Leveling the Playing Field: The Selection and Motivation Effects of Tournament Prize Spread Information

2017 ◽  
Vol 93 (4) ◽  
pp. 127-149 ◽  
Author(s):  
Eddy Cardinaels ◽  
Clara Xiaoling Chen ◽  
Huaxiang Yin
Keyword(s):  
Experimental Data ◽  
Selection Effect ◽  
Data Availability ◽  
High Ability ◽  
Playing Field ◽  
Self Selection ◽  
Employee Effort ◽  
Motivation Effect ◽  
Jel Classifications ◽  
Low Ability

ABSTRACT Many companies administer wage policies based on tournaments or have different salaries attached to various promotion-based ranks within the company. Employees, however, do not always receive information about pay-level differences at higher ranks prior to joining the company. While some companies openly disclose prize spread information across these ranks, others keep such information secret. In this paper, we experimentally investigate whether the availability of tournament prize spread information enhances employee effort through both a selection effect and a motivation effect. We predict and find that when employees can select into tournaments of varying prize spreads (which proxies for an environment where prize spread information is available), high-ability employees are more likely than low-ability employees to select into the tournament with a larger prize spread. Thus, the availability of prize spread information produces a separation of employees based on ability. We also find that employees exert more effort when they can select into a tournament than when they are randomly assigned to one (which proxies for an environment where prize spread information is absent). We show that this result is driven by greater homogeneity in the ability of tournament contestants when the availability of tournament prize spread information provides self-selection opportunity. JEL Classifications: C91; D83; M40. Data Availability: Experimental data are available from the authors on request.

Firm-Value Effects of Carbon Emissions and Carbon Disclosures

2013 ◽  
Vol 89 (2) ◽  
pp. 695-724 ◽  
Author(s):  
Ella Mae Matsumura ◽  
Rachna Prakash ◽  
Sandra C. Vera-Muñoz
Keyword(s):  
Selection Bias ◽  
Capital Markets ◽  
Carbon Emissions ◽  
Voluntary Disclosure ◽  
Firm Value ◽  
Data Availability ◽  
Carbon Disclosure Project ◽  
Self Selection ◽  
Jel Classifications

ABSTRACT Using hand-collected carbon emissions data for 2006 to 2008 that were voluntarily disclosed to the Carbon Disclosure Project by S&P 500 firms, we examine the effects on firm value of carbon emissions and of the act of voluntarily disclosing carbon emissions. Correcting for self-selection bias from managers' decisions to disclose carbon emissions, we find that, on average, for every additional thousand metric tons of carbon emissions, firm value decreases by $212,000, where the median emissions for the disclosing firms in our sample are 1.07 million metric tons. We also examine the firm-value effects of managers' decisions to disclose carbon emissions. We find that the median value of firms that disclose their carbon emissions is about $2.3 billion higher than that of comparable non-disclosing firms. Our results indicate that the markets penalize all firms for their carbon emissions, but a further penalty is imposed on firms that do not disclose emissions information. The results are consistent with the argument that capital markets impound both carbon emissions and the act of voluntary disclosure of this information in firm valuations. JEL Classifications: G14, Q51, M14. Data Availability: Data are available from the sources identified in the study.

Interim Reporting Frequency and the Mispricing of Accruals

2018 ◽  
Vol 32 (3) ◽  
pp. 29-47
Author(s):  
Shou-Min Tsao ◽  
Hsueh-Tien Lu ◽  
Edmund C. Keung
Keyword(s):  
Financial Reporting ◽  
Stock Prices ◽  
Data Availability ◽  
Financial Reports ◽  
Regulatory Changes ◽  
Sample Composition ◽  
Reporting Frequency ◽  
Over Time ◽  
Jel Classifications ◽  
Accrual Mispricing

SYNOPSIS This study examines the association between mandatory financial reporting frequency and the accrual anomaly. Based on regulatory changes in reporting frequency requirements in Taiwan, we divide our sample period into three reporting regimes: a semiannual reporting regime from 1982 to 1985, a quarterly reporting regime from 1986 to 1987, and a monthly reporting regime (both quarterly financial reports and monthly revenue disclosure) from 1988 to 1993. We find that although both switches (from the semiannual reporting regime to the quarterly reporting regime and from the quarterly reporting regime to the monthly reporting regime) hasten the dissemination of the information contained in annual accruals into stock prices and reduce annual accrual mispricing, the switch to monthly reporting has a lesser effect. Our results are robust to controlling for risk factors, transaction costs, and potential changes in accrual, cash flow persistence, and sample composition over time. These results imply that more frequent reporting is one possible mechanism to reduce accrual mispricing. JEL Classifications: G14; L51; M41; M48. Data Availability: Data are available from sources identified in the paper.

Tax-Advantaged Trust Use Among IPO Executives: Determinants and Implications for Valuation and Future Performance

2019 ◽  
Vol 95 (3) ◽  
pp. 145-175 ◽  
Author(s):  
Michael J. Dambra ◽  
Matthew Gustafson ◽  
Phillip J. Quinn
Keyword(s):  
Stock Price ◽  
Relevant Information ◽  
Data Availability ◽  
Market Prices ◽  
The Public ◽  
Future Performance ◽  
Estate Taxes ◽  
Price Appreciation ◽  
One Year ◽  
Jel Classifications

ABSTRACT We examine the prevalence and determinants of CEOs' use of tax-advantaged trusts prior to their firm's IPO. Twenty-three percent of CEOs use tax-advantaged pre-IPO trusts, and share transfers into tax-advantaged trusts are positively associated with CEO equity wealth, estate taxes, and dynastic preferences. We project that pre-IPO trust use increases CEOs' dynastic wealth by approximately $830,000, on average. We next examine a simple model's prediction that trust use will be positively related to IPO-period stock price appreciation. We find that trust use is associated with 12 percent higher one-year post-IPO returns, but is not significantly related to the IPO's valuation, filing price revision, or underpricing. This evidence is consistent with CEOs' personal finance decisions prior to the IPO containing value-relevant information that is not immediately incorporated into market prices. JEL Classifications: D14; G12; G32; M21; M41. Data Availability: Data are available from the public sources cited in the text.

Concurrent Earnings Announcements and Analysts' Information Production

2019 ◽  
Vol 95 (1) ◽  
pp. 165-189 ◽  
Author(s):  
Matthew Driskill ◽  
Marcus P. Kirk ◽  
Jennifer Wu Tucker
Keyword(s):  
Earnings Announcements ◽  
Financial Analysts ◽  
Earnings Forecasts ◽  
Data Availability ◽  
Limited Attention ◽  
Conference Calls ◽  
Stock Recommendations ◽  
Rich Information ◽  
Sample Firm ◽  
Jel Classifications

ABSTRACT We examine whether financial analysts are subject to limited attention. We find that when analysts have another firm in their coverage portfolio announcing earnings on the same day as the sample firm (a “concurrent announcement”), they are less likely to issue timely earnings forecasts for the sample firm's subsequent quarter than analysts without a concurrent announcement. Among the analysts who issue timely earnings forecasts, the thoroughness of their work decreases as their number of concurrent announcements increases. In addition, analysts are more sluggish in providing stock recommendations and less likely to ask questions in earnings conference calls as their number of concurrent announcements increases. Moreover, when analysts face concurrent announcements, they tend to allocate their limited attention to firms that already have rich information environments, leaving behind firms in need of attention. Overall, our evidence suggests that even financial analysts, who serve as information specialists, are subject to limited attention. JEL Classifications: G10; G11; G17; G14. Data Availability: Data are publicly available from the sources identified in the paper.

Come on Over: Analyst/Investor Days as a Disclosure Medium

2016 ◽  
Vol 91 (6) ◽  
pp. 1725-1750 ◽  
Author(s):  
Marcus P. Kirk ◽  
Stanimir Markov
Keyword(s):  
Information Content ◽  
Short Duration ◽  
Price Impact ◽  
Senior Management ◽  
Data Availability ◽  
Market Participants ◽  
Temporal Proximity ◽  
Conference Presentations ◽  
Close Temporal Proximity ◽  
Jel Classifications

ABSTRACT Our study introduces analyst/investor days, a new disclosure medium that allows for private interactions with influential market participants. We also highlight interdependencies in the choice and information content of analyst/investor days and conference presentations, a well-researched disclosure medium that similarly allows for private interactions. Analyst/investor days are less frequent, but with longer duration and greater price impact than conference presentations. They are mostly hosted by firms that already have opportunities to interact with investors at conferences, but whose complex and diverse activities make the short duration and rigid format of a conference presentation an imperfect solution to these firms' information problems. Analyst/investor days and conference presentations tend to occur in different quarters, consistent with their competing for the time and attention of senior management. When these two mediums are scheduled in close temporal proximity to each other, analyst/investor days diminish the information content of conference presentations, but not vice versa, consistent with managers' favoring analyst/investor days over conference presentations as a disclosure medium. JEL Classifications: D82; M41; G11; G12; G14. Data Availability: Data are publicly available from the sources identified in the paper.

Auditors and the Principal-Principal Agency Conflict in Family Controlled Firms

2020 ◽  
Vol 39 (4) ◽  
pp. 31-55
Author(s):  
Chiraz Ben Ali ◽  
Sabri Boubaker ◽  
Michel Magnan
Keyword(s):  
Risk Assessment ◽  
Negative Relationship ◽  
Audit Fees ◽  
Data Availability ◽  
Audit Risk ◽  
Controlling Shareholder ◽  
Voting Power ◽  
The Public ◽  
Agency Conflict ◽  
Jel Classifications

SUMMARY This paper examines whether multiple large shareholders (MLS) affect audit fees in firms where the largest controlling shareholder (LCS) is a family. Results show that there is a negative relationship between audit fees and the presence, number, and voting power of MLS. This is consistent with the view that auditors consider MLS as playing a monitoring role over the LCS, mitigating the potential for expropriation by the LCS. Therefore, our evidence suggests that auditors reduce their audit risk assessment and audit effort and ultimately audit fees in family controlled firms with MLS. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: G32; G34; M42; D86.

The Association between Audit Manager and Auditor-In-Charge Experience, Effort, and Risk Responsiveness

2018 ◽  
Vol 38 (3) ◽  
pp. 121-147 ◽  
Author(s):  
Christine Contessotto ◽  
W. Robert Knechel ◽  
Robyn A. Moroney
Keyword(s):  
Audit Quality ◽  
Data Availability ◽  
The Core ◽  
Specific Experience ◽  
Primary Core ◽  
Using Data ◽  
Audit Team ◽  
Industry Experience ◽  
Jel Classifications ◽  
Core Role

SUMMARY Audit quality is dependent on the experience and effort of the audit team to identify and respond to client risks (risk responsiveness). Central to each team are the core role holders who plan and execute the audit. While many studies treat the partner as the primary core role holder, the manager and auditor-in-charge (AIC) are also important. Using data for engagements from two midtier firms, we analyze the association between the experience and relative effort of the manager and AIC and risk responsiveness. We find a manager's client-specific experience is associated with risk responsiveness for non-listed clients but find no evidence that the general or industry experience of a manager, or the experience of the AIC, is associated with risk responsiveness. The client-specific experience and relative effort of the partner is associated with risk responsiveness. These results suggests that managers can provide an important, albeit limited, contribution to the audit. JEL Classifications: M2. Data Availability: The data were made available to the researchers on the understanding that they will remain confidential.

scholarly journals Do Managerial Ability Impact Indonesian Firm Risk-Taking Behavior?

2020 ◽  
Vol 12 (1) ◽  
pp. 18
Author(s):  
Emiliya Rahma Wati ◽  
Heru Tjaraka ◽  
Erina Sudaryati
Keyword(s):  
Risk Taking ◽  
Firm Value ◽  
Structural Equation ◽  
High Ability ◽  
Manufacturing Companies ◽  
Firm Risk ◽  
Managerial Ability ◽  
Risk Taking Behavior ◽  
Corporate Investors ◽  
Low Ability

This study aims to examine the role of managerial in firm decisions. This study recognizes that managerial plays an important role in corporate decision making. Decisions carried out by the company are not only influenced by the manager's explicit mandate to maximize firm value, but also by the manager's ability to manage the company. In previous research it was found that high-ability and low-ability managers have opposite effects on firm behavior and firm value. High-ability managers accept risk-taking whereas low-ability managers refrain from taking risks. Managerial Ability in this study was measured using DEA (Data Envelopment Analysis) while for firm risk-taking behavior using the return on assets (ROA), return on equity (ROE), and research and development costs to total assets (R&D). The model used in this study is a causality model or the relationship of influence between research variables. The proposed model is analyzed using the Structural Equation Model (SEM) causality technique. This research was conducted on manufacturing companies listed on IDX (Indonesian Stock Exchange) in 2013-2017. However, unlike previous studies, the results of this study indicate that highly capable managers play a role in minimizing corporate risk taking. This research contributes as a reference for Indonesian corporate investors and also regulators as a reflection of the effectiveness of regulations made in Indonesia.

scholarly journals How Indonesian Students Use the Polya’s General Problem Solving Steps

2018 ◽  
Vol 8 (1) ◽  
pp. 39-48
Author(s):  
Hari Pratikno ◽  
Endah Retnowati
Keyword(s):  
Problem Solving ◽  
Mathematics Achievement ◽  
Secondary School ◽  
General Problem ◽  
High Ability ◽  
School Students ◽  
Junior Secondary School ◽  
Junior Secondary ◽  
Mathematical Problems ◽  
Low Ability

General problem-solving steps consist of understanding the problem, developing a plan, implementing the plan and checking the result. The purpose of this study is to explore how well Indonesia junior secondary school students apply these four steps in solving mathematical problems, especially on plane geometry topics. Using a qualitative approach, with a sample of nine students, of which three students were from the low mathematics achievement category, three from the medium and three from the high category, were given a test and instructed to write the answers to each question step by step. The results were described and categorized into four groups. The first group consisted of students who used all of the four steps. The second and the third were for students who used the first three steps or the first two steps respectively. The fourth group was for those who could only show the first step. The study indicated that for this sample the level of mathematic ability corresponded to how the students applied their problem-solving steps. It was found that students with high ability were included in the first group, while those with moderate ability were in the second group. Low ability students were categorized into group four. Nevertheless, there was one student with high ability who did not to do the checking step and there was one student with low ability who was able to develop a plan.

scholarly journals ANALISIS KEMAMPUAN MENELAAH DAN MEREVISI TEKS DESKRIPSI

2019 ◽  
Vol 10 (1) ◽  
pp. 16
Author(s):  
Sri Maryani ◽  
Bq Desi Milandari ◽  
Murti Sari Dewi
Keyword(s):  
Data Analysis ◽  
Data Collection ◽  
High Ability ◽  
Observation Methods ◽  
Quantitative Descriptive ◽  
High Ability Students ◽  
Descriptive Method ◽  
Low Ability

Abstrak: Penelitian ini bertujuan untuk mendeskripsikan kemampuan menelaah dan merevisi teks deskripsi pada siswa kelas VII SMP. Objek dalam penelitian ini berjumlah 29 siswa. Metode pengumpulan data dalam peneltian ini terdiri dari metode observasi, metode tugas, dan metode dokumentasi. Analisis data menggunakan metode deskriptif kuantitatif dan hasil analisisnya disajikan dalam bentuk angka dan dijelaskan dalam suatu uraian dengan rumus Penilaian Acuan Patokan (PAP). Berdasarkan hasil penelitian maka diperoleh kesimpulan bahwa kemampuan menelaah dan merevisi teks deskripsi pada siswa tergolong normal, dengan rincian 41% siswa berkemampuan tinggi, 59% siswa berkemampuan sedang, 0% berkemampuan rendah, dan diperoleh IPK 65 yang berkisar antara 55 sampai dengan 65.Abstract: This study aims to describe the ability to review and revise the description text in class VII SMP students. The objects in this study were 29 students. The method of data collection in this study consisted of observation methods, task methods, and documentation methods. Data analysis uses quantitative descriptive method and the results of the analysis are presented in numerical form and explained in a description using the Standard Reference Assessment (PAP) formula. Based on the results of the study, it can be concluded that the ability to review and revise the description text in students is classified as normal, with the details 41% of high-ability students, 59% of students with moderate ability, 0% of low ability, and 65 GPA which ranges from 55 to 65.

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