Rutgers, State University of New Jersey

Displaying 1-22 of 22 results

  • White Papers // Aug 2010

    The Value Of Columnists~ Stock Recommendations

    This paper empirically assesses the value of stock recommendations made by columnists in three leading business magazines; Business Week, Forbes, and Fortune, for 2000-2003. The authors show that the choice of models (index versus benchmark) leads to significantly different assessments of the value of the recommendations. Abnormal returns generated by...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Changing Business Environment And The Value Relevance Of Accounting Information

    The R2 of yearly regressions of prices on Earnings Per Share (EPS) and Book Value Per Share (BVPS) has commonly been used to measure the value relevance of accounting information. However Brown, Lo & Lys (1999) analytically show that the scale effects present in levels regressions increase the R square...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Status "Leakage" In The Executive Suite: The Impact Of CEO Status Attainment On The Economics Outcomes Of Other Senior Managers

    In this paper, the authors develop and test predictions regarding the impact of CEO status on the economic outcomes of members of his or her top management team. Using a unique data set incorporating Financial World's widely publicized CEO of the Year contest, they found that non-CEO top management team...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Multi-Level Study Of Sanctions: The Importance Of Second-Order Sanctions

    In this paper, the author uses observational data to analyze instances of sanction conflict in a workplace, with the goal of understanding how sanctions may compete or interact. Using a data sample of trader behaviors exhibited while working under the influence of three sets of groups (crowd, firm, and exchange),...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Financial Distress And Earnings Management: Effectiveness Of Independent Audit Committees

    This paper empirically tests whether independent audit committees protect investors' interests by constraining managerial behavior of earnings management, especially when managers have a strong motivation to manage the reported earnings in financially distressed firms. Additionally, it examines whether monitoring of earnings management is more effective when audit committees are fully...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    A Re-Evaluation Of Auditor~s Opinions Versus Statistical Models In Bankruptcy Prediction

    Existent empirical evidence on the relative performance of auditors' going concern opinions versus statistical models in predicting bankruptcy is mixed. This paper attempts to add new reliable evidence on this important issue by conducting the comparison based upon an improved statistical model. The improved statistical model incorporates some new developments...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Explaining Firm Willingness To Forfeit Tax Deductions Under Internal Revenue Code Section 162(m): The Million-Dollar Cap

    In this paper, the authors examine firm responses to Internal Revenue Code Section 162(m). In particular they examine firms' willingness to forfeit tax deductions, as well as the effect of Section 162(m) on the components and composition of compensation packages. Using a sample of firms over the five-year period subsequent...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Dividend Paying Firm And Flexibility Hypothesis

    Previous research suggests that firms substitute stock repurchases for dividend increases in response to higher cash flow volatility and/or higher tax rates on dividends relative to capital gains. However, when the authors separately examine repurchase decisions by dividend and non-dividend paying firms, they find little evidence that either cash flow...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    The Role Of Analysts~ Earning Forecasts In The Valuation Process: An Introductory Overview

    This paper explains how analysts' earnings estimates (issued early in a fiscal year) affect the valuation process, illustrating key concepts with analyst forecast data. To derive estimates of future earnings, analysts observe historical performance (using accounting data) and adjust for changing conditions. The empirical results in this paper reveal that...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Accruals As A Determinant Of Debt Covenant Tightness

    This paper examines the use of accounting accrual information by commercial lenders in setting debt covenants. Tests of the relation between accruals and debt covenant tightness indicate that lenders do not use the information in accruals in setting debt covenants. However, further tests show that lenders extract compensation for the...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    The Role Of Accruals In Predicting Future Cash Flows And Stock Returns

    The authors revisit the role of the cash and accrual components of accounting earnings in predicting future cash flows using out-of-sample predictions, firm-specific regression estimates, and different levels of aggregation of the dependent variable, with market value of equity as a proxy for all future cash flows. They find that,...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Insider Trading And Conflicts Of Interest: Evidence From Corporate Bonds

    This paper examines the prevalence of insider trading in the corporate debt market prior to takeover announcements, and the related conflicts of interest within financial intermediaries. The authors document significant pre-announcement trading activities and price movements in target bonds, in directions consistent with the nature of pending information. Unlike target...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Analysis Of Discrimination In Prime And Subprime Mortgage Markets

    This paper examines lending discrimination in prime and subprime mortgage markets. The recent development of the subprime mortgage lending market allows them to examine implications of the taste-based and information-based theories of discrimination in an important asset class, namely, residential real estate. The existing single equation studies on race-based discrimination...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Evidence That Companies Are Not Analyzing Goodwill For Impairment As Required By SFAS142

    SFAS142 (2001) requires that goodwill be analyzed for impairment annually and written down if impaired. Impairment testing is complex and relies on many subjective factors. To users it is a "Black box" analysis which gives companies an unprecedented opportunity to manage earnings. For example, in 2005 some 2,724 companies with...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Impact Of Offshoring And Outsourcing Of Core Activities On Performance: An Examination Of Clinical Trials

    This paper examines the impact of offshoring and outsourcing of core activities on the project level performance of these activities. Specifically, the authors look at whether offshoring and outsourcing of core activities have a positive impact on performance which is measured as the duration and cost of the study. The...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Sep 2009

    The Economic Cost Of Myopic Going Concern Practice

    Myopic going concern practice refers to the current audit going concern opinion that a firm is rewarded a favorable going concern opinion as long as it has the capability to satisfy its debt obligation in the following year. The authors show, via a structural agency problem they develop in the...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2009

    Evidence Of Excess Market Frictions For Small Public Firms

    As done in prior literature, the authors first relate the theory of liquidity and asset pricing to the standard theory of an asset pricing in frictionless markets. They then review the more cited frictions that beset the market causing various degrees of illiquidity and make the argument that public ownership...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Jul 2009

    Online Risk Analytics on the Cloud

    In today's turbulent market conditions, the ability to generate accurate and timely risk measures has become critical to operating successfully, and necessary for survival. Value-at-Risk (VaR) is a market standard risk measure used by senior management and regulators to quantify the risk level of a firm's holdings. However, the time-critical...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Jul 2009

    Guidance, Guidance And Guidance -- The Discontinuing And Restarting Phenomenon Of Quarterly Earnings Guidance

    This paper proposes and examines three research questions on quarterly earnings guidance on its discontinuity and revival. In particular, it examines the impact of corporate governance on a firm's decision to stop quarterly earnings guidance, the impact of its discontinuity on a firm's investment decisions, and why a firm restarts...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Jun 2009

    Do Foreign Investors Exhibit A Governance Disadvantage? An Information Asymmetry Perspective

    This paper examines whether the governance role of foreign block acquirers in U.S. targets is different from that of domestic block acquirers. The authors find that foreign block acquirers are less likely to engage in post-acquisition governance activities in U.S. targets than domestic control block acquirers. Among foreign block acquirers,...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Mar 2004

    Organic Foods: What Do We Mean?

    Farmers grow and process organically produced food without using synthetic chemicals. Organic does not mean pesticide-free however, as many consumers believe. Organic agriculture may rely on the use of naturally occurring pesticides and other agricultural practices to provide insect, disease, and weed control. Composts, legumes, manure, and minerals provide nutrients...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Jun 2000

    Efficient Risk-Taking and Regulatory Covenant Enforcement in a Deregulated Banking Industry

    This paper analyzes the safety and soundness (CAMEL) ratings assigned by bank supervisors to commercial banks, and searches for evidence that these ratings reflect not just the level of risk taken by banks, but also the risk-taking efficiency of those banks (i.e., whether taking an increased level of risk generates...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Jul 2009

    Online Risk Analytics on the Cloud

    In today's turbulent market conditions, the ability to generate accurate and timely risk measures has become critical to operating successfully, and necessary for survival. Value-at-Risk (VaR) is a market standard risk measure used by senior management and regulators to quantify the risk level of a firm's holdings. However, the time-critical...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    The Value Of Columnists~ Stock Recommendations

    This paper empirically assesses the value of stock recommendations made by columnists in three leading business magazines; Business Week, Forbes, and Fortune, for 2000-2003. The authors show that the choice of models (index versus benchmark) leads to significantly different assessments of the value of the recommendations. Abnormal returns generated by...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Changing Business Environment And The Value Relevance Of Accounting Information

    The R2 of yearly regressions of prices on Earnings Per Share (EPS) and Book Value Per Share (BVPS) has commonly been used to measure the value relevance of accounting information. However Brown, Lo & Lys (1999) analytically show that the scale effects present in levels regressions increase the R square...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Status "Leakage" In The Executive Suite: The Impact Of CEO Status Attainment On The Economics Outcomes Of Other Senior Managers

    In this paper, the authors develop and test predictions regarding the impact of CEO status on the economic outcomes of members of his or her top management team. Using a unique data set incorporating Financial World's widely publicized CEO of the Year contest, they found that non-CEO top management team...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Multi-Level Study Of Sanctions: The Importance Of Second-Order Sanctions

    In this paper, the author uses observational data to analyze instances of sanction conflict in a workplace, with the goal of understanding how sanctions may compete or interact. Using a data sample of trader behaviors exhibited while working under the influence of three sets of groups (crowd, firm, and exchange),...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Financial Distress And Earnings Management: Effectiveness Of Independent Audit Committees

    This paper empirically tests whether independent audit committees protect investors' interests by constraining managerial behavior of earnings management, especially when managers have a strong motivation to manage the reported earnings in financially distressed firms. Additionally, it examines whether monitoring of earnings management is more effective when audit committees are fully...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    A Re-Evaluation Of Auditor~s Opinions Versus Statistical Models In Bankruptcy Prediction

    Existent empirical evidence on the relative performance of auditors' going concern opinions versus statistical models in predicting bankruptcy is mixed. This paper attempts to add new reliable evidence on this important issue by conducting the comparison based upon an improved statistical model. The improved statistical model incorporates some new developments...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Explaining Firm Willingness To Forfeit Tax Deductions Under Internal Revenue Code Section 162(m): The Million-Dollar Cap

    In this paper, the authors examine firm responses to Internal Revenue Code Section 162(m). In particular they examine firms' willingness to forfeit tax deductions, as well as the effect of Section 162(m) on the components and composition of compensation packages. Using a sample of firms over the five-year period subsequent...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Dividend Paying Firm And Flexibility Hypothesis

    Previous research suggests that firms substitute stock repurchases for dividend increases in response to higher cash flow volatility and/or higher tax rates on dividends relative to capital gains. However, when the authors separately examine repurchase decisions by dividend and non-dividend paying firms, they find little evidence that either cash flow...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    The Role Of Analysts~ Earning Forecasts In The Valuation Process: An Introductory Overview

    This paper explains how analysts' earnings estimates (issued early in a fiscal year) affect the valuation process, illustrating key concepts with analyst forecast data. To derive estimates of future earnings, analysts observe historical performance (using accounting data) and adjust for changing conditions. The empirical results in this paper reveal that...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Accruals As A Determinant Of Debt Covenant Tightness

    This paper examines the use of accounting accrual information by commercial lenders in setting debt covenants. Tests of the relation between accruals and debt covenant tightness indicate that lenders do not use the information in accruals in setting debt covenants. However, further tests show that lenders extract compensation for the...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Sep 2009

    The Economic Cost Of Myopic Going Concern Practice

    Myopic going concern practice refers to the current audit going concern opinion that a firm is rewarded a favorable going concern opinion as long as it has the capability to satisfy its debt obligation in the following year. The authors show, via a structural agency problem they develop in the...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    The Role Of Accruals In Predicting Future Cash Flows And Stock Returns

    The authors revisit the role of the cash and accrual components of accounting earnings in predicting future cash flows using out-of-sample predictions, firm-specific regression estimates, and different levels of aggregation of the dependent variable, with market value of equity as a proxy for all future cash flows. They find that,...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Insider Trading And Conflicts Of Interest: Evidence From Corporate Bonds

    This paper examines the prevalence of insider trading in the corporate debt market prior to takeover announcements, and the related conflicts of interest within financial intermediaries. The authors document significant pre-announcement trading activities and price movements in target bonds, in directions consistent with the nature of pending information. Unlike target...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Analysis Of Discrimination In Prime And Subprime Mortgage Markets

    This paper examines lending discrimination in prime and subprime mortgage markets. The recent development of the subprime mortgage lending market allows them to examine implications of the taste-based and information-based theories of discrimination in an important asset class, namely, residential real estate. The existing single equation studies on race-based discrimination...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Evidence That Companies Are Not Analyzing Goodwill For Impairment As Required By SFAS142

    SFAS142 (2001) requires that goodwill be analyzed for impairment annually and written down if impaired. Impairment testing is complex and relies on many subjective factors. To users it is a "Black box" analysis which gives companies an unprecedented opportunity to manage earnings. For example, in 2005 some 2,724 companies with...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2009

    Evidence Of Excess Market Frictions For Small Public Firms

    As done in prior literature, the authors first relate the theory of liquidity and asset pricing to the standard theory of an asset pricing in frictionless markets. They then review the more cited frictions that beset the market causing various degrees of illiquidity and make the argument that public ownership...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Jul 2009

    Guidance, Guidance And Guidance -- The Discontinuing And Restarting Phenomenon Of Quarterly Earnings Guidance

    This paper proposes and examines three research questions on quarterly earnings guidance on its discontinuity and revival. In particular, it examines the impact of corporate governance on a firm's decision to stop quarterly earnings guidance, the impact of its discontinuity on a firm's investment decisions, and why a firm restarts...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Jun 2009

    Do Foreign Investors Exhibit A Governance Disadvantage? An Information Asymmetry Perspective

    This paper examines whether the governance role of foreign block acquirers in U.S. targets is different from that of domestic block acquirers. The authors find that foreign block acquirers are less likely to engage in post-acquisition governance activities in U.S. targets than domestic control block acquirers. Among foreign block acquirers,...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Aug 2010

    Impact Of Offshoring And Outsourcing Of Core Activities On Performance: An Examination Of Clinical Trials

    This paper examines the impact of offshoring and outsourcing of core activities on the project level performance of these activities. Specifically, the authors look at whether offshoring and outsourcing of core activities have a positive impact on performance which is measured as the duration and cost of the study. The...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Mar 2004

    Organic Foods: What Do We Mean?

    Farmers grow and process organically produced food without using synthetic chemicals. Organic does not mean pesticide-free however, as many consumers believe. Organic agriculture may rely on the use of naturally occurring pesticides and other agricultural practices to provide insect, disease, and weed control. Composts, legumes, manure, and minerals provide nutrients...

    Provided By Rutgers, State University of New Jersey

  • White Papers // Jun 2000

    Efficient Risk-Taking and Regulatory Covenant Enforcement in a Deregulated Banking Industry

    This paper analyzes the safety and soundness (CAMEL) ratings assigned by bank supervisors to commercial banks, and searches for evidence that these ratings reflect not just the level of risk taken by banks, but also the risk-taking efficiency of those banks (i.e., whether taking an increased level of risk generates...

    Provided By Rutgers, State University of New Jersey