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本期继续推送三篇MIT Asia conference 2019的文章，具体如下： The 2019 MIT Asia Conference In Accounting Jul 14, 2019 –Jul 16, 2019 17 Science Museum Rd, Tsim Sha Tsui East, Kowloon, Hong Kong Homepage: https://mitsloan./events/2019-07-14-2019-mit-asia-conference-accounting 1.Foreign Capital and Earnings Management: International Evidence from Equity Market Openings Fangfang Hou The Hong Kong Polytechnic University Jeffrey Ng The Hong Kong Polytechnic University Tjomme Rusticus University of Minnesota Xinpeng Xu The Hong Kong Polytechnic University The opening of equity markets to foreign investors provides financing opportunities and disrupts the stock ownership structure of the firms in these markets. In this paper, we study how this affects firms’ earnings management in the opening’s immediate aftermath. Using a broad set of countries that opened their equity markets, we find a significantly positive effect on firms’ income increasing earnings management in the year of opening. We show that there are substantial heterogeneous effects across industries and firms. The positive effect is more pronounced in industries that are more dependent on external financing and for firms that are financially constrained, suggesting that firms’ intrinsic need for equity finance contributes to income increasing earnings management behaviors. In addition, the effect is weaker when the firm is audited by a Big N auditor, consistent with the monitoring effect of relatively more reputable auditors. We find that income-increasing earnings management is less pronounced in countries with better funded securities regulators and that it is more pronounced in countries with greater corruption. Overall, our results suggest that incentives to attract financing when a country opens its equity market to foreign investors affects firms’ reporting bias. https://mitsloan./sites/default/files/inline-files/Foreign%20Capital%20and%20Earnings%20Management.pdf 2.Short-Sales Constraints and Aftermarket IPO Pricing Panos N. Patatoukas University of California, Berkeley Richard G. Sloan University of Southern California Annika Yu Wang University of Houston We use the IPO setting in conjunction with accounting measures of valuation uncertainty to provide new evidence on the role of short-sales constraints in explaining mispricing. The IPOs that we predict to be most susceptible to overpricing in the immediate aftermarket have first-day returns of 44% and lockup expiration returns of 10%. Our granular analysis of securities lending market data shows that these IPOs experience severe short-sales constraints that peak around the lockup expiration. While prior studies are inconclusive with respect to the importance of short-sales constraints for IPOs, we provide systematic evidence that the combination of elevated valuation uncertainty with binding short-sales constraints is key to explaining aftermarket IPO pricing. https://mitsloan./sites/default/files/inline-files/Short-Sales%20Constraints%20and%20Aftermarket%20IPO%20Pricing.pdf 3.Market Power and Credit Rating Standards: Global Evidence Mingyi Hung Hong Kong University of Science and Technology Pepa Kraft HEC Paris Shiheng Wang Hong Kong University of Science and Technology Gwen Yu University of Michigan Using a global sample from 27 developed markets between 1994 to 2016, we document a tightening trend of corporate credit ratings, which parallels the growth of rating agencies’ market shares in the region. Increased market share precedes a decline in ratings and the result holds among a set of constant firms. In addition, the trend reverses following the NRSRO designation of a local rating agency in the region. Further supporting the notion that market power strengthens rating agencies’ reputational incentives to issue stringent ratings, we find that rating agencies’ market shares are associated with pessimistic qualitative rating adjustments. https://mitsloan./sites/default/files/inline-files/Market%20power%20and%20rating%20standards%2020190531.pdf |
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