Advances in Financial Planning and Forecasting
Center for PBBEFR & Ainosco Press,正常發行
選擇卷期
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Existing literature assumes that regulation allows utilities to shift input cost changes to consumers, reducing revenue volatilities, thus lowering systematic risk for regulated firms. We offer the first empirical test of this assumption by comparing beta and revenue volatility between utilities and less regulated firms, specifically manufacturing firms. We find that utilities have significantly lower betas and revenue volatility. Further, revenue volatility has significant explanatory power over manufacturing firm betas but none for utilities because so little variation in both beta and revenue volatility exists cross-sectionally for the utility sample. The results have important implications for investors considering low-beta stocks.
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Financial reporting fraud (FRF) has a significant detrimental impact on society. Though extant literature examines various attributes of FRF, little research has been done on the deterrent factors of FRF. Recently, four perpetrators of a major FRF were sentenced to death by the Sharia (Islamic) court of Iran. This study examines whether or not capital punishment for FRF is relevant and applicable to Sharia-based Islamic societies. After analyzing the efficacy of the death penalty in light of the Quran and Sunnah (the teachings of the Prophet Mohammed), we infer that imposing the death penalty for committing white-collar crimes such as FRF is permissible in Islamic society if such punishment contributes toward maximizing the social welfare of the society by deterring people from committing such crimes in the future. While this article sheds light on the rationale for imposing capital punishment in an Islamic society, we contend that future research should extrapolate the relevance of the death penalty for perpetrators of high-profile FRF in non-Islamic secular countries.
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The objective of this study is to reach significant determinants of corporate debt ratio that help avoid bankruptcy risk. The study defines Debt Ratio Safe Buffer as the difference between zero-default debt ratio and the observed debt ratio. As far as finance managers are able to manage capital structure in a way that preserves positive 〞Debt Ratio Safe Buffer,〞 corporate financial resources as well as shareholders' wealth are managed efficiently. The authors operationalize the statistical properties of Black-Scholes option pricing model to estimate a debt ratio associated with zerodefault probability. This study uses data for the firms listed in DJIA30 and NASDAQ100. The data cover quarterly intervals covering the period 30th June 1989 ~ 31st March 2011. The methods of econometric estimation in this study include (1) tests for linearity versus non-linearity, (2) tests for normality, (3) tests for fixed versus random effects, (4) Cointegration analysis that tests for model specification and (5) classical regression that estimates the determinants of 〞Debt Ratio Safe Buffer.〞 The results conclude that: (1) the coefficient of speed of adjusting debt ratio safe buffer in a previous quarter to a target debt ratio safe buffer is relatively high and statistically significant. This high speed of adjustment shows that firms determine debt ratios in a way that does not cause an exposure to bankruptcy risk. (2) firms adjust debt ratio to a safe buffer in the long term rather than short term, (3) the assumptions of the trade-off and peckingorder theories are quite valid and can be utilized to manage debt ratio safe buffer effectively, (4) firms have financed expansions in fixed assets and sales using zero-default debt, (5) nevertheless, firms are not able to reach an optimal liquidity strategy that helps minimize debt financing. As far as debt financing is associated with bankruptcy risks, debt ratios might be high enough to expose a firm to bankruptcy risk. In this study, the mathematical algorithm and measurement of the variables offer the advantage of using the negative coefficients of the significant variables as proxies for financial risks (e.g., narrowing 〞Debt Ratio Safe Buffer〞). Otherwise, positive coefficients can be used for monitoring bankruptcy risks. If firms determine the debt ratio being less than zero-default debt ratio, firms as well as shareholders can achieve substantial benefits given that the probability of bankruptcy is eliminated.
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This study uses the Hoping Industrial Harbor build-operate-transfer (BOT) project as an example and analyzes the feasibility of financial investment projects. In traditional investment evaluation decisions, capital budgeting methods such as net present value (NPV) and internal rate of return (IRR) are most commonly used but traditional capital budgeting is a static model, which will not help decision-making in a timely manner in the face of the uncertain future cash flows. It also lacks management flexibility. Decision makers are assisted by using sensitivity analysis in consideration of the following variables: shipping volume, announced land, rate of government rent, and facility maintenance fees to make strategic decisions under a variety of future financial changes. Then, this study applies an expansion of scale decision tree to determine whether to implement a second phase project and provide decision makers more flexible investment strategies. The findings of this study contribute to the development of related future BOT projects.
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This study aims to estimate the likelihood of false share repurchase signaling, to identify how corporate governance factors affect the likelihood of such false signaling, and to determine the appropriateness of the proxies for false signaling used in the prior literature that are based on ex-post and indirect measurements. To the best of our knowledge, no study to date has used an ex-ante and direct approaches to estimate the likelihood of false share repurchase signaling. In filling this gap, this paper employs a direct and ex-ante estimation of managerial cheating intention, called the onesided response bias model, which was developed by Hsiao and Sun (1999). This innovative approach avoids or mitigates the noise resulting from indirect measurements, facilitates the estimation of cheating probability and assesses how corporate governance factors affect this probability. The main empirical results reveal that the increase in management holdings and block shareholders' holdings is associated with reduced managerial cheating intention with regard to share repurchases. Finally, we provide evidence that our ex-ante and direct measurements approach is more reliable than the approaches previously used in the false share repurchase literature.
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Whether the Imputation Credit Account (ICA) should be recognized as an asset in the firm's statement of financial position has caused heated debates among standard setters, accounting professionals, and academia in countries where the Income Tax laws employ the Integration of Corporate and Individual Income Tax System. The purpose of this study is to examine the market valuation of the disclosed imputation credit account (ICA). We use data composed of public firms listed in Taiwan Stock Exchange (TSE) and Over-the-Counter market (OTC) from 1998 to 2011. We find that ICA is significantly and positively associated with share prices for firms listed in both the TSE and OTC markets. This finding supports the position that investors view the disclosed ICA an asset to the firm. In addition, we find that the pricing effect of ICA is greater for TSE firms than for OTC firms. Further, we find the pattern of the pricing effect of ICA to be commensurate with the levels of ICA over the sample period. Moreover, we find that industry sectors with positive ICA pricing effect tend to have greater levels of ICA. Finally, our results are robust to alternative model specifications and variable measurements.
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This paper examines the impact of the adoption of International Financial Reporting Standards (IFRS) on Taiwanese listed companies. We employ ten metrics, classified in income smoothing, report aggressiveness and value relevance, to test whether accounting quality has improved after mandatory IFRS adoption in Taiwan beginning in 2013. The 2012 financial statements under local Generally Accepted Accounting Principles (GAAP) are also required to be restated with IFRS. These statements provide us useful information to evaluate the effect of adopting an alternate accounting standard. Our sample covers over 800 listed firms in Taiwan during 2011 to 2013. Our results can be summarized as follows. Relative to 2012, we find evidence of significant decreases in income smoothing and in discretionary accruals as well as a significant increase in timely recognition of large losses in 2013. However, relative to 2012, we do not find any significant increase in value relevance after mandatory IFRS adoption. Our results contribute to the existing debate on whether adopting IFRS improves accounting quality. They also prompt regulators in emerging economies to be aware that the effectiveness of adopting IFRS may not be consistent with reducing earnings management and amplifying value relevance.
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We investigate how board structure affects the choice of ADR for Taiwan and Hong Kong listed firms during 1992 to 2009. We find that board structure does play a role in the choice of ADR. Taiwan listed firms with CEO duality tend to choose to cross list in the US while for Hong Kong listed firms, higher ratio of independent directors will significantly increase the probability to cross list in the US. Moreover, we interestedly find that reallocation among three choices (Level I, Level III, and Rule 144A) of ADR occurs after SOX; and this choice reallocation is significantly influenced by the independent directors. After SOX, Rule 144A is preferred to Level I. Besides, the higher ratio of independent directors would increase the probability to choose Level I more than to choose Rule 144A and Level III when cross-listing.
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This paper examines whether the relationship between bank's risk and financial performance changes with bank's attributes. The findings suggest that, in Taiwan's banking industry, bank's risk has negative effects on financial performance. Namely, the lower the bank's risk is, the better the bank's financial performance is. This phenomenon is more apparent in case of small-sized banks. By further categorizing Taiwan's banks into financial holding group's subsidiary banks and banks that are not subsidiaries of any financial holding group, it can be found that the risk of financial holding banks has negative effects on financial performance. However, the risk of those non-financial holding banks has positive effects, indicating that they rely on holding high-risk assets to improve their financial performance. To prevent those non-financial holding banks from improving their performance by neglecting their operating risk, the government must develop appropriate financial regulatory policies to avoid the crisis of financial institutions.
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In this paper, we aim to investigate extreme short-term contrarian profits in Taiwan by observing whether stock opening prices have information content. In contrast to earlier studies, we adopt a variable period holding approach. For robustness checks, three sub-period and two sub-sample tests are conducted by taking actual transaction costs into consideration. It is discovered that utilizing the stock opening price signals, contrarian trading strategies thrive in Taiwan's stock market. Based on the results of this work, suggestions are made with regard to the development of new contrarian trading strategies.