The literature examining analyst activity assumes that access to management is valued by analysts and their employers. We propose a readily observable measure of access: How often an analyst is invited to be among the first to ask questions in the Q&A session of an earnings conference call. These "early participants" are more successful in the labor market than peers from the same brokerage when their brokerages close. Our results show that access is valued by both sell-side and buy-side employers and reflects connectivity to management as well as analyst skill dimensions not captured in traditional measures of performance.

We study information production and diffusion resulting from dynamic interactions between different types of informed investors in financial markets. Using a theoretical framework that exploits the setting of the Q&A section of earnings conference calls, we predict that information production from buy-side participation is more likely to trigger high price jumps and abnormal trading volume, as well as a subsequent price drift, relative to sell-side participation. Using high-frequency trading data during earnings conference calls we find evidence consistent with our prediction. The impact of buy-side participation on asset prices and trading activities is particularly strong when buy-side participants are affiliated with hedge funds. Our theoretical and empirical analyses shed light on how information complementarities affect financial market outcomes and provide an explanation to the "Einhorn Effect" that intrigues practitioners and policy makers.

Theoretical models of groups suggest that sub-group usage can affect communication among members and group decision-making. To examine the trade-offs from forming sub-groups, we assemble a detailed dataset on corporate boards (groups) and committees (sub-groups). Boards have increasingly used committees formally staffed entirely by outside directors. Our data show that twenty-five percent of all director meetings occurred in such committees in 1996; this increased to 45% by 2010. Our evidence suggests that granting formal authority to such committees can impair communication and decision-making. Sub-groups are relatively understudied, but our results suggest that they play an important role in group functioning and corporate governance.

This study provides further evidence on the cross-listing valuation premium using a sample of Asian firms from 2000 to 2010. First, following Doidge etal. (2004), we document a premium, but it disappears when we incorporate firm fixed effects. Second, consistent with Gozzi etal. (2008), we find that the premium arises immediately preceding the cross-listing year and disappears shortly thereafter. Of central interest, consistent with our proposition that the listing is strategically timed like an SEO, we document a similar pattern in operating performance, and increased financing activity in the listing year and the following 2years.

Would the crisis have happened if Lehman Brothers had been Lehman Sisters? Evidence on population gender differences in risk-aversion suggest not. Consistent with the idea that female managers need not be more risk-averse than men, we find that listed banks with more female directors did not engage in fewer risk-taking activities around the crisis and did not have lower risk than other banks. However, banks with more diverse boards had better performances, even in instrumental variable regressions. Our results suggest that more gender diversity is not necessarily associated with less risk. However, diversity may be valuable in crisis situations.

The literature examining analyst activity assumes that access to management is valued by analysts and their employers. We propose a readily observable measure of access: how often an analyst is invited to be among the first to ask questions in the Q&A session of an earnings conference call. These “early participants” are more successful in the labor market than peers from the same brokerage when their brokerages close. Our results show that access is valued by both sell-side and buy-side employers and reflects connectivity to management as well as dimensions of analyst skill not captured in traditional measures of performance.

Boards are working harder over time, but are they working better? Using text-based algorithms to construct a dataset with over 30,000 firm-year observations from 1996 to 2010, we document that the governance reforms of the early 2000s may have had unintended consequences. While readily observable board characteristics have not changed much over time, boards have increasingly delegated responsibilities to committees, staffed by independent directors. We find evidence that this delegation may have erected barriers to communication and elective board decision-making. Investors discount the informativeness of the personal stock purchases for independent directors who are active committee members; returns to firms announcing an acquisition decrease as board delegation increases. Reform-induced delegation does not appear to be value-enhancing; a conservative estimate suggests that Tobin’s q of the typical firm in the sample decreases by 1.7% after the reforms. Board committees are relatively understudied, but our results suggest that ignoring them leads to a very incomplete picture of board governance.

Boards are working harder over time, but they may not be working better. Using a comprehensive sample of board data from 1996 to 2010, we document that a large proportion of board activity is carried out by committees. Pre-SOX, 36% of board activity takes place in committees. This increases to 47% post-SOX. Since board activity levels have risen substantially over time, this means more board activity is carried out in the absence of insiders. This change does not appear to be value-enhancing. Board committees are relatively understudied, but our results suggest that ignoring them leads to a very incomplete picture of board governance.

We examine the incentives of buy-side analysts to participate in earnings conference calls, and how their participation and proactive involvement in the call affects information production during the call. Our results suggest that avoiding large losses on stocks in the buy-side portfolios is a major reason for their participation and involvement. Buy-side participation and early involvement lead to greater information production, but the effect exists only when the news around the earnings announcement event is negative. Sell-side analysts benefit from the information production – they revise their forecasts more often and make more accurate forecasts when buy-side involvement is more; however, again, this effect is present only when the news is negative. Finally, when the news around the earnings announcement is positive, greater buy-side participation ameliorates the post-announcement drift, but when the news is negative, the drift is more pronounced when there is more buy-side involvement in the earnings conference call.

This paper proposes an alternative explanation for the valuation premiums documented for cross-listed firms. We contend that the cross-listing premium for exchange listings is due to the increase in firm valuations in the years prior to cross-listing, a feature also documented in the Seasoned Equity Offering literature for domestic firms. Using a sample of Asian cross-listings we show that their Tobin’s q is at a premium relative to non-cross-listed compatriots and this premium is transitory. Our approach allows us to rule out the corporate governance explanation for the premium as proposed by the bonding hypothesis.

This paper investigates the reasons that lead to modification of auditors' opinions. We revisit the conclusions of prior US-based research on whether a modification highlights likely earnings management activities. Extending this research, we consider an alternate explanation that managers adjust accruals to report earnings that better predict future firm performance, which has the side-effect of placing them in conflict with their auditors. Our study sample comprises all firms listed on the Australian Stock Exchange over the period 1999-2003. Consistent with prior research, there is no evidence of earnings management leading to an audit opinion modification. However, we do show that firms receiving inherent uncertainty modifications (other than going concern) have greater persistence of earnings (accruals) relative to other firms. This is consistent with the proposition that managers have made policy choices in reporting current earnings, with which their auditors disagree, that will likely result in a greater ability to forecast the firm's future earnings.

This paper examines what value is added by an audit report through an investigation of the information content for first-time going concern modifications (GCMs). Consistent with prior research, we find no evidence of a short-term market reaction to the public announcement of a first-time GCM. We document a significant adverse medium-term market reaction in the 12 months prior to a first-time GCM announcement, but find no evidence of a persistent market underreaction in the 12 months following the announcement. These results are consistent with an audit opinion fulfilling an attestation function and confirming the deteriorating financial condition of a firm.

We study the impact credit rating revisions have on stock returns of Australian firms rated by Standard & Poor's and Moody's. Our evidence is consistent with that documented in the USA showing that only downgrades contain price-relevant information. The reaction is most significant when the downgrade: (i) is unanticipated; (ii) is for an unregulated firm; and (iii) reduces the firm's rating by more than one category.

We examine the impact that various financial and industry variables have on credit ratings issued for Australian firms by Standard and Poor's. Our ordered probit model indicates that interest coverage and leverage ratios have the most pronounced effect on credit ratings. Profitability variables and industry concentration measures are also important. Financial variables are helpful in discriminating between A- and BBB-rated firms, but are less precise in separating AA- and A-rated firms. We also document a consistent trend towards lower ratings—the standard required to achieve a particular rating is increasing over time.

Recent studies have documented the growing economic and financial integration between countries. Among other things, this has led to the argument that greater integration results in higher bilateral correlations between returns on national stock markets. This study endeavours to link the two issues by utilizing the assumption that if countries are integrated, they would have to display a minimum level of correlation. This is achieved by constructing a bound on the level of the bilateral correlation, as originally developed by Kasa (). In contrast to Kasa, the present studies demonstrate that the correlation bound may not be downward sloping in all cases and careful interpretation of the results is required.

The transfer of information is analysed within two distinct markets in the same country, specifically, the Chinese stock markets. The presence of autocorrelation and cross correlation in the four main stock indices is examined. The results for stock index data find spillovers in both directions from ‘A’ and ‘B’ shares. However, it is also documented that this feature of the market does not extend to volatility in that there is no spillover in volatility from ‘B’ share prices to ‘A’ share prices or vice-versa.

In this study, we explore the relative importance of the several documented factors in explaining the behaviour of stock returns for a sample of 157 Australian companies over the period 1993–9. In line with prior evidence, we contend that the influence of global (market, industry and currency) factors is related to the extent of a firm's international activity. We find that Australian firms are in large part impacted by domestic factors with the level of sensitivity declining as the level of international activity increases. In contrast to prior literature, we also show that Australian firm returns are related to regional market, global industry and currency factors and the firm's sensitivity to these factors is an increasing function of its level of international activities.