The informational advantage of specialized monitors: the case of bank examiners

Large commercial banking firms are monitored by specialized private sector monitors and by specialized government examiners. Previous research suggests that bank exams produce little useful information that is not already reflected in market prices. In this article, we apply a new research methodology to a unique data set, and find that government exams of large national banks produce significant new information which financial markets do not fully internalize for several additional months. Our results indicate that specialized government monitors can identify value-relevant information about private firms, even if those firms are already actively followed by investors and their private-sector agents.Bank supervision ; Bank examination

PENGARUH PERUBAHAN LABA PER SAHAM TERHADAP HARGA DAN VOLUME PERDAGANGAN SAHAM (Studi Empiris pada Perusahaan Manufaktur yang Go Publik di PT. BEJ)

Harga saham merupakan ukuran prestasi kinerja perusahaan yaitu seberapa jauh manajemen telah berhasil mengelola perusahaan atas nama pemegang saham dimana tugas seorang manajemen dengan tujuan utamanya adalah memaksimalkan harga saham dan bukan untuk memaksimalkan ukuran akuntansi seperti laba bersih atau laba per saham. Akan tetapi data akuntansi sangat mempengaruhi harga saham sehingga untuk memahami bagaimana kinerja perusahaan serta proyeksi keuangan, maka harus mengevaluasi informasi akuntansi dan volume perdagangan yang dilaporkan dalam laporan keuangan. Tujuan penelitian ini adalah untuk memperoleh bukti empiris mengenai pengaruh variabel independen yaitu perubahan laba per saham untuk tahun buku 2003 –2004 terhadap varibel dependen yaitu perubahan sampel harga saham dan volume perdagangan saham. Populasi yang digunakan adalah semua perusahaan go-publik yang terdaftar di BEJ dari tahun 2003 sampai tahun 2004. Sampel yang digunakan adalah perusahaan manufaktur yang aktif memperdagangkan sahamnya di BEJ yaitu perusahaan yang tergolong goodnews sebanyak 23 dan yang badnews sebanyak 19 perusahaan. Pemilihan sampel penelitian ini menggunakan purposive sampling dengan tujuan agar diperoleh sampel yang representatif sesuai dengan kriteria yang ditentukan. Untuk mengetahui hasil analisis data yang diperoleh digunakan analisis regresi berganda, dengan persamaan: Vi,t = α+βΔEPSGi,t + ε i,t , Vi,t = α+β ΔEPSBi,t + ε i,t , Hi,t = α+βΔEPSGi,t + ε i,t , dan Hi,t = α+βΔEPSBi,t + ε i,t .Setelah diketahui masing-masing variabel, kemudian diuji hipotesis dengan uji t. Berdasarkan hasil penelitian atas pengaruh laba per saham terhadap harga dan volume perdagangan saham dari 23 perusahaan tergolong Goodnews dan 19 perusahaan tergolong Badnews, dapat disimpulkan: 1) Perubahan laba per saham dalam kondisi goodnews tidak berpengaruh signifikan terhadap peningkatan saham di sekitar tanggal publikasi laporan keuangan, 2) Perubahan laba per saham dalam kondisi badnews tidak berpengaruh signifikan terhadap penurunan saham di sekitar tanggal publikasi laporan keuangan, 3) Perubahan laba per saham dalam kondisi goodnews tidak berpengaruh signifikan terhadap kenaikan volume perdagangan saham di sekitar tanggal publikasi laporan keuangan, 4) Perubahan laba per saham dalam kondisi badnews tidak berpengaruh signifikan terhadap penurunan volume perdagangan saham di sekitar tanggal publikasi laporan keuangan

Asymmetric News Effects on Volatility : Good vs. Bad News in Good vs. Bad Times

We study the impact of positive and negative macroeconomic US and European news announcements in different phases of the business cycle on the highfrequency volatility of the EUR/USD exchange rate. The results suggest that in general bad news increases volatility more than good news. The news effects also depend on the state of the economy: bad news increases volatility more in good times than in bad times, while there is no difference between the volatility effects of good news in bad and good times

Do Managers Strategically Time Investor Mood? Evidence of Releasing Bad News on Sunny Days

This paper explores whether managers strategically time the dissemination of bad news on sunny days to leverage positive investor mood. Our empirical evidence suggests that managers are more likely to announce bad news on sunny days and tend to reschedule bad news earnings announcements from cloudy days to sunny days when accurate weather forecasts are available. Further analysis shows a weaker short-term market reaction and a stronger post-earnings announcement drift for firms announcing bad news on sunny days rather than non-sunny days. In addition, we find that this strategic disclosure of bad news is not motivated by insider selling, but is more likely to be driven by firms’ fear of high litigation risks. Considering the benefit and cost of applying the mood-timing strategy, our cross-sectional tests show that managers are more likely to announce bad news on sunny days when the market sentiment is low, when the firm does not follow a routine pattern to release its earnings announcement, and when there are fewer sunny days around the EAD. In summary, our findings suggest that managers consider investor mood in their information dissemination strategies and that litigation concerns are the main driver behind the strategic release of bad news on sunny days

Do Markets React to Bank Examination Ratings? Evidence of Indirect Disclosure of Management Quality Through BHCs' Applications to Convert to FHCs

Certain nonrecurring circumstances associated with the passage of the Financial Services Modernization Act of 1999 have created a unique opportunity for the market to obtain bank examination ratings of management quality. We utilize this natural experiment in order to determine how the market views this heretofore private information. We find that the stock market utilizes bank examination ratings in order to reveal regulatory intent, rather than simply as information about management quality. Revelation of unsatisfactory M ratings (denoted “bad news”) causes BHC stock returns and market risk betas to increase, whereas revelation of acceptable M ratings (“good news”) causes BHC stock returns and market risk betas to decrease. The market thrives on “bad news” because unsatisfactory M ratings indicate that regulatory intervention is likely to occur, possibly benefiting both shareholders and creditors. On the other hand, revelation of acceptable M ratings (“good news”) indicates that bank regulators are unprepared to intervene in the near future. Moreover, we find lower bond spreads for a subsample of FHCs with satisfactory M ratings revealed upon conversion

Do Markets React to Bank Examination Ratings? Evidence of Indirect Disclosure of Management Quality Through BHCs' Applications to Convert to FHCs

Certain nonrecurring circumstances associated with the passage of the Financial Services Modernization Act of 1999 have created a unique opportunity for the market to obtain bank examination ratings of management quality. We utilize this natural experiment in order to determine how the market views this heretofore private information. We find that the stock market utilizes bank examination ratings in order to reveal regulatory intent, rather than simply as information about management quality. Revelation of unsatisfactory M ratings (denoted “bad news”) causes BHC stock returns and market risk betas to increase, whereas revelation of acceptable M ratings (“good news”) causes BHC stock returns and market risk betas to decrease. The market thrives on “bad news” because unsatisfactory M ratings indicate that regulatory intervention is likely to occur, possibly benefiting both shareholders and creditors. On the other hand, revelation of acceptable M ratings (“good news”) indicates that bank regulators are unprepared to intervene in the near future. Moreover, we find lower bond spreads for a subsample of FHCs with satisfactory M ratings revealed upon conversion

Properties Of Management Forecast And Analysts' Responsiveness

This paper examines the degree of analysts’ responsiveness to voluntary management guidance. Prior studies report that the management guidance is informative and influential (e.g. Baginski et al., 1993). This paper studies various factors that trigger equity market reactions around the management forecast issuance date and find that analysts are more reactive to new information contained in management guidance when the guidance conveys information that affects the stock market. The extent of the analysts’ reaction to management guidance increases when the analysts find that the guidance is more credible. Credibility of management guidance from the standpoint of analysts means ex-post accuracy of the earnings estimate by the management. The direction and the magnitude of earnings forecast revisions are influenced by the assessment of the credibility of management earnings forecast by financial analysts

Breaking bad news: exploring patient\u27s perspective and expectations

OBJECTIVE: To explore patient\u27s perspectives and expectations from physicians with respect to breaking of bad news. METHODS: A cross-sectional survey was carried out in the Community Health Centre of a tertiary care teaching hospital in Pakistan. All consenting individuals from 18 to 60 years of age were interviewed on the basis of a structured, pre-tested questionnaire. RESULTS: The response rate for this study was 91.3%. A total of 400 respondents completed the full interview. About 60% patients had a fairly accurate idea about the implications of the phrase bad news . A big proportion (44.1%) of people reported that bad news had been broken to them previously with incomplete details. From their personal experience, most respondents quoted disease diagnosis and chances of survival as most commonly encountered bad news. Diagnosis of cancer or its recurrence was stated as the most likely example of bad news (35.5%). A significant majority of respondents (40.5%) stated that it\u27s the patient\u27s absolute right to know bad news. A significant association for the relationship between both age as well as the gender of the respondents and type of emotional response expressed on hearing bad news (p = 0.000) was observed. CONCLUSION: This study documents the perceptions and expectations of patients from their physicians with regards to breaking of bad news. Most of the respondents wanted their doctors to be honest and upfront during the process

Moral Hazard with Counterfeit Signals

In many moral hazard problems, the principal evaluates the agent's performance based on signals which the agent may suppress and replace with counterfeits. This form of fraud may affect the design of optimal contracts drastically, leading to complete market failure in extreme cases. I show that in optimal contracts, the principal deters all fraud, and does so by two complementary mechanisms. First, the principal punishes signals that are suspicious, i.e. appear counterfeit. Second, the principal is lenient on bad signals that the agent could suppress, but does not

Pengaruh Return Saham, Earnings, dan Volume Perdagangan Saham terhadap Bid Ask Spread Sebelum dan Sesudah Pengumuman Laporan Keuangan

This research was intended to study and to analyze the influence of stock price,earnings and stock trading volume on bid ask spread before and after thepublication of financial statements both in good and in bad news. This research wasalso intended to identify the differences between bid ask spread before and after thepublication of financial statements both in good and bad news. Researchingpopulation are manufacture companies which listed in Jakarta Stock Exchange in2001 to 2005. The sample gained by purposive sample technique. The resultsample are 39 companies which 16 companies publishing financial statements ingood news and 23 companies others publishing financial statements in bad news.The hypotesis was analyzed by using a paired sample t tet and multiple regressionanalysis.The result showed that stock return consistently had a significant effect on bid askspread after the publication of financial statements in bad news. Earnings had asignificant effect on bid ask spread before the publication of financial statements inboth good and bad news. Stock trading volume had a significant effect on bid askspread before and after the publication of financial statements in both good and badnews. The results also showed that there were no differences between bid askspread before and after the publication of financial statements in good and badnews