Matching Items (4)
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- All Subjects: Accounting
- All Subjects: Global Settlement
- All Subjects: Individual investors
- Genre: Doctoral Dissertation
- Creators: Hugon, Artur
- Resource Type: Text
- Status: Published
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
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
This study examines the effect of outside wealth on executives’ risk-taking in financial reporting. To investigate this question, I hand-collect data on Chief Financial Officers’ (CFO) real estate assets and use housing returns as a proxy for CFOs’ outside wealth changes. I find that CFOs who experience a large negative housing return become less aggressive in financial reporting, as evidenced by a lower likelihood of restatement. Additional tests show that this effect is driven by CFOs who have less diversified wealth portfolios, by younger CFOs, and by CFOs with more leveraged houses, suggesting that the reduced risk-taking behavior of CFOs stems from decreased diversification of personal wealth and increased career concerns after a negative shock to outside wealth. These findings highlight the important role of executive outside wealth in explaining their risk-taking behaviors.
ContributorsLiu, Summer Z. (Author) / Huang, Shawn (Thesis advisor) / Lamoreaux, Phillip (Thesis advisor) / Hugon, Artur (Committee member) / Li, Yinghua (Committee member) / Arizona State University (Publisher)
Created2023
Description
Prior studies examine how the use of earnings for valuation purposes is related to the use of earnings in contracting. I extend this literature by examining the value relevance of internal earnings relative to targets, a performance measure widely used in annual bonus contracts. Internal earnings relative to targets could be value relevant because they reflect board’s private information or the quality of firm’s management control systems. However, any internal performance measure could also be manipulated by the board or management, which would undermine its reliability and relevance to capital market participants. Using hand-collected data on internal earnings and annual bonus targets in Chief Executive Officer (CEO) cash bonus plans, I find that internal earnings relative to targets strongly predict annual stock returns. This effect is incremental to that of Generally Accepted Accounting Principles (GAAP) and street earnings surprises, as well as management earnings guidance surprises. Moreover, this effect is stronger for firms with more detailed disclosure about compensation contracts and with better governance. Buttressing the stock return results, I further show that internal earnings relative to targets predict future cash flows. This evidence suggests that the value of internal earnings relative to targets extends beyond its traditional role in contracting.
ContributorsLee, Eugie (Author) / Matejka, Michal (Thesis advisor) / Kaplan, Steve (Committee member) / Hugon, Artur (Committee member) / Arizona State University (Publisher)
Created2023