12,257 research outputs found
International interdependence of an emerging market: the case of Iran
No full textIn this study the interdependence between Iran, its major trading partners and the United States is investigated using vector autoregression, generalized impulse response function and generalized variance decomposition techniques, introduced by Pesaran and Shin (1998). These techniques have an advantage over the commonly used impulse response and variance decomposition procedures in that they are insensitive to the ordering of the countries considered and hence, they produce more reliable results. The countries included in the sample, besides Iran are, France, Germany, Spain, Japan, South Korea, Brazil, Italy and the United States. The direction, strength, durability and stability of the effect of shocks in one market on the return patterns of the other markets are examined. The findings are 4-fold. First, the effect of past own market shocks on current behaviour is significant, beyond the first month, in most cases. Second, the own effect is stronger for the emerging markets such as Iran and Brazil, than the industrialized countries. Third, cross-country effects are short-lived for Brazil, Korea and Japan, but durable in the case of Iran, Germany, Spain and the United States. Fourth, in terms of breadth and strength, cross-country effects exhibit differential degrees of interdependence and asymmetry. The observed lack of integration between the Iranian market and the industrialized world makes it less vulnerable to the effect of shocks in the latter countries but it also deprives it from the flow of funds that could spur economic development and growth
Patents do not measure innovation success
No full textWe find that a company’s patent filings and citations are not good measures of R&D success or failure, even when compared to firms in the same industry. Instead, our analysis reveals that patent counts reflect the firm’s mix of product and process innovation. Intuitively, competitor infringements of process innovation are difficult to detect, suggesting these innovations are better protected via trade secret than patents. We document that non-patenting firms frequently announce valuable new products, even though they emphasize process over product innovation. Insider trading in non-patenting firms generates positive excess returns, while such activity in patenting firms yields ordinary returns. The Uniform Trade Secrets Act induced firms to switch from patenting to non-patenting, leading to lower analysts and institutional following. Financial intermediaries potentially influence the disclosure of innovation rather than research and development success (Aghion et al., 2013; Bena et al., 2017). Overall, our tests indicate that patents and citations signify the nature of innovation rather R&D success
Politician careers and SEC enforcement against financial misconduct
No full textWe document that corporate financial misconduct has significant consequences for politicians' election outcomes and, in particular, those politicians that serve on U.S. congressional committees with SEC-relevant oversight responsibilities (“SEC-relevant politicians”). These politicians display a 31% greater likelihood of losing a reelection campaign after a local firm faces SEC enforcement for financial misconduct. We also document that SEC-relevant politicians appear to influence the SEC to limit career effects due to the potential consequences from enforcement against local firms. First, the timing of enforcement action announcements around SEC-relevant politicians' elections appears opportunistic. Second, firms in the districts of SEC-relevant politicians are less likely to receive SEC enforcement actions relative to other firms and, when faced with enforcement, receive smaller penalties. Collectively, these results suggest that politicians' career concerns impede the SEC's enforcement efforts
Disregarding the shoulders of giants: inferences from innovation research
No full textStudies proposing new determinants of corporate innovation include previously identified factors in an ad-hoc manner. We find that only a sparse set of recently proposed innovation determinants provide material, independent information about patents and citations. We document that inferences in recent empirical studies often change when we include previously discovered innovation determinants. Commonly-used econometric methods, including fixed effects and plausible shocks, do not always mitigate the need to condition on previously identified innovation determinants. Rather than randomly selecting a subset of control variables from prior studies, our analysis offers researchers a framework to consider variables previously proposed
The Politics of M&A Antitrust
No full textAntitrust regulators play a critical role in protecting market competition. We examine whether the political process affects antitrust reviews of merger transactions. We find that acquirers and targets located in the political districts of powerful U.S. congressional members who serve on committees with antitrust regulatory oversight receive relatively favorable antitrust review outcomes. To establish causality, we use plausibly exogenous shocks to firm–politician links and a falsification test. Additional findings suggest congressional members’ incentives to influence antitrust reviews are affected by three channels: special interests, voter and constituent interests, and ideology. In aggregate, our findings suggest that the political process adversely interferes with the ability of antitrust regulators to provide independent recommendations about anticompetitive mergers.Peer Reviewedhttps://deepblue.lib.umich.edu/bitstream/2027.42/153651/1/joar12291.pdfhttps://deepblue.lib.umich.edu/bitstream/2027.42/153651/2/joar12291_am.pd
Legal Expertise on Corporate Audit Committees and Financial Reporting Quality
No full textABSTRACT
Recent trends in corporate board composition indicate an increase in the appointment of directors with legal expertise. Using two financial reporting quality measures, accruals quality and discretionary accruals, we find—for a sample of Russell 1000 firms in 2003 and 2005—that the presence (and proportion) of directors with legal backgrounds on the audit committee is associated with higher financial reporting quality. These results obtain after controlling for accounting expertise on audit committees. Also, supplementary tests indicate a positive association between changes in legal expertise and changes in financial reporting quality, suggesting that legal expertise serves as a monitor rather than as a signal of financial reporting quality. Further, the two forms of expertise interact —i.e., the presence of directors with both forms of expertise enhances financial reporting quality, beyond the contribution of the individual forms of expertise. Additional tests suggest that the positive effects of legal expertise are greater in the post-SOX period compared with a pre-SOX year.</jats:p
Going Beyond Counting First Authors in Author Co-citation Analysis
No full textThe present study examines one of the fundamental aspects of author co-citation analysis (ACA) - the way co-citation
counts are defined. Co-citation counting provides the data on which all subsequent statistical analyses and mappings
are based, and we compare ACA results based on two different types of co-citation counting - the traditional type that
only counts the first one among a cited work's authors on the one hand and a non-traditional type that takes into
account the first 5 authors of a cited work on the other hand. Results indicate that the picture produced through this non-traditional author co-citation counting contains more coherent author groups and is therefore considerably clearer. However, this picture represents fewer specialties in the research field being studied than that produced through the traditional first-author co-citation counting when the same number of top-ranked authors is selected and analyzed. Reasons for these effects are discussed
Limits to political capture: evidence from patent grants, disclosures, and litigation
No full textSubstantial evidence suggests that regulatory agencies in the U.S. can be captured by the politicians who oversee them. We provide novel evidence of a federal agency in which capture is limited: the United States Patent and Trademark Office. Although patent applications from politically connected firms are more likely to be approved despite being of lower ex-post quality, additional analyses suggest these outcomes are not indicative of capture. In particular, the disclosure quality of connected patents' legal claims increases through the review process, narrowing the scope of the patents and constraining the intellectual property rights. Furthermore, connected patents are no more likely than others to be litigated ex-post, suggesting these patent grants are not spurious. Our findings provide insights into how the design of a regulator can limit the benefits that accrue to politically connected firms
Director capital and corporate disclosure quality
No full text10.1016/j.jaccpubpol.2012.11.003Journal of Accounting and Public Policy324191-212JACP
Insider Trading in Supervised Industries
No full textWe investigate the impact of government agency oversight, such as by the Federal Reserve, on insider trading at the firm level. Regulatory supervision potentially limits trading based on material, nonpublic information, as it provides another layer of corporate governance to mitigate outflows of private information. Yet regulators themselves may serve as a source of information leakage, thereby facilitating insider-trading activity. We find, first, that in comparison to nonsupervised firms, supervised firms exhibit substantially greater trading based on inside information prior to earnings announcements. Second, in the first few days after firms provide private information to regulators or when regulators possess private information inaccessible to corporate insiders, these firms exhibit greater symptoms of insider trading. Finally, within a given supervised industry, insider-trading symptoms appear more pronounced when regulators exhibit greater leniency or operate in states with more political corruption. These insider-trading activities translate into over $1 billion in annual transfers
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