarding the effectiveness of applying corporate governance code in Bahrain Bourse. More specifically, this study reveals an urgent need for new amendments to restrict EM practices in Bahrain Bourse.Originality/valueThis study enriches the EM literature by covering Bahrain as an Asian country, which has not been sufficiently examined in relation to this topic. Further, this study provides a clear picture of the level of EM practices in Bahrain Bourse to multiple parties.

Innovation strategies in the Brazilian sugar–energy industry

2019 ◽  
Vol 9 (5) ◽  
pp. 536-551 ◽  
Author(s):  
Samara Marques Gomes ◽  
David Ferreira Lopes Santos ◽  
Leonardo Fernando Cruz Basso
Keyword(s):  
Design Methodology ◽  
Energy Industry ◽  
Southern Brazil ◽  
Content Type ◽  
Management Of Resources ◽  
Two Factors ◽  
Innovation Strategies ◽  
Energy Companies ◽  
Implementation Of Innovations ◽  
Practical Implications

Purpose The purpose of this paper is to analyze the innovation strategies of the sugar–energy industry in Central-Southern Brazil with regard to its resource structure and results. Design/methodology/approach The data were collected through a questionnaire covering the three-year period from 2015 through 2017. The results were extracted based on a combination of factor analysis and multiple regression analysis. Findings The innovation strategies of Brazilian sugar–energy companies are characterized as defensive and imitative based on the resources dedicated to innovation and the implementation of innovation with respect to products, processes, eco-innovation and cost reductions. Research limitations/implications The sample is representative, but it does not cover all companies in the Brazilian sugar–energy industry. The data were acquired using a survey, and the results could not be compared to the financial results of the companies. Practical implications Sugar–energy companies need to define their innovation strategies, as these strategies lead to different results that can be achieved only through the management of resources dedicated to the generation and implementation of innovations. Managers and analysts need to know the profile of these innovation strategies to evaluate the effectiveness of the results based on the resources that were invested. Originality/value This study presents an exploratory model that identified two factors related to innovation efforts and three results. It is possible to define the innovation strategies of companies in the Brazilian sugar–energy industry, which is one of the most competitive in Brazil.

Accrual reliability, earnings persistence, and stock prices: revisited

2015 ◽  
Vol 30 (1) ◽  
pp. 22-48
Author(s):  
R. Mithu Dey ◽  
Lucy Lim
Keyword(s):  
Least Squares ◽  
Stock Prices ◽  
Stock Return ◽  
Design Methodology ◽  
Ordinary Least Squares ◽  
Original Study ◽  
Earnings Persistence ◽  
Content Type ◽  
Total Accrual

Purpose – The purpose of this paper is to replicate Richardson et al.’s (2005) study on how accrual components’ reliability affects earnings persistence and whether investors anticipate the lower earnings persistence through stock return. In this study, the authors use more recent data to examine whether the previous results still hold. Design/methodology/approach – The authors run the analysis using Richardson et al.’s (2005) design of ordinary least squares and report the results using Fama and Macbeth’s (1973) procedures. Findings – The results corroborate Richardson et al.’s (2005) conclusions that lower reliability of total accrual (accrual components) leads to lower earnings persistence. Originality/value – This study replicates Richardson et al. (2005) using more recent US data. The results in this paper confirm the general conclusion in the original study: less reliable accruals lead to lower earnings persistence.

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