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Article
Publication date: 30 July 2018

Harjeet Bhabra and Ashrafee Tanvir Hossain

The purpose of this paper is to analyze and compare the influence of the Sarbanes–Oxley (SOX) Act of the USA and the Canadian SOX (C-SOX) through the comparison of…

Abstract

Purpose

The purpose of this paper is to analyze and compare the influence of the Sarbanes–Oxley (SOX) Act of the USA and the Canadian SOX (C-SOX) through the comparison of corporate acquisitions in these two countries.

Design/methodology/approach

The final sample includes 1,187 merger and tender offers undertaken by publicly traded (TSX listed) Canadian firms between 1990 and 2016. The authors use standard event study methodology (Patell, 1976) and Berkovitch and Narayanan’s (1993) seminal method to examine announcement period performance and deal motive, respectively.

Findings

The findings support the pro-regulation hypothesis which states that stricter regulations are more useful. Cross-listed acquirers exposed to SOX regime performed much better (both short- and long-term) than non-cross-listed counterparts with only C-SOX exposure. These findings are both statistically and economically significant.

Research limitations/implications

This study has direct implications as it provides evidence to the legislatures of the provinces, as well as to the federal government, that stricter regulations are effective and Canada should enact additional corporate legislation. Canada may have fared well in the past, but dynamics are changing and may further change in the future, and therefore, timely and stricter corporate legislation are more appropriate.

Practical implications

This study has direct implications as it provides evidence to the legislatures of the provinces, as well as to the federal government, that stricter regulations are effective and Canada should enact additional corporate legislation. Canada may have fared well in the past, but dynamics are changing and may further change in the future, and therefore, timely and stricter corporate legislation are more appropriate.

Originality/value

This study contributes to the growing literature of SOX-related studies. This is the first study to investigate comprehensively the differences between the two laws enacted by these neighboring countries. As USA and Canada share largely integrated capital markets and are each other’s biggest trading partner, this genre of research has great value. It is a timely study as the Canadian Federal Government is looking into standardizing corporate legislation across provinces and territories.

Details

Managerial Finance, vol. 44 no. 8
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 19 September 2019

Harjeet S. Bhabra, Ashrafee Tanvir Hossain and Vidyoot Roy Karmakar

The purpose of this paper is to examine existing literature, including both academic and practitioner publications, related to Canadian SOX (or C-SOX as it is popularly…

Abstract

Purpose

The purpose of this paper is to examine existing literature, including both academic and practitioner publications, related to Canadian SOX (or C-SOX as it is popularly known). The study discusses the origins of the Act, the underlying motivations for enacting this legislation in Canada and its impact on corporate decisions since its inception in 2003.

Design/methodology/approach

The principal focus of this literature review is on C-SOX, its inception, reception, compliance and impact in Canada, both from business’ and investors’ critical perspectives. The authors have followed a two-step process to gather all the articles. First, the authors used a keyword search at Google Scholar and ProQuest (e.g. C-SOX, Canadian SOX, Bill 198, etc.) to gather all the articles. Second, the authors retained articles and abstracts that primarily dealt with the background framework and impact of the legislation. It is to be noted that C-SOX was mainly a reactionary legislation following the adoption of US-SOX in 2002. Any discussion of C-SOX is, therefore, incomplete without referencing the literature related to US-SOX.

Findings

In this review paper the evolution of C-SOX over time in Canada, as well as studies on its impacts and criticisms have been summarized. Based on the extensive research that followed the enactment of US-SOX, the authors also provide suggested research directions related to C-SOX in the future.

Research limitations/implications

C-SOX has been relatively underexplored and therefore, not much academic work is available presently. This study highlights this gap in the literature with the hope that researchers will devote their energy to understanding the broader ramifications of major legislations such as C-SOX which will potentially also inform future public policy choices.

Practical implications

This research will help both businesses and investors to understand each other’s perspectives and concerns regarding C-SOX. This paper will also be helpful to policy makers to identify potential areas of improvement in this and future legislative decisions in the future.

Originality/value

Using a qualitative approach this study combines the development of C-SOX as a legislation in Canada, its overall effectivity/drawbacks and explores the areas it impacts, both positively and negatively, along with criticisms and appreciations.

Details

Managerial Finance, vol. 46 no. 2
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 10 April 2017

Harjeet Singh Bhabra and Ashrafee Tanvir Hossain

The purpose of this paper is to analyze and compare the performance of corporate acquisitions between the pre- and post-SOX periods, using both short-term and long-term analyses.

1204

Abstract

Purpose

The purpose of this paper is to analyze and compare the performance of corporate acquisitions between the pre- and post-SOX periods, using both short-term and long-term analyses.

Design/methodology/approach

The sample includes 9,463 mergers and tender offers undertaken by publicly traded US firms between 1996 and 2009. The authors used the standard event study methodology for short-term performance analysis; Berkovitch and Narayanan (1993) method to identify merger motives; and standard benchmark adjusted return on assets (sales) (Barber and Lyon, 1996) and buy-and-hold abnormal returns (Mitchell and Stafford, 2000) to analyze long-term performance.

Findings

Compared to the pre-SOX period, US acquirers experience significantly higher announcement returns in the post-SOX period; the results are robust to various controls like bidder, target and deal characteristics, bidder management quality, and product market competition. Similar results (in favor of post-SOX US acquirers) are obtained with long-term post-acquisition operating and stock performance analyses.

Research limitations/implications

This paper only addressed domestic acquisitions.

Originality/value

This paper adds to the growing body of research on the impact of SOX on publicly traded US corporations. By examining corporate acquisitions, an important long-term investment decision for a firm, the paper shows that despite the complex nature of SOX, substantial compliance costs and the unintended negative consequence it engendered, the act had a beneficial impact in an important area of corporate finance.

Details

Managerial Finance, vol. 43 no. 4
Type: Research Article
ISSN: 0307-4358

Keywords

Content available

Abstract

Details

Managerial Finance, vol. 46 no. 2
Type: Research Article
ISSN: 0307-4358

Article
Publication date: 21 August 2019

Ashrafee Tanvir Hossain and Lawrence Kryzanowski

The purpose of this paper is to critically review the relevant literature from the perspective of dual-class firms and to provide suggestions for future research on…

Abstract

Purpose

The purpose of this paper is to critically review the relevant literature from the perspective of dual-class firms and to provide suggestions for future research on dual-class firms, and on methodological issues that should be addressed in such research.

Design/methodology/approach

The research design consists of three parts: an introduction to dual-class firms (motivations for; firm life cycle effects) in Part 1; concerns with firms with such share class structures (valuation; governance; accounting and corporate policy issues) in Part 2; and some solutions or ways to accommodate the trade-offs involved with such share class structures (retention arguments; index/exchange exclusions; contractual provisions; external monitoring) in Part 3. Throughout the paper, the authors provide some critiques of existing studies, particularly from a methodological perspective, the authors’ opinion on the state of the literature and suggestions for future areas of research.

Findings

While motivations for the use of dual-class voting structures include flexibility so that the idiosyncratic vision of their entrepreneurs/founders can be pursued in a less encumbered fashion, greater innovation and long-term managerial orientation, there are many possible costs (e.g. underinvestment and managerial entrenchment) to this ownership structure. Nevertheless, the authors believe that such firms should have provisions in place that facilitate a reversion to a single-class structure longer term when such firms have become more mature, less dependent on the idiosyncratic vision of the entrepreneurs/founders at IPO and have attracted more managerial talent.

Originality/value

The literature arrives at no consensus on the benefits/drawbacks of this type of share ownership structure which means that many topics of research require further academic examination. The authors provide suggested directions for such future enquiries.

Details

Managerial Finance, vol. 45 no. 9
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 13 May 2019

Ashrafee Tanvir Hossain and Lawrence Kryzanowski

The purpose of this paper is to review the relevant literature on the causes of and regulatory reactions to the financial crisis of the last decade, popularly known as the…

1078

Abstract

Purpose

The purpose of this paper is to review the relevant literature on the causes of and regulatory reactions to the financial crisis of the last decade, popularly known as the “Global Financial Crisis (GFC)” or the “Housing Crisis” in the USA.

Design/methodology/approach

This review primarily focuses on the four main causes of the crisis, namely, excessive household leverage, securitization, corporate governance and credit ratings. The main reaction vis-à-vis recovery measures taken by most governments were quantitative easing (QE), bailouts and more stringent regulations of banks, though the discussion mainly focuses on QE.

Findings

In this paper, the authors summarize the literature on the causes and regulatory reactions to the GFC and propose future avenues of research for various topics.

Originality/value

Research on the GFC spans multiple disciplines as well as multiple facets of financial economics. A review paper such as this should help future researchers in generating ideas and gathering information for their research. Given that no review uncovers all worthy papers, the authors apologize in advance to the authors of any papers that the authors have inadvertently not reviewed in this paper.

Details

Managerial Finance, vol. 45 no. 7
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 27 October 2020

Erin Oldford, Saif Ullah and Ashrafee Tanvir Hossain

The objective of this paper is to leverage a two-sided view of social capital to develop a model of board gender diversity and firm performance using social capital data…

Abstract

Purpose

The objective of this paper is to leverage a two-sided view of social capital to develop a model of board gender diversity and firm performance using social capital data from Northeast Regional Center of Rural Development.

Design/methodology/approach

The authors examine a large sample of 2,322 US publicly listed firms over the period 1996 to 2009. The final sample consists of 14,634 firm-year observations.

Findings

The authors find that when a firm's social network is not supportive of gender diversity, corporate boards have lower levels of female representation. The strength of a social network's social ties exacerbates the relationship between social capital and board gender diversity. The authors also report a negative relationship between female board membership and firm performance in social networks that are not pro-diversity. Robustness tests reveal that the authors’ social capital view of board diversity also applies to board ethnic diversity.

Research limitations/implications

This study focuses primarily on blue chip firms due to data constraints. It will be interesting for future researchers to investigate a broader spectrum of firms from a broader perspective of diversity beyond the study’s gender and ethnicity findings. Furthermore, this study assesses the US context, and future research could investigate firm sociability in other national contexts.

Practical implications

This study contributes new insights to the discourse on gender diversity on corporate boards which stand to inform both policy and practice. The results of the study can inform the position of an industry association on board gender diversity, with guidance on how messaging across networks can be more effective should it account for the hidden bias that the authors uncover in the current study. From a manager's perspective, this study can help those managers and boards trying to enhance board gender diversity by providing a more complete understanding of the factors that can limit progress.

Originality/value

This study contributes a social capital view of board gender diversity to the growing literature of corporate governance, board diversity and local environmental influences on corporate policies.

Details

Managerial Finance, vol. 47 no. 4
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 2 July 2018

Majidul Islam, Ashrafee Tanvir Hossain and Lokman Mia

The purpose of this paper is to examine the role of strategic alliance (SA) and innovation on organizational sustainability using data from North American organizations…

1286

Abstract

Purpose

The purpose of this paper is to examine the role of strategic alliance (SA) and innovation on organizational sustainability using data from North American organizations listed in the Dunn-Bradstreet database. While organizational economic sustainability could be achieved in several ways, this research investigates the relationship of engagement in SA, product life cycle (PLC) and innovation with organizational sustainability from the perspective of the strategy-based balanced scorecard (BSC) that incorporates the mix of financial as well as environmental and social concerns in an environment.

Design/methodology/approach

This paper reports the results of an empirical study investigating the above relationships in Canadian and American organizations listed in the Dunn & Bradstreet database. The authors analyze the responses to the survey consisting of the questions about firm’s internal process, external environment, strategy, BSC perception and corporate performance of the companies who indicated that they use the BSC.

Findings

Consistent with the authors’ predictions, results show that there are positive and significant relationships between PLC and SA, between innovation and sustainability, and between innovation and SA (though positive but not significant), thus providing support for the hypotheses. Though the methodology the authors applied is acceptable in management accounting research, the authors recognize that there are limitations of this study and further studies are necessary before the results can be generalized.

Originality/value

This paper contributes to the literature by providing empirical evidence encompassing the areas of SA, innovation and performance leading toward sustainability.

Details

Benchmarking: An International Journal, vol. 25 no. 5
Type: Research Article
ISSN: 1463-5771

Keywords

Article
Publication date: 9 November 2015

Ashrafee Tanvir Hossain

– The purpose of this paper is to examine the impact of governance quality on firms with multiple voting structures.

Abstract

Purpose

The purpose of this paper is to examine the impact of governance quality on firms with multiple voting structures.

Design/methodology/approach

The sample includes 487 acquisitions undertaken by dual-class firms from 1996 to 2009. The author used event studies (Patell, 1976) for short-term performance analysis around merger announcement dates; Berkovitch and Narayanan (1993) methods to identify the motive behind these transactions; and standard benchmark adjusted return on assets (and return on sales) (Barber and Lyon, 1996) and BHAR (Mitchell and Stafford, 2000) to analyze long-term post-acquisition performance.

Findings

First, dual-class acquirers with better governance quality show stronger performance around takeovers which indicates that these firms make better acquisition decisions. These results hold even after controlling for different firm and deal characteristics. Second, transactions undertaken by acquirers with good governance show little or no sign of agency motive. This reinforces the findings in first. Third, the author reports that acquirers with above-median governance quality display stronger long-term post-acquisition operating as well as stock performances. These results are robust to different benchmarks used for this study.

Originality/value

This paper expands the literature on dual-class firms by showing the impact of governance quality on acquisition activities undertaken by these firms. This is the first study to show that despite agency issues inherent in the dual-class structure, improving governance quality would have a positive impact, at least in the case of corporate takeovers.

Details

Managerial Finance, vol. 41 no. 11
Type: Research Article
ISSN: 0307-4358

Keywords

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