This study extends prior studies by examining how managerial ownership and external unrelated blockholdings affect the informativeness of earnings. The results are in contrast to prior studies. A non-linear relation exists between managerial ownership and earnings informativeness. Earnings informativeness increases with managerial ownership at low levels but not at higher levels of managerial ownership where the entrenchment effect sets in. Consistent with the role of large shareholder monitoring, the evidence shows a strong positive relationship between external unrelated blockholdings and earnings informativeness. These results are supported when income-increasing and absolute discretionary accruals are used to measure the extent of earnings management Copyright Blackwell Publishers Ltd 2002.
We examine institutional characteristics and the wealth effects of private equity placements in Singapore. Our findings show that private placements in Singapore generally result in a negative wealth effect and a reduction in ownership concentration. We find that at high levels of ownership concentration, the relation between abnormal returns and changes in ownership concentration is significantly negative. We also show that the market reacts less favorably to placements in which management ownership falls below 50%, but more favorably to issues to single investors. We do not find evidence suggesting that our results are due to an information effect.
Using a unique data set collected from financial statements of all Singapore listed firms from 1983 to 1991, we provide international evidence on the determinants of the amount of secured loans as a fraction of total secured and unsecured loans. This data set comprises a much wider range of firms than most previous studies. We show that consistent with the agency-cost hypothesis, firms with more growth opportunities use more secured loans. This is in contrast to the opposite result reported in Barclay and Smith (1995b) who measure secured debt as a fraction of total long-term fixed claims. We also find strong support for the hypothesis that smaller firms use more secured loans. In contrast, Leeth and Scott (1989), using survey data on small firms, find an insignificant firm size effect. Finally, we show that the use of secured loans is positively related to asset riskiness and loan size, and is negatively related to asset specificity. Firm quality has no explanatory power. Copyright Blackwell Publishers Ltd 1998.
In this .stud.v, M Y ident(fj1 (I ,f~~ndunicntul uttrihute oj the organizational structure of' the j i m~i i e intensity of' interdivisional trunsuctiorz relatedness unu' ~~o n i p l e n i r r i t u i~i t~~~~h i c~k contributes to earnings management. We drmv jkoni the theorcticul ccotiomics literature thut demonstrates thut intrqfirni cdliisiori is morc likc1.y in hirrurchicul und cwnplex organizationul striic~irrc. We p s i t thut intrufi:rm cwllusion toward a c'ommori oi-~ycirii~mtion~I goal is more prewlent in highly reluted organizational .str~uc~turc hccaiisc the economic wdfurc of economic agents is highly intri.dcpPricIcrit. Consistent with our hypothesis, we find that eurnings nianagmment i.r positiivly us.soc%~tcd Mith orgunizational relutedness. Wc also jind that, ,fiw ,firms with high organizutional relatedness, those Mith a high proportion of' outside directors und high institutional equity oMwo:ship h u \~) 1 r . s~ pronounced curnings munugement. Collectiwl.y, our result sug~yrsts an interaction hctll'een corporate governunce structure und or~ycirii3NtioriNI i-clatednc,ss in uflkcting eurnings quulity. agement." .lournu/ of Awounting Re.scwr.c~lr 34( I ): 45-05.
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