Accounting Conservatism and Stock Underpricing In High Information Asymmetry Setting

2021 ◽  
Vol 20 (4) ◽  
pp. 756-768
Author(s):  
HusseinFalah Hasan ◽  
Hudaa Nadhim Khalbas ◽  
SalahChyad Kadhim
Keyword(s):  
Information Asymmetry ◽  
Accounting Conservatism ◽  
High Information

scholarly journals Pengaruh Konservatisme Akuntansi Terhadap Underpricing Saham IPO (Initial Public Offering)

2020 ◽  
Vol 2 (1) ◽  
pp. 2494-2512
Author(s):  
Meri Andani ◽  
Salma Taqwa
Keyword(s):  
Regression Analysis ◽  
Information Asymmetry ◽  
Initial Public Offering ◽  
Stock Price ◽  
Sampling Method ◽  
Annual Report ◽  
Secondary Data ◽  
Accounting Conservatism ◽  
Public Offering ◽  
High Information

This study examines how the effect of accounting conservatism to IPO’s underpricing and information asymmetry effect the association of accounting conservatism with IPO’s underpricing. The sample of this study using the 97 a-shares companies that went public through IPO’s at both Indonesia Stock Exchage during 2015-2018. Sampling was done by using total sampling method. The type of data used is secondary data obtained from annual report companys and stock price. Based on regression analysis with Eviews9 we find (1) Accounting conservatism has no effect to IPO’s underpricing. (2) Has no effect of high information asymmetry or low information asymmetry on association between accounting conservatism and IPO’s underpricing.

scholarly journals Discount, transparency and announcements effects of equity rights offerings: international evidence

2021 ◽  
Author(s):  
Nils-Christian Bobenhausen ◽  
Astrid Juliane Salzmann
Keyword(s):  
Financial Markets ◽  
Information Asymmetry ◽  
Capital Market ◽  
Announcement Effect ◽  
Announcement Effects ◽  
Market Transparency ◽  
International Evidence ◽  
Negative Effect ◽  
Rights Offering ◽  
High Information

AbstractEquity rights offerings and their respective announcement effects have been studied extensively in the literature. Our study expands upon these studies and focuses on those announcement effects and the relation between the discount of an equity rights offering and the announcement effect. Previous theoretical and empirical analyses show that firms can signal their quality via the discount in an equity rights offering and demonstrate a negative relation between the discount and the announcement effect. We argue that this link is only relevant in environments where signalling is possible and necessary. These are financial markets with a particularly low level of capital market transparency, i.e. high information asymmetry. We calculate announcement effects for an international sample of equity rights offerings and show that the negative effect of the discount on announcement effects can only be observed in environments with a low capital market transparency. Hence, our study estimates announcement effects across several different countries and is thus among the first to analyse signalling considerations for equity rights offerings in different transparency environments.

Securities-Based Crowdfunding by Startups: Does Auditor Attestation Matter?

2021 ◽  
Author(s):  
Jing Gong ◽  
Jayanthi Krishnan ◽  
Yi Liang
Keyword(s):  
Information Asymmetry ◽  
Small Businesses ◽  
Financial Statements ◽  
Future Prospects ◽  
Positive Effect ◽  
High Information

We examine financing outcomes for small businesses seeking to sell public securities in a setting characterized by high information asymmetry, weak requirements for auditor participation, and a complete absence of Big N auditors. Issuers that raise capital from small, unsophisticated investors through crowdfunding, under the Securities and Exchange Commission's Regulation Crowdfunding (RegCF), often need no auditor attestation or need only weak attestation in the form of reviews, not audits, of their financial statements. We find that auditor reviews are positively associated with both the probability of crowdfunding success and the total amount raised. Further, we compare outcomes for issuers that procure auditor reviews voluntarily and mandatorily, and document that issuers with voluntary reviews have better outcomes. We conjecture that, for issuers that voluntarily procure reviews, the reviews serve as signals of high future prospects. Finally, the positive effect of reviews is concentrated in PCAOB-registered auditors.

Intermediation in Private Equity: The Role of Placement Agents

2019 ◽  
Vol 55 (4) ◽  
pp. 1095-1116
Author(s):  
Matthew D. Cain ◽  
Stephen B. McKeon ◽  
Steven Davidoff Solomon
Keyword(s):  
Real Estate ◽  
Information Asymmetry ◽  
Private Equity ◽  
Abnormal Returns ◽  
Theoretical Predictions ◽  
Illiquid Investments ◽  
First Time ◽  
High Information

Intermediation in private equity involves illiquid investments, professional investors, and high information asymmetry. We use this unique setting to empirically evaluate theoretical predictions regarding intermediation. Using placement agents has become nearly ubiquitous, but agents are associated with significantly lower abnormal returns in venture and real estate funds, consistent with investor capture and influence peddling. However, returns are higher for buyout funds employing a top-tier agent and for first-time real estate and venture funds employing an agent, and are less volatile for agent-affiliated funds, consistent with a certification role. Our results suggest heterogeneous motives for intermediation in the private equity industry.

scholarly journals The Tripartite Regulation Game of Carbon Financial Products Based on the Prospect Theory

2020 ◽  
Vol 8 ◽  
Author(s):  
Xiaoran Yu ◽  
Guanglong Dong ◽  
Changyu Liu
Keyword(s):  
Information Asymmetry ◽  
Prospect Theory ◽  
Bounded Rationality ◽  
Influencing Factors ◽  
Financial Institutions ◽  
Behavioral Strategy ◽  
Financial Products ◽  
Different Types ◽  
Game Players ◽  
High Information

Because of the high information asymmetry of carbon financial products (CFPs), financial institutions infringing on the rights of investors occurred worldwide. However, few studies focused on how to protect investors effectively. In this paper, from the perspective of regulation, we analyze the game relationships among governments, financial institutions, and investors. Following this, the tripartite regulation game of CFPs is further constructed. Meanwhile, centered on heterogeneity and bounded rationality, we divide participants in this game into two types: tough or weak ones, and the strategies for different types of game players are compared based on the prospect theory. Moreover, through discussion of the deterrence equilibrium, challenge equilibrium, and separation equilibrium, the crucial influencing factors of the behavioral strategy are explored separately. Finally, some countermeasures of CFPs are put forward for governments to design appropriate regulation policies.

Accruals quality, financial constraints, and corporate cash holdings

2019 ◽  
Vol 45 (8) ◽  
pp. 1129-1145 ◽  
Author(s):  
Hatem Mansali ◽  
Imen Derouiche ◽  
Karima Jemai
Keyword(s):  
Information Asymmetry ◽  
Financial Constraints ◽  
Earnings Quality ◽  
Cash Holdings ◽  
Reporting Quality ◽  
Discretionary Accruals ◽  
Content Type ◽  
Accruals Quality ◽  
Corporate Cash Holdings ◽  
High Information

Purpose The purpose of this paper is to examine how information asymmetry driven by earnings quality affects corporate cash holdings. It also investigates the role that financial constraints play in this effect. Design/methodology/approach The paper examines a large sample of 6,501 observations of 741 firms listed on Euronext Paris over the period 2000–2015. Earnings quality is computed using the Jones model performance-matched discretionary accruals developed by Kothari et al. (2005): the larger the absolute value of discretionary accruals, the lower the accruals quality. Findings The study finds that firms with poor accruals quality hold more cash and that cash holdings in firms of low reporting quality are higher under financial constraints. These results indicate that firms tend to increase their cash reserves in the presence of high information asymmetry which is notably driven by low accounting quality. The findings also suggest that information asymmetry associated with low reporting quality is greater when firms also have strong financial constraints. The study’s conclusions are consistent with the precautionary motive for cash holdings. Practical implications The results would enhance practitioners’ awareness of the importance of accounting choices in the management of cash policies. It would also give researchers an incentive to further explore how these policies are influenced by the precautionary behavior of managers. Originality/value This paper is the first work to investigate the effect of accruals quality on corporate cash holdings in the French equity market, which typically has a poor information environment resulting in high information asymmetry. Moreover, the role of financial constraints in this effect has not yet been explored.

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