Accounting Restatements and Bank Liquidity Creation

2022 ◽  
Author(s):  
Wei Wang
Keyword(s):  
Information Asymmetry ◽  
Research Design ◽  
Deposit Insurance ◽  
Difference In Differences ◽  
Accounting Restatements ◽  
Illiquid Assets

Banks play a central role in creating liquidity for the economy by financing illiquid assets with liquid liabilities. This paper examines the effect of accounting restatements on bank liquidity creation. Using a difference-in-differences research design, I show that restatements trigger a significant reduction in liquidity creation. This effect derives mainly from banks shifting away from illiquid assets and toward liquid assets. Further analysis reveals that restatements affect liquidity creation through supervisory enforcement actions and unravelling of risk exposures accumulated in the misreporting period. Government deposit insurance blunts the effect of an information asymmetry channel.

scholarly journals Exploiting the Irish Border to Estimate Minimum Wage Impacts in Northern Ireland

2019 ◽  
Vol 8 (1) ◽  
Author(s):  
Duncan McVicar ◽  
Andrew Park ◽  
Seamus McGuinness
Keyword(s):  
Northern Ireland ◽  
Minimum Wage ◽  
Research Design ◽  
The Other ◽  
Living Wage ◽  
Employment Rate ◽  
Small Decrease ◽  
Difference In Differences ◽  
Hours Worked ◽  
The Uk

AbstractThis paper examines the impacts of the introduction of the UK National Minimum Wage (NMW) in 1999 and the introduction of the UK National Living Wage (NLW) in 2016 in Northern Ireland (NI) on employment and hours. NI is the only part of the UK with a land border where the NMW and NLW cover those working on one side of the border but not those working on the other side of the border (i.e., Republic of Ireland). This discontinuity in minimum wage coverage enables a research design that estimates the impacts of the NMW and NLW on employment and hours worked using difference-in-differences estimation. We find a small decrease in the employment rate of 22–59/64-year-olds in NI, of up to 2% points, in the year following the introduction of the NMW, but no impact on hours worked. We find no clear evidence that the introduction of the NLW impacted either employment or hours worked in NI.

Signaling Under Threat: Evidence of Voluntary Disclosure in Contested Takeovers

2020 ◽  
pp. 0148558X2096781
Author(s):  
Gerald J. Lobo ◽  
Kangzhen Xie ◽  
Claire J. Yan
Keyword(s):  
Propensity Score ◽  
Information Asymmetry ◽  
Propensity Score Matching ◽  
Voluntary Disclosure ◽  
Bargaining Power ◽  
Economic Consequences ◽  
Good News ◽  
Earnings Guidance ◽  
Difference In Differences ◽  
Target Management

We investigate voluntary disclosure strategies in contested takeovers and the associated economic consequences. Using a difference-in-differences research design and propensity score matching, we find that, relative to friendly takeovers, target management in contested takeovers provides more earnings guidance and conveys more good news during the takeover. Moreover, voluntary disclosure helps contested targets negotiate a better offer, and the results are stronger for targets with more information asymmetry. Collectively, targets adopt voluntary disclosure and alter their strategies under the threat of contested takeover to enhance their bargaining power. Voluntary disclosure by contested targets serves as a negotiation tactic that potentially benefits target shareholders.

Accounting Restatements and Corporate Cash Policy

2017 ◽  
Vol 35 (2) ◽  
pp. 290-317 ◽  
Author(s):  
Huili Chen ◽  
Zhihong Chen ◽  
Dan S. Dhaliwal ◽  
Yuan Huang
Keyword(s):  
Financial Reporting ◽  
Cash Holdings ◽  
Market Value ◽  
Precautionary Savings ◽  
Difference In Differences ◽  
Accounting Restatements ◽  
Pronounced Increase ◽  
Corporate Decisions ◽  
Value Of Cash ◽  
Excess Cash

Using a difference-in-differences approach, we find that the cash holdings of firms increase significantly after announcements of irregularity-related restatements. The increase is larger for firms with a higher demand for precautionary savings and is smaller for firms with less pronounced increase in shareholder control after the restatements. Investments and repurchases of irregularity firms become more sensitive to excess cash after the restatements. In addition, we find that the market value of cash holdings increases after restatements. Overall, the evidence suggests that strengthened shareholder control reduces cash holdings, but this effect is weaker than the increase in cash holdings due to exacerbated precautionary savings concerns. Our study contributes to the literature on the effect of financial reporting credibility on real corporate decisions.

scholarly journals THE EFFECT OF FRAUD ON PROFITABILITY OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

2021 ◽  
Vol 25 ◽  
pp. 169-190
Author(s):  
Suleiman Salami ◽  
Abass Wahab Olabamiji
Keyword(s):  
Research Design ◽  
Deposit Insurance ◽  
Fraud Detection ◽  
Secondary Data ◽  
Financial Statements ◽  
Correlational Research ◽  
Multiple Regression Technique ◽  
Detection Mechanisms ◽  
Detection Unit ◽  
Actual Loss

The increasing rate of fraud occurrence and poor profitability rate in the listed Deposit Money Banks (DMBs) in Nigeria calls for a research investigation. To unravel the likely connection between fraud and profitability, this study has examined the effect of fraud on the profitability of listed DMBs in Nigeria. To achieve this objective, the study adopted a correlational research design and utilised secondary data extracted from the Nigerian Deposit Insurance Commission (NDIC) and published financial statements of the DMBs. The study focused on 14 listed DMBs for a six-year period (2012-2017). Panel multiple regression technique was used to estimate the model of the study. The findings showed that fraud (proxied by actual loss from fraud and staff involvement in fraud) has a negative and significant effect on profitability (proxied by return on asset) of listed DMBs in Nigeria. In line with the findings, this study has recommended that listed DMBs should establish fraud detection mechanisms which will entail the setting up of an efficient, reliable and functioning fraud detection unit to monitor transactions that may be susceptible to fraud.

Reducing information asymmetry before marriage: Evidence from South Korea

2020 ◽  
Vol 29 (1) ◽  
pp. 79-100
Author(s):  
Haeil Jung ◽  
Yeonwoo Sim
Keyword(s):  
South Korea ◽  
Information Asymmetry ◽  
National Survey ◽  
Business Management ◽  
Difference In Differences ◽  
International Marriage ◽  
South Korean ◽  
Male Clients ◽  
Foreign Brides ◽  
The Difference

This study examines whether information asymmetry during the matchmaking period affects women’s choice of spouse. The 2010 amendment of the Marriage Brokers Business Management Act requiring international marriage brokers in South Korea to provide more information about their South Korean male clients to prospective foreign brides in brokered marriages provided an opportunity to probe this question. Using the National Survey of Multicultural Families 2015, we employed the difference-in-differences method. Following the 2010 amendment, foreign women in brokered marriages were more likely to marry a more-educated Korean man and were less likely to work in low-skilled jobs after marriage.

The Illusion of Urbanization: Impact of Administrative Reform on Communities’ Resilience

2020 ◽  
Vol 44 (1) ◽  
pp. 33-84
Author(s):  
Alina Botezat ◽  
Mihaela David ◽  
Cristian Incaltarau ◽  
Peter Nijkamp
Keyword(s):  
Research Design ◽  
Positive Impact ◽  
Large Body ◽  
Administrative Reform ◽  
Difference In Differences ◽  
Income Levels ◽  
The Poor ◽  
Effect Difference ◽  
The Impact ◽  
Resilience Capacity

While a large body of literature separately documents urban and rural resilience, little is known about how resilience evolves when communities experience an administrative reform that changes their judicial status from rural to urban. This paper explores the effects of the largest post-communist urbanization waves that took place in Romania in the early 2000s, when more communes were reclassified as towns. Using rich administrative data from 2000 to 2014, we employ a two-way fixed effect difference-in-differences research design to examine the impact of the reform on the resilience capacity of the affected communes. Our results reveal that the administrative reform had an initially positive impact on the physical resilience capacity. While the administrative reform did not have a significant effect on the overall resilience capacity of the newly declared towns, there are important differences across groups. The settlements situated in more developed counties and those with higher income levels were among the main beneficiaries. Negatively affected were mainly the poor communes and those that lack accessibility due to their mountain position and being far from big cities. In policy terms, this clearly emphasizes the need for place-sensitive policies complementing the administrative reform in order to help them escape from their rural uprootedness.

Managerial Political Orientation and Stock Price Crash Risk

2020 ◽  
pp. 0148558X2094542
Author(s):  
Wanyi Chen ◽  
Hengda Jin ◽  
Yan Luo
Keyword(s):  
Research Design ◽  
Stock Price ◽  
Political Orientation ◽  
Crash Risk ◽  
Stage Model ◽  
Difference In Differences ◽  
Corporate Managers ◽  
Political Ideologies ◽  
External Monitoring ◽  
Jel Classifications

This article examines whether managers’ political orientation, which reflects their risk preferences, is associated with firms’ stock price crash risk. We find that stock price crash risk is lower when corporate managers have more conservative political ideologies, and the results are robust to controls for other determinants of crash risk. We use Heckman two-stage model and employ difference-in-differences research design around executive turnovers to show that our results are not simply driven by potential endogeneity. We also document that the relation between managerial political orientation and stock price crash risk is stronger when external monitoring is weaker. JEL Classifications: G12; G14; M41.

scholarly journals Do Spitzenkandidaten debates matter? Effects on voters’ cognitions and evaluations of candidates and issues

Politics ◽  
2021 ◽  
pp. 026339572110152
Author(s):  
Irene Palacios ◽  
Christine Arnold
Keyword(s):  
Research Design ◽  
Experimental Research ◽  
Online Survey ◽  
Institutional Changes ◽  
Difference In Differences ◽  
Policy Positions ◽  
Policy Issues ◽  
Matter Effects ◽  
European Universities ◽  
Quasi Experimental

The Lisbon Treaty introduced key institutional changes to increase the relevance of elections to the European Parliament (EP). Among these was the ‘Spitzenkandidaten process’, which was introduced with the aim to increase the visibility of the EP elections and mobilize more citizens to turnout to vote. This article investigates the effect that the debates among the Lead Candidates had on voters’ perceptions about candidates and policy issues. To do this, we administered a two-wave panel online survey to a sample of students from different European universities prior to the Spitzenkandidaten debates and right after them, following the logic of a quasi-experimental research design. Following a difference-in-differences approach, we gauge the extent to which those respondents who were exposed to the debates increased their degree of information about the candidates and changed their perceptions about the candidates and their policy positions. The findings reveal that respondents who followed the debate felt significantly more informed to make up their minds about the candidates as well as to make their vote decisions and slightly improved the perceptions of the policy positions of those candidates who they had intended to vote for.

The Information Asymmetry Effects of Expanded Disclosures About Derivative and Hedging Activities

2021 ◽  
Author(s):  
Thomas D. Steffen
Keyword(s):  
Information Asymmetry ◽  
Firm Value ◽  
Quantitative Data ◽  
Accounting Standards ◽  
Financial Accounting ◽  
Qualitative Information ◽  
Difference In Differences ◽  
Disclosure Requirements ◽  
Asymmetry Effects ◽  
Bid Ask Spreads

I study the information asymmetry effects of Statement of Financial Accounting Standards Number 161 (SFAS 161), which requires changes to the content and format of derivative and hedging footnote disclosures. Using a difference-in-differences design, I investigate whether these mandatory disclosure changes affected bid-ask spreads. To capture the extent to which firms were likely impacted by SFAS 161, I employ two complementary measures: (1) actual changes in firms’ derivative and hedging disclosures, and (2) pre-SFAS 161 levels of firms’ derivative and hedging activities. Both measures provide consistent evidence that bid-ask spreads decreased more for firms whose disclosures were more likely affected by SFAS 161. I also find that increased qualitative information and more disaggregated quantitative data (i.e., disclosure content) matter more than disclosure grouping and tabular display (i.e., disclosure format) for the observed decrease in bid-ask spreads. Overall, my findings suggest that the disclosure changes required by SFAS 161 reduced information asymmetry among investors regarding the firm value effects of derivative and hedging activities. These results may prove useful to regulators and standard setters as they consider disclosure requirements in other contexts. This paper was accepted by Brian Bushee, accounting.

The corporate governance of banks

2006 ◽  
Vol 14 (4) ◽  
pp. 375-382 ◽  
Author(s):  
Andy Mullineux
Keyword(s):  
Corporate Governance ◽  
Asymmetric Information ◽  
Information Asymmetry ◽  
Deposit Insurance ◽  
Design Methodology ◽  
Bank Regulation ◽  
Fiduciary Duty ◽  
Content Type

PurposeTo consider the implications of the banks fiduciary duty to their depositors (as well as the shareholders) and the government's fiscal duty to taxpayers (in the presence of deposit insurance) for the corporate governance (CG) of banks.Design/methodology/approachRecent contributions to the literature are outlined and assessed in the context of the asymmetric information literature relating to banking.FindingsThe good CG of banks requires regulation to balance the interests of depositors and taxpayers with those of the shareholders.Originality/valueLinking the bank regulation in literature based on information asymmetry to the CG literature.

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