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Book part
Publication date: 1 October 2015

Reza Houston and Stephen P. Ferris

In this study, we examine the relationship between political connections of private firms and the initial public offering process. Using registration statement…

Abstract

In this study, we examine the relationship between political connections of private firms and the initial public offering process. Using registration statement information, we create a unique database of politically connected IPO firms. We find that political connections are substitutes to high-quality underwriters and big four auditors. Politically connected firms manage earnings more highly upward than non-connected firms prior to the public offering. Politically connected firms also exhibit less underpricing than non-connected firms. Finally, politically connected IPO firms have superior post-IPO returns relative to non-connected IPO firms.

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International Corporate Governance
Type: Book
ISBN: 978-1-78560-355-6

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Book part
Publication date: 6 November 2012

Abstract

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Advances in Financial Economics
Type: Book
ISBN: 978-1-78052-788-8

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Book part
Publication date: 9 December 2013

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Advances in Financial Economics
Type: Book
ISBN: 978-1-78350-120-5

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Book part
Publication date: 6 November 2012

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Advances in Financial Economics
Type: Book
ISBN: 978-1-78052-788-8

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Book part
Publication date: 30 March 2017

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Global Corporate Governance
Type: Book
ISBN: 978-1-78635-165-4

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Book part
Publication date: 6 November 2012

Abstract

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Advances in Financial Economics
Type: Book
ISBN: 978-1-78052-788-8

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Book part
Publication date: 6 November 2012

Abstract

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Advances in Financial Economics
Type: Book
ISBN: 978-1-78052-788-8

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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

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Book part
Publication date: 9 December 2013

Hyung-Suk Choi, Stephen P. Ferris, Narayanan Jayaraman and Sanjiv Sabherwal

To determine what role overconfidence plays in the forced removal of CEOs internationally.

Abstract

Purpose

To determine what role overconfidence plays in the forced removal of CEOs internationally.

Design/Methodology

The study makes use of the Fortune Global 500 list.

Findings

We find that overconfident CEOs face significantly greater hazards of forced turnovers than their non-overconfident peers. Regardless of important differences in culture, law, and corporate governance across countries, overconfidence has a separate and distinct effect on CEO turnover. Overconfident CEOs appear to be at greater risk of dismissal regardless of where in the world they are located. We also discover that overconfident CEOs are disproportionately succeeded by other overconfident CEOs, regardless of whether they are forcibly removed or voluntarily leave office. Finally, we determine that the dismissal of overconfident CEOs is associated with improved market performance, but only limited enhancement in accounting returns.

Originality/Value

This study is unique with its examination of overconfidence among global CEOs rather than being limited to U.S. chief executives. It also provides insight into how overconfidence is related to national cultures, legal systems and corporate governance mechanisms.

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Advances in Financial Economics
Type: Book
ISBN: 978-1-78350-120-5

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Book part
Publication date: 6 November 2012

David Javakhadze, Stephen P. Ferris and Gregory Noronha

Purpose – The question of whether the corporate governance practices of firms in diverse countries are converging to those of U.S. firms, and the extent of convergence or…

Abstract

Purpose – The question of whether the corporate governance practices of firms in diverse countries are converging to those of U.S. firms, and the extent of convergence or divergence, is examined.

Design/methodology/approach – Company level governance measures of board structure and organization, firm audit attributes, antitakeover defenses, and compensation design attributes of international firms are compared with those of U.S. firms.

Findings – We find that the evidence for convergence is more mixed than previously believed, with firms in some nations converging, others essentially static, and a number diverging from U.S. practices. We further determine that country factors such as measures of national economic freedom, increased shareholder rights, and impartial judiciaries help to explain convergence. Greater participation by banks in the national economy is associated with greater divergence from U.S. governance standards. Firm characteristics which are suggestive of a future need for external equity encourage convergence while those which capture the use of leverage or the ability to service additional debt are correlated with greater divergence.

Research limitations/implications – This study suggests that inquiry into whether convergence is occurring might be the wrong question to ask. Rather, our findings suggest that the research focus should be shifted toward an inquiry of what specific areas of governance are converging and in what countries or regions.

Originality/value – This study helps to describe what constitutes effective corporate governance design for firms worldwide. It provides managers with insights on how governance mechanisms can be tailored to reflect local practices and laws.

Details

Advances in Financial Economics
Type: Book
ISBN: 978-1-78052-788-8

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