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Managerial Ownership (managerial + ownership)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	100%

Selected Abstracts

Managerial Ownership and Accounting Conservatism in Japan: A Test of Management Entrenchment Effect

JOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 7-8 2010
Akinobu Shuto
Abstract:, We examine the effect of managerial ownership on the demand for accounting conservatism in Japan. We find that within the low and high levels of managerial ownership, managerial ownership is significantly negatively related to the asymmetric timeliness of earnings, which is consistent with the implication of the incentive alignment effect. We also find a significant positive relationship between managerial ownership and the asymmetric timeliness of earnings for the intermediate levels of managerial ownership, as suggested by the management entrenchment effect. These evidences suggest the possibility that accounting conservatism contributes to addressing the agency problem between managers and shareholders. [source]

Managerial Ownership, Information Content of Earnings, and Discretionary Accruals in a Non,US Setting

JOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 7-8 2002
Gorm Gabrielsen
This study employs Danish data to examine the empirical relationship between the proportion of managerial ownership and two characteristics of accounting earnings: the information content of earnings and the magnitude of discretionary accruals. In previous research concerning American firms, Warfield et al. (1995) document a positive relationship between managerial ownership and the information content of earnings, and a negative relationship between managerial ownership and discretionary accruals. We question the generality of the Warfield et al. result, as the ownership structure found in most other countries, including Denmark, deviates from the US ownership configuration. In fact, Danish data indicate that the information content of earnings is inversely related to managerial ownership. [source]

Who Cares about Auditor Reputation?,

CONTEMPORARY ACCOUNTING RESEARCH, Issue 3 2005
JAN BARTON
Abstract I provide evidence on the demand for auditor reputation by examining the defections of Arthur Andersen LLP's clients following the accounting scandals and criminal conviction marring the auditor's reputation in 2002. About 95 percent of clients in my sample did not switch auditors until after Andersen was indicted for criminal misconduct regarding its failed audit of Enron Corp. I test whether the timing of client defections and the choice of a new auditor are consistent with managers' incentives to mitigate potentially costly information and agency problems. I find that clients defected sooner, mostly to another Big 5 auditor, if they were more visible in the capital markets; such clients attracted more analysts and press coverage, had larger institutional ownership and share turnover, and raised more cash in recent security issues. However, my proxies for agency conflicts , managerial ownership and financial leverage , are not associated with the timing of defections or the choice of new auditor. Overall, my study suggests that firms more visible in the capital markets tend to be more concerned about engaging highly reputable auditors, consistent with such firms trying to build and preserve their own reputations for credible financial reporting. [source]

Discretionary Accounting Accruals, Managers' Incentives, and Audit Fees,

CONTEMPORARY ACCOUNTING RESEARCH, Issue 3 2003
Ferdinand A. Gul
Abstract This paper examines the linkages between discretionary accruals (DAs), managerial share ownership, management compensation, and audit fees. It draws on the theory that managers of firms with high management ownership are likely to use DAs to communicate value-relevant information, while managers of firms with high accounting-based compensation are likely to use DAs opportunistically to manage earnings to improve their compensation. OLS regression results of 648 Australian firms show that (1) there is a positive association between DAs and audit fees; (2) managerial ownership negatively affects the positive relationship between DAs and audit fees; and (3) this negative impact is further found to be weaker for firms with high accounting-based management compensation. [source]

The Underpricing of Insurance IPOs

FINANCIAL MANAGEMENT, Issue 2 2009
Qiming Wang
The previous literature documents that insurance initial public offerings (IPOs) are less underpriced than those of noninsurance firms. This difference is usually attributed to lower information asymmetry for regulated firms. However, we find that once one controls for the file price adjustment insurance IPOs, both stock and mutual, are no less underpriced than other noninsurance offerings suggesting the book-building process resolves any such information asymmetries. We also find that mutual IPOs appear more underpriced than stock insurance IPOs, but this difference is related to the differences in pre-issue managerial ownership. [source]

Corporate Governance and Asset Sales: The Effect of Internal and External Control Mechanisms

FINANCIAL REVIEW, Issue 3 2006
Robert C. Hanson
G32; G34 Abstract We investigate firms that sell assets to determine whether corporate governance mechanisms are effective at controlling agency problems. Our evidence shows that these firms have lower managerial ownership and are more likely to make unrelated acquisitions, suggesting weak internal controls. Analysis of insider trading activity shows that, on average, net buying increases before the asset sale and shareholders benefit more when this occurs. Results suggest that how managers reach a given level of ownership provides more information about incentive alignment than just the level of ownership. Our results also highlight the dynamic nature of corporate restructuring as firms acquire and then sell assets. [source]

The Effect of Managerial Ownership on the Short- and Long-run Response to Cash Distributions

FINANCIAL REVIEW, Issue 2 2003
Keith M. Howe
G32/G35 Abstract We examine both the short-run and long-run responses to the following corporate cash flow transactions: dividend increases and decreases, dividend initiations, and tender offer repurchases. Our focus is the short-run and long-run effects of managerial ownership. We hypothesize that ownership plays an important role in explaining the announcement effects for these events, owing to signaling effects and the reduction of agency problems. Our short-run results accord well with the earlier work on announcement effects for these events and show that firms with high insider ownership exhibit higher excess returns. Our long-term results indicate a drift over a three-year period following the announcement, with the excess returns for the high insider-ownership group becoming more pronounced. [source]

Managerial Ownership and Accounting Conservatism in Japan: A Test of Management Entrenchment Effect

Voluntary Appointment of Independent Directors in Taiwan: Motives and Consequences

JOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 9-10 2008
Chaur-Shiuh Young
Abstract:, This study explores factors that motivate firms to increase board independence in the absence of legal requirements to do so. In addition, we examine the impact of voluntary enhancement of board independence on firm performance. Using a sample of listed companies in Taiwan, we show that voluntary appointment of independent directors is associated with both economic factors and managerial power. Specifically, we find that board independence increases with the weaknesses of alternative corporate governance mechanisms and the severity of agency problems. However, board independence decreases with managerial ownership and family control. In addition, by employing a simultaneous equations model with selectivity, we provide evidence supporting the positive performance impact of voluntary appointment of independent directors in Taiwan. [source]

Managerial Ownership, Information Content of Earnings, and Discretionary Accruals in a Non,US Setting

Small Business Borrowing and the Owner,Manager Agency Costs: Evidence on Finnish Data

JOURNAL OF SMALL BUSINESS MANAGEMENT, Issue 1 2010
Mervi Niskanen
This study investigates the impact that managerial ownership has on loan availability and credit terms. We find that managerial ownership is common in a sample of small and medium-sized Finnish firms. Our results suggest that an increase in managerial ownership decreases loan availability. The results on loan interest rates suggest that though an increase in managerial ownership initially increases interest rates, the effect is reversed at higher levels of ownership. Collateral requirements increase monotonically with managerial ownership. Overall, the results suggest that banks view that there are agency costs involved with managerial ownership even in small and medium-sized firms and that this is taken into account when lending to these firms. [source]

Founding Family Controlled Firms: Performance, Risk, and Value

JOURNAL OF SMALL BUSINESS MANAGEMENT, Issue 1 2001
Daniel L. McConaugby
An agency theory framework is used to test the effects of founding family control on firm performance, capital structure, and value. Both the finance and management literatures regarding the relationship between firm control and firm value are explored. Controlling for size, industry, and managerial ownership, the results suggest that firms controlled by the founding family have greater value, are operated more efficiently, and carry less debt than other firms. [source]

Managerial hedging, equity ownership, and firm value

THE RAND JOURNAL OF ECONOMICS, Issue 1 2009
Viral V. Acharya
Suppose risk-averse managers can hedge the aggregate component of their exposure to firm's cash-flow risk by trading in financial markets but cannot hedge their firm-specific exposure. This gives them incentives to pass up firm-specific projects in favor of standard projects that contain greater aggregate risk. Such forms of moral hazard give rise to excessive aggregate risk in stock markets. In this context, optimal managerial contracts induce a relationship between managerial ownership and (i) aggregate risk in the firm's cash flows, as well as (ii) firm value. We show that this can help explain the shape of the empirically documented relationship between ownership and firm performance. [source]