Females are underrepresented in academic finance departments, especially among senior faculty. Using information on 2910 finance scholars from 387 universities worldwide, we show that although females have become more common in finance departments over the past 30 years, yet only one in ten full professors are women. We explore whether this gap is associated with a lower likelihood of female faculty transitioning into higher academic ranks and find no significant difference between the sexes. While we cannot rule out the existence of a glass ceiling impacting women, partly due to their higher exit rates from the profession, we primarily attribute the low representation of female finance professors to historic male-centric recruitment activity. Due to the length of time for early-career academics to reach full professor status, gender imbalance at the most senior levels in finance is likely to continue for several years.

We examine the impact of incentive compensation on the riskiness of acquisition decisions before and after the passage of the Sarbanes–Oxley Act (SOX). Before SOX, equity-based compensation was positively related to changes in risk around acquisition decisions, but this relationship weakened after the introduction of SOX. The drop in post-SOX acquisition-related risk stems from how managers respond to compensation-based incentives in the new regulatory environment. We show that executive stock options and pay-risk sensitivity drive post-SOX managerial responsiveness to risk-taking incentives. We also document a post-SOX value-enhancing effect on long-term stock-price performance and total factor productivity through these same incentive compensation mechanisms. The results are robust to selection bias, simultaneity, measurements of risk, and the definition of incentive compensation.

This paper examines the relation between executive compensation and value creation in merger waves. The sensitivity of CEO wealth to firm risk increases the likelihood of out-of-wave merger transactions but has no influence on in-wave merger frequency. CEOs with compensation linked to firm risk have better out-of-wave merger performance in comparison to in-wave mergers. We also present evidence that cross-sectional acquirer return dispersion is greater for in-wave acquisitions. Our results suggest that the underperformance of acquiring firms during merger waves can be attributed in part to ineffective compensation incentives, and appropriate managerial incentives can create value, particularly in non-wave periods.

Hiring and promotion committees consider a broad range of journals and the relative importance of journal titles is highly subjective. In this paper, we present a novel approach to objective finance journal ranking by considering the impact of journal publications on career advancement. While the top three journals (Journal of Finance, Journal of Financial Economics, Review of Financial Studies) are significant drivers of promotion success, other journals are nearly as important, particularly for business schools outside of the top tier. In rank order, these are the Journal of Banking and Finance, the Journal of Financial and Quantitative Analysis, the Journal of Corporate Finance, and the Review of Finance.

This paper represents the intersection of three spheres of influence, highly relevant to the global research community interested in a more reliable understanding of capital market phenomena. First, as a timely context, we celebrate the 50-year legacy of an iconic paper on event studies, Ball and Brown (1968). Second, we add our voice to the growing call for researchers to follow principles of “responsible science”. Third, using the Ball and Brown paper as their inspiration, we report on an experiment in which several teams of researchers follow a registration-based editorial process, which illustrates one fruitful avenue on how more responsible research can be fostered in the future.

This paper represents the intersection of three spheres of influence, relevant to the global research community interested in a more reliable understanding of capital market phenomena. First, as a timely context, we celebrate the 50-year legacy of an iconic event study of accounting information and the evolution of stock prices, namely Ball and Brown (1968). Second, we add our voice to the growing call for researchers to follow principles of "responsible science". Third, using the Ball and Brown paper as the inspiration, we report on an experiment in which several teams of researchers follow a registration-based editorial process, which illustrates one fruitful avenue for fostering responsible research into the future.

We study the effect of stock market integration on the cost of capital and investment, using Brazil as a case study. We show that integration, as proxied by foreign ownership, has a positive impact on the financing side by reducing cost of capital. On the output side, we find that integration increases corporate investment, but only for well-governed firms. We contribute to the debate on the pros and cons of financial globalization, particularly by providing evidence of important linkages between financial integration and real economic activity.

This paper examines the effect of political uncertainty on stock returns, exploiting an exogenous shock to political stability in Brazil. In May 2017, a conversation between Brazil's President and a businessman was bugged by Brazilian Police and leaked to the media. This led to sudden political instability and a collapse in the equity market. We decompose the cross-sectional variation of abnormal returns around this event and investigate whether corporate political connections and exposure to foreign capital were factors in the price falls. Our results show that firms connected with the Brazilian state-owned development bank, BNDES, and firms cross-listed via ADRs (American Depositary Receipts) were most affected by this shock. The evidence suggests that political connections and foreign capital exposure are factors in channeling political risk to asset prices, increasing the cost of equity capital during periods of political instability.

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While past work finds support for both higher and lower cost of debt among family firms, whether lower shareholder–creditor agency conflicts in family firms translate into greater ex-ante contracting efficiency (i.e., lower debt contract strictness) remains unexplored. Drawing on a shareholder–creditor agency framework and costly contracting theory, creditors, expecting firm value maximization rather than shareholder value maximization from family firms, may offer less strict debt contracts to increase contracting efficiency. We find in a sample of 716 publicly traded U.S. firms (2001–2010) that family firms have less strict debt contracts, which are even less strict when family firms have higher asset tangibility. Although increases in R&D investments could lead to more pronounced shareholder–creditor agency conflicts, given family firms' preferences for lower risk and growth, debt contract strictness among family firms is not positively associated with higher R&D intensity.

More than anyone else, Magali Sarfatti Larson in 1977 established today’s received wisdom in the sociology of professions, in reaction against Talcott Parsons’ earlier functionalist approach. However, she acknowledges that she had failed to provide a theoretical alternative to Parsons’ functionalism. Today, Larson has substantially reevaluated her approach to professions, and indeed now accepts one of Parsons’ central arguments, namely that professions introduce important consequences into the larger social order. But from 1977 to today, she has still not developed consistently any identifiable theoretical approach to professions. One result of lacking any mooring at a conceptual level is that her descriptions and explanations of professionalism across her entire career suffer as a result, being at once ad hoc, unreliable and ultimately contradictory.

We investigate the agency costs of corporate ownership structure and the role of audit committees in mitigating their effect. Using China as a laboratory, where audit committees are voluntary, we study the demand for and value relevance of audit committees conditional on the various agency costs of corporate ownership. Audit committees complement existing internal governance systems by reducing the agency conflicts embedded in ownership structure. They are always value relevant, the magnitude of which depends upon the level and complexity of the ownership lattice. Audit committees substitute for inefficient external regulatory environments, particularly where weak legal institutions predominate. Our results are robust to firm size, investment level and financial leverage.

We employ dynamic threshold partial adjustment models to study the asymmetries in firms’ adjustments toward their target leverage. Using a sample of US firms during 2002–2012, we document a negative impact of the Global Financial Crisis on the speed of leverage adjustment. In our subperiod analysis, we find moderate evidence of cross-sectional heterogeneity in this speed, which seems more pronounced pre-crisis and provides little support for the financial constraint view. For the pre-crisis period, more constrained firms, such as those with high growth, with large investment, of small size, and with volatile earnings, adjust their capital structures more quickly than their less constrained counterparts. These firms rely heavily on external funds to offset their large financing deficits, suggesting that their higher adjustment speeds may be driven by lower adjustment costs that are shared with the transaction costs of accessing external capital markets. For the crisis period, the speed of adjustment only varies with the deviation from target leverage, with only firms having sufficiently large deviations attempting to revert to the target, albeit slowly. Overall, our results provide new evidence of both cross-sectional and time-varying asymmetries in capital structure adjustments, which is consistent with the trade-off theory. JEL Classification: G30; G32; C33

This paper reports the results of a behavioural finance experiment on the ability of Thai individuals to make informed investment decisions under a defined contribution self-management option. Using an asset allocation dataset from members of the Thai Government Pension Fund (TGPF) and a control sample of financially knowledgeable individuals (MBA finance students), we report that TGPF members are relatively more risk averse, exhibit a greater home investment bias, and over-react to market price movements. Financially savvy MBA students hold more shares and international securities, and earn greater long term returns. The fact that the worse performing TGPF member allocations outperform the TGPF default plan, along with strong preferences for time liquidity diversification, provide challenges for TGPF managers to increase their financial engineering and to continue to lobby for restrictive investment ceilings to be revised.

Previous research argues that large noncontrolling shareholders enhance firm value because they deter expropriation by the controlling shareholder. We propose that the conflicting incentives faced by large shareholders may induce a nonlinear relationship between the relative size of large shareholdings and firm value. Consistent with this prediction, we present evidence that there are costs to having a second (and third) largest shareholder, especially when the largest shareholdings are similar in size. Our results are robust to various relative size proxies, firm performance measures, model specifications, and potential endogeneity issues.

Previous research argues that large noncontrolling shareholders enhance firm value because they deter expropriation by the controlling shareholder. We propose that the conflicting incentives faced by large shareholders may induce a nonlinear relationship between the relative size of large shareholdings and firm value. Consistent with this prediction, we present evidence that there are costs to having a second (and third) largest shareholder, especially when the largest shareholdings are similar in size. Our results are robust to various relative size proxies, firm performance measures, model specifications, and potential endogeneity issues.

AbacusVolume 52, Issue 4 p. 685-771 Commentary Comments on Shan and Walter: ‘Towards a Set of Design Principles for Executive Compensation Contracts’* Stacey Beaumont, Corresponding Author Stacey Beaumont Associate Lecturer s.beaumont@business.uq.edu.au University of Queensland Business SchoolSearch for more papers by this authorRaluca Ratiu, Raluca Ratiu Assistant Professor IE University, SpainSearch for more papers by this authorDavid Reeb, David Reeb Professor National University of SingaporeSearch for more papers by this authorGlenn Boyle, Glenn Boyle Professor of Finance glenn.boyle@canterbury.ac.nz Department of Economics and Finance at the University of CanterburyHe is grateful to Warwick Anderson, Helen Roberts, and, especially, Neil Crombie for very helpful suggestions.Search for more papers by this authorPhilip Brown, Philip Brown Emeritus Professor Honorary Professor philip.brown@uwa.edu.au Business School, University of Western Australia Business School, University of New South WalesSearch for more papers by this authorAlexander Szimayer, Alexander Szimayer Professor Faculty of Business, Economics and Social Sciences, University of HamburgSearch for more papers by this authorRaymond da Silva Rosa, Raymond da Silva Rosa Professor of Finance ray.dasilvarosa@uwa.edu.au UWA Business School, the University of Western AustraliaSearch for more papers by this authorDavid Hillier, David Hillier david.hillier@strath.ac.uk University of StrathclydeSearch for more papers by this authorPatrick McColgan, Patrick McColgan University of StrathclydeSearch for more papers by this authorAthanasios Tsekeris, Athanasios Tsekeris University of StrathclydeSearch for more papers by this authorBryan Howieson, Bryan Howieson Associate Professor bryan.howieson@adelaide.edu.au School of Accounting and Finance, Business School, University of AdelaideThanks to Paul Coram and Dorothea Greiling for their helpful comments on an earlier version of this commentary.Search for more papers by this authorZoltan Matolcsy, Zoltan Matolcsy zoltan.matolcsy@uts.edu.au University of Technology, SydneySearch for more papers by this authorHelen Spiropoulos, Helen Spiropoulos University of Technology, SydneySearch for more papers by this authorJohn Roberts, John Roberts Professor john.roberts@sydney.edu.au University of Sydney Business SchoolSearch for more papers by this authorTom Smith, Tom Smith University of Queensland Business SchoolSearch for more papers by this authorQing Zhou, Qing Zhou q.zhou@business.uq.edu.au University of Queensland Business School School of Management, Xi'an Jiaotong University, ChinaZhou would like to acknowledge the funding support from the National Natural Science Foundation of China, NSFC(71602158).Search for more papers by this authorPeter L. Swan, Peter L. Swan peter.swan@unsw.edu.au University of New South Wales Business SchoolSearch for more papers by this authorStephen Taylor, Stephen Taylor Professor of Accounting stephen.taylor@uts.edu.au UTS Business School, University of Technology SydneyThe author acknowledges the helpful suggestions and feedback offered by Yaowen Shan.Search for more papers by this authorSue Wright, Sue Wright Associate Professor sue.wright@mq.edu.au Faculty of Business and Economics at Macquarie UniversitySearch for more papers by this authorDavid Yermack, David Yermack dyermack@stern.nyu.edu NYU Stern School of BusinessSearch for more papers by this author Stacey Beaumont, Corresponding Author Stacey Beaumont Associate Lecturer s.beaumont@business.uq.edu.au University of Queensland Business SchoolSearch for more papers by this authorRaluca Ratiu, Raluca Ratiu Assistant Professor IE University, SpainSearch for more papers by this authorDavid Reeb, David Reeb Professor National University of SingaporeSearch for more papers by this authorGlenn Boyle, Glenn Boyle Professor of Finance glenn.boyle@canterbury.ac.nz Department of Economics and Finance at the University of CanterburyHe is grateful to Warwick Anderson, Helen Roberts, and, especially, Neil Crombie for very helpful suggestions.Search for more papers by this authorPhilip Brown, Philip Brown Emeritus Professor Honorary Professor philip.brown@uwa.edu.au Business School, University of Western Australia Business School, University of New South WalesSearch for more papers by this authorAlexander Szimayer, Alexander Szimayer Professor Faculty of Business, Economics and Social Sciences, University of HamburgSearch for more papers by this authorRaymond da Silva Rosa, Raymond da Silva Rosa Professor of Finance ray.dasilvarosa@uwa.edu.au UWA Business School, the University of Western AustraliaSearch for more papers by this authorDavid Hillier, David Hillier david.hillier@strath.ac.uk University of StrathclydeSearch for more papers by this authorPatrick McColgan, Patrick McColgan University of StrathclydeSearch for more papers by this authorAthanasios Tsekeris, Athanasios Tsekeris University of StrathclydeSearch for more papers by this authorBryan Howieson, Bryan Howieson Associate Professor bryan.howieson@adelaide.edu.au School of Accounting and Finance, Business School, University of AdelaideThanks to Paul Coram and Dorothea Greiling for their helpful comments on an earlier version of this commentary.Search for more papers by this authorZoltan Matolcsy, Zoltan Matolcsy zoltan.matolcsy@uts.edu.au University of Technology, SydneySearch for more papers by this authorHelen Spiropoulos, Helen Spiropoulos University of Technology, SydneySearch for more papers by this authorJohn Roberts, John Roberts Professor john.roberts@sydney.edu.au University of Sydney Business SchoolSearch for more papers by this authorTom Smith, Tom Smith University of Queensland Business SchoolSearch for more papers by this authorQing Zhou, Qing Zhou q.zhou@business.uq.edu.au University of Queensland Business School School of Management, Xi'an Jiaotong University, ChinaZhou would like to acknowledge the funding support from the National Natural Science Foundation of China, NSFC(71602158).Search for more papers by this authorPeter L. Swan, Peter L. Swan peter.swan@unsw.edu.au University of New South Wales Business SchoolSearch for more papers by this authorStephen Taylor, Stephen Taylor Professor of Accounting stephen.taylor@uts.edu.au UTS Business School, University of Technology SydneyThe author acknowledges the helpful suggestions and feedback offered by Yaowen Shan.Search for more papers by this authorSue Wright, Sue Wright Associate Professor sue.wright@mq.edu.au Faculty of Business and Economics at Macquarie UniversitySearch for more papers by this authorDavid Yermack, David Yermack dyermack@stern.nyu.edu NYU Stern School of BusinessSearch for more papers by this author First published: 29 December 2016 https://doi.org/10.1111/abac.12091Citations: 3 *For corresponding and other author details please see the end of this article. Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat Citing Literature Volume52, Issue4Special Issue: Issues in Executive CompensationDecember 2016Pages 685-771 RelatedInformation

This paper examines the relation between executive compensation incentives and the nature of merger transactions inside and outside of merger waves. We find that the sensitivity of CEO wealth to firm risk, vega, increases the likelihood of merger transactions outside of waves, but is unrelated to merger frequency inside wave periods. CEOs whose compensation is more closely tied to firm risk make better performing acquisitions when they acquire outside of merger waves, but this is not the case for in-wave deals, suggesting that underperformance of acquiring firms during waves can be attributed in part to ineffective compensation incentives. We also find that the cross-sectional dispersion of acquirers’ returns is higher for in-wave acquisitions relative to acquisitions made outside a wave, suggesting that out-wave acquisitions are characterized by lower uncertainty of future stock price returns. This is again restricted to high vega CEOs during out-wave periods.

We examine the value relevance of accounting across several African countries and test whether IFRS improved the value association of earnings and equity book values. We report a stronger valuation association between accounting and stock prices in African countries classified as having a secrecy culture. This increases after IFRS and more so for earnings. On the other hand, IFRS induced a stronger increase in the book value coefficient in the less secretive and more developed South African market. We surmise that the more conceptual focus of IFRS induced an increased demand for higher-quality accounting professionals, which had a filtering-down effect of improving quality information flow and breaking down the secrecy culture. Our research highlights the diverse impacts of IFRS and the role of culture, asset markets and accounting professionalism, in driving the relevance of accounting components across Africa.