| 1. |
- Athanasakou, Vasiliki, et al.
(author)
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Annual Report Narratives and the Cost of Equity Capital: UK Evidence of a U-shaped Relation
- 2020
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In: European Accounting Review. - : Taylor & Francis (Routledge): SSH Titles. - 1468-4497 .- 0963-8180. ; 29:1, s. 27-54
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Journal article (peer-reviewed)abstract
- We hypothesize and test for a U-shaped relation between the cost of equity capital and the level of disclosure in annual report narratives. Using a computer-generated word-count-based index of the level of disclosure in U.K. annual report narratives, we document a negative relation with the cost of equity capital at low levels of disclosure, and a positive relation at higher levels of disclosure, together implying the presence of an optimal level of disclosure. We interpret the positive relation at higher levels of disclosure as evidence of uninformative clutter increasing the cost of equity capital. Additional analyses indicate the presence of both firm-level learning and regulatory corporate reporting initiatives as factors shaping adjustments towards optimum levels of disclosure.
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| 2. |
- Dong, Ting, et al.
(author)
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Business school education, motivation, and young adults' stock market participation
- 2023
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In: Journal of Accounting and Public Policy. - : Elsevier Inc. - 1873-2070 .- 1089-652X .- 0278-4254. ; 42:2
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Journal article (peer-reviewed)abstract
- In this paper, we examine whether business school education increases students’ stock market participation. We use unique stock ownership data of students from a business school in Sweden. We find a significant increase in stock ownership during and after their studies at the school compared to before entering the school. The marginal effects are 3.8% for the first two years of the core curriculum, 4.4% for the specialisation year, and 4.3% for the three years following graduation. The positive effect of business education on stock market participation is mainly driven by students interested in accounting or finance subjects, and the effect is more pronounced for females than for male students. © 2022
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| 3. |
- Dong, Ting, et al.
(author)
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Passive Investors and Audit Quality : Evidence from the U.S
- 2024
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In: SSRN Electronic Journal. - : Elsevier BV. - 1556-5068.
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Other publication (other academic/artistic)abstract
- The rise of index funds, or passive investing, in recent decades has caused heated debates over the efficacy of passive investors’ stewardship role in corporate governance. Our study adds to this emerging line of literature by examining whether passive investors enhance the quality of financial statement audits, a key aspect of corporate governance mechanisms. We follow Appel et al. (2016) in exploiting the yearly Russell index reassignment, which provides us with an ideal setting to study the causal relation between passive institutional investors (i.e., index trackers) and firms’ audit quality. Examining firms closely surrounding the Russell 1000/2000 cutoff line, we find that higher passive ownership leads to higher audit quality proxied by audit fees. To investigate the channel through which passive investors influence audit-related governance issues, our evidence from auditor ratification voting records suggests that passive investors do ‘voice’ their opinion on low-quality audits. Such effort also leads to a higher likelihood of auditor turnover in the following year. In the cross-sectional analysis, we also find that the positive effect of passive investors on audit quality is more pronounced in firms with higher agency costs. Thus, our study supports the view that passive investors play an active role in improving corporate governance.
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| 4. |
- Dong, Ting, et al.
(author)
-
Passive Investors and Audit Quality: Evidence from the U.S
- 2024
-
In: European Accounting Review. - : Taylor & Francis. - 1468-4497 .- 0963-8180.
-
Journal article (peer-reviewed)abstract
- The rise of index funds, or passive investing, in recent decades has caused heated debates over the efficacy of passive investors’ stewardship role in corporate governance. Our study adds to this emerging line of literature by examining whether passive investors enhance the quality of financial statement audits, a key aspect of corporate governance mechanisms. We follow [Appel, I. R., Gormley, T. A., & Keim, D. B. (2016). Passive investors, not passive owners. Journal of Financial Economics, 121(1), 111–141. https://doi.org/10.1016/j.jfineco.2016.03.003] we exploit the yearly Russell index reassignment, which provides us with an ideal setting to study the causal relation between passive institutional investors (i.e., index trackers) and firms’ audit quality. Examining firms closely surrounding the Russell 1000/2000 cutoff line, we find that higher passive ownership leads to higher audit quality proxied by audit fees. To investigate the channel through which passive investors influence audit-related governance issues, our evidence from auditor ratification voting records suggests that passive investors do ‘voice’ their opinion on low-quality audits. Such effort also leads to a higher likelihood of auditor turnover in the following year. In the cross-sectional analysis, we also find that the positive effect of passive investors on audit quality is more pronounced in firms with higher agency costs. Thus, our study supports the view that passive investors play an active role in improving corporate governance.
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| 5. |
- Dzieliński, Michał, et al.
(author)
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Climate Talk in Corporate Earnings Calls
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Other publication (other academic/artistic)abstract
- Climate change is a major concern for many companies, but it has not historically featured much in earnings conference calls. We find a marked increase in climate talk on these calls in recent years. We also find that climate talk is negatively related to the change in CO2 emissions (especially Scope 2) in the year after the call, particularly in firms with high overall environmental and governance ratings. Conversely, investors react particularly negatively to climate talk when it comes from a firm with low levels of ESG performance or following poor earnings performance. Finally, a firm employs more climate talk when it is more material, when there is greater shareholder pressure or when it is better prepared for climate-related disclosure. Overall, these results suggest that investors and other stakeholders interested in corporate climate action should be paying attention to earnings conference calls as a source of useful information about companies’ broader stance on climate-related issues.
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| 6. |
- Dzieliński, Michał, et al.
(author)
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Perceptions about quarterly earnings: Rhetorical differences comparing Sweden and the USA.
- 2020
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In: Sweden through the crisis. - Stockholm : Stockholm School of Economics Institute for Research. - 9789186797386 ; , s. 157-163
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Book chapter (other academic/artistic)abstract
- In this article, Michał Dzieliński and Florian Eugster compare earnings calls from Swedish and American companies from January 2019 to May 2020. Analyzing 3,677 transcripts, the authors find that COVID-19 clearly impacted companies’ financial communication regardless of country. However, comparing the countries, it is also shown that Swedish companies were more positive and less uncertain about the future. If these differences are caused by a better underlying performance or different rhetorical strategies in Sweden and the USA remains to be seen for future research.
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| 7. |
- Eugster, Florian, et al.
(author)
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Earning Investor Trust: The Role of Past Earnings Management
- 2017
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In: SSRN Electronic Journal. - : Elsevier BV. - 1556-5068.
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Other publication (other academic/artistic)abstract
- Higher past financial reporting quality (FRQ, as measured by less past earnings management, either in the prior year(s), or over a CEO’s tenure) is associated with stronger earnings responses. This effect is more pronounced where managers would have had more incentives and opportunities to misrepresent earnings – that is, where they passed a “litmus test” of trustworthiness. Analysts recognize that earnings of high-FRQ firms more reliably predict earnings. Overall, the results suggest that the trust investors put in a firm’s announcements depends on its reporting track record and on management’s resistance against temptations for misreporting.
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| 8. |
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| 9. |
- Eugster, Florian
(author)
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Endogeneity and the Dynamics of Voluntary Disclosure Quality: Is there Really an Effect on the Cost of Equity Capital?
- 2020
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In: Contemporary Accounting Research. - : Canadian Academic Accounting Association. - 0823-9150 .- 1911-3846. ; 37:4, s. 2590-2614
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Journal article (peer-reviewed)abstract
- Research on the effects of voluntary disclosure quality on the cost of equity capital is often plagued by endogeneity concerns. In this paper, I use a dynamic panel system GMM estimator, which provides internal instruments from the firm's history that directly address endogeneity arising from unobserved heterogeneity and simultaneity. By using hand-collected voluntary disclosure scores for firms listed in the Swiss stock exchange, I examine the dynamic relation between voluntary disclosure quality and the cost of equity capital in a panel over a period of 10 years. The results suggest that the relation between voluntary disclosure quality and the cost of equity capital becomes insignificant after controlling adequately for potential dynamic endogeneity, simultaneity, and unobserved heterogeneity.
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| 10. |
- Eugster, Florian, et al.
(author)
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Managerial Extraversion and Corporate Voluntary Disclosure
- 2023
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Other publication (other academic/artistic)abstract
- This paper examines the effect of managers’ personality trait of extraversion on the voluntary disclosure of their firms. Our results from analyzing archival data from Sweden show that the extraversion scores of CEOs and CFOs obtained from psychological tests are positively associated with the voluntary disclosure scores of their firms. The effect of manager extraversion on disclosure is moreover stronger when managerial discretion or managerial job demands are higher. We also find that extraversion affects managers’ disclosure styles during earnings conference calls.
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