Matching Items (7)
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- All Subjects: Accounting
- All Subjects: Individual investors
- Genre: Doctoral Dissertation
- Creators: Brown, Jennifer
- Creators: Lamoreaux, Phillip T
- Resource Type: Text
Description
Responding to the allegedly biased research reports issued by large investment banks, the Global Research Analyst Settlement and related regulations went to great lengths to weaken the conflicts of interest faced by investment bank analysts. In this paper, I investigate the effects of these changes on small and large investor confidence and on trading profitability. Specifically, I examine abnormal trading volumes generated by small and large investors in response to security analyst recommendations and the resulting abnormal market returns generated. I find an overall increase in investor confidence in the post-regulation period relative to the pre-regulation period consistent with a reduction in existing conflicts of interest. The change in confidence observed is particularly striking for small traders. I also find that small trader profitability has increased in the post-regulation period relative to the pre-regulation period whereas that for large traders has decreased. These results are consistent with the Securities and Exchange Commission's primary mission to protect small investors and maintain the integrity of the securities markets.
ContributorsDong, Xiaobo (Author) / Mikhail, Michael (Thesis advisor) / Hwang, Yuhchang (Committee member) / Hugon, Artur J (Committee member) / Arizona State University (Publisher)
Created2011
Description
Existing literature consistently documents a relationship between book-tax differences and future financial performance. Specifically, large book-tax differences are associated with lower earnings persistence. I contend that one reason the tax information contained in financial statements is informative about future earnings is that the relationship between book income and taxable income captures information about a firm's life cycle stage. Using a life cycle measure from the literature, I use fundamental analysis to group firm-year observations into life cycle stages and document a link between book-tax differences and firm life cycle. I build on prior studies that find a relation between earnings persistence and book-tax differences, and earnings persistence and firm life cycle. I find that after controlling for firm life cycle stage, the association between large positive book-tax differences and lower earnings persistence does not hold. My results offer an economic theory based explanation for the relation between book-tax differences and earnings persistence as an alternative explanation to findings in prior research.
ContributorsDrake, Katharine D (Author) / Mikhail, Michael (Thesis advisor) / Brown, Jennifer (Committee member) / Martin, Melissa (Committee member) / Arizona State University (Publisher)
Created2012
Description
This paper examines whether CEOs with general managerial skills are better at achieving the goals of external communication. Using the General Ability Index developed by Custodio, Ferreira, and Matos (2013) to measure CEOs' general managerial skills, I find that firms with generalist CEOs are more likely to obtain the desired outcomes of communication, including the smaller difference between analyst forecasts and management guidance, less dispersion in analyst forecasts, higher analyst following, and higher institutional ownership, after controlling for CEO talent and the impact of Regulation FD. Moreover, I provide direct evidence that general managerial skills are more important to external communication under poor information environments. I also investigate the characteristics of analysts who follow firms with generalists, and my findings suggest the private interaction with analysts is an important communication channel for generalists. Finally, I find that generalists are able to attract dedicated investors and gain long-term capital for their firms. Overall, I provide evidence on the growing importance of general managerial skills in external communication. This paper offers new insights into why CEOs with general skills are paid at a premium over those with specific skills, as documented in previous studies.
ContributorsYeh, Eugenia (Author) / Hillegeist, Steve (Thesis advisor) / Brown, Jennifer (Committee member) / Custodio, Claudia (Committee member) / Arizona State University (Publisher)
Created2015
Description
U.S. based multinational firms are able to use foreign subsidiaries as a means to reduce their overall tax burden. As disclosure requirements are vague, there is very little useful information provided to firm outsiders to analyze a firm’s foreign operations activity and earnings. I demonstrate that even sophisticated financial statement users, financial analysts, have difficulty predicting the effective tax rate for firms with foreign operations, as evidenced by increased forecast errors for multinational firms as compared to domestic firms. I examine factors that may contribute to the increased difficulty of forecasting for multinationals and find that decreased ETR persistence and the presence of a loss may affect the difficulty of the forecasting task, but the presence or quality of management forecasts may not. The market finds tax forecasts important as evidenced by the positive response to the tax and non-tax components of earnings forecasts. This evidence is useful to investors, policy makers, and others interested in the tax activities of multinational firms.
ContributorsJordan, Erin (Author) / Brown, Jennifer (Thesis advisor) / Hugon, Artur (Committee member) / Huston, Ryan (Committee member) / Arizona State University (Publisher)
Created2018
Description
During the past decade, the Chinese bond market has been rapidly developing. The percentage of bond to total social funding is constantly increasing. The structure and behavior of investors are crucial to the construction of China’s bond market. Due to specific credit risks, bond market regulation usually involves in rules to control investor adequancy. It is heatedly discussed among academia and regulators about whether individual investors are adequate to directly participate in bond trading. This paper focuses on the comparison between individual and institutional bond investors, especially their returns and risks. Based on the comparison, this paper provides constructive suggestions for China’s bond market development and the bond market investor structure.
ContributorsLiu, Shaotong (Author) / Gu, Bin (Thesis advisor) / Zhu, Ning (Thesis advisor) / Yan, Hong (Committee member) / Arizona State University (Publisher)
Created2016
Description
This study investigates the relation between the line of service (audit, tax, advisory) of Big Four office managing partners (OMPs) and both non-audit service fees and audit quality. Given that audit quality has been shown to vary across offices and because changes in office-level leadership can impact the office culture, I examine the impact of the OMP’s line of service on non-audit service fees and audit quality. I find that when an accounting firm office changes leadership to an advisory OMP, non-audit service revenues increase while audit quality suffers. This finding is consistent with advisory partners encouraging an office culture that emphasizes selling non-audit services more than conducting quality audits. Overall, this study provides evidence consistent with regulators’ concerns that the recent trend toward greater advisory services at the largest accounting firms reduces their focus on providing high-quality audits, thereby leading to decreased audit quality.
ContributorsMowchan, Michael (Author) / Kaplan, Steven E (Thesis advisor) / Lamoreaux, Phillip T (Committee member) / Call, Andrew C. (Committee member) / Arizona State University (Publisher)
Created2016
Description
Companies commonly offer temporary price discounts to stimulate product demand. Despite the considerable impact that such promotional strategies have on performance, firms disclose limited information regarding the extent to which they provide discounts. In this study, I evaluate whether market participants understand the implications of current period couponing activity – a special case of price discounts – for future performance. Using a sample of public manufacturers, I use transaction-level data to construct a firm-level measure of couponing activity and find that earnings are less persistent when generated with heavy reliance on couponing. Further, greater couponing in the current quarter increases analyst optimism for future periods, leading to an increased likelihood that the firm misses analyst expectations in the subsequent period (which results in predictably negative earnings announcement returns). Collectively, my findings highlight how market participants’ forecasting and trading decisions can benefit from information regarding price discounting.
ContributorsSnow, Mason C. (Author) / Call, Andrew C (Thesis advisor) / Lamoreaux, Phillip T (Committee member) / White, Roger M (Committee member) / Arizona State University (Publisher)
Created2022