Do cross-border listing firms manage earnings or seize a window of opportunity?

Accounting Review, 82(4): pp. 1009-1030.Firms raising new equity capital at cross-listing (IPO) and those crosslisting existing home-country public shares (non-IPO) benefit from earnings that are high when they cross-list on U.S. stock exchanges. IPO firms have greater benefits than non-IPO firms because they receive cash infusion at listing. I find that performance (ROA) and cash flows peak at cross-listing period for all cross-border firms. Using a matched-firm research design to control for industry and performance, the results suggest that both IPO and non-IPO firms time cross-listing when performance is peaking (seize a window of opportunity). Further tests investigate whether IPO and non-IPO firms differ in their incentives to engage in earnings management at the time of crosslisting. The results suggest that both appear to engage in the same level of earnings management at the time of cross-listing. This suggests that incentives to boost earnings to obtain higher cash infusion are not the main motivation for the earnings management observed. Other incentives, such as greater investor recognition could be a stronger motivation

Corporate Tax Avoidance And Political Action Committee Contributions: An Empirical Analysis

This study examines the relationships between corporate tax avoidance and Political Action Committee (PAC) contributions.  The study hypothesizes that corporate PAC contributions influence corporate tax avoidance behavior.  However, the tax savings associated with corporate PAC contributions do not increase monotonically because of significant wealth transfers from voters to corporations and the subsequent brokering behavior of politicians in favor of the voter constituency.  The results are consistent with our hypothesis

The Effects of International Differences in the Tax Treatment of Goodwill: A Reply

This reply summarizes the major findings of Dunne and Ndubizu [1995] and addresses the comments of Nobes [1996]. The assumptions underlying the tax hypothesis [Dunne and Ndubizu 1995] are reviewed. A possible suggestion for a direct test of the hypothesis is presented as well as the requirements for the falsification of a hypothesis.© 1996 JIBS. Journal of International Business Studies (1996) 27, 593–596

International Acquisition Accounting Method and Corporate Multinationalism: Evidence from Foreign Acquisitions

This paper examines the effect of different international accounting and tax treatments for goodwill on targets shareholders' wealth. The evidence shows that foreign companies that write off goodwill against a reserve account transfer more wealth to the target shareholders than those that amortize goodwill against income. Further analysis reveals that foreign acquires that deduct goodwill for tax purposes transfer more wealth to the target stockholders at the acquisition announcement than other acquires. Such wealth transfers are precipitated by the competition for corporate control. Thus, the more advantageous international accounting and tax treatments for goodwill may leave U.S. bidders at a disadvantage as they compete with foreign acquirers for corporate control.Furthermore, contrary to the multinational network hypothesis, the study shows that for the firms in the sample, the acquirers with previous experience in the U.S. market transfer more wealth to target shareholders than those entering the U.S. market for the first time. On the other hand, the results for the relationship between industrial relatedness of merger partners and abnormal returns to target shareholders is mixed.© 1995 JIBS. Journal of International Business Studies (1995) 26, 361–377

The Impact of "SFAS No. 14 Segment Information on Price Variability and Earnings Forecast Accuracy"

This study provides empirical evidence on the economic effects of "Statement of Financial Accounting Standards (SFAS) No. 14" segment disclosures. Required disclosures under this standard subsume those of the Securities and Exchange Commission' (SEC) 1970 line-of-business disclosure rule both in terms of the variables to be disclosed and the degree of decomposition of the consolidated information. Consequently, this study hypothesizes that stock price variability will be greater at the time of, and security analysts' earnings forecasts more accurate following, release of these disclosures. The results of the empirical analysis support these hypotheses. They indicate that "SFAS No. 14" segment disclosures convey incremental information over previously reported SEC line-of-business information that is relevant to stockholders and to security analysts. Copyright Blackwell Publishers Ltd 1998.