Showing papers by "Mark H. Lang published in 2005"
TL;DR: The authors compare the characteristics of US GAAP earnings for US firms with reconciled earnings for non-US firms cross listing on US markets, and find that the reconciled results for nonUS firms differ systematically from USGAAP earnings, and are characterized by more evidence of smoothing, a greater tendency to manage earnings towards a target, a lower association with share price and less timely recognition of losses.
Abstract: We compare the characteristics of US GAAP earnings for US firms with reconciled earnings for non-US firms cross listing on US markets. We find that the reconciled earnings for non-US firms differ systematically from US GAAP earnings for US firms, and are characterized by more evidence of smoothing, a greater tendency to manage earnings towards a target, a lower association with share price and less timely recognition of losses. Further, splitting by country of domicile, earnings for firms from countries with relatively weak local investor protection environments show more evidence of earnings management, suggesting that institutional features of the local environment find their way into US GAAP-reported earnings. Our evidence suggests that, even though cross-listed firms operate under the regulatory authority of the SEC and follow nominally similar accounting standards, their reconciled accounting data show more evidence of earnings management than data prepared by US firms.
681 citations
TL;DR: The authors examine the determinants and consequences of the split of options between executive and non-executive employees and find that the proportion of options granted to executives is lower the stronger is firm governance.
Abstract: We examine the determinants and consequences of the split of options between executive and non-executive employees. We find that the proportion of options granted to executives is lower the stronger is firm governance. For the sample as a whole, the relation between options and both operating income and valuation is weaker for executive options than for options to lower-level employees. Splitting the sample between weak and strong governance firms, for the weak (strong) governance firms, the relation between executive options and firm performance and valuation is weaker (stronger) relative to non-executive options. Results are robust to controls for the endogeneity of option granting choice. Taken as a whole, our results suggest that firms with relatively weak governance tend to give a larger proportion of options to executives and appear to receive relatively less benefit from those options.
10 citations