Implications of Deferred Revenue Changes for Future Financial Performance and Market Underreaction

This study found that changes in current deferred revenues (ΔDRC) are positively associated with sales growth, gross profit margin, profit margin and return on assets of the next two years. The evidence suggests that deferred revenue changes can serve as a valid leading indicator for a firm’s future financial performance. It also identified a positive relationship between a firm’s ΔDRC and its market valuation, indicating that market participants (at least partially) incorporate the future performance implications of deferred revenue changes into their valuation decisions. While prior research suggested mismatch of revenues and expenses (Prakash and Sinha 2013) as the potential explanation for the abnormal stock returns in reporting firms, the empirical evidence in this study supports an alternative explanation: investors’ underreaction to the information content of deferred revenue changes

The Deregulatory Effects of the Telecommunications Act of 1996 on the Broadcasting Industry: Expectations vs. Reality

The broadcasting industry experienced drastic deregulation with the passage of the Telecommunications Act of 1996. This study examines the capital market reactions to the passage of the Act and aftermath changes in profitability and efficiency in the broadcasting industry. This study finds that the deregulation. particularly relaxing the rules for broadcast ownership. had significant positive effects on stock returns for the broadcasting firms. Among them, firms focusing on broadcasting business and small television groups gained more from the deregulation in terms of increases in market value, as opposed to diversified and large television groups. The longitudinal analysis indicates that the profitability of broadcasting firms in terms of return on sales improved after the Act. This can mainly be attributed to broadcasting firm\u27s increased market power that resulted from increased industry concentration. Profitability in terms of return on assets, however, deteriorated after the Act. which can be attributed to decreased operating efficiency represented by asset turnover. We find no evidence that the deregulation improved the broadcasting industry\u27s efficiency of employees to generate sales. Our findings question the notion that the deregulation would help the industry to improve its operating efficiency by achieving economies of scale

Chief Executive Compensation and Institutional Ownership

In this study the impact of institutional ownership is explored on the structure of CEO compensation. Evidences indicate that large increases in institutional ownership significantly reduce the level of CEO compensation and compensation risk. However, no significant evidence shows that the CEO pay-for-performance sensitivity is affected by institutional holdings

The deregulatory effects of the Telecommunications Act of 1996 on the broadcasting industry: Expectations vs. reality

The broadcasting industry experienced drastic deregulation with the passage of the Telecommunications Act of 1996. This study examines the capital market reactions to the passage of the Act and aftermath changes in profitability and efficiency in the broadcasting industry. This study finds that the deregulation, particularly relaxing the rules for broadcast ownership, had significant positive effects on stock returns for the broadcasting firms. Among them, firms focusing on broadcasting business and small television groups gained more from the deregulation in terms of increases in market value, as opposed to diversified and large television groups. The longitudinal analysis indicates that the profitability of broadcasting firms in terms of return on sales improved after the Act. This can mainly be attributed to broadcasting firm's increased market power that resulted from increased industry concentration. Profitability in terms of return on assets, however, deteriorated after the Act, which can be attributed to decreased operating efficiency represented by asset turnover. We find no evidence that the deregulation improved the broadcasting industry's efficiency of employees to generate sales. Our findings question the notion that the deregulation would help the industry to improve its operating efficiency by achieving economies of scale.

Price Clustering of Chinese IPOs: The Impact of Regulation, Cultural Factors, and Negotiation

During June 2009–May 2012, the China Securities Regulatory Commission (CSRC) suspended window guidance that limits issue prices. Using this regime change as a natural experiment, we test the combined effects of regulation, culture, and negotiation on price clustering of Chinese IPOs. The proportion of IPOs priced on round number 0 increases from 42.58% during sample periods with window guidance to 79.81% during sample period without window guidance, a level similar to that reported in developed markets. Moreover, we document a connection between whole CNY pricing of Chinese IPOs and several uncertainty measures including a unique uncertainty proxy defined as the time gap between the IPO date and the listing date. Second to the round number 0, issuing firms favour number 8 that associates with fortune, particularly during sample periods with window guidance. Our findings that price restrictions limit the power of negotiations but not the influence of cultural factors contributing to the understanding of price formation process

The Varlability of Board Size Determinants: An Empirical Analysis

We use a sample of randomly selected CRSP-listed firms to explore the cross-sectional determinants of corporate board size. We find that the average number of directors on boards differs significantly across industries. Further evidence indicates that these differences are jointly and significantly determined by a variety of director, CEO, ownership, and firm-specific variables across industries. The determinants of board size also vary substantially across surviving and delistingfirms, regulated and unregulated companies, firms in financial distress, and bankrupt firms. Our models explain as much as 52% ofthe observed variation in board size. The cross-sectional variation in board size is driven by various economic forces. Therefore, understanding the choice of board structure requires a thorough examination ofthe associated costs and benefits for individual firms. [G30, G32, G33, G34

The influence of executive age, career horizon and incentives on pre-turnover earnings management

In this paper we hypothesize that CEOs will be motivated to manage earnings prior to a turnover decision. This motivation comes from the horizon problem for CEOs nearing retirement age and for CEOs whose profit-based bonus is a large portion of their total compensation. We find that firms in which CEOs are nearing retirement age have large discretionary accruals in the year prior to turnover. Although we find firms with a larger proportion of profit-based bonus pay have larger discretionary accruals, this result is not robust with the inclusion of control variables in the regressions. Copyright Springer Science+Business Media, LLC 2007

Too busy to show up? An analysis of directors' absences

This study contributes to the debate on the benefits and costs of multiple directorships by investigating the impact of multiple directorships on board meeting attendance. Individuals with multiple board seats (or "busy" directors) exhibit a higher tendency to be absent from board meetings. The results are robust even after controlling for firm-specific characteristics, board of directors structure and endogeneity. Furthermore, our results do not support the hypothesis that directors with higher ownership stakes are more motivated to attend board meetings. Monetary inducements such as board meeting fees and annual director retainers do not appear to enhance attendance. Finally, the enactment of the Sarbanes-Oxley Act (SOX) appears to have a material impact on board attendance.Multiple directorships Meeting attendance Corporate governance