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Article
Publication date: 11 July 2016

Kulabutr Komenkul and Dhanawat Siriwattanakul

The purpose of this paper is to investigate the characteristics of the Initial Public Offering (IPO) market, IPO underpricing and the long-run performance of IPOs and to…

Abstract

Purpose

The purpose of this paper is to investigate the characteristics of the Initial Public Offering (IPO) market, IPO underpricing and the long-run performance of IPOs and to find out the ex ante difference in the market structure between the pre-, during and post-periods of the Unremunerated Reserve Requirement (URR) at the 30 per cent rate.

Design/methodology/approach

The sample is a total of 245 IPOs listed on the Stock Exchange of Thailand (SET) and the Market for Alternative Investment (mai), during the period 2001-2012. The explanatory variables consist of the age of the firm, the offer size, the time-lag between the IPO date and the first trading date, the proportion of shares owned by the government and the IPO subscription rates by foreign and institutional investors. In further analysis, the authors adopt a two-stage least squares approach to derive unbiased estimates of the relationship between government ownership, IPO underpricing and firm quality.

Findings

We find the ex ante uncertainty and earning management partially explain the IPO underpricing phenomenon in the Thai IPO market. Our findings support the impresario hypothesis shown by the negative relation between underpricing and the three-year after-market. In addition, the 30 per cent URR imposition by the Thai Central Bank promptly reduced the number of IPO issues and the proportion of foreigners and institutions subscribing to IPOs. However, it was able to enhance the degrees of IPO underpricing and the long-run performance of IPOs in Thailand.

Practical implications

The results presented in this paper may be, therefore, useful for investors, security analysts, companies and regulators in many other emerging markets beyond Thailand. Given the results from the over-performance of IPOs in the post-URR period, investors may do better holding Thai IPOs for a long period with a likelihood of gaining a higher return.

Originality/value

This paper contributes to the literature concerning IPOs – in that we have considered two stock markets, namely, SET and mai. Furthermore, unique data such as the government ownership and proportion of IPOs subscribed by foreign and institutional investors are taken into consideration in our research model. To the best of our knowledge, for the first time in the Thai IPO market, the effect of the 30 per cent URR on IPO underpricing and the performance of IPOs in the long-run has been closely examined.

Details

Journal of Financial Regulation and Compliance, vol. 24 no. 3
Type: Research Article
ISSN: 1358-1988

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Article
Publication date: 13 January 2021

Muttanachai Suttipun

This study aims to investigate the extent, level and pattern of key audit matters (KAMs) reporting by companies listed in the market for alternative investment (MAI) in…

Abstract

Purpose

This study aims to investigate the extent, level and pattern of key audit matters (KAMs) reporting by companies listed in the market for alternative investment (MAI) in Thailand, and to test for a relationship between the external auditors and KAMs reporting.

Design/methodology/approach

The population and sample used in this study were all companies listed in the MAI. Based on the annual reports issued by the sample of companies from 2016 to 2018, content analysis was used to quantify the KAMs reporting in the audit reports by using word counting and a checklist. Descriptive analysis, correlation matrix and multiple regression were used to analyse the data.

Findings

The results showed that the word counts of KAMs reporting fluctuated around 600 words during the three year period studied, while the number of issues on which KAMs reporting was performed was similar each year with an average of 1.63 KAMs issues per company. Moreover, the study found a significant positive relationship between auditor type, audit fees and the level of KAMs reporting.

Practical implications

This is the first longitudinal study of the KAMs reporting of companies listed in the alternative capital market in Thailand.

Originality/value

Communication and legitimacy theories were found to offer cogent explanations explaining the quality of and reasons for KAMs reporting by Thai listed companies as a reaction to the need for quality communication between external auditors and company stakeholders, based on external pressure due to societal expectations.

Details

Meditari Accountancy Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2049-372X

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Abstract

Details

Corporate Financial Distress
Type: Book
ISBN: 978-1-83982-981-9

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Article
Publication date: 5 August 2019

Anahí Briozzo, Clara Cardone-Riportella and Myriam García-Olalla

This paper aims to develop a cross-country analysis of the similarities and differences in the debt maturity structure of listed SMEs from the point of view of corporate…

Abstract

Purpose

This paper aims to develop a cross-country analysis of the similarities and differences in the debt maturity structure of listed SMEs from the point of view of corporate governance (CG) attributes in two different economic environments: an OECD (Spain) country and a non-OECD (Argentina) country.

Design/methodology/approach

Using data from listed SMEs in the Argentinian SME segment (pooled data from 2012 to 2015) and 31 listed SMEs in the Spanish Mercado Alternativo Bursátil for growing firms (MAB_GE)(2014), bivariate and multivariate analyses are performed.

Findings

Spanish firms with a higher ownership concentration and a large controlling shareholder have higher short-term liabilities (STL) ratios. Participation of women on the board has a negative relation with the STL ratio only for Spain. The participation of corporations in ownership and a Big4 auditor have a negative relation with the STL ratio for both countries.

Practical implications

These results will help SME managers understand the effects of the application of good governance policies. The study also gives regulators a guideline to develop standards to assist in efficient borrowing in terms of seeking funding in alternative capital markets.

Originality/value

First, the results provide evidence about the financial impact on the STL ratio of CG attributes in listed SME. Second, as far as the authors know, this is the first paper to analyse the CG attributes of listed SMEs in an OECD country and a non-OECD country. Third, the paper presents CG data derived from an ad hoc basis elaborated from different websites and databases.

Details

Corporate Governance: The International Journal of Business in Society, vol. 19 no. 4
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 5 October 2015

Godfred Adjappong Afrifa and Venancio Tauringana

This paper aims to report the results of an investigation into the effect of corporate governance factors on the performance of listed small and medium-sized enterprises…

Abstract

Purpose

This paper aims to report the results of an investigation into the effect of corporate governance factors on the performance of listed small and medium-sized enterprises (SMEs), and examines whether this effect differs between the two sizes of business.

Design/methodology/approach

The paper uses unbalanced panel data regression analysis on a sample of 234 SMEs listed on the Alternative Investment Market, for a 10-year period (2004-2013).

Findings

The panel data analysis results show that for all SMEs, corporate governance factors – board size, chief executive officer (CEO) age and tenure and directors’ remuneration – are significantly associated with performance of SMEs. The results also suggest that while board size is associated with the performance of both small and medium enterprises, CEO age is significant only for medium firms and directors’ remuneration only for small ones, while CEO tenure and proportion of non-executive directors are not significant for either.

Practical implications

Overall, the results imply that corporate governance factors affect the performance of listed SMEs. However, this effect differs significantly between small and medium enterprises. The findings have important implications for policymakers who prescribe corporate governance mechanisms for SMEs.

Originality/value

The paper adds to existing literature on corporate governance of SMEs by establishing a relationship between firm performance and board size, CEO age, CEO tenure, directors’ remuneration and proportion of non-executive directors.

Details

Corporate Governance, vol. 15 no. 5
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 4 November 2019

Naruanard Sarapaivanich, Jomjai Sampet and Paul G. Patterson

This study aims to examine the extent to which clients’ perceptions of a financial auditor’s communication style affect their psychological comfort and trust when…

Abstract

Purpose

This study aims to examine the extent to which clients’ perceptions of a financial auditor’s communication style affect their psychological comfort and trust when considering whether to retain the incumbent firm for future financial audits.

Design/methodology/approach

A multistage method was used comprising integrated results from a literature review and findings from five in-depth interviews with chief financial officers of listed firms. A cross-sectional survey then yielded valid responses from 190 incorporated firms listed on The Stock Exchange of Thailand or Market for Alternative Investment.

Findings

The results reveal that, consistent with social interaction theory, an affiliation communication style positively influenced client’s psychological comfort and trust in an auditor. On the other hand, a dominant communications style negatively impacted psychological comfort. Cognitive social capital was found to moderate the links between dominant communication–psychological comfort, psychological comfort–trust and trust–relationship commitment.

Practical implications

From a managerial perspective, an affiliation communication style is fundamental for building client comfort and trust, especially for professional service firms, but especially in Eastern collectivist cultures that are relationship rich, where people seek to avoid conflict and prefer indirect communication styles over more direct styles.

Originality/value

This research highlights the central role that interpersonal communication style plays in developing psychological comfort and trust with a professional service firm. In addition, this study introduces the role of client psychological comfort as a key mediator between communications and trust.

Details

Accounting Research Journal, vol. 32 no. 4
Type: Research Article
ISSN: 1030-9616

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Article
Publication date: 12 June 2009

Matthew A. Zolnor

The purpose of this paper is to analyze the efficiency of the internal control reporting (ICR) requirements imposed by Sections 302 and 404 of the Sarbanes‐Oxley Act of…

Abstract

Purpose

The purpose of this paper is to analyze the efficiency of the internal control reporting (ICR) requirements imposed by Sections 302 and 404 of the Sarbanes‐Oxley Act of 2002 (SOX). The lessons learned are then applied to the current financial crisis.

Design/methodology/approach

The Coase Theorem is applied to the events leading up to the collapse of Enron and the enactment of SOX. The paper then analyzes the efficacy of the various examples of ICR regulation, both pre‐ and post‐SOX, noting the ways in which they effectively mitigate transaction costs and the ways in which they over‐regulate.

Findings

US investors continue to invest in foreign markets despite the fact that those markets maintain less demanding ICR requirements than those required by Section 404. Moreover, investors do not respond negatively to Section 404 disclosures. The research demonstrates that Section 404 does not provide useful information in the minds of investors. Considering Section 404's ineffectiveness and the burdensome costs it imposes on reporting companies, it is clear that Section 404 is an example of over‐regulation and should be repealed.

Practical implications

The transaction costs that caused the collapse of Enron and the enactment of SOX bear strong similarities to those causing the more recent subprime mortgage crisis. The lessons learned from the enactment of SOX Section 404 are directly applicable to the current financial crisis and should be noted moving forward.

Originality/value

By utilizing a law and economics perspective, the paper more clearly demonstrates how Section 404 is an example of over‐regulation and draws links to the current economic crisis.

Details

Journal of Investment Compliance, vol. 10 no. 2
Type: Research Article
ISSN: 1528-5812

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Article
Publication date: 1 March 2011

Allan Hodgson, Suntharee Lhaopadchan and Sitapa Buakes

Prior research, in mainly Western economies, suggests the level of corporate governance is financially important. As an emerging economy case study, the purpose of this…

Abstract

Purpose

Prior research, in mainly Western economies, suggests the level of corporate governance is financially important. As an emerging economy case study, the purpose of this paper is to investigate whether the Thai Institute of Directors (IOD) corporate governance index provides investors with financial information about fundamental value and arbitrage portfolio decisions, and if/how information content changes over time.

Design/methodology/approach

Logistic regressions using 11 financially dependent variables and a “good governance” dummy variable, constructing zero‐cost buy‐sell portfolios, and Fama‐French cumulative average returns (CARs), over the period 2001‐2006.

Findings

The predicted significant relationships between a “good governance” categorization and financial proxies for firm performance; and zero‐cost portfolios that generate very high future monthly excess returns early in the study period, which are then dissipated by 2006, are found. These high returns were also associated with insignificant or inconsistent ten‐day CARs after the announcement of an improving (deteriorating) index category, but with a more rapid reaction in 2006.

Research limitations/implications

Results suggest that either (or in a combination): the Thai stock market had a slow learning adjustment to the governance index because of uncertainty as to information content; the IOD was incomplete and needed fine tuning and updating before full information impact was realized; and other time‐specific factors meant the IOD was of a lesser importance. One limitation is the data time period and the extension of the governance analysis to the global financial crisis years.

Practical implications

Governance information content in Thailand was not (initially) fully integrated into prices with substantial arbitrage returns available to astute investors. Continual re‐assessment and improvement of governance reporting should be an agenda requirement.

Originality/value

The paper forms an extension of governance studies into an Asian emerging economy, and determination of time‐varying information content and arbitrage opportunities.

Details

International Journal of Accounting & Information Management, vol. 19 no. 1
Type: Research Article
ISSN: 1834-7649

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Book part
Publication date: 6 September 2018

Wonlop Buachoom

As there is inclusive evidence on relationship between board characteristics and firm performance in the Thai context, and mixed findings of this relationship are usually…

Abstract

As there is inclusive evidence on relationship between board characteristics and firm performance in the Thai context, and mixed findings of this relationship are usually reported from previous studies, this study tries to clarify a reason for the mixed finding by determining the impact of board structures on different quantile levels of firm performance. Building on extant literature and using a developed econometric technique, the Quantile Analysis, on a sample of 446 listed firms in Thailand for a 15-year period ranging from 2000 to 2014, empirical evidence is provided which is consistent with prior studies that some characteristics of the board as the core mechanisms of corporate governance, i.e., board independence, board size, board meeting frequency, and dual role leadership on board, have significant influence on performance of Thai firms. In particular, when considering different quantile levels of firm performance, board structures are found to have different effects across quantile of performance distribution. Board independence and dual role leadership on board are found to have a significant influence on only moderate-performing firms, while board size and board meeting frequency are revealed as having significant impact on only firms with high-performance which need more effectiveness of the board in overseeing and supervising decision-making of the executives. Thus, these findings indicate that considering different quantile levels of firm performance for the board structures and performance relationship should be a reason of previous mixed findings. Moreover, the findings should be important information in encouraging better understanding an optimal governance system in Thailand for related stakeholders such as policymakers, corporate firms, and investors.

Details

Advances in Pacific Basin Business, Economics and Finance
Type: Book
ISBN: 978-1-78756-446-6

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Expert briefing
Publication date: 15 April 2016

Microfinance in South-east Asia.

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