Accounting - Research Publications
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ItemDoes a Liability of Foreignness in Liquidity Apply to US IPOs?(Taylor & Francis, 2022-11-30)We provide evidence regarding two unanswered and consequential questions regarding share trading liquidity, a primary motive for US listings, for the prominent listing cohort of foreign-firm US initial public offerings (FIPOs). First, we test whether FIPOs exhibit a ‘liability of foreignness (Bell et al. 2012) in liquidity’ (LFL) compared with matched domestic-firm IPOs (DIPOs), despite listing requirements that are more stringent than for the mature cross-listed foreign firms studied previously. Second, we test whether US IPO LFL is moderated by FIPO home country institutional attributes that promote liquidity. Our findings for 327 FIPOs from 36 countries between 1990 and 2012 reveal that US IPO LFL is moderated, but not eliminated, by FIPO home country attributes, thus indicating incomplete bonding with US institutions. These findings extend prior research and serve to inform foreign firms considering US IPOs, exchanges competing for them, listing facilitators, regulators, and investors regarding a salient listing consideration.
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ItemManagerial Learning from Analyst Feedback to Voluntary Capex Guidance, Investment Efficiency and Firm Performance(Institute for Operations Research and Management Sciences, 2022-01-01)We test predictions that managers issuing voluntary capex guidance learn from analyst feedback and that this learning enhances investment efficiency and firm performance (Langberg and Sivaramakrishnan, 2010). Our findings are consistent with these predictions. First, we find that managers’ capex adjustments and capex guidance revisions relate positively with analyst feedback measured by differences between post-guidance analyst capex forecasts and managerial capex guidance. Second, changes in investment efficiency relate positively with analyst feedback. Third, subsequent firm financial performance relates positively with the predicted values of both managers’ capex adjustments and capex guidance revisions. These findings extend prior evidence regarding sources of managerial learning and investment efficiency and help to explain the active issuance of voluntary guidance by managers in settings where, as for capex guidance, the potential for managerial learning from related share price effects is limited.
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ItemAccounting Conservatism and Bankruptcy Risk(SAGE PUBLICATIONS INC, 2022-04)For a large sample of U.S. listed firms, we find that unconditional and conditional accounting conservatism help lower bankruptcy risk. We further find that the mitigating effect of accounting conservatism on bankruptcy risk functions via cash enhancement and earnings management mitigation channels. This evidence is relevant to accounting standards setting, financial regulation, financial risk management, and helps explain conservatism’s long-standing presence as a pervasive feature of financial accounting.