Large Shareholder Incentives and Auditor Choice

2019 ◽  
Vol 38 (3) ◽  
pp. 203-222 ◽  
Author(s):  
Shanshan Zhang ◽  
Kangtao Ye ◽  
Yijing Cui ◽  
Wenjiao Zang
Keyword(s):  
Fixed Effects ◽  
Data Availability ◽  
Legal Environment ◽  
Auditor Choice ◽  
The Public ◽  
Large Shareholder ◽  
Large Shareholders ◽  
Declining Demand ◽  
Share Structure ◽  
The Impact

SUMMARY This study investigates the impact of large shareholder incentives on firms' auditor choice using a quasi-natural experiment setting provided by the split share structure reform in China. The reform converted the previously non-tradable shares held by large shareholders into tradable shares and thus enhanced the alignment of large shareholders' and outside investors' interests. We find that firms switch from large auditors to small auditors following the completion of the reform. The results are robust to the audit firm merging effect and the firm fixed effects. Further analyses reveal that the effect is more pronounced in firms with greater agency costs prior to the reform and in firms located in a weak legal environment. Taken together, these results suggest that a reduction in conflicts between large shareholders and outside investors leads to a declining demand for high-quality audits. JEL Classifications: M42; G34. Data Availability: Data are available from the public sources cited in the text.

Compensation Consultants and the Level, Composition, and Complexity of CEO Pay

2019 ◽  
Vol 95 (1) ◽  
pp. 311-341 ◽  
Author(s):  
Kevin J. Murphy ◽  
Tatiana Sandino
Keyword(s):  
Fixed Effects ◽  
Conflicts Of Interest ◽  
Data Availability ◽  
The Public ◽  
Say On Pay ◽  
Suggestive Evidence ◽  
Ceo Pay ◽  
The Impact ◽  
Equity Incentive ◽  
Jel Classifications

ABSTRACT We provide fresh evidence regarding the relation between compensation consultants and CEO pay. First, firms that employ consultants have higher-paid CEOs—this result is robust to firm fixed effects and matching on economic and governance variables. Second, while this relation is partly due to consultant conflicts of interest, it is largely explained by the impact consultants have on the composition and complexity of CEO pay plans; notably, this impact fully mediates the consultant-CEO pay relation. Third, firms with higher-paid CEOs and more complex pay plans are more likely to hire a consultant. Last, Say-on-Pay voting patterns suggest shareholders view positively the advice consultants provide, but only when consultants provide no other services. We also find suggestive evidence of boards “layering” new equity incentive plans over existing ones, thereby increasing the impact of composition and complexity on CEO pay beyond the premium the CEO would demand for bearing additional compensation risk. JEL Classifications: J33; M12; M52; M48. Data Availability: Data are available from the public sources cited in the text.

Impact of trade facilitation reforms on tax revenue

2017 ◽  
Vol 44 (5) ◽  
pp. 765-780 ◽  
Author(s):  
Sena Kimm Gnangnon
Keyword(s):  
Developing Countries ◽  
Fixed Effects ◽  
Data Availability ◽  
Empirical Literature ◽  
Future Research ◽  
Tax Revenue ◽  
Trade Facilitation ◽  
Content Type ◽  
The World ◽  
The Impact

Purpose The purpose of this paper is to contribute to the empirical literature of the macroeconomic effect of trade facilitation reforms by examining the impact of the latter on tax revenue in both developed and developing countries. The relevance of the topic lies on the fact that at the Bali Ministerial Conference of the World Trade Organization (WTO) in 2013, Trade Ministers agreed for the first time since the creation of the WTO (in 1995) on an Agreement to facilitate trade around the world, dubbed Trade Facilitation Agreement (TFA). The study considers both at-the-border and behind-the border measures of Trade Facilitation. Design/methodology/approach To conduct this study, the authors rely on the literature related to the structural factors that explain tax revenue mobilization. The authors mainly use within fixed effects estimator. The analysis relies on 102 countries (of which 23 industrial countries) over the period 2004-2007 (based on data availability). A focus has also been made on African countries, within the sample of developing countries. Findings The empirical analysis suggests evidence of a positive and significant effect of trade facilitation reforms on non-resources tax revenue, irrespective of the sample of countries considered in the analysis. Research limitations/implications This finding should contribute to dampening the fear of policymakers in developing countries, including Africa that the implementation of the TFA would entail higher costs, without necessarily being associated with higher benefits. An avenue for future research would be to extend the period of the study when data would be available. Originality/value To the best of the authors knowledge, this study had not been performed in the literature of the determinants of tax revenue mobilization, although fact-based analysis was performed.

scholarly journals COPERNICUS KNOWLEDGE AND INNOVATION HUBS

2020 ◽  
Vol XLIII-B5-2020 ◽  
pp. 35-42
Author(s):  
B. Riedler ◽  
S. Lang ◽  
P. Zeil ◽  
M. Miguel-Lago ◽  
C. Schröder ◽  
...  
Keyword(s):  
Knowledge Exchange ◽  
Data Availability ◽  
Public And Private ◽  
The Public ◽  
Active Involvement ◽  
Free Data ◽  
Financial Framework ◽  
Uptake Process ◽  
The Impact ◽  
And Training

Abstract. Copernicus, the European Space program ensures free data availability and the organisational and financial framework to provide standardized information products in its service domains atmosphere, marine, land monitoring, climate change, emergency management and human security. A key to success to the market uptake process is knowledge exchange among all actors from the various sectors involved, notably research and educational institutions, industry, and the public sector. As a successful instrument to foster and stimulate this exchange, maximize the impact and additionally boost related capacity building and training activities, the Copernicus Academy has been anchored in the European Space Strategy. The present paper highlights some key activities to leverage the potential of this dynamically growing network of experts from universities and research institutions, public and private organizations, companies, stakeholders, and increase the benefit to its members. The vision of establishing both physical implementations of regional Copernicus hubs and virtual Copernicus hubs, built on key elements of the European Innovation strategy, is discussed. Regional hubs, attached e.g. to centres of excellence, are essential to meet local needs for exchange and training to boost the user uptake. The increasing importance of virtual hubs is becoming evident as a critical means to maximise synergies among actors in the rapidly advancing technological areas. Proposed technical elements demonstrate innovative solutions to visualize and facilitate easy harvesting of the Copernicus Academy member´s expertise for different stakeholder and the public, and show cast possibilities of active involvement and exchange within the network.

scholarly journals Time-use and mental health during the COVID-19 pandemic: a panel analysis of 55,204 adults followed across 11 weeks of lockdown in the UK

2020 ◽  
Author(s):  
Feifei Bu ◽  
Andrew Steptoe ◽  
Hei Wan Mak ◽  
Daisy Fancourt
Keyword(s):  
Mental Health ◽  
Time Use ◽  
Fixed Effects ◽  
Panel Study ◽  
Social Study ◽  
Panel Analysis ◽  
The Public ◽  
Health And Wellbeing ◽  
The Uk ◽  
The Impact

There is currently major concern about the impact of the global COVID 19 outbreak on mental health. But it remains unclear how individual behaviors could exacerbate or protect against adverse changes in mental health. This study aimed to examine the associations between specific activities (or time use) and mental health and wellbeing amongst people during the COVID 19 pandemic. Data were from the UCL COVID 19 Social Study; a panel study collecting data weekly during the COVID 19 pandemic. The analytical sample consisted of 55,204 adults living in the UK who were followed up for the strict 11 week lockdown period from 21st March to 31st May 2020. Data were analyzed using fixed effects and Arellano Bond models. We found that changes in time spent on a range of activities were associated with changes in mental health and wellbeing. After controlling for bidirectionality, behaviors involving outdoor activities including gardening and exercising predicted subsequent improvements in mental health and wellbeing, while increased time spent on following news about COVID 19 predicted declines in mental health and wellbeing. These results are relevant to the formulation of guidance for people obliged to spend extended periods in isolation during health emergencies, and may help the public to maintain wellbeing during future pandemics.

scholarly journals Impact of contact tracing on COVID-19 mortality: An impact evaluation using surveillance data from Colombia

PLoS ONE ◽  
2021 ◽  
Vol 16 (3) ◽  
pp. e0246987
Author(s):  
Andres I. Vecino-Ortiz ◽  
Juliana Villanueva Congote ◽  
Silvana Zapata Bedoya ◽  
Zulma M. Cucunuba
Keyword(s):  
Fixed Effects ◽  
Contact Tracing ◽  
Supply Side ◽  
Fixed Effects Model ◽  
Surveillance Strategy ◽  
Middle Income ◽  
The Public ◽  
Middle Income Countries ◽  
The Impact ◽  
Crucial Part

Background Contact tracing is a crucial part of the public health surveillance toolkit. However, it is labor-intensive and costly to carry it out. Some countries have faced challenges implementing contact tracing, and no impact evaluations using empirical data have assessed its impact on COVID-19 mortality. This study assesses the impact of contact tracing in a middle-income country, providing data to support the expansion and optimization of contact tracing strategies to improve infection control. Methods We obtained publicly available data on all confirmed COVID-19 cases in Colombia between March 2 and June 16, 2020. (N = 54,931 cases over 135 days of observation). As suggested by WHO guidelines, we proxied contact tracing performance as the proportion of cases identified through contact tracing out of all cases identified. We calculated the daily proportion of cases identified through contact tracing across 37 geographical units (32 departments and five districts). Further, we used a sequential log-log fixed-effects model to estimate the 21-days, 28-days, 42-days, and 56-days lagged impact of the proportion of cases identified through contact tracing on daily COVID-19 mortality. Both the proportion of cases identified through contact tracing and the daily number of COVID-19 deaths are smoothed using 7-day moving averages. Models control for the prevalence of active cases, second-degree polynomials, and mobility indices. Robustness checks to include supply-side variables were performed. Results We found that a 10 percent increase in the proportion of cases identified through contact tracing is related to COVID-19 mortality reductions between 0.8% and 3.4%. Our models explain between 47%-70% of the variance in mortality. Results are robust to changes of specification and inclusion of supply-side variables. Conclusion Contact tracing is instrumental in containing infectious diseases. Its prioritization as a surveillance strategy will substantially impact reducing deaths while minimizing the impact on the fragile economic systems of lower and middle-income countries. This study provides lessons for other LMIC.

LARGE SHAREHOLDERS AND INFORMATION ASYMMETRY IN A TRANSITION ECONOMY–EVIDENCE FROM VIETNAM

2019 ◽  
pp. 1-17 ◽  
Author(s):  
XUAN VINH VO
Keyword(s):  
Stock Market ◽  
Information Asymmetry ◽  
Fixed Effects ◽  
Transition Economy ◽  
Stock Exchange ◽  
Emerging Market ◽  
Market Development ◽  
Stock Market Development ◽  
Large Shareholder ◽  
Large Shareholders

A growing volume of studies indicate that the information asymmetry problem is a serious issue which significantly hinders stock market development. This problem is more pronounced in emerging markets with weak institutions. The domination of large shareholders in a firm might be a cause of information asymmetry because they are commonly believed to have access to private and value-relevant information. The current paper offers insight into the relationship between multiple large shareholder ownership and stock market information asymmetry in the context of Vietnam, an important emerging market. Employing fixed effects and GMM estimators for a panel data sample of firms listed on the Ho Chi Minh City stock exchange covering the period 2007–2015, the results suggest that the concentration of large shareholder ownership is positively and significantly associated with information asymmetry. This finding has strong implications for policy making process in promoting stock market development.

Joint Audit Engagements and Client Tax Avoidance: Evidence from the Italian Statutory Audit Regime

2018 ◽  
Vol 41 (1) ◽  
pp. 31-58 ◽  
Author(s):  
Pietro A. Bianchi ◽  
Diana Falsetta ◽  
Miguel Minutti-Meza ◽  
Eric Weisbrod
Keyword(s):  
Fixed Effects ◽  
Tax Avoidance ◽  
Data Availability ◽  
Tax Rates ◽  
Firm Characteristics ◽  
Professional Networks ◽  
Effective Tax Rates ◽  
Accounting Firms ◽  
The Public ◽  
Professional Network

ABSTRACT Under the Italian statutory audit regime, three individual accountants are jointly appointed to audit each client's annual financial statements and sign off on the tax return. These individuals can belong to the same or different accounting firms and through multiple and repeated collaborations they form a professional network. We use network measures of centrality to capture individuals' ability to acquire and apply tax expertise across clients. We demonstrate that clients engaging better-connected individual auditors have comparatively lower effective tax rates. Our results are robust to controlling for a number of client, individual, and accounting firm characteristics, as well as for alternative network connections between clients. We also use instrumental variables, individual fixed effects, and matching to mitigate the effect of endogenous pairing of clients and auditors. Our findings demonstrate that in a joint audit environment, individual auditor professional networks have consequences for tax outcomes. Data Availability: Data are obtainable from the public sources cited in the text and are available upon request.

The Impact of Audit Committee Information Technology Expertise on the Reliability and Timeliness of Financial Reporting

2019 ◽  
Vol 95 (5) ◽  
pp. 23-56 ◽  
Author(s):  
Musaib Ashraf ◽  
Paul N. Michas ◽  
Dan Russomanno
Keyword(s):  
Information Technology ◽  
Financial Reporting ◽  
Fixed Effects ◽  
Audit Committee ◽  
Data Availability ◽  
Audit Committees ◽  
Material Weaknesses ◽  
Other Information ◽  
High Quality Information ◽  
The Impact

ABSTRACT We examine whether information technology expertise on audit committees impacts the reliability and timeliness of financial reporting. We find a reduction in the likelihood of material restatement, a reduction in the likelihood of information technology-related material weaknesses (which account for 55 percent of all reported material weaknesses), and more timely earnings announcements at firms with audit committee information technology expertise. These findings are robust to controlling for a firm's other information technology attributes, as well as when using entropy balanced samples, and we mitigate endogeneity concerns with evidence that our findings hold in a subsample of firms that all possess overall high-quality information technology. Finally, a difference-in-differences analysis, inclusion of firm fixed effects, and a falsification test largely support our assertion that the quality of financial reporting is significantly improved by the presence of an audit committee information technology expert. JEL Classifications: M41; M15. Data Availability: All data used in the study are publicly available.

Do Career Concerns Affect the Delay of Bad News Disclosure?

2017 ◽  
Vol 93 (2) ◽  
pp. 61-95 ◽  
Author(s):  
Stephen P. Baginski ◽  
John L. Campbell ◽  
Lisa A. Hinson ◽  
David S. Koo
Keyword(s):  
Empirical Evidence ◽  
Career Concerns ◽  
Data Availability ◽  
Bad News ◽  
Severance Pay ◽  
The Public ◽  
Ex Ante ◽  
Theoretical Evidence ◽  
The Impact ◽  
Jel Classifications

ABSTRACT Theory argues that career concerns (i.e., concerns about the impact of current performance on contemporaneous and future compensation) encourage managers to withhold bad news disclosure. However, empirical evidence regarding the extent to which a manager's career concerns are associated with a delay in bad news disclosure is limited. Across multiple proxies for career concerns, we find that the extent to which managers delay bad news is positively associated with their level of career concerns. Then, we hand-collect data on a compensation contract that firms use to reduce CEOs' career concerns (i.e., ex ante severance pay agreements). We find that if managers receive a sufficiently large payment in the event of dismissal, they no longer delay the disclosure of bad news. Overall, our findings support prior theoretical evidence that managers delay bad news disclosure due to career concerns and suggest a mechanism through which firms can mitigate the delay. JEL Classifications: M12; M41. Data Availability: Data are available from the public sources cited in the text.

scholarly journals The Determinants of FDI in OIC Countries

2019 ◽  
Vol 10 (5) ◽  
pp. 466
Author(s):  
Sulaiman Sajilan ◽  
Muhammad Umar Islam ◽  
Mohsin Ali ◽  
Urooj Anwar
Keyword(s):  
Developing Countries ◽  
Fixed Effects ◽  
Trade Openness ◽  
Data Availability ◽  
Host Countries ◽  
Policy Makers ◽  
Poor Countries ◽  
Panel Fixed Effects ◽  
Developed World ◽  
The Impact

Foreign Direct investment (FDI) is considered to be an important source of capital especially in developing countries. FDI supplements local savings and brings a series of benefits in host countries. This research has focused OIC on countries since these countries are still far behind in attracting FDI compared to other developing countries. OIC member countries inhibit diversity in their resources from resource rich to resource poor countries. They lack behind the developed world in terms of economic development pertaining to weak economies. Since for these types of countries FDI can prove to be a vital source of capital, it becomes important to study the factors that affect it. This study exactly does the same by incorporating a series of determinants (inflation, size of the economy, trade openness, infrastructure, and institutional quality) to assess the impact they have in attracting FDI. We have used data for 42 countries spanning over 1996-2013. The choice of data selection has been dictated by data availability. For estimation we have used panel fixed effects and random effects estimators. Our results indicate that size of economy, infrastructure and trade openness are positively and significantly related in attracting FDI in those countries. Institutions on the other hand are negatively related. The effects of inflation are somewhat mixed according to our estimation and not robust. The implications of our findings are that policy makers should expend efforts in making more trade oriented policies, improve infrastructure and increase the size of economy.

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