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Conference Paper: Governance through trading: does institutional trading discipline empire building and earnings management?
Title | Governance through trading: does institutional trading discipline empire building and earnings management? |
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Authors | |
Keywords | Governance through trading Institutional trading Empire building Earnings management |
Issue Date | 2013 |
Publisher | University of North Carolina. |
Citation | The 24th Annual Conference on Financial Economics and Accounting, Kenan-Flagler Business School, University of North Carolina, Chapel Hill, NC., 15-16 November 2013. How to Cite? |
Abstract | This paper empirically identifies an important external corporate governance mechanism through which the institutional trading improves firm values and disciplines managers from conducting value-destroying activities. We propose a reward-punishment intensity (RPI) measure, and show that it is positively related to firm’s subsequent Tobin’s Q. Importantly, we find that firms with higher RPI exhibit less subsequent empire building and earnings management. Furthermore, we show that the exogenous liquidity shock of Decimalization augments the governance effect of institutional trading. We also find that the discipline effect is more pronounced for firms with moderate institutional ownership concentration, higher managers’ wealth-performance sensitivity, and higher trading liquidity, which further supports the governance role of the RPI. The results are robust to using a subsample containing firms with reduced institutional ownership and to using two instrumental variables. |
Description | Accounting Session 1: Earnings Management The Conference program's website is located at http://areas.kenan-flagler.unc.edu/conferences/2013cfea/Pages/Final%20Schedule.aspx |
Persistent Identifier | http://hdl.handle.net/10722/193328 |
DC Field | Value | Language |
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dc.contributor.author | Chang, EC | en_US |
dc.contributor.author | Lin, TC | en_US |
dc.contributor.author | Ma, X | en_US |
dc.date.accessioned | 2013-12-20T02:51:34Z | - |
dc.date.available | 2013-12-20T02:51:34Z | - |
dc.date.issued | 2013 | en_US |
dc.identifier.citation | The 24th Annual Conference on Financial Economics and Accounting, Kenan-Flagler Business School, University of North Carolina, Chapel Hill, NC., 15-16 November 2013. | en_US |
dc.identifier.uri | http://hdl.handle.net/10722/193328 | - |
dc.description | Accounting Session 1: Earnings Management | - |
dc.description | The Conference program's website is located at http://areas.kenan-flagler.unc.edu/conferences/2013cfea/Pages/Final%20Schedule.aspx | - |
dc.description.abstract | This paper empirically identifies an important external corporate governance mechanism through which the institutional trading improves firm values and disciplines managers from conducting value-destroying activities. We propose a reward-punishment intensity (RPI) measure, and show that it is positively related to firm’s subsequent Tobin’s Q. Importantly, we find that firms with higher RPI exhibit less subsequent empire building and earnings management. Furthermore, we show that the exogenous liquidity shock of Decimalization augments the governance effect of institutional trading. We also find that the discipline effect is more pronounced for firms with moderate institutional ownership concentration, higher managers’ wealth-performance sensitivity, and higher trading liquidity, which further supports the governance role of the RPI. The results are robust to using a subsample containing firms with reduced institutional ownership and to using two instrumental variables. | - |
dc.language | eng | en_US |
dc.publisher | University of North Carolina. | - |
dc.relation.ispartof | 4th Annual Conference on Financial Economics and Accounting 2013 | en_US |
dc.subject | Governance through trading | - |
dc.subject | Institutional trading | - |
dc.subject | Empire building | - |
dc.subject | Earnings management | - |
dc.title | Governance through trading: does institutional trading discipline empire building and earnings management? | en_US |
dc.type | Conference_Paper | en_US |
dc.identifier.email | Chang, EC: ecchang@business.hku.hk | en_US |
dc.identifier.email | Lin, TC: chunlin@hku.hk | en_US |
dc.identifier.email | Ma, X: xrma@business.hku.hk | en_US |
dc.identifier.authority | Chang, EC=rp01050 | en_US |
dc.identifier.authority | Lin, TC=rp01077 | en_US |
dc.description.nature | postprint | - |
dc.identifier.hkuros | 227059 | en_US |
dc.publisher.place | United States | - |