Earnings Management and Investor Protection: An International Comparison

What makes organizations so similar? We contend that the engine of rationalization and bureaucratization has moved from the competitive marketplace to the state and the professions. Once a set of organizations emerges as a field, a paradox arises: rational actors make their organizations increasingly similar as they try to change them. We describe three isomorphic processes-coercive, mimetic, and normative—leading to this outcome. We then specify hypotheses about the impact of resource centralization and dependency, goal ambiguity and technical uncertainty, and professionalization and structuration on isomorphic change. Finally, we suggest implications for theories of organizations and social change.

The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields (Chinese Translation)

https://cws.journals.yorku.ca/index.php/cws/article/download/14795/13847

Men and Women of the Corporation

This paper investigates the effect of female representation on the board of directors on corporate response to stakeholders’ demands for increased public reporting about climate change-related risks. We rely on the Carbon Disclosure Project as a sustainability initiative supported by institutional investors. Greenhouse gas emissions measurement and its disclosure to investors can be thought of as a first step toward addressing climate change issues and reducing the firm’s carbon footprint. Based on a sample of publicly listed Canadian firms over the period 2008–2014, we find that the likelihood of voluntary climate change disclosure increases with women percentage on boards. We also find evidence that supports critical mass theory with regard to board gender diversity. These findings reinforce initiatives being undertaken around the world to promote gender diversity in corporate governance while demonstrating board effectiveness in stakeholder management.

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Board Gender Diversity and Corporate Response to Sustainability Initiatives: Evidence from the Carbon Disclosure Project

This study examines how family ownership affects the performance and capital structure of 613 Canadian firms from 1998 to 2005. In particular, we distinguish the effect of family ownership from the use of control-enhancing mechanisms. We find that freestanding family owned firms with a single share class have similar market performance than other firms based on Tobin’s q ratios, superior accounting performance based on ROA, and higher financial leverage based on debt-to-total assets. By contrast, family owned firms that use dual-class shares have valuations that are lower by 17% on average relative to widely held firms, despite having similar ROA and financial leverage.

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Family values: Ownership structure, performance and capital structure of Canadian firms.

Considerable academic research documents wealth destruction following mergers and acquisitions. The last decade has seen an unprecedented level of merger activity, in particular involving new economy firms. Prior studies (Kohers and Kohers 2000; 2001) suggest that high-tech M&A are associated with the payment of large premiums and involve target firms with high growth potential but with high risk. We investigate the shareholder wealth implications of high-tech M&A undertaken by Canadian firms over the period 1997-2006. We examine the relationship between ownership structure, agency problems, corporate governance, deal characteristics and acquiring firm performance. Canada offers an interesting setting given ownership is highly concentrated like in many countries with dominant family shareholdings. Some argue (e.g., Morck and Yeung 2004, 2005) that family firms are less likely to undertake optimal investment decisions or creative destructionism so as to maintain the benefits of concentrated ownership. Using the Villonga and Amit (2006) framework, we examine not only the impact of family ownership but contrast two potential agency conflicts, the conflict between shareholders and professional managers (Agency problem 1) and the conflict between large and small investors via control enhancing mechanisms such as multiple class voting shares and pyramids (Agency problem 2). First, we document positive announcement period abnormal returns for new economy deals. Second, we find a positive relationship between both family and institutional ownership and acquiring firm performance. Third, we show that the conflict between shareholders and professional managers (Agency problem 1) has a detrimental impact on announcement period abnormal returns whereas the conflict between large and small investors via control enhancing mechanisms (Agency problem 2) does not. However, the presence of both agency problems has a negative impact on shareholder wealth. Fourth, abnormal returns are higher during the boom years of 1997-2000 but lower for deals involving acquiring firms with large boards, deals involving publicly listed targets and deals involving acquirers with higher market to book ratios.

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Family Ownership, Agency Problems, Corporate Governance and Acquiring Firm Shareholder Wealth: Evidence from Acquisitions of New Economy Firms

This article examines whether firms' board gender diversity disclosures signal transparency, reveal impression management, or both. To disentangle the two disclosure motives further, we also investigate whether the disclosure features of clarity and tone are related to new women director appointments. Based on initial gender diversity disclosures of 506 Toronto Stock Exchange (TSX) publicly traded firms, our results suggest that firms committed to enhancing board diversity provide clearer disclosures and exhibit a higher level of “optimism” to signal their confidence in the positive outcomes of diversity. In contrast, firms reluctant to enhance their diversity policies engage in impression management through obfuscation and show the most “certainty” in their diversity disclosures to indicate no change to the status quo is required. We also find that tone optimism does translate into enhanced diversity practices while certainty is negatively related to subsequent diversity performance. Taken together, our findings are consistent with the assertion that firms employ a combination of signaling and impression management strategies in their disclosures about diversity practices. 

Disclosure transparency and impression management: A textual analysis of board gender diversity disclosures in Canada

Cette recherche examine la gestion des resultats comptables par les dirigeants d'entreprises sujettes a des offres publiques d'achat (OPA) dans le contexte Suisse. La recherche comptable suggere que les transactions de fusions et acquisitions offrent un cadre propice a la gestion des resultats tant pour les dirigeants de l'entreprise cible que pour ceux de l'acquereur (Easterwood, 1998 ; Erickson et Wang, 1999 ; North et O'Connell, 2002). Toutefois, les etudes empiriques relatives a cette question obtiennent des resultats divergents, et proviennent en outre essentiellement d'etudes menees dans le contexte americain. Notre recherche se propose d'enrichir la litterature comptable a travers l'analyse de la manipulation des resultats comptables par les firmes cibles d'OPA dans un contexte Europeen. Dans cette perspective, la Suisse offre un cadre interessant en raison des caracteristiques de son marche des prises de controle et de la flexibilite offerte aux dirigeants dans le choix des pratiques comptables comparativement a d'autres pays. Sur un echantillon de 50 societes suisses cibles d'OPA entre 1990 et 2002, nos resultats documentent une gestion significative des resultats comptables (mesuree par le niveau des accruals discretionnaires) au cours de l'annee qui precede celle de l'initiation de la transaction.

https://halshs.archives-ouvertes.fr/halshs-00581249/document

Walid Ben-Amar

Papers

Family Ownership, Agency Problems, Corporate Governance and Acquiring Firm Shareholder Wealth: Evidence from Acquisitions of New Economy Firms

Disclosure transparency and impression management: A textual analysis of board gender diversity disclosures in Canada

La gestion des résultats comptables lors des fusions et acquisitions: une analyse dans le contexte suisse

Regroupements d'entreprises et gestion des bénéfices

Regroupements d'entreprises et création de valeur (Business Combinations and Value Creation)