http://hdl.handle.net/1903/2205 2013-05-21T16:48:17Z 2013-05-21T16:48:17Z Zhu, Wenjie http://hdl.handle.net/1903/12754 2012-07-08T02:36:39Z 2012-01-01T00:00:00Z

Title: International Financial Reporting Standards and Cross-Border Mergers and Acquisitions Authors: Zhu, Wenjie Abstract: This dissertation investigates the economic impact of global accounting harmonization. Particularly I focus on its influence on macro level cross-border M&A investments. I posit that mandatory IFRS adoption lowers the systemic information noise embedded in countries' accounting standards. This reduces the associated information processing costs and enhances the economic role accounting standards play on cross-border M&A flows. After mandatory IFRS adoption, a 1% increase in accounting standards disparity suppresses bilateral M&A flows by around 2%; decrease in accounting standards disparity helps promote bilateral M&A flows when paired countries' governance infrastructure gap is relatively wider. I do not find these associations significant prior to mandatory IFRS adoption. Overall, this dissertation documents an evolving economic role accounting standards play on bilateral cross-border M&A flows, and supports International Accounting Standards Board's advocacy in adopting a uniform set of accounting standards globally. Moreover, it further analyses the current adoption demand for IFRS from the U.S. firms.

2012-01-01T00:00:00Z Wilford, Amanda Lyn http://hdl.handle.net/1903/12622 2012-07-08T02:32:13Z 2012-01-01T00:00:00Z

Title: Determining the Impact of Multiple Consecutive Years of Financial Reporting Quality Issues on Investment Efficiency Authors: Wilford, Amanda Lyn Abstract: Prior research recognizes that there is a positive relation between financial reporting quality and investment efficiency. The primary object of this dissertation is to examine how financial reporting quality in multiple consecutive years impacts investment efficiency. I use material weaknesses in internal control (MW) as a proxy for poor financial reporting quality and I examine the impact of poor financial reporting quality in multiple consecutive years using an OLS regression model. The results indicate there is a progressively negative impact on investment efficiency tied to the number of consecutive years in which firms report MW. Additionally, I examine whether investment specific financial reporting quality issues have a greater impact on investment efficiency than all other types of financial reporting quality issues. My results suggest that investment specific financial reporting quality issues are driving the negative impact on investment efficiency. These results imply that managers can reduce investment inefficiency by focusing their resources on remediating (correcting) financial reporting quality issues (MW) associated with investment. Current internal control research identifies firms as having either strong or weak internal control dependent upon (1) the presence or absence of MW or (2) the number of MW. This research essentially treats each MW as being of equal importance, Thus, as a secondary objective of this dissertation, in Appendix B, I develop a metric for internal control using the Analytic Hierarchy Process (AHP) to provide a weighting scheme for the different types of MW. Based on Audit Analytics (which separates MW into 21 different categories), I engage 18 participants in an AHP exercise to determine which types of MW have the greatest impact on the financial statements. The results indicate that auditors and managers find MW related to Personnel Weaknesses have the greatest impact on the financial statements. AHP results in weights that are then applied to the 21 different categories of MW. These weights are applied to firms based upon the types of MW reported and the sum of the weights is the measure used for the internal control metric. I then perform a simple OLS regression to test the relation between the internal control metric and stock market returns (Appendix C). I find that a positive relation exists between strong internal controls (as measured by the newly constructed metric) and stock market returns.

2012-01-01T00:00:00Z Kim, Yura http://hdl.handle.net/1903/12297 2012-02-18T03:33:28Z 2011-01-01T00:00:00Z

Title: THE INFLUENCE OF PUBLIC EQUITY OWNERSHIP ON EARNINGS MANAGEMENT THROUGH THE MANIPULATION OF OPERATIONAL ACTIVITIES Authors: Kim, Yura Abstract: This paper examines whether public equity firms and private equity firms with public debt exhibit different degrees of real earnings management, defined as the manipulation of operational activities in order to influence reported earnings. Public equity firms face intense capital market scrutiny that their private equity counterparts do not. Therefore, this study's comparison of the two types of firms provides insight on the impact of capital market pressure on real earnings management behaviors. The impact of capital market pressure is not clear ex ante. On the one hand, the scrutiny associated with the public equity markets may play a disciplining role that leads firms to refrain from activities that distort reported earnings. On the other hand, the penalties faced by public equity firms that fail to meet earnings benchmarks may put additional pressure on top managers to report positive and improved earnings and hence, may lead to greater distortion of reported earnings through the manipulation of operational activities. Consistent with the latter possibility, I find that public equity firms are more likely than private equity firms to opportunistically alter normal operations to improve earnings by cutting R&D spending, by pushing sales through discounts and promotions, and by lowering costs of sales through overproduction. I find no difference in abnormal discretionary expenses between public equity and private equity firms. Although private equity firms with public debt do not face the same capital market pressure that public equity firms face, they are not immune from incentives to engage in real earnings management. Specifically, I find that private equity firms with public debt engage in a greater degree of real earnings management as their debt moves closer to default. Given that debt claims become more like equity claims as a firm's debt moves closer to default, this finding suggests that public debtholders exert similar pressure to public equity holders when their claims become more equity-like. Moreover, private equity firms with public debt that do engage in real earnings management appear to emphasize the zero earnings benchmark, consistent with prior research, suggesting that this benchmark is of primary importance to creditors. In addition, I assess the performance implications of capital market-induced real earnings management, by examining its association with one-year ahead industry-adjusted return on assets (ROA). I find that public equity firms that just meet earnings benchmarks while altering real operating activities suffer from lower future industry-adjusted ROA than private equity firms that just meet earnings benchmarks while altering real operating activities. The finding for the public equity firms validates concerns that operating decisions made in response to capital market pressure may negatively impact future firm performance. On the other hand, the results for private equity firms indicate that alterations of operating activities made in the absence of capital market pressure are more likely to be strategically sound.

2011-01-01T00:00:00Z Kiatapiwat, Wilasinee http://hdl.handle.net/1903/10406 2011-07-19T02:39:23Z 2010-01-01T00:00:00Z

Title: Controlling shareholders, audit committee effectiveness, and earnings quality: the case of Thailand Authors: Kiatapiwat, Wilasinee Abstract: This study examines the associations of controlling shareholders and audit committee effectiveness with earnings quality. A sample of non-financial Thai listed firms is used in the study because Thailand provides a useful setting for the study of ownership concentration. A unique data set on the voting rights of controlling shareholders and audit committee characteristics is used to test the hypotheses of whether controlling shareholders and audit committees with strong governance characteristics affect the quality of earnings. Earnings quality is measured using (1) Basu's (1997) asymmetric timeliness measure of accounting conservatism, and (2) absolute abnormal accruals estimated from the Dechow and Dichev (2002) and the Jones (1991) models and its variations. Audit committee effectiveness is measured using a composite index comprising four audit committee characteristics. The empirical results show that firms with a controlling shareholder, on average, are associated with both lower accounting conservatism (lower earnings quality) and lower absolute abnormal accruals (higher earnings quality) than firms with no controlling shareholder. Further analysis shows that family- and the government-controlled firms and firms whose controlling shareholders have voting rights below 75%, in particular, are associated with lower accounting conservatism and absolute abnormal accruals. Although the results imply both lower and higher earnings quality for firms with a controlling shareholder compared to firms with no controlling shareholder, the lower (higher) absolute abnormal accruals (earnings quality) simply reflects less conservative accounting practice by firms with a controlling shareholder. The results provide no evidence that audit committees with strong governance characteristics are associated with earnings quality.

2010-01-01T00:00:00Z