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Description
In this study, I test whether firms reduce the information asymmetry stemming from the political process by investing in political connections. I expect that connected firms enjoy differential access to relevant political information, and use this information to mitigate the negative consequences of political uncertainty. I investigate this construct in the context of firm-specific investment, where prior literature has documented a negative relation between investment and uncertainty. Specifically, I regress firm investment levels on the interaction of time-varying political uncertainty and the degree of a firm's political connectedness, controlling for determinants of investment, political participation, general macroeconomic conditions, and firm and time-period fixed effects. Consistent with prior work, I first document that firm-specific investment levels are significantly lower during periods of increased uncertainty, defined as the year leading up to a national election. I then assess the extent that political connections offset the negative effect of political uncertainty. Consistent with my hypothesis, I document the mitigating effect of political connections on the negative relation between investment levels and political uncertainty. These findings are robust to controls for alternative explanations related to the pre-electoral manipulation hypothesis and industry-level political participation. These findings are also robust to alternative specifications designed to address the possibility that time-invariant firm characteristics are driving the observed results. I also examine whether investors consider time-varying political uncertainty and the mitigating effect of political connections when capitalizing current earnings news. I find support that the earnings-response coefficient is lower during periods of increased uncertainty. However, I do not find evidence that investors incorporate the value relevant information in political connections as a mitigating factor.
ContributorsWellman, Laura (Author) / Dhaliwal, Dan (Thesis advisor) / Hillegeist, Stephen (Thesis advisor) / Walther, Beverly (Committee member) / Mikhail, Mike (Committee member) / Hillman, Amy (Committee member) / Brown, Jenny (Committee member) / Arizona State University (Publisher)
Created2014
Description
While credit rating agencies use both forward-looking and historical information in evaluating a firm's credit risk, the role of forward-looking information in their rating decisions is not well understood. In this study, I examine the association between management earnings guidance news and future credit rating changes. While upward earnings guidance is not informative for credit rating changes, downward earnings guidance is significantly and positively associated with both the likelihood and speed of rating downgrades. In cross-sectional analyses, I find that downward guidance is especially informative in two important circumstances: (i) when a firm's current credit rating is overly optimistic compared to a model predicted rating, and (ii) when the relevance or reliability of alternative information sources is lower. In addition, I find that downward guidance is associated with lower future cash flows, as well as a higher volatility of future cash flows. Overall, the results are consistent with credit rating agencies incorporating voluntary bad news disclosures into their decisions about whether and when to downgrade a firm.
ContributorsLin, An-Ping (Author) / Hillegeist, Stephen (Thesis advisor) / Hugon, Jean (Thesis advisor) / Call, Andrew (Committee member) / Dhaliwal, Dan (Committee member) / Arizona State University (Publisher)
Created2015
Description
I examine the degree to which stockholders' aggregate gain/loss frame of reference in the equity of a given firm affects their response to the firm's quarterly earnings announcements. Contrary to predictions from rational expectations models of trade (Shackelford and Verrecchia 2002), I find that abnormal trading volume around earnings announcements is larger (smaller) when stockholders are in an aggregate unrealized capital gain (loss) position. This relation is stronger among seller-initiated trades and weaker in December, consistent with the cognitive bias referred to as the disposition effect (Shefrin and Statman 1985). Sensitivity analysis reveals that the relation is stronger among less sophisticated investors and for firms with weaker information environments, consistent with the behavioral explanation. I also present evidence on the consequences of this disposition effect. First, stockholders' aggregate unrealized capital gain position moderates the degree to which information-related determinants of trade (e.g. unexpected earnings, firm size, and forecast dispersion) affect abnormal announcement-window trading volume. Second, stockholders' aggregate unrealized capital gains position is associated with announcement-window abnormal returns, consistent with the disposition effect reducing the market's ability to efficiently incorporate earnings news into price.
ContributorsWeisbrod, Eric (Author) / Hillegeist, Stephen (Thesis advisor) / Kaplan, Steven (Committee member) / Mikhail, Michael (Committee member) / Arizona State University (Publisher)
Created2012
Description
When managers provide earnings guidance, analysts normally respond within a short time frame with their own earnings forecasts. Within this setting, I investigate whether financial analysts use publicly available information to adjust for predictable error in management guidance and, if so, the explanation for such inefficiency. I provide evidence that analysts do not fully adjust for predictable guidance error when revising forecasts. The analyst inefficiency is attributed to analysts' attempts to advance relationship with the managers, analysts' compensation not tie to forecast accuracy, and their forecasting ability. Finally, the stock market acts as if it does not fully realize that analysts respond inefficiently to the guidance, introducing mispricing. This mispricing is not fully corrected upon earnings announcement.
ContributorsLin, Kuan-Chen (Author) / Mikhail, Michael (Thesis advisor) / Hillegeist, Stephen (Committee member) / Hugon, Jean (Committee member) / Arizona State University (Publisher)
Created2012
Description
This study investigates the relation between credit supply competition among banks and their clients’ conditional accounting conservatism (i.e., asymmetric timely loss recognition). The Interstate Banking and Branching Efficiency Act (IBBEA) of 1994 permits banks and bank holding companies to expand their business across state lines, introducing a positive shock to credit supply competition in the banking industry. The increase in credit supply competition weakens banks’ bargaining power in the negotiation process, which in turn may weaken their ability to demand conservative financial reporting from borrowers. Consistent with this prediction, results show that firms report less conservatively after the IBBEA is passed in their headquartered states. The effect of the IBBEA on conditional conservatism is particularly stronger for firms in states with a greater increase in competition among banks, firms whose operations are more concentrated in their headquarter states, firms with greater financial constraints, and firms subject to less external monitoring. Robustness tests confirm that the observed decline in conditional conservatism is causally related to the passage of IBBEA. Overall, this study highlights the impact of credit supply competition on financial reporting practices.
ContributorsHuang, Wei (Author) / Li, Yinghua (Thesis advisor) / Huang, Xiaochuan (Committee member) / Kaplan, Steve (Committee member) / Arizona State University (Publisher)
Created2018
Description当前，上市公司的盈余管理问题已是我国资本市场中普遍存在的突出问题。一般来说，一些企业为了满足资本市场对于上市、增发等条件的要求,以及为有效推动企业的并购、重组等行为的顺利实现,甚至为了谋求公司管理层的个别利益,往往运用盈余管理等举措实施公司财报及关键指标的粉饰修正，让不知情的股民蒙受一定的损失。普遍分析显示，我国股市中民营企业比其他企业遭遇的问题和压力更多、更大、更突出,因此民营企业从客观上来说拥有更强的盈余管理动机。而从当前我国资本市场的实际情况来看，我国相关专家学者对盈余管理的系统性深入研究，一般都瞄准了上市企业群体或持续亏损企业，对盈余管理的研究不系统、不全面、不深入，这将对我国进一步提升盈余管理监管水平构成一定不利影响。当前，由于我国民企在自身管理及发展动力方面的特殊性,我国民企的管理、盈余管理特点和国外上市公司还存在着很大的不同,进一步深入研究我国民企上市公司自身管理方面的突出特点，以及其对企业盈余管理等方面的深层次影响,有助于监管层对症下药，更有针对性地研究出台全新的监管措施,进一步提升管理水平。这还可以为公司发展的决策层及相关会计信息使用人员提供一定的决策参考, 因此其拥有十分重要的意义。
本文首先认真总结分析了有关上市企业治理结构和盈余管理等方面的历史文献资料，依托当前资本市场上普遍运用的委托代理、内部人控制和契约等理论，系统研究了我国民企上市公司在自身治理结构方面的突出特征以及其对盈余管理方面所构成影响的深层次原理。在此基础上，本文通过2015-2017年我国上市企业数据，基于截面Jones模型对民营企业和非民营企业盈余管理程度进行测算和比较分析，发现民营企业盈余管理程度更高；从四个层面系统研究民企公司自身的治理结构突出特点,设立回归模型论证了民营企业独特的公司治理结构特征对盈余管理程度确实会产生影响；最后,本文进一步利用修正的费尔萨姆一奥尔森估价模型对民营上市公司盈余管理有公司价值的关系进行了验证，发现两者具有显著相关性。
本文首先认真总结分析了有关上市企业治理结构和盈余管理等方面的历史文献资料，依托当前资本市场上普遍运用的委托代理、内部人控制和契约等理论，系统研究了我国民企上市公司在自身治理结构方面的突出特征以及其对盈余管理方面所构成影响的深层次原理。在此基础上，本文通过2015-2017年我国上市企业数据，基于截面Jones模型对民营企业和非民营企业盈余管理程度进行测算和比较分析，发现民营企业盈余管理程度更高；从四个层面系统研究民企公司自身的治理结构突出特点,设立回归模型论证了民营企业独特的公司治理结构特征对盈余管理程度确实会产生影响；最后,本文进一步利用修正的费尔萨姆一奥尔森估价模型对民营上市公司盈余管理有公司价值的关系进行了验证，发现两者具有显著相关性。
ContributorsChen, Hui (Author) / Shen, Wei (Thesis advisor) / Chang, Chun (Thesis advisor) / Huang, Xiaochuan (Committee member) / Arizona State University (Publisher)
Created2019
Description
An ethical dilemma is not a matter of “right” versus “wrong,” but rather it is a situation of conflicting values. A common ethical dilemma is that of honesty versus loyalty—is it better to tell the truth, or remain loyal to the company? In the Japanese culture, truth is circumstantial and can vary with different situations. In a way, the Japanese idea of honesty reflects how highly they value loyalty. This overlap of values results in the lack of an ethical dilemma for the Japanese, which creates a new risk for fraud. Without this struggle, a Japanese employee does not have strong justification against committing fraud if it aligns with his values of honesty and loyalty.
This paper looks at the Japanese values relating to honesty and loyalty to show how much these ideas overlap. The lack of a conflict of values creates a risk for fraud, which will be shown through an analysis of the scandals of two Japanese companies, Toshiba and Olympus. These scandals shine light on the complexity of the ethical dilemma for the Japanese employees; since their sense of circumstantial honesty encourages them to lie if it maintains the harmony of the group, there is little stopping them from committing the fraud that their superiors asked them to commit.
In a global economy, understanding the ways that values impact business and decisions is important for both interacting with others and anticipating potential conflicts, including those that may result in or indicate potential red flags for fraud.
This paper looks at the Japanese values relating to honesty and loyalty to show how much these ideas overlap. The lack of a conflict of values creates a risk for fraud, which will be shown through an analysis of the scandals of two Japanese companies, Toshiba and Olympus. These scandals shine light on the complexity of the ethical dilemma for the Japanese employees; since their sense of circumstantial honesty encourages them to lie if it maintains the harmony of the group, there is little stopping them from committing the fraud that their superiors asked them to commit.
In a global economy, understanding the ways that values impact business and decisions is important for both interacting with others and anticipating potential conflicts, including those that may result in or indicate potential red flags for fraud.
ContributorsTabar, Kelly Ann (Author) / Samuelson, Melissa (Thesis director) / Goldman, Alan (Committee member) / WPC Graduate Programs (Contributor) / W.P. Carey School of Business (Contributor) / School of Accountancy (Contributor) / Barrett, The Honors College (Contributor)
Created2018-05
Description
#VanLife is a long-time, up and coming lifestyle movement on social media centered around the process of leaving the traditional nine-to-five work week for a life on the road in a camper van. While the ‘hippie-esque’ vagabond lifestyle has its humble roots long before the turn of the century, the inception of social media platforms such as Instagram and Pinterest have fueled the more recent popularization of a full-time life on the road. #VanLifers often freelance on the road, work part time jobs, or gain sponsorships to help fund their traveling and humble lifestyle.
As the #VanLife craze continues to grow, new businesses are finding ways to meet the demand in the market. For #Vanlifers who own and operate their own camper vans, specialized companies like GoWesty, Vanagain, and Boxeer offer a full range of parts, upgrades, and custom mechanical and systems conversion kits to keep these vans on the road as OE manufacturers discontinue production on these parts. For those who have an itch to try out the #VanLife for a shorter period and without the financial commitment, companies like Roamerica, TontoTrails, and adventureRIGS offer nightly and weekly rental opportunities on fully-outfitted campervans ready to hit the road.
For my Honors Project I wrote a complete analysis on the history, development, and modernization of the #VanLife movement. With plans to take to the road for an extended period of time after graduation, I also developed a complete financial plan for a one-year #VanLife experience. The financial plan includes a comprehensive set of budgets that scrutinize the start-up an operational costs of the #VanLife and associated travel.
As the #VanLife craze continues to grow, new businesses are finding ways to meet the demand in the market. For #Vanlifers who own and operate their own camper vans, specialized companies like GoWesty, Vanagain, and Boxeer offer a full range of parts, upgrades, and custom mechanical and systems conversion kits to keep these vans on the road as OE manufacturers discontinue production on these parts. For those who have an itch to try out the #VanLife for a shorter period and without the financial commitment, companies like Roamerica, TontoTrails, and adventureRIGS offer nightly and weekly rental opportunities on fully-outfitted campervans ready to hit the road.
For my Honors Project I wrote a complete analysis on the history, development, and modernization of the #VanLife movement. With plans to take to the road for an extended period of time after graduation, I also developed a complete financial plan for a one-year #VanLife experience. The financial plan includes a comprehensive set of budgets that scrutinize the start-up an operational costs of the #VanLife and associated travel.
ContributorsRischitelli, Noah Gary (Author) / Garverick, Michael (Thesis director) / Dawson, Gregory (Committee member) / WPC Graduate Programs (Contributor) / School of Accountancy (Contributor) / Department of Finance (Contributor) / Barrett, The Honors College (Contributor)
Created2018-05
Description
This thesis examines the impact of price changes of select microprocessors on the market share and 5-year gross profit net present values of Company X in the networking market through a multi-step analysis. The networking market includes segments including media processing, cloud services, security, routers & switches, and access points. For this thesis our team focused on the routers & switches, as well as the security segments. Company X wants to capitalize on the expected growth of the networking market as it transitions to its fifth generation (henceforth referred to as 5G) by positioning itself favorably in its customers eyes through high quality products offered at competitive prices. Our team performed a quantitative analysis of benchmark data to measure the performances of Company X's products against those of its competitors. We collected this data from third party computer reviewers, as well as the published reports of Company X and its competitors. Through the use of a preference matrix, we then normalized this performance data to adjust for different scales. In order to provide a well-rounded analysis, we adjusted these normalized performances for power consumption (using thermal design power as a proxy) as well as price. We believe these adjusted performances are more valuable than raw benchmark data, as they appeal to the demands of price-sensitive customers. Based on these comparisons, our team was able to assess price changes for their market and discounted financial impact on Company X. Our findings challenge the current pricing of one of the two products being analyzed and suggests a 9% decrease in the price of said product. This recommendation most effectively positions Company X for the development of 5G by offering the best balance of market share and NPV.
ContributorsArias, Stephen (Co-author) / Masson, Taylor (Co-author) / McCall, Kyle (Co-author) / Dimitroff, Alex (Co-author) / Hardy, Sebastian (Co-author) / Simonson, Mark (Thesis director) / Haller, Marcie (Committee member) / School of Accountancy (Contributor) / Department of Finance (Contributor) / Barrett, The Honors College (Contributor)
Created2018-05
Description
Financial stress is one of the main stressors that university students face. At Arizona State University, 18.8% of students reported that financial stress has a high or very high effect on their overall stress levels. Nationwide, the National Student Financial Wellness Report states that over 70% of college students feel stressed about their financial situation. To address this problem, universities across the nation have implemented financial wellness programs to educate students on financial matters. This thesis conducts a study of five of the top financial wellness programs in the country, and then uses those findings to identify best practices for creating and implementing a financial wellness program at Arizona State University. I propose the development of a peer-to-peer program formed under the Financial Aid office. It would deliver content through presentations, workshops, one-on-one meetings, and an online platform called iGrad. It would cover critical financial topics such as budgeting, loans, credit, and investments. The program's goal of increasing financial wellness should be evaluated based on perceived efficacy, satisfaction with the material, a decrease in stress levels, lower default rates, and lower borrowing rates. Implementing this program allows ASU to help break the vicious cycle of financial stress that many students face.
ContributorsWilliamson, Madeline Jean (Author) / Pizzo, Melissa (Thesis director) / Dawes, Mary (Committee member) / WPC Graduate Programs (Contributor) / School of Accountancy (Contributor) / Department of Information Systems (Contributor) / Barrett, The Honors College (Contributor)
Created2018-05