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Article
Publication date: 9 August 2018

Min-Yu (Stella) Liao

The purpose of this paper is to investigate the effect of cross-listing on the size and structure of director compensation at individual director level. While much of the…

Abstract

Purpose

The purpose of this paper is to investigate the effect of cross-listing on the size and structure of director compensation at individual director level. While much of the prior literature has focused on executive compensation, more recent literature has started to examine director compensation. Additionally, there has been extensive literature examining the impact of cross-listing on the corporate governance and equity valuation of listed firms. The literature, however, has largely ignored the effect of cross-listing on director compensation schemes. This study attempts to combine these two literature streams and examine the effect of cross-listing on director compensation.

Design/methodology/approach

This study uses American Depository Receipts (ADRs) and matched non-ADRs from the same country and industry to test the relationship between cross-listing and director compensation. Regressions with country, year and industry fixed-effects are employed. The relationship is further examined using only ADR firms during pre-listing and post-listing periods.

Findings

This study finds that directors of ADR firms receive higher total compensation and greater percentage equity-based compensation relative to directors of non-ADR firms. This study also finds that such differences in director compensation are dependent on the cross-listing program a firm is registered to. Directors of ADR firms also receive higher total compensation and greater percentage equity-based compensation during post-listing periods relative to their own compensation during pre-listing periods.

Originality/value

This study extends the literature on director compensation in a global setting, and is the first to examine an unanswered question regarding the effect of cross-listing on director compensation. This study provides important information that cross-listing affects the size and structure of director compensation between ADR and non-ADR firms, as well as between pre-listing and post-listing periods for ADR firms themselves.

Details

Managerial Finance, vol. 44 no. 9
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 13 March 2019

Thomas S. Howe, Vladimir Kotomin, Min-Yu (Stella) Liao and Abhishek Varma

The purpose of this paper is to document and compare the characteristics of two student-managed investment funds at the University.

Abstract

Purpose

The purpose of this paper is to document and compare the characteristics of two student-managed investment funds at the University.

Design/methodology/approach

This study uses a case study approach to achieve this purpose.

Findings

Consistent with other studies, this study finds considerable differences in funding, oversight and the structure of the courses in which the students manage the portfolios. This is the case even though the portfolios are managed by students in courses offered by the same department at the same university.

Originality/value

This study presents different possible ways of obtaining funds and structuring courses in which the students manage investment portfolios.

Details

Managerial Finance, vol. 46 no. 5
Type: Research Article
ISSN: 0307-4358

Keywords

Content available
Article
Publication date: 3 October 2019

Stephen P. Ferris and Min-Yu (Stella) Liao

Because of our limited understanding of the incidence and effect of board busyness globally, the mixed evidence of the effect of board busyness obtained in the USA and the…

Abstract

Purpose

Because of our limited understanding of the incidence and effect of board busyness globally, the mixed evidence of the effect of board busyness obtained in the USA and the divergence of international patterns of director busyness from that observed in the USA, the author contends that there is a strong need to examine board busyness from a global perspective. The literature, however, does not examine the effect of board busyness on reported earnings quality and certainly does not analyze it internationally. Consequently, the purpose of this study is to examine the effect of multiple board appointments on the quality of a firm’s reported earnings.

Design/methodology/approach

The research design for this study is empirical. It uses both univariate and multivariate statistical analysis to examine historical corporate accounting, finance and governance data.

Findings

Consistent with the busyness hypothesis of corporate governance, the author finds that firms with a higher proportion of busy independent directors or busy CEOs manage their earnings more extensively. Further, the findings of this study present that firms with a higher proportion of busy independent audit committee members have poorer financial reporting quality. Using a sample of American Depository Receipts (ADRs), this study determines that the ineffectiveness of busy boards regarding earnings management is mitigated by the listing regulations imposed by US exchanges.

Research limitations/implications

The author believes that this study offers new and important evidence regarding the debate whether busy directors provide knowledge, skill and corporate connections, or whether they are overextended and, thus, unable to fully perform their monitoring duties. This study shows that firms with busy directors are associated with poorer financial reporting quality and, consistent with the busyness hypothesis, are less effective as managerial monitors.

Practical implications

This study provides useful guidance regarding board design and the kinds of policies that firms should adopt regarding multiple boarding.

Social implications

The social implications focus on the public policy implications regarding the importance of effective corporate governance in the reporting of financial wealth, wealth creation and wealth management.

Originality/value

This is the first study that examines the relation between board/committee busyness and corporate earnings management using a comprehensive set of international firms. Second, the author expands the analysis of audit committee into a new dimension: committee quality as captured by the busyness of its independent members. This study also contributes to the ongoing debate in the corporate finance literature regarding the reputation and busyness hypotheses of multiple directorships.

Details

Review of Accounting and Finance, vol. 18 no. 4
Type: Research Article
ISSN: 1475-7702

Keywords

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Book part
Publication date: 14 November 2014

Min-Yu (Stella) Liao and Chris Tamm

We examine what changes, if any, firms are making to their capital structure around the time they cross-list because both of these affect a firm’s corporate governance…

Abstract

Purpose

We examine what changes, if any, firms are making to their capital structure around the time they cross-list because both of these affect a firm’s corporate governance. Cross-listing requires firms to follow SEC rules and regulations, which helps improve the firm governance. A firm’s capital structure, specifically the use of debt, is an effective way to mitigate the conflict between managers and shareholders by reducing the cash available to managers. We examine whether these governance mechanisms are complimentary or being used as substitutes by cross-listing firms.

Methodology

We compare the capital structures of Level II and Level III cross-listing firms from both civil law and common law countries in the three years before and the three years after cross-listing.

Findings

We show firms are significantly reducing their debt to equity ratio after the cross-listing. This reduction is shown for both Level II and Level III firms; however, it is primarily seen in civil law countries.

Practical implications

The corporate governance improvement firms recognize by cross-listing is partially offset by the reduced use of debt after the cross-listing. These governance characteristics may be especially relevant for shareholders in Level III cross-listings because those firms are actually raising addition cash.

Details

Corporate Governance in the US and Global Settings
Type: Book
ISBN: 978-1-78441-292-0

Keywords

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Book part
Publication date: 1 November 2018

Min-Yu (Stella) Liao

The literature has documented evidence that economic freedom is positively associated with economic growth, investment spending, income equality, employment, gender…

Abstract

The literature has documented evidence that economic freedom is positively associated with economic growth, investment spending, income equality, employment, gender equality, etc. Economic freedom is also found to be associated with a country’s rule of law and legal regime. There is, however, little studies examining how economic freedom affects a firm’s performance such as firm valuation and profitability. The evidence presented in this study shows that economic freedom strengthens a firm’s valuation and profitability. Additionally, firms headquartered in emerging markets or younger firms from countries with higher levels of economic freedom experience higher valuation and profitability. That is, economic freedom is more beneficial for firms from emerging markets and is crucial to the success of early-stage firms.

Details

International Corporate Governance and Regulation
Type: Book
ISBN: 978-1-78756-536-4

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Article
Publication date: 7 December 2015

Min-Yu (Stella) Liao and Stephen Ferris

When a foreign firm cross-lists on an exchange in the US, it signals stronger investor protection. This is because cross-listing firms must comply with SEC and exchange…

Abstract

Purpose

When a foreign firm cross-lists on an exchange in the US, it signals stronger investor protection. This is because cross-listing firms must comply with SEC and exchange regulations, thus producing stronger corporate governance. Consequently, cross-listing increases firm attractiveness to investors and places domestic rivals at a disadvantage. Rivals might respond by mimicking the governance changes resulting from cross-listing. The purpose of this paper is to examine whether firms respond to their rivals’ cross-listings through improvement in governance.

Design/methodology/approach

This study uses earnings management as a measure of governance for a set of international firms. The authors track the changes in governance of non-cross-listing firms following their rivals’ cross-listings. The authors employ an event study methodology to assess the spillover effect of a competitor’s cross-listing.

Findings

The authors find that rivals exhibit imitative improvements in their governance following a competitor’s cross-listing. This response is immediate and is the strongest in the year of cross-listing. Further, rivals with greater growth opportunities, lower market share, stronger past performance, and larger size demonstrate greater improvements in governance. Rivals make greater improvements in response to more rigorous Level III listings.

Practical implications

This study finds that cross-listing effects are underestimated. It is not only the investors of the listing-firms who benefit from the cross-listing, but also the investors of non-listing rival as competitors try to match the higher governance standard.

Originality/value

This study is the first that examines the intra-industry spillover effect of a cross-listing. This study also expands the analysis of the spillover effect in a new dimension: corporate governance.

Details

Managerial Finance, vol. 41 no. 12
Type: Research Article
ISSN: 0307-4358

Keywords

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Book part
Publication date: 1 January 2014

Abstract

Details

Corporate Governance in the US and Global Settings
Type: Book
ISBN: 978-1-78441-292-0

To view the access options for this content please click here
Book part
Publication date: 1 November 2018

Abstract

Details

International Corporate Governance and Regulation
Type: Book
ISBN: 978-1-78756-536-4

Content available
Article
Publication date: 28 May 2020

Stephen Buser

Abstract

Details

Managerial Finance, vol. 46 no. 4
Type: Research Article
ISSN: 0307-4358

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