9 research outputs found

    Share-Option Based Compensation Expense, Shareholder Returns and Financial Crisis

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    This paper contributes to the literature that analyses the relationship between Share-Option Based Compensation (SOBC) expense and shareholder returns. It utilises a sample of financial firms listed in the European Economic Area and Switzerland between 2005 and 2016 to make inferences about the impact of the financial crisis on the above-mentioned relationship. The paper also assesses the extent to which the relationship between SOBC expense and shareholder returns during the financial crisis varies with ownership concentration. We find evidence that the positive relationship between SOBC expense and shareholder returns is significantly more apparent during the financial crisis. This suggests that investors place more emphasis on the unrecognised intangible features of SOBC contracts during the crisis, even though their associated expenses are subject to managerial discretion and measurement errors. We also find that the positive relationship between SOBC expense and shareholder returns over the financial crisis is more pronounced when ownership is more concentrated. The results of our study are robust after controlling for firm size, potential investment growth opportunities, traditional banking activities and firm self-selection bias

    The Economic Consequences of Share-Option Based Compensation: New Evidence from the US and EU Banking Sectors.

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    The mandatory adoption of IFRS2 and its equivalent FAS123R (Share-Based Payment) presented a radical change in financial reporting of Share-Option Based Compensation (SOBC). Both IASB and FASB adopted the view that disclosure is not an adequate substitute for recognition; consequently, all SOBC transactions ultimately lead to expense recognition, measured at the grant-date fair value of SOBC. This thesis identifies and evaluates the major financial reporting implications of alternative reporting methods of accounting for SOBC across a global context and over different time periods for pre and post adoption of IFRS2/FAS123R. It explores two key research questions using an international sample of US and EU banks over the period (2004-2011). The first research question aims to identify, analyse, compare and evaluate the total effect of the compulsory adoption of IFRS2/FAS123R, on selected banks’ performance measures. Underpinned by equity valuation and agency theories, the second question aims to assess the extent to which the mandatory recognition approach to expensing SOBC provides more value relevant information that better reflects the incentive properties of such rewards than the disclosure approach. The findings show that the expensing of SOBC has resulted in modest and statistically significant negative effects on both US and EU banks’ selected financial performance measures with the impact being more likely to be higher in the US banking sector. The reported modest impact does not reflect earlier research estimations indicating that concerns and criticism of the implementation of IFRS2/FAS123R are largely unsubstantiated. The results also indicate that the recognition regime to expense SOBC is significantly more value relevant and better reflects the intangible value attributable to such rewards, relative to the disclosure regime. The influence of the differences in the financial reporting contexts on the intangible value attributable to SOBC is less burdensome after the mandatory adoption of IFRS2/FAS123R

    The Predictive Ability of Share-Based Compensation Expense

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    This paper examines the ability of share-based compensation expense (SBCE) to predict future firm performance relative to other employee compensation expenses. It also examines whether cash settled-based compensation expense has greater predictive ability for future performance than equity settled expense. Using a sample of 443 firms listed in the UK between 2005 and 2018, we find that the predictive ability of SBCE is statistically significantly higher than that of other employee compensation expenses. Furthermore, the results show that the predictive ability of SBCE classified as cash settled is statistically significantly higher than that of equity settled SBCE. Overall, our findings suggest that recognised SBCE, particularly cash settled SBCE (i.e. fair value-adjusted expense), is useful for predicting future firm performance

    Fair value accounting and value relevance of equity book value and net income for European financial firms during the crisis

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    This paper examines whether and how the level of exposure to fair value accounting moderates the changes in the value relevance of equity book value and net income during a crisis period. Using a sample of European listed financial firms over 2005‚Äď2011, our analysis confirms prior literature that the value relevance of book value of equity increases, while that of net income decreases during the financial crisis. More importantly, our findings offer robust support for the hypothesis that the impact of the crisis is less pronounced for firms whose financial statements are more exposed to fair value accounting. This evidence can be explained by the increased valuation weight placed by investors on the book value of equity relative to net income for firms with more exposure to fair value in the pre-crisis period

    Non-executive employee ownership and financial reporting quality: evidence from Europe

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    This paper examines the association between non-executive employee shareholding and financial reporting quality. The analysis is conducted using a sample of non-financial firms listed in eleven European countries between 2006 and 2017. We find a positive association between non-executive employee ownership and financial reporting quality. Furthermore, we find this positive association to be more pronounced for firms operating in the following settings: higher labour union density, more industry peer firms and more flexible labour market regulations. Overall, these findings support the view that employee shareholding enhances the quality of financial reporting by aligning the interests of employees with those of shareholders through two channels: reduced agency problems and enhanced employee retention. Our study contributes to the research on the impact of ownership characteristics on financial reporting incentives. It underscores the role non-executive employee ownership can play in improving a firm’s corporate governance and therefore the quality of financial reporting

    Global variation in postoperative mortality and complications after cancer surgery: a multicentre, prospective cohort study in 82 countries

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    ¬© 2021 The Author(s). Published by Elsevier Ltd. This is an Open Access article under the CC BY-NC-ND 4.0 licenseBackground: 80% of individuals with cancer will require a surgical procedure, yet little comparative data exist on early outcomes in low-income and middle-income countries (LMICs). We compared postoperative outcomes in breast, colorectal, and gastric cancer surgery in hospitals worldwide, focusing on the effect of disease stage and complications on postoperative mortality. Methods: This was a multicentre, international prospective cohort study of consecutive adult patients undergoing surgery for primary breast, colorectal, or gastric cancer requiring a skin incision done under general or neuraxial anaesthesia. The primary outcome was death or major complication within 30 days of surgery. Multilevel logistic regression determined relationships within three-level nested models of patients within hospitals and countries. Hospital-level infrastructure effects were explored with three-way mediation analyses. This study was registered with ClinicalTrials.gov, NCT03471494. Findings: Between April 1, 2018, and Jan 31, 2019, we enrolled 15 958 patients from 428 hospitals in 82 countries (high income 9106 patients, 31 countries; upper-middle income 2721 patients, 23 countries; or lower-middle income 4131 patients, 28 countries). Patients in LMICs presented with more advanced disease compared with patients in high-income countries. 30-day mortality was higher for gastric cancer in low-income or lower-middle-income countries (adjusted odds ratio 3¬∑72, 95% CI 1¬∑70‚Äď8¬∑16) and for colorectal cancer in low-income or lower-middle-income countries (4¬∑59, 2¬∑39‚Äď8¬∑80) and upper-middle-income countries (2¬∑06, 1¬∑11‚Äď3¬∑83). No difference in 30-day mortality was seen in breast cancer. The proportion of patients who died after a major complication was greatest in low-income or lower-middle-income countries (6¬∑15, 3¬∑26‚Äď11¬∑59) and upper-middle-income countries (3¬∑89, 2¬∑08‚Äď7¬∑29). Postoperative death after complications was partly explained by patient factors (60%) and partly by hospital or country (40%). The absence of consistently available postoperative care facilities was associated with seven to 10 more deaths per 100 major complications in LMICs. Cancer stage alone explained little of the early variation in mortality or postoperative complications. Interpretation: Higher levels of mortality after cancer surgery in LMICs was not fully explained by later presentation of disease. The capacity to rescue patients from surgical complications is a tangible opportunity for meaningful intervention. Early death after cancer surgery might be reduced by policies focusing on strengthening perioperative care systems to detect and intervene in common complications. Funding: National Institute for Health Research Global Health Research Unit

    Effects of hospital facilities on patient outcomes after cancer surgery: an international, prospective, observational study