scholarly journals Analyst ratings for firms filing for and reorganizing under Chapter 11

2017 ◽  
Vol 16 (3) ◽  
pp. 303-321
Author(s):  
Elena Precourt ◽  
Henry Oppenheimer
Keyword(s):  
Private Information ◽  
Information Disclosure ◽  
Small Firms ◽  
Analyst Recommendations ◽  
Security Analysts ◽  
Content Type ◽  
And Performance ◽  
One Year ◽  
Better Than

Purpose The purpose of this paper is to examine analyst followings of firms starting from one year prior to their filing for Chapter 11 and as the firms progress through bankruptcy proceedings with a focus on firms receiving “Hold” or better recommendations. The authors attempt to answer questions such as what the common characteristics of the firms receiving stronger than expected recommendations one year prior to filing for bankruptcy reorganization or while in bankruptcy are, and how the market reacts to the issuance of stronger ratings for those firms. Design/methodology/approach The authors design various regressions and apply them to a total of 2,754 sell-side analyst recommendations and 325 firms that are either approaching bankruptcy filing or in the process of reorganizing. In each analysis, the authors control for several firm and performance characteristics. Findings The authors find that the probability of securing stronger ratings is higher for small firms and for those followed by a greater number of analysts than for large firms and firms followed by fewer analysts. The market becomes more skeptical of optimistic evaluations closer to the date of bankruptcy filing (perhaps reflecting some anticipation) and reacts more positively to rating upgrades issued during bankruptcy protection than to the upgrades issued before the bankruptcy filing. Research limitations/implications The conclusions are based on the analysis of analyst recommendations issued shortly before Chapter 11 filings and during bankruptcy proceedings. The conclusions could be strengthened by further analysis of firms’ post-bankruptcy recovery and performance and examination of analyst recommendations issued for the firms after they emerge from Chapter 11.. Practical implications Analyst security ratings that are more positive than expected are perhaps the result of superior expertise and access to private information. During bankruptcy proceedings, when information disclosure is limited, investors could greatly benefit from reports issued by security analysts. Originality/value This study contributes to the literature in a number of ways. First, the authors contribute to the literature on the analyst ratings of firms in distress by considering the period between bankruptcy filing and emergence, while the existing literature provides analysis of pre-bankruptcy recommendations and forecasts. Second, the authors focus on better than expected ratings rather than all types of ratings as the firms approach bankruptcy filings and proceed through reorganization. Finally, they evaluate how investors react to stronger than expected analyst ratings.

How analyst recommendations respond to corporate uncertainty caused by investment behavior

2019 ◽  
Vol 10 (3) ◽  
pp. 243-269 ◽  
Author(s):  
Longwen Zhang ◽  
Minghai Wei
Keyword(s):  
Private Information ◽  
Conflicts Of Interest ◽  
Earnings Forecasts ◽  
Corporate Investment ◽  
Investment Behavior ◽  
Analyst Recommendations ◽  
Content Type ◽  
Information Transparency ◽  
And Performance ◽  
Earnings Forecasting

Purpose Corporate investment behavior increases the uncertainty of a company’s operation and performance. The purpose of this paper is to investigate how analyst recommendations respond to corporate uncertainty caused by investment behavior and what motivates analysts to react as they do. Design/methodology/approach The authors test two motivation hypotheses: the hypothesis that analysts are currying favor with management to obtain private information and the hypothesis that analysts have conflicts of interest due to connections. Using Chinese analyst-level data from 2007 to 2015, the authors find that overall investment levels, R&D investment and M&A events are significantly positively correlated with analyst recommendations, suggesting that analysts tend to react optimistically to corporate investment behavior. Findings Analysts are only optimistic about companies with low information transparency, suggesting that analysts may be trying to curry favor with management to gain access to private information. The authors find that analysts with stronger recommendations have more private information and analysts with more private information publish more accurate earnings forecasts, which supports the hypothesis that analysts curry favor with management through optimistic recommendations to obtain more private information. This is consistent with the logic that the difficulty of earnings forecasting increases under uncertain conditions, increasing the demand for private information. The authors then group the analysts according to their underwriting connections, securities company’s proprietary connections and fund connections, and find that the positive correlation between corporate investment behavior and analyst recommendations exists only in the unconnected groups. This is evidence against the hypothesis that analysts have conflicts of interest due to their connections. Originality/value First, the authors link the optimism of analysts with the uncertainty of analysts’ information inputs to partially unpack the black box of analysts’ analyses. Second, the authors test the two hypotheses mentioned. There is a lack of comparative studies on the influence of different motivations on the behavior of analysts.

The scantness of the effect of corporate governance mechanisms on executive directors’ remuneration in small listed companies: evidence from Malaysia

2018 ◽  
Vol 14 (4) ◽  
pp. 934-949
Author(s):  
Husna Siraji Nyambia ◽  
Hamdino Hamdan
Keyword(s):  
Corporate Governance ◽  
Small Firms ◽  
Independent Directors ◽  
Executive Directors ◽  
Content Type ◽  
Power And Control ◽  
Executive Remuneration ◽  
The Family ◽  
One Year ◽  
And Control

Purpose This study extensively aims to investigate the effects of different aspects of corporate governance (CG) mechanism, including board size, executive directors’ shareholdings, Chief Executive Officer (CEO) duality, a family member as the CEO and/or chairperson of the board, independent directors in remuneration committee and number of board meeting, on executive directors’ remuneration in small firms listed on Bursa Malaysia (BM). Design/methodology/approach The sample of this study consists of 173 bottom-listed companies from Bursa Malaysia in Year 2010. The Year 2010 was chosen because the disclosure of remuneration committee activities and directors’ pay structure is required under the revised Malaysia Code of Corporate Governance, 2007. Furthermore, the period selected is after the global economic crisis (2008), which may have an effect on the remuneration structure in small firms. The ordinary least squares regression was used to estimate the relationship between remuneration as dependent variable and other independent variables. Findings A finding from this study reveals that there is a significant positive relationship between executive ownership and executive remuneration, and between board size and executive remuneration. The results provide evidence that the family members manipulate power and control remuneration in small firms. This indicates that the independent directors are not truly independent to monitor and control the firm activities, including minimizing the excessive remuneration. Research limitations/implications This study examines how the corporate governance (CG) affects remuneration among 173 small firms in Malaysia based on market capitalization, for one year, 2010. Hence, the results may not be generalizable to other periods or types of the companies. This shows the possibility of the absence of some additional variables in the research model and hence a limitation to the findings of the study. Although the study is being parsimonious in the choice of relevant variables, prior literature serves the guide in the selection of the used variables. This therefore gives room for future research using the potential omitted variables. Furthermore, the study focuses on total remuneration, such as fees, salaries, bonuses and benefits in kind, which makes aggregate directors’ remuneration. However, this study did not consider the remuneration related to stock options. Finally, this study only uses secondary data; hence, it could be interesting to use other instruments to collect data like a questionnaire to add more weight to the research. This study only uses one-year data; therefore, impact of changes between years cannot be analysed. Originality/value Results of the study provide evidence that the family members manipulate power and control remuneration in small firms. They reduce the effectiveness of non-executive directors because most of them are appointed by a family member and not socially responsible to their stakeholders.

scholarly journals On the performance of US fiscal forecasts: government vs. private information

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zidong An ◽  
Joao Tovar Jalles
Keyword(s):  
Private Sector ◽  
Private Information ◽  
Forecast Errors ◽  
Content Type ◽  
Consensus Forecasts ◽  
Point Estimates ◽  
Congressional Budget Office ◽  
And Performance ◽  
Information Rigidity ◽  
Fiscal Policy Sustainability

PurposeThis paper contributes to shed light on the quality and performance of US fiscal forecasts.Design/methodology/approachThe first part inspects the causes of official fiscal forecasts revisions by Congressional Budget Office (CBO) between 1984 and 2016 that are due to technical, economic or policy reasons.FindingsBoth individual and cumulative means of forecast errors are relatively close to zero, particularly in the case of expenditures. CBO averages indicate net average downward revenue and expenditure revisions and net average upward deficit revisions. Focusing on the causes of the technical component, the authors uncover that its revisions are quite unpredictable, which cast doubts on inferences about fiscal policy sustainability that rely on point estimates. Comparing official with private-sector (consensus) forecasts, despite the informational advantages CBO might have, one cannot unequivocally say that one or the other is more accurate. Evidence also seems to suggest that CBO forecasts are consistently heavily biased toward optimism while this is less the case for consensus forecasts. Not only is the extent of information rigidity is more prevalent in CBO forecasts but also evidence seems to indicate that consensus forecasts dominate CBO in terms of information content.Originality/valueThe authors provide a detailed analysis on US fiscal forecasts both using revenue and expenditure and decomposing forecast errors into several explanatory components. Moreover, the authors compare official with private-sector (consensus) forecasts and assess which one is better or preferred.

Family firms, family generation and performance: evidence from an emerging economy

2014 ◽  
Vol 4 (2) ◽  
pp. 197-219 ◽  
Author(s):  
Mohammad Badrul Muttakin ◽  
Arifur Khan ◽  
Nava Subramaniam
Keyword(s):  
Firm Performance ◽  
Family Firms ◽  
Emerging Market ◽  
Emerging Economy ◽  
Family Ownership ◽  
Content Type ◽  
Generation Family ◽  
And Performance ◽  
The Impact ◽  
Better Than

Purpose – The purpose of this paper is to examine the impact of family ownership on firm performance. In particular the authors investigate whether family firms outperform non-family firms and whether first generation family firms perform better than second generation family firms in an emerging economy using Bangladesh as a case. Design/methodology/approach – This study uses a data set of 141 listed Bangladeshi non-financial companies for the period 2005-2009. The methodology is based on multivariate regression analysis. Findings – The result shows that family firms perform better than their non-family counterparts. The authors also find that family ownership has a positive impact on firm performance. The analysis further reveals intergenerational differences where family firms and performance are associated positively only when founder members act as CEOs or chairmen. However, when descendents serve as CEOs or chairmen family firms are associated with poorer firm performance. Originality/value – The authors extend the findings of previous studies that investigate the family ownership and firm performance relationship in developed economy settings, but neglected emerging economies. The study also informs the literature about the intergenerational impact of family firms on performance in an emerging market.

Bureau de Eventos: internationalization of an emerging country event planning company

2019 ◽  
Vol 15 (4) ◽  
pp. 279-294
Author(s):  
Vivian Peuker Steinhauser ◽  
Angela da Rocha
Keyword(s):  
Theoretical Basis ◽  
Small Firms ◽  
International Markets ◽  
International Expansion ◽  
Content Type ◽  
Academic Level ◽  
Emerging Country ◽  
Resources And Capabilities ◽  
One Year ◽  
Secondary Information

Theoretical basis The case can be used to examine the resources and capabilities of small firms considering entering international markets. It can also be a vehicle for examining typical barriers that such companies may face and must overcome when expanding abroad: liabilities of smallness, liabilities of foreignness, liabilities of emergingness and liabilities of outsidership. Research methodology The case is based on several interviews with both entrepreneurs over a one-year period and on secondary information from reports and documents. Case overview/synopsis This teaching case presents the trajectory of a Brazilian services company operating in the corporate events planning industry. The case explores the potential for the company’s international expansion, and the vision and engagement of the entrepreneurs, despite several barriers the company needs to overcome. Complexity academic level The case can be used in Entrepreneurship and International Marketing courses, both at graduate and undergraduate levels. It can also be used in training seminars for executives of tourism and events planning companies, and for employees of export promotion agencies.

Do investors herd in emerging economies? Evidence from the Indian equity market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Aleem Ansari ◽  
Valeed Ahmad Ansari
Keyword(s):  
Small Firms ◽  
Stock Exchange ◽  
Market Liquidity ◽  
Investor Behavior ◽  
Herding Behavior ◽  
Content Type ◽  
Standard And Poor's ◽  
Sample Data ◽  
One Year ◽  
Indian Stock Market

PurposeThe purpose of this study is to empirically examine the presence of herding behavior of Indian investors using daily sample data drawn from the Standard and Poor's (S&P) Bombay Stock Exchange-500 Index over the period 2007–2018.Design/methodology/approachThe study employs the model proposed by Chang et al. (2000), taking stock return dispersion as a measure to capture herding. The empirical results demonstrate the absence of herding behavior in all market states, that is, normal, up and down market conditions for the overall period.FindingsContrastingly, the study found negative herding behavior, which underlines that individuals are taking the decision away from the market consensus. The subperiod analysis corroborates the negative herding behavior. The results remain invariant across large, mid and small-capitalization firms except in one year, that is, 2009 for small firms. While using liquidity and sentiment as variables to examine herding, the study finds some evidence of herding behavior for high market liquidity state and sentiment. The findings of negative herding shed new light on herding behavior in the Indian stock market.Originality/valueThis pattern of behavior may indicate irrationality of investor behavior and the presence of noise traders who mistrust market-wide information. Behavioral factors such as overconfidence may explain this pattern of behavior.

The role of uncertainty in performance information disclosure

2018 ◽  
Vol 31 (5) ◽  
pp. 583-598 ◽  
Author(s):  
Veronica Allegrini ◽  
Fabio Monteduro
Keyword(s):  
Information Processing ◽  
Information Disclosure ◽  
Environmental Uncertainty ◽  
Performance Information ◽  
Content Type ◽  
Processing Theory ◽  
The Difference ◽  
Enforcement Mechanisms ◽  
And Performance ◽  
The Relationship

Purpose The purpose of this paper is to investigate the relationship between the environmental uncertainty faced by public administrations and their likelihood of disclosing performance information, particularly at municipal level. Design/methodology/approach The existence of the relationship between environmental uncertainty and performance information disclosure is explored, drawing on organizational information processing theory. The paper describes an empirical quantitative investigation in a sample of 490 Italian municipalities. Findings Municipalities facing more uncertainty are more likely to disclose performance information. There is no unique set of factors that can explain the difference in the disclosure activity of Italian municipalities, but this activity appears to be contingent on the level of environmental uncertainty. Originality/value The paper explores the under-investigated field of factors influencing the disclosure of performance information by public administrations. It identifies uncertainty as one of the determinants of performance information disclosure. The findings suggest that the use of theories and variables not previously used in this type of study can improve understanding of the phenomenon. The study also suggests that public officials should consider adequate enforcement mechanisms to promote performance information disclosure, especially for organizations with lower incentives to improve information processing capabilities.

scholarly journals Bank risk and performance in an emerging market setting: the case of Bangladesh

2018 ◽  
Vol 23 (46) ◽  
pp. 199-229
Author(s):  
Md. Tofael Hossain Majumder ◽  
Xiaojing Li
Keyword(s):  
Banking Sector ◽  
Emerging Market ◽  
Capital Requirements ◽  
Policy Implications ◽  
Bank Capital ◽  
Content Type ◽  
Generalized Methods Of Moments ◽  
And Performance ◽  
One Year ◽  
Bank Capital Requirements

PurposeThis study aims to investigate the impacts of bank capital requirements on the performance and risk of the emerging economy, i.e. Bangladeshi banking sector.Design/methodology/approachThe study applies an unbalanced panel data which comprises 30 banks yielding a total of 413 bank-year observations over the period 2000 to 2015.FindingsUsing generalized methods of moments, the empirical results of this research reveal that bank capital is positively and significantly impressive on bank performance, whereas negatively and significantly impact on risk. The study also finds the inverse relationship between risk and performance in both the performance and risk equations. The results also indicate that there is a persistence of performance and risk from one year to the next year.Originality/valueThis is the unique investigation on Bangladeshi bank industry that considers the simultaneous effect of bank capital requirements on risk and performance. Therefore, it is predicted that the empirical evidence of this research shows policy implications to the regulatory authority of Bangladeshi banking industry to determine relevant policies.

The impact of post-trade transparency on price efficiency and price discovery

2019 ◽  
Vol 45 (8) ◽  
pp. 1062-1075
Author(s):  
Chiou-Fa Lin ◽  
Cheng-Huei Chiao ◽  
Bin Wang
Keyword(s):  
Private Information ◽  
Stock Prices ◽  
Small Firms ◽  
Price Discovery ◽  
Positive Impact ◽  
Large Body ◽  
Policy Implications ◽  
Price Efficiency ◽  
Content Type ◽  
The Impact

Purpose The purpose of this paper is to examine the impact of post-trade transparency on price efficiency and price discovery. Design/methodology/approach The authors use an exogeneous change in market transparency in the Taiwan Stock Exchange that mandates the disclosure of unexecuted orders of the five best bid and ask prices after each trade, and conduct an event study analysis. Findings After the change, price efficiency enhances for both large and small firms, although the impact on stock prices is greater when the firm is larger. The authors also find that post-change trading reveals more private information for large firms but more public information for small firms. The findings support the view that transparency has a positive impact on market quality. Originality/value The paper adds to a large body of literature investigating the relationship between transparency and market behavior, especially the ongoing debate about whether trading transparency positively affects price dynamics. The findings also have important policy implications for the regulators.

The Impact of Nutrition Label Regulation on Firm Marketing Action and Performance in China

2018 ◽  
Vol 37 (1) ◽  
pp. 119-130 ◽  
Author(s):  
Peng Zou ◽  
Yixin Li ◽  
Yan Liu
Keyword(s):  
Information Disclosure ◽  
Small Firms ◽  
Developing Economies ◽  
Nutrition Labeling ◽  
Negative Effect ◽  
Quasi Experimental ◽  
And Performance ◽  
Corporate Social ◽  
Developed World ◽  
The Impact

Although considerable research has been conducted on the impact of nutrition labeling in the economically developed world, there has been relatively little attention to the impact of such programs in developing economies. In 2013, China implemented the Food Nutrition Labeling Act (FNLA), requiring that more standardized information be provided on the packaging of food items. The focus of the current study is the impact of the standardized information disclosure requirement on firms in China, the world's biggest developing economy. In particular, the authors examine the effect of this law on firms in terms of marketing responses (e.g., advertising, R&D, corporate social responsibility) and sales, using a longitudinal, quasi-experimental field study. Findings indicate that, in general, the FNLA has had a positive effect on advertising and R&D investment but a negative effect on donations. When accounting for firm size as an asymmetry, we observe that the FNLA has led to a greater increase in advertising for large firms and a greater increase in sales for small firms.

Sign in / Sign up

Export Citation Format

Share Document