This paper aims to examine the role of corporate governance in reducing the negative effect of earnings management. The accounting data for U.S. firms during 2002-2010 were collected from WorldScope database and the corporate governance data were from ASSET4, which is an affiliate of Thomson Reuter. Earnings management can be harmful to firm value if it arises from managerial opportunism, whereas it can also be beneficial if managers intend to convey some information about future earnings or reduce the volatility of reported earnings. The empirical evidence has shown that earnings management has a negative effect on firm value. However, the negative effect of earnings management is neutralized by the role of corporate governance, which helps to reduce managerial opportunism. Firms with a lower CG score face the negative effect of earnings management, whereas firms with a higher CG score face a less-negative effect from earnings management. In other words, managerial opportunism with earnings management is lower in good-governance firms. Therefore, corporate governance provides a crucial role in reducing the negative effect of earnings management.
Purpose -The purpose of this paper is to examine whether the catering incentives of dividends can influence firms' dividend payment decisions in Thailand. Design/methodology/approach -The sample includes all listed stocks in the Stock Exchange of Thailand during the years 1992-2009, excluding the firms from financial industries and firms with incomplete information. The catering incentives are measured by dividend premium. The firms' dividend payment decisions are measured by propensity to pay dividends and decision to change dividends. Findings -The findings yield qualitatively consistent with the previous research. After controlling for the effect of the Asian Crisis during 1997-1999, the result shows that the firm's decision to pay dividend could be affected by the catering incentives. Furthermore, dividend premium will reduce the probability that firms will decide to cut dividend payment from previous years.Research limitations/implications -The result is limited to the availability of historical data. The Stock Exchange in Thailand has been established for only 35 years. With the lack of availability and completeness of data, the historical data could be gathered for only 18 years. Practical implications -Investors in Thailand show their preference for dividend incomes. This could be the catering incentive of the firm to decide to pay dividends. Originality/value -This paper offers the evidence of catering incentives of dividend proposed by Baker and Wurgler in the emerging market. Even though the result is not strong, it can be the evidence supporting the catering theory of dividend, not only in well-developed markets, but also in emerging markets such as Thailand.
This paper aims to review a number of studies on macroeconomic factors and stock returns. All of the macroeconomic variables are classified into four groups: variables reflecting general economic conditions, variables related to interest rate and monetary policy, variables concerning price level, and variables concerning international activities. Furthermore, various studies on macroeconomics factors and stock returns have employed different methodologies based on their purposes and interpretations. Although the results are mixed, most studies have shown evidence that there are significant relationships between macroeconomic variables and stock returns.
This paper aims to examine the importance of macroeconomic factors to determine the performance of stock market. The regression analysis is used to examine this relationship. The result shows that macroeconomic variables can explain stock return significantly after adjusting for some lags of data availability. Moreover, the lead-lag relationship is examined by Vector Autoregression model and Granger causality test. They reveal that macroeconomic variables are less important to predict future stock return whereas stock return can be used to predict macroeconomic variables more. In the other word, stock return is good candidate as a leading economic indicator. Finally, the variance decomposition technique reveals that interest rate is the most important macroeconomic variable to explain the variance in stock return. However, it is clearly noticed that all macroeconomic variables can explain only a little variance in stock return.
This paper aims to examine the importance of macroeconomic factors to determine the performance of stock market. The regression analysis is used to examine this relationship. The result shows that macroeconomic variables can explain stock return significantly after adjusting for some lags of data availability. Moreover, the lead-lag relationship is examined by Vector Autoregression model and Granger causality test. They reveal that macroeconomic variables are less important to predict future stock return whereas stock return can be used to predict macroeconomic variables more. In the other word, stock return is good candidate as a leading economic indicator. Finally, the variance decomposition technique reveals that interest rate is the most important macroeconomic variable to explain the variance in stock return. However, it is clearly noticed that all macroeconomic variables can explain only a little variance in stock return.
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