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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

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
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Description
In this study, I predict that involvement in a fraud-related securities class action lawsuit is associated with a change in political activity patterns toward less transparent channels and a reduction in the quality of public political disclosures. Allegations of fraud may impair a firm’s reputation and cause the firm to

In this study, I predict that involvement in a fraud-related securities class action lawsuit is associated with a change in political activity patterns toward less transparent channels and a reduction in the quality of public political disclosures. Allegations of fraud may impair a firm’s reputation and cause the firm to reevaluate the effectiveness of its political strategies. I find evidence that firms involved in a fraud-related securities class action lawsuit are associated with less political action committee (PAC) contributions and more lobbying after the accusation. I find a similar pattern for additional measures of transparency: firms shift from in-house lobbying to contract lobbying, are more likely to spend through their subsidiaries, and increase activity through their subsidiaries in the period after the fraud-related securities class action lawsuit. I also find that firms significantly reduce the level of their voluntary political spending disclosures. Overall, my results provide evidence of a change in real activities and disclosures after an accusation of fraud. While prior research documents that firms generally work to improve their reputations following a fraud, I find evidence that firms reduce the transparency of their corporate political spending and related disclosures.
ContributorsPaparcuri, Christina Marie (Author) / Brown, Jennifer L (Thesis advisor) / Huston, George R (Committee member) / Kenchington, David G (Committee member) / Arizona State University (Publisher)
Created2021
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This study examines determinants of the length of conflict between firms and the Internal Revenue Service (IRS). I hand collect firm disclosures of the number of years open for federal tax purposes to create a proxy for IRS conflict length. Using this proxy, I find evidence that larger firms, firms

This study examines determinants of the length of conflict between firms and the Internal Revenue Service (IRS). I hand collect firm disclosures of the number of years open for federal tax purposes to create a proxy for IRS conflict length. Using this proxy, I find evidence that larger firms, firms with more book-tax differences, and firms facing higher IRS attention and audit probabilities are associated with lengthier IRS conflicts. In contrast, firms with higher deferred tax assets, intangibles, return on assets, and firms disclosing participation in the Compliance Assurance Process program are associated with shorter IRS conflicts. Additional analyses show IRS conflict length is positively associated with manager risk preferences and poor tax accounting quality. I also find lengthier IRS conflicts are associated with higher future tax risk and higher audit fees. Tax controversy is becoming increasingly important for firms but remains relatively understudied. I provide empirical evidence on cross-sectional variation in IRS conflict length.
ContributorsPaparcuri, Christian Simon (Author) / Brown, Jennifer L. (Thesis advisor) / Huston, George R (Committee member) / White, Roger M. (Committee member) / Arizona State University (Publisher)
Created2020