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This paper explores the impact of the CEO's supervisory role as an independent director on firm performance, utilizing measures such as Return on Equity (ROE) and Tobin's Q. The supervisory effect is assessed through the remuneration of directors and supervisors. Empirical findings indicate a significant supervisory role when the CEO also serves as an independent director. Whether viewed from the perspective of shareholders' equity or company growth, the CEO's involvement as an independent director positively influences firm performance. Furthermore, the concurrent roles of CEO and independent director contribute to enhanced firm performance, irrespective of their relationship. [ABSTRACT FROM AUTHOR]

Faster attainment of optimal financial leverage guarantees the company's survival and the growth of shareholders' interests. This paper investigates the effect of family ownership on the speed of adjustment of financial leverage toward optimal leverage. The data of 133 companies listed on the Tehran Stock Exchange, selected according to the systematic exclusion pattern, was collected for 10 years from 2012 to 2021 to achieve the research objectives. A multivariate linear regression model was used to test the research hypotheses. In order to measure the speed of adjustment of financial leverage, the partial adjustment pattern model of Öztekin (2015) has been used, and to evaluate the Family Ownership, Chen et al. (2008) method was used. The results showed that the speed of adjustment of financial leverage towards optimal leverage in family companies is faster than in non-family companies. Therefore, family owners in companies with a higher sense of responsibility towards the company's capital can create a safe environment for investors and ensure a return on their investment. [ABSTRACT FROM AUTHOR]

The objective of this article was to measure the cash flow at risk (CFaR) of non-financial companies in the Brazilian capital market and compare it to shareholders' equity in order to assess the risk of insolvency. Unlike banks and insurance companies, which have strong capital requirements, the current regulation of non-financial institutions in Brazil does not provide for the calculation or maintenance of a minimum shareholders' equity. This study fills a gap in the literature by relating CFaR to the shareholders' equity of entities, providing a measure of insolvency risk. Monitoring insolvency risk (i.e., the possibility of negative shareholders' equity) is critical for any entity, regardless of its industry, market, or size. The results of the CFaR measurement show that companies in different sectors can be exposed to insufficient resources in the event of operational problems. It is hoped that this will help regulators in different sectors to assess minimum capital requirements. CFaR was measured using Ebit and Ebitda (quarterly and annual). The panel consisted of 186 companies listed on the B³ between 2010 and 2022, totaling 4,897 company-quarters. The companies were divided into eight subgroups based on their characteristics. The results showed that non-financial listed companies in the Brazilian market may be undercapitalized, as 18% of the 169 entities that currently have positive shareholders' equity would become negative at a 1% risk level. CFaRs were also reestimated during the pandemic and did not show a clear pattern compared to other periods. [ABSTRACT FROM AUTHOR]

INTRODUCTION: A company's net profit is a significant factor in measuring whether the company is performing well or not. How to improve the company's return on assets, strengthen the company's operations, improve the company's capital structure, enhance the company's marketing strength, and accelerate the company's financing speed is an inevitable choice for the company to avoid falling into a financial crisis. OBJECTIVES: Forecasting the financial crisis of listed companies based on the financial situation of selected listed companies. METHODS: The return on assets, shareholders' equity ratio, return on net worth and other company factors have been studied empirically using data mining techniques. A mathematical model for financial risk identification was developed and evaluated. RESULTS: The results show that the accuracy is above 90%. CONCLUSION: The study found that the lower the return on capital, the higher the financial risk the firm faces; the lower the financial debt ratio, the higher the chance of financial difficulties, and the two are positively correlated. [ABSTRACT FROM AUTHOR]

Copyright of Revista Evidenciação Contábil & Finanças is the property of Revista Evidenciacao Contabil & Financas and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Objective: To verify the relationship between signs of corporate fraud and the relevance of accounting information in Brazilian publicly-held companies. Method: A sample of 126 publicly traded companies listed on the B3 was used, from 2011 to 2020, whether they were involved in different situations that indicate fraud. Fraud was measured by a dummy variable that aimed to capture whether the company was involved in a case of fraud reported in the media or by the existence of a sanctioning administrative process. To analyze this interaction, the econometric model of value relevance, proposed by Collins et al. (1997), complemented Ohlson's model (1995). Results: Generally, the results denote that profit and equity are relevant to their information. However, when analyzing companies with signs of fraud, the loss of relevance of net income is observed, while the relevance of shareholders' equity started to have "inverse relevance" of its information, as it presented a negative sign. Contributions: The findings contribute by highlighting the importance of considering the occurrence of corporate fraud when interpreting accounting information. The loss of relevance of net income may indicate questionable accounting practices, which undermines investor confidence and negatively affects the ability to assess the performance and value of companies. In addition, the "inverse relevance" of equity suggests that corporate fraud can distort the financial reality of companies, making accounting information less reliable and valuable for users. [ABSTRACT FROM AUTHOR]

Over the past few decades, financial performance has attracted researchers' attention, especially in the insurance sector. Insurance is a tool for the growth and sustainability of both rising and developing economies. It promotes economic stability for people, organizations, and governments by taking on risk and spreading it across the market. We intend to classify insurance companies' financial performance in Jordan's Amman Stock Exchange (ASE). The sample size is 15 out of 22 selected insurance firms from 2008 to 2020. We apply the Multi-Layer Perceptron (MLP) model for the detection of (high/low) total asset turnover (TAT) as output, while we select the subrogation (SB), claims paid (CP), market capitalization (MC), and total shareholders' equity (SE) as input to the MLP model. The performance of the MLP model is evaluated using different criteria, namely the false positive rate (FP rate), false negative rate (FN rate), F-measure, precision, and accuracy (ACC). The results show that MLP is efficient and performs well in multiple criterion tests through iteration growth. Based on our knowledge, the paper assesses the financial performance of Jordanian insurance firms, which has not been investigated previously. Furthermore, this study gives valuable information to regulators and policymakers to improve asset management efficiency in the insurance sector. [ABSTRACT FROM AUTHOR]

The impact of personal risk caused by controlling shareholders' equity pledges on the company's debt policy is an issue worth exploring. Using Chinese A-share listed companies from 2006 to 2020, this paper studies the impact of ultimate owner equity pledges on firm debt size and debt maturity structure and explores the mechanism of ultimate owner personal leverage on firms. The results show that the increase in ultimate owner stock pledges leads to higher financial leverage and a longer debtmaturity structure for the company. In addition, the study reveals that the high personal leverage of the ultimate owner of the pledged equity is an influential mechanism driving the transfer of personal risk to the firm. In particular, even if a company's actual debt ratio is higher than its target debt ratio, equity pledges can prompt listed companies to increase their debt ratios and debt maturities, causing them to take on excessive debt risk and transfer the risk to creditors. It follows that the tunneling effect is a driving force of equity pledging and corporate debt policies. These results remain robust after the robustness test and endogenous test. The conclusions of this paper not only emphasize the impact of shareholders' personal risk on the firm but also provide a reference for investors' perception of firm risk. [ABSTRACT FROM AUTHOR]

ResearchBackground. The process of economic globalization is accelerating, and the financial risks that listed companies need to face are more complicated. Research Purpose. In order to clarify the impact of shareholder equity pledge on financial leverage imbalance crisis, research on the analysis and prevention of financial leverage imbalance crisis of shareholder equity pledge based on the DANP model is carried out. Research Method and Process. The DANP financial leverage imbalance early warning model is introduced to analyze the impact of shareholder equity pledge on financial leverage imbalance crisis by combining the financial leverage effect and potential risks of shareholder equity pledge, optimize the financial leverage imbalance early warning evaluation index system, preprocess the early warning evaluation indicators, determine the constant weight of each evaluation index, and obtain the final financial leverage imbalance crisis early warning evaluation value based on the determined constant weight. Research Results. The DANP model can accurately analyze the financial leverage imbalance crisis in the case of shareholder equity pledges, clarify the company's financial status in the case of shareholder equity pledges, propose to standardize equity pledge behavior, improve the company's internal control system in response to the crisis of shareholder equity pledge financial leverage imbalances, and improve the three prevention and control measures of the independent director system to enhance the ability of enterprises to resist the crisis of financial leverage imbalance. [ABSTRACT FROM AUTHOR]

The equity pledge has become a universal practice in the world. Taking Chinese listed companies from 2007 to 2020 as a sample, this paper investigates the influence of controlling shareholders' equity pledges on M&A behavior. It is found that the probability of M&A of listed companies is greater when the controlling shareholder has an equity pledge (or the proportion of equity pledge of controlling shareholder is higher). M&A activities can raise the stock price and play the role of market value management. Controlling shareholders with margin call pressure have stronger motivation to use M&A to increase their share price. Investors seem to be aware of this behavior and underestimate the potential benefits of M&A under this pressure. Propensity score matching (PSM) and difference in difference (DID) were used to test endogeneity and the results were still robust. Overall, our results reveal the impact of equity pledges by controlling shareholders on M&A. Furthermore, margin call pressure, this organizational psychology promotes this possibility. [ABSTRACT FROM AUTHOR]

Based on the unbalanced panel data of China's A-share listed companies from 2013 to 2021, this paper empirically examines the influence of controlling shareholders' equity pledge on the listed companies' stock repurchase. It is found that listed companies will stabilize the share price through stock repurchase to prevent the risk of control right transfer due to stock price decline. There is a positive correlation between equity pledge and stock repurchase. Moreover, this positive correlation is more significant among nonstate-owned listed companies and listed companies in the eastern region. Further research shows that the positive influence of equity pledge on stock repurchase is more significant under a good information environment and good corporate governance. However, the earnings management behavior of listed companies has no significant influence on the positive influence of equity pledge on stock repurchase. [ABSTRACT FROM AUTHOR]

In China's growth enterprise market, information disclosure has become the main basis for investors to make investment decisions. A sound information disclosure system is the cornerstone of maintaining the normal order of the market and a strong guarantee for the sustainable and healthy development of the New Third Board market. This study mainly discusses the enterprise risk information disclosure based on a semantic analysis method. The method of emotion dictionary construction based on dictionary has a large scale, but it is suitable for general domain emotion dictionary construction; the method of emotion dictionary construction based on corpus has strong domain. Obtain a plurality of modeling corpora to be identified; from each modeling corpus to be identified, obtain at least one emotional feature word; for any emotional feature word, obtain at least two labeling results for the emotional feature word, at least two the labeling results are labelled by the publisher and multiple receivers, and each labeling result corresponds to a classified sentiment label; according to at least two labeling results of sentiment feature words. In this paper, sentiment analysis is carried out for web financial reviews, so the domain applicability of sentiment dictionary is required to be high. The basic characteristics of the company are as follows: Indep and Concen. As an independent third party with no interest relationship with listed companies, independent directors play an important role in reducing agency costs and insider control, protecting the interests of investors, and improving the company's decision-making ability. ROA returns on total assets, which is intended to measure the ability of a company to use all its assets (including liabilities and shareholders' equity) to generate a percentage of pretax profit before interest. When calculating ROA for a certain period, the denominator (total assets) in the formula can be the average of the total assets at the beginning of the period and the total assets at the end of the period as the denominator. To be more precise, take the weighted average. To a certain extent, the concentration of equity can eliminate the defects of equity dispersion, so as to achieve the strategic purpose of enterprises. The financial characteristics of the company are measured by ROA, Leve, and OPG. Once the company's operating revenue growth rate is not ideal, it will affect the company's listing, so the management has the motivation to affect the company's relevant information disclosure. The shareholding ratio of venture capital is measured by the total proportion of all venture capital. The average value is 8.5%, the maximum value is 74%, and the minimum value is 0.04%. In the future, not only the information disclosure requirements of regulatory agencies for listing and applying for listing will be more stringent, but also the information disclosure requirements of external investors will be more stringent. This study helps to make up for the lack of gem data. Combined with the relevant experience accumulated in the actual work and the relevant regulations of the mature OTC capital market, some suggestions are put forward, in order to be beneficial to the improvement of the market information disclosure system. [ABSTRACT FROM AUTHOR]

The study is carried out to determine reinsurance in place of a risk management instrument and its effect on the non-life insurance firms' profitability in Nigeria, adopting ex-post-facto design, with multiple correlation and regression model to analyze the data obtained from Nigeria Insurers Association Digest report 2007 to 2018, which is indicating 12 years of study sample size. The findings of the study show that Premium Cession Ratio (PCR) and Net Retention Ratio (NRR) have positive effect on the profitability (ROA) of insurance companies but not significant with their coefficient values of (0.059880 and 0.006273) and their associated probability values of (0.2811 and 0.8880) respectively. However, the findings reveal that Reinsurance Dependence Cede Premium (RDC) and Reinsurance Commission to Shareholder's Equity (RCS) have affected the profitability (ROA) of insurance business entities negatively and insignificantly with their values of coefficient (-0.266824 and -0.894553) and their corresponding pvalue is (0.5149 and 0.3497) respectively. [ABSTRACT FROM AUTHOR]

This paper takes the stock repurchase cases in 2018-2019 after the promulgation of the New Company Law as the research object. Using the qualitative comparative analysis method and PSO-ICA-GARCH model, we analyze the influencing factors of the stock repurchase announcement market reaction. Through the analysis of the degree of premium (DP), repurchase ratio (RR), natural logarithm of total assets (LAS), return on net assets (ROE), top 10 shareholder equity ratio (CR10), and executive shareholding ratio (MSL), it is found that the paths of high CAR stock repurchase effect include repurchase clause-oriented type and centralization-proportional matching type; the path of nonhigh CAR stock repurchase effect includes size-premium limit type, profit-proportion limit type, and repurchase clause limit type. Compared with GARCH model, it has higher separation accuracy and more accurate model prediction effect. [ABSTRACT FROM AUTHOR]

This study analyzes the value relevance of accounting information and the quality of analysts' forecasts in different information environments of emerging countries. We analyze 7,024 non-financial companies in 21 countries in the period from 2000 to 2016. The qualities of the analysts' forecasts (AFQ) and the information environment (CIEI) of the countries are captured using indexes built by Principal Component Analysis. The value relevance of the AFQ is analyzed using the model proposed by Collins, Maydew, and Weiss (1997). Our results suggest that AFQ is value relevant in emerging markets, helping to explain the firms' stock price. Still, the evidence points out that the AFQ adds relevance to the accounting information, with emphasis on the information about shareholders' equity. We found that accounting and AFQ are value relevant, regardless of whether CIEI is high or low. More than that, we differentiate ourselves from previous studies by grouping in an original way some quality indicators of the analysts' forecasts, and the information environment, noting that both accounting information and AFQ become more relevant when the country's information environment is better. [ABSTRACT FROM AUTHOR]

Several theories point to the influence of board interlocks on the diffusion of important resources, mainly information. Empirical confirmation of the information functionality of the interlocking directorates network was obtained in the case of network research under the Anglo-Saxon model of corporate governance as well as the continental model in developed countries. Since the early 1990s another model of corporate governance in CEE countries has been developed. The specific determinants of the development of this model do not allow us to unequivocally state similar causes and consequences of interlocking directorates in relation to the most frequently studied western corporate governance models. The aim of this study is to determine the importance managers attach to these relationships within a corporate network as a source of strategic information that is important to the company's strategic decision-making process, in the context of the Polish governance model. The research employs the case-study method and presents the results of five case studies of companies listed on the Warsaw Stock Exchange. The research, on the one hand, suggests that the network embeddedness of Polish listed companies is of minor significance; on the other hand, it pointed to the existence of two main types of corporate networks: one inwardly directed and focused on supervisory board members' controlling function performed with a view to protecting the shareholders' equity ownership, and the other orientated towards external relationships, often distant from the original industry, in order to obtain information that supports new initiatives. What seems to most determine the behaviour of company managers is the corporate culture resulting from the presence of a foreign owner from a Western European country. In general, the findings confirm the importance of the network of interlocking directorates more as an instrument of control than diffusion of strategic information. [ABSTRACT FROM AUTHOR]

Purpose: The focus of the study was to investigate whether acquisition and merger as a tool of recapitalization improves Ecobank Ghana limited performance in the long run. This study precisely examined the effect of acquisition and merger on return on assets, return on capital employed, shareholders equity to total assets, debt to equity and total liabilities to total assets. Methodology: The study adopted a descriptive research model with quantitative analysis. Financial ratios over a 12-year period (2006-2018, excluding 2012) were extracted from financial statements of the bank. The inferential and descriptive statistics were employed for the data analysis. The hypothesis of the study was tested by employing the independent sample test. Also, the Levene's test was employed to test for the variance homogeneity. Findings: Results from the t-test for equality of means revealed that acquisition and merger had an insignificant relation with the return on equity, return on capital employed, shareholders equity to total assets, debt to equity and total liabilities to total asset. Originality/Value: This paper seeks to add up to the existing empirical evidence on the impact of mergers and acquisitions on the financial performance of Ecobank Ghana Limited. The study further recommend that the processes involve in mergers should be strategically planned and executed not ignoring the valuation process. [ABSTRACT FROM AUTHOR]

An important and significant feature of Takāful Model is the proper administration and effective management of risk fund and the takāful surplus distribution. Unlike conventional insurance where all premiums paid are exchanged in consideration for underwriting risk pool assumed by the insurance company in the form of risk transfer, Takāful contribution is based on the principle of mutual trust, mutual risk pooling, and mutual benefit based on (ta’aun) cooperation and the social contract of tabarru’. The tabarru’ contribution to the risk fund exemplifies the social nature of the risk fund. Technically the nature of this mutual risk fund is based on social contribution intended to indemnify the participants as policyholders against peril arising from hazard. However, the issue of both moral and morale hazard may also arise due to the lack of policy and strategy in terms of governance and transparency of the risk fund. This article attempts to critically review the current takāful surplus management of selected takāful operator’s model based on Shariah principles, rulings, and requirements; and the regulatory guidelines and policy documents. It will highlight the issue(s) of social equity among the shareholders, takāful operators, and policyholders and present the analytics of takāful surplus based on the different takāful operating models as specified by the Takāful Operating Framework. It will also examine the consequences of takāful surplus management reporting practices and the implications of the adoption of relevant international financial reporting standards. Finally, this article will attempt to articulate the analytics for social equity in Takāful. [ABSTRACT FROM AUTHOR]

Control power is a core issue that every listed company pays great attention to. The company's shareholding structure directly affects the allocation of control rights. Therefore, the shareholding structure of listed companies is analyzed, and various factors related to the allocation of company control rights are discussed. It is very important to build indicators of control allocation of listed companies and improve the governance model of listed companies. Based on this, this article proposes to use neural networks and machine learning techniques to build related models and solve related problems. This article takes the control allocation index of listed companies on the SSE and SZSE platforms under good securities' market conditions as the research object and takes the stock holding allocation of listed companies as a reference for the control allocation index. Combine sliding removal technology and approximate entropy with sample entropy, select the sliding window and sliding step size as 21 data, keep the sliding window unchanged, and calculate the approximate entropy and sample entropy of the sequence after removing 21 data for each sliding value to analyze the correlation between the rate of return, complexity, and effectiveness. The results of the study show that the mean and median of the majority shareholder's equity pledge behavior are 0.249 and 0, respectively, and the mean and median of the majority shareholder's equity pledge ratio are 0.147 and 0, respectively, indicating that 24.9% of the companies in the sample have major shareholder equity. Pledge is limited by sample data, and the proportion of major shareholders' equity pledge is moderate, which means that there is a certain gap in the quality of internal control between companies. [ABSTRACT FROM AUTHOR]

Adopting fair value measurement may bring more earnings fluctuations and induce irrational psychology and radical financing behavior of managers and major shareholders. Based on behavioral corporate governance theory, using the sample of A-share nonfinancial listed companies of China during 2015–2017, this paper empirically examines the regulatory effect of fair value measurement; that is, whether fair value measurement affects the company's financing decisions when major shareholders have irrational psychological characteristics, i.e., overconfidence. The study found that overconfident major shareholders increase the probability of equity pledge and increase the proportion of equity pledge; further inspection found that if the level of accrued earnings management is higher, the adjustment effect of fair value measurement is also higher; when the risk of stock price collapse is higher, fair value measurement obviously increases the probability and ratio of overconfident major shareholders' equity pledge. The above conclusions provide empirical evidence that fair value measurement has a positively regulatory effect on financing decisions of major shareholders. [ABSTRACT FROM AUTHOR]

New share issuances are capable of severe corporate governance consequences for the issuer and should be considered fundamental changes. Several recent Delaware cases confirm the severity of new share issuances, showing that the transactions have been used to affect the ownership structure of the firm, with the goal to either dilute or strengthen the participation of identified shareholders. U.S. law adopts a management-centric approach to the transaction, which is more focused on its economic side and seems consistent with the traditional view of public corporations with dispersed shareholders. However, this legal framework does not seem responsive to shareholders' interests anymore. The institutionalization of the shareholder base of public firms has increased the average concentration of the ownership structures and the shareholders' powers. This Article identifies several instances of conflicts between the insiders and the outsiders, where shareholders carry a strong interest in avoiding the dilution of their voting power. Moreover, the entire fairness analysis proves to be flawed in that it fails to consider that the value of voting rights is highly subjective both for controllers and minority shareholders. Managers may take advantage of the tool, exploiting either the value or the voting rights of the existing shareholders. The claim of this Article is to increase the shareholders' power in U.S. law. The comparative analysis helps identify possible tools. Namely, European legal systems set forth both the preemptive right and the requirement of the existing shareholders' approval. After having identified the flaws of the preemptive right provision -- mainly due to the information asymmetry that affects outsider shareholders -- this Article puts up a new framework requiring mandatory approval of new share issuances. Certain recent Italian cases witnessed a successful opposition by the outsider shareholders, who cast a negative vote and prevented the completion of the transaction. The value of the proposed rule in this Article declines depending on the presence of a controlling shareholder. Namely, while in non-controlled firms all the shareholders should be entitled to cast their vote, in controlled firms, the controller should vote only if the issuance does not strengthen her position, in order to avoid tunneling issues. Authoritative studies debated the increase of shareholders' powers in public firms. Other essays focused on the issue of midstream recapitalizations and the protection of the minority shareholders in controlled firms. This Article analyzes a wide range of new share issuances both in controlled and in non-controlled firms, considering the possible incentives underlying the decision to enter into the transaction. The impact of the transaction is not trivial since, among other reasons, any debate on shareholder engagement and activism is frustrated as the insiders are empowered to easily dilute the "noisy" outsiders at will. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to present a new approach to developing a financial distress prediction model that analyzes factors affecting success or failure of dot-com companies. In a new model, both demand side and supply side categories account for the performance of firms following IPOs. Huyghebaert et al. (2000) and Lewis et al. (2000) serve as a framework for the new model. This research uses a logistic regression analysis to build the proposed model. The demand side category includes a market condition factor, while the supply side category includes a funds flow factor. The statistical results show that independent variables such as Gross Profit Margins, Cash Flows, Accounts Receivables, Accounts Payables, and Market Value are significant whereas Stockholders' Equities, Dividends, Capital Expenditures, and Inventories are insignificant. [ABSTRACT FROM AUTHOR]

Copyright of Scientific Journal European Policies, Finance & Marketing / Polityki Europejskie, Finanse & Marketing is the property of Wydawnictwo SGGW and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

There are several measures of equity compensation that may provide shareholders with distinct and useful information for evaluating CEO pay. We examine whether shareholders consider additional disclosures of equity compensation measures beyond the grant date fair value when participating in corporate governance. We find that CEO equity compensation expense, a distinct measure of equity compensation, is a determinant of shareholder voting for management sponsored equity plans and voting for directors that serve on the compensation committee. After controlling for ISS recommendations, we find that voting outcomes remain significantly related to abnormal equity compensation expense. Consistent with shareholders considering the equity compensation expense, we document that firms shorten equity compensation vesting periods when they are no longer required to disclose the equity compensation expense. Our findings suggest that shareholders rely on multiple, distinct measures of equity compensation when participating in corporate governance. JEL Classifications: M12; M52; G34. Data Availability: Data are available from the public sources cited in the text. [ABSTRACT FROM AUTHOR]

Copyright of Revista Evidenciação Contábil & Finanças is the property of Revista Evidenciacao Contabil & Financas and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper investigates the associations between managerial aversion, capital structure, and market valuation. The paper outlines managerial risk aversion and managerial regret aversion as perceptions of managerial aversion and tests whether both managerial behaviours directly affect the capital structure and market valuation of firms. The study uses a comprehensive measure of risk aversion by considering risk frequency, risk severity, and risk reduction price on shareholders' equity. Using a data set of 860 Southeast Asian firms from 2007 to 2018, the study finds that managerial regret aversion affects market valuation and capital structure in market-based economies. Managerial risk aversion affects market valuation in both bank and market-based economies. Contrary to our hypothesis, managerial risk aversion has no significant effect on capital structure among Southeast Asian firms. The paper concludes that capital market undervaluation, leading to managerial aversion, has theoretical implications for regret theory of capital structure. [ABSTRACT FROM AUTHOR]

Purpose: Director interlocks, with their extended resources and shared experiences, have the potential power to go beyond the basic role of providing advice and monitoring the activities of an organization. Interlocked directors can have a cross-cultural role in manipulating corporate choices and strategies in several areas, including capital structure, based on learned behavior in their internal company. Shareholders and creditors are the two main capital providers for a company. However, their risk return horizons are very different, and policies that benefit one group may not be optimal to the other. Interlocks can act as carriers of sub-par practices that affect the behavior of several organizations. Such transactional and relational activities may increase short-term value for equity shareholders, but increase the risk for the creditors. The purpose of this paper is to examine cross-cultural effects of interlocks on corporate strategies that affect this essential agency relationship. Design/methodology/approach: This paper surveys the extant literature on board interlocks, board practices, equity valuation and credit risk to develop a link between such interlocks and creditor protection. Based on a brief survey of the central concepts of governance and the role of directors, this paper then provides various propositions on the role of interlocking directorships and their effect on the shareholder–creditor agency problem. Findings: Director interlocks, through their linked common practices, have the potential to increase or worsen shareholder–creditor conflicts by magnifying strategic practices like short-termism, earnings management or through its effects on chief executive officer compensation. Such cross-cultural effects persist across ownership structures and cultural differences in governance. Research limitations/implications: The paper is not an empirical study of the conflict. This paper uses a literature review to arrive at propositions that may impact shareholder–creditor conflicts. Practical implications: Several studies have shown cronyism and the dense corporate network has been a large factor in the financial crisis that affected both shareholders and creditors. As the influence of creditors grows with the current availability, and therefore increase in debt levels, this conflict can be magnified through homophily inherent in interlocks. For an organization to be successful in its role of protecting all stakeholders, especially the two major providers of equity capital, factors that cause conflicts must be taken into account while developing the tenets of governance policies and, on a regular basis, during the strategic planning process within the organization. Regulations affecting interlocks, including governance policies, must therefore take into account such influences. Social implications: Board interlocks act as channels of information between companies, creating a social network where processes and polices are shared and implemented as defined by the concept of homophily. Such management actions reduce both the quality of information available to creditors and their monitoring capabilities. This juxtaposition of shareholder and creditor interest can, therefore, be worsened by director interlocks. Originality/value: Prior literature has not specifically linked director interlocks and their mutual impact on the culture and strategy of linked corporations to the shareholder–creditor conflict. [ABSTRACT FROM AUTHOR]

We examine how investor preferences and beliefs affect trading in relation to past gains and losses. The probability of selling as a function of profit is V-shaped; at short holding periods, investors are more likely to sell big losers than small ones. There is little evidence of an upward jump in selling at zero profits. These findings provide no clear indication that realization preference explains trading. Furthermore, the disposition effect is not driven by a simple direct preference for selling a stock by virtue of having a gain versus a loss. Trading based on belief revisions can potentially explain these findings. [ABSTRACT FROM PUBLISHER]

Using new data for the universe of firms covered in Amadeus, we reconstruct the portfolios of shareholders who hold equity stakes in private- and publicly traded European firms. We find great heterogeneity in the degree of portfolio diversification across large shareholders. Exploiting this heterogeneity, we document that firms controlled by diversified large shareholders undertake riskier investments than firms controlled by nondiversified large shareholders. The impact of large shareholder diversification on corporate risk-taking is both economically and statistically significant. Our results have important implications at the policy level because they identify one channel through which policy changes can improve economic welfare. [ABSTRACT FROM PUBLISHER]

We study the effects of the controlling shareholders' portfolio diversification on the initial public offering (IPO) process. Less diversified shareholders have more to gain from taking their firm public, and are more willing to accept a lower price for shares. We test these hypotheses using the data on all IPOs in Sweden between 1995 and 2001. Using detailed information on the portfolio composition of shareholders in private and public firms, we construct several proxies of their portfolio diversification and relate them to the probability of the IPO and the underpricing. We show that the less diversified individual shareholders, especially those with lower wealth, sell more of their shares at the IPO. Firms held by less diversified controlling shareholders are more likely to go public, and exhibit higher underpricing, These effects are economically and statistically significant, while the diversification of noncontrolling shareholders has no effect. Our findings suggest that diversification of controlling shareholders plays a prominent role in the IPO process. [ABSTRACT FROM AUTHOR]

We develop a model with incomplete markets and heterogeneous agents that generates a large equity premium, while simultaneously matching stock market participation and individual asset holdings. The high risk-premium is driven by incomplete risk sharing among stockholders, which results from the combination of aggregate uncertainty, borrowing constraints, and a (realistically) calibrated life-cycle earnings profile subject to idiosyncratic shocks. We show that it is challenging to simultaneously match asset pricing moments and individual portfolio decisions, while limited participation has a negligible impact on the risk-premium, contrary to the results of models where it is imposed exogenously. [ABSTRACT FROM AUTHOR]

The lock-in effect proposes that capital gains taxes represent transaction costs that increase the reservation price for security owners and, ceteris paribus, reduce trading volume. Consistent with the lock-in effect, previous empirical research documents price and volume reactions to enacted changes in the capital gains tax rate. We investigate whether the "volume hypothesis" predicted by the lock-in effect extends to corporate acquisition activity. In particular, we analyze whether aggregate corporate acquisition activity is inversely associated with shareholder capital gains tax rates. We measure quarterly corporate acquisition activity from 1973 through 2001 using (1) the percentage of traded firms acquired in a calendar quarter and (2) the percentage of market value of traded firms acquired in a calendar quarter. In supplemental analysis, we measure acquisition activity at the industry level (that is, as the percentage of firms and percentage of market value acquired by industry annually). In each analysis we model acquisition activity as a function of the maximum long-term capital gains tax rate for individuals and other macroeconomic factors previously hypothesized to be associated with acquisition activity. Consistent with a lock-in effect for corporate acquisitions, we find a significant negative association between corporate acquisition activity and the capital gains tax rate whether we measure acquisition activity in the aggregate or at the industry level. In addition, we find that this negative association is attributable to increased (decreased) taxable acquisition activity during periods of low (high) capital gains tax rates. These results suggest that, ceteris paribus, capital gains taxes represent significant transaction costs that influence the level of corporate acquisition activity. [ABSTRACT FROM AUTHOR]

I investigate whether changes in stock market participation costs can explain the long-term increase in the number of U.S. stockholders. I separate these costs into two components: an information cost (the cost of collecting market information), and an entry cost (all other costs, including commissions and fees), and disentangle their general equilibrium implications in a noisy rational expectations economy. While a falling information cost cannot explain the observed increase in stock market participation, a falling entry cost can account for this plus several other features of the U.S. economy, including the falling equity premium, rising return variances, and the boom in passive relative to active investing. [ABSTRACT FROM AUTHOR]

In this article, the authors strengthen the chain of effects that link customer satisfaction to shareholder value by establishing the link between satisfaction and two characteristics of future cash flows that determine the value of the firm to shareholders: growth and stability. Using longitudinal American Customer Satisfaction Index and COMPUSTAT data and hierarchical Bayesian estimation, the authors find that satisfaction creates shareholder value by increasing future cash flow growth and reducing its variability. They test the stability of findings across several firm and industry characteristics, and they assess the robustness of the results using multimeasure and multimethod estimation. [ABSTRACT FROM AUTHOR]

It is increasingly apparent that the financial value of a firm depends on off-balance-sheet intangible assets. In this article, the authors focus on the most critical aspect of a firm: its customers. Specifically, they demonstrate how valuing customers makes it feasible to value firms, including high-growth firms with negative earnings. The authors define the value of a customer as the expected sum of discounted future earnings. They demonstrate their valuation method by using publicly available data for five firms. They find that a 1% improvement in retention, margin, or acquisition cost improves firm value by 5%, 1%, and .1 % , respectively. They also find that a 1% improvement in retention has almost five times greater impact on firm value than a 1% change in discount rate or cost of capital. The results show that the linking of marketing concepts to shareholder value is both possible and insightful. [ABSTRACT FROM AUTHOR]

Existing theory suggests that, in an unregulated market for corporate control, the level of takeovers is suboptimal because shareholders do not receive the full benefit from them. However, existing theory neglects that the threat of takeover may divert managerial effort from productive to defensive activities. This paper shows that, when this is considered, takeovers may, in fact, be excessive. [ABSTRACT FROM AUTHOR]

The objective of this study is to verify the effect of the exchange of audit firm on earnings management level of Brazilian companies listed on the BM&FBovespa. We conducted a descriptive with a quantitative approach by means of information retrieval. The research population comprised the Brazilian listed companies listed on the BM&FBovespa from 2010 to 2016. Panel data regression was used. The findings showed that the GROWTH variables (percentage changes in sales) and TURN (sales divided by total assets at the end of the year) were significant at the level of 99%, which allows us to state that these impacts the earnings management in the sample in the analyzed period. On the other hand, other variables SIZE (natural logarithm of total assets), LEV (total liabilities divided by total shareholders' equity at the end of the year), DISSUE (percentage of changes in total liabilities), CF (annual net cash operating activities divided by total assets at the end of the year), AUD (company audited by audit firm Big Four or not) and TROFIRAUD exchange (auditing firm) were not significant. [ABSTRACT FROM AUTHOR]

Ideology matters. Since the 1980s stockholder primacy has been the dominant ideology shaping corporate law. As a result, case law, director conduct, and our understanding of "best governance practices" have all been viewed under a single prism: how do these rules impact stockholder value? Even the recent debate over corporate purpose has largely been limited to stockholders, directors, and (of course) academics. Excluded from the debate are the vast majority of the population that owns little or no stock, as well as other corporate stakeholders such as employees and communities. This article considers how the discussion of corporate purpose is limited by stockholder primacy, and how a true debate over corporate purpose may require a reconsideration of the dominant ideology over stockholder purpose. [ABSTRACT FROM AUTHOR]

Equity compensation and company share buybacks are complementary: Equity compensation share issuances increase outstanding shares; buybacks decrease outstanding shares. Yet, the two types of transactions require very different approval processes and securities and financial disclosures, and generate different financial and tax results, all of which are described in this article, and illustrated by data collected from fifty-nine of America's largest public companies. This article encourages critics of buybacks to consider the complexity and interrelationship of buybacks and equity compensation. [ABSTRACT FROM AUTHOR]

Copyright of Management Issues / Problemy Zarządzania is the property of Problemy Zarzadzania and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Purpose: The purpose of this paper is to examine alternative reporting formats of comprehensive income (CI) information and measures the extent to which losses are being accumulated in other comprehensive income (OCI) in the specific context of two major FASB updates: Summary of Financial Accounting Standard (SFAS) No. 130 and Accounting Standard Update (ASU) 2011–05. Design/methodology/approach: This paper investigates alternative reporting formats of CI information and its effect on Earnings Per Share (EPS) of 100 top US firms over the 1997–1999 period. The pattern of Other Comprehensive Income (OCI) is then examined using a sub-sample of ten companies with 31 December year ends over the 1995–2014 period. Findings: The results indicate that several firms show OCI items as part of shareholders' equity. On average, the difference between CI and net income is significant for the majority of firms, fluctuating by up to 15% (in absolute terms) over three-years. The negative effect on EPS is significant. For sub-sample firms, OCI is predominantly negative (i.e., is reported as a loss). Research limitations/implications: The effect of the above findings is that reported earnings generally provide an overly optimistic picture of book values. Conservative book values are shown to be a more sufficient statistic for returns than earnings for investors. [ABSTRACT FROM AUTHOR]

Copyright of Revista de Contabilidade e Organizações is the property of Revista de Contabilidade e Organizacoes and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Current paper focuses on business economics of tourism industry. Liquidity of a company has the key role within financial management among all industries, including the tourism as well. However, the question still remains: What drives the liquidity among hotels and travel agencies? The aim of the paper is to investigate whether or not is the liquidity among tourism companies in Bulgaria, Czech Republic and Poland affected by other selected microeconomic variables. It is obtained financial data from annual reports of 1,892 tourism companies collected within Amadeus, the international statistical database. Estimated period is from 2006 till 2015. In particular it has been explored three variables (i) return on assets, (ii) share of stockholders’ funds, and (iii) average length of loans from creditors. As the main estimation method is employed the Generalized Method of Moments (GMM) with panel data. A comparison is made between both, large as well as medium sized hotels and travel agencies in selected countries. Except of a few, it was proven that reinvestments of the decreasing profit supported liquidity among tourism companies during a period affected by the global financial crisis. [ABSTRACT FROM AUTHOR]

The article discusses the implications of government budget constraints on macroeconomic theory. Empirical research is conducted to determine the relation of tax revenue to price levels or real income as it is dependent on the institutional nature of the tax structures. Capital stock increases output but creates a decline in the rate of return to capital as well as the interest rate. However, monetarists of the Chicago School of Economics believe continued levels of government spending do not affect a stabilized economy.