Accounting & Information Assurance Theses and Dissertations
Permanent URI for this collectionhttp://hdl.handle.net/1903/2736
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Item NONDISCLOSURE – A GOOD NEWS SIGNAL?(2016) Lee, Kyungran; Kimbrough, Michael D; Business and Management: Accounting & Information Assurance; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)I examine the implications of nondisclosure in a setting where there is a credible signal as to the proprietary nature of the undisclosed information. Specifically, I investigate the market and analysts' response to firms’ application to the Securities and Exchange Commission (SEC) for a confidential treatment order (CTO), which allows firms to redact required disclosures from SEC filings when the redacted information is proprietary. I find that the market and analysts react favorably to the voluntary nondisclosure of proprietary information using the SEC confidential treatment process. Market and analysts reactions are more favorable to the redaction of information that is more likely to have proprietary value, such as information related to research and development. In addition, I show that the redacting firms experience superior accounting performance compared to their peers in the years following the redaction, consistent with the market and analysts’ response to the redaction. However, I find that analysts engage in more intense private information search in response to a CTO redaction. This finding suggests that, although a CTO redaction can signal the nature of undisclosed information, analysts believe that the signal is not fully revealing of the economic magnitude of the undisclosed information. Overall, this study’s findings indicate that a firm's willingness to submit to the CTO approval process serves as a credible signal of the proprietary nature of the withheld information. The results of this study suggest a possible role for a credible signaling channel to facilitate communication between insiders and outsiders regarding the nature of withheld information.Item When do targets' past financial results matter most to acquirers? The role of disruption of targets' existing operations(2014) Rabier, MaryJane Raffaella; Kimbrough, Michael D; Business and Management: Accounting & Information Assurance; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)A target's past earnings and past earnings quality are informative about the performance of its stand-alone operations while its book value is informative about its adaptation value, which is the potential value from alternative uses of its resources. The information in past earnings and past earnings quality about a target's stand-alone operations is likely to be more important to acquirers that intend to keep the target's operations intact post-merger while the information in book value about its adaptation value is likely to be more important to acquirers that anticipate significant disruption of the target's operations. Using acquirer industry classification and a self-constructed index as alternative approaches to measuring anticipated disruption of target operations, I find evidence consistent with these predictions. Specifically, I find that acquirers assign greater discounts to targets' pre-merger earnings performance and pre-merger earnings quality in setting their bids as anticipated disruption of targets' operations increases. In addition, acquirers place greater weight on targets' pre-merger book values in setting their bids as anticipated disruption increases. These findings provide important insights into the conditions under which particular types of accounting information are most useful in the merger context.Item International Financial Reporting Standards and Cross-Border Mergers and Acquisitions(2012) Zhu, Wenjie; Gordon, Lawrence A; Loeb, Martin P; Business and Management: Accounting & Information Assurance; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)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.