Finance
http://hdl.handle.net/10211.3/207215
2024-03-29T14:11:23ZCorporate Sustainability Investment and Overinvestment of Free Cash Flow
http://hdl.handle.net/10211.3/213884
Corporate Sustainability Investment and Overinvestment of Free Cash Flow
Sun, Qi
This study examines whether corporate sustainability leaders behave differently in internal resource allocation. Specifically, I investigate whether sustainability leaders constrain overinvestment of free cash flow, thereby delivering more efficient use of internally generated resources, as compared to firms that do not meet the same corporate social and environmental criteria. Empirical evidence documented in this study test alternative hypotheses regarding why companies expend effort and resources to address social and environmental concerns. If sustainability investment is due to the higher ethical standards adopted by the management, the
higher standards will also extend to other aspects of corporate behavior, such as a more responsible use of free cash flow. On the other hand, if corporate sustainability investment is driven by management’s pursuit of self-interest, the opportunistic behavior will extend to other discretionary decision making, such as overinvestment of free cash flow. Presentation by Qi Sun at Global Conference on Business and Finance, Honolulu, Hawaii, January 6-9, 2014
2014-01-01T00:00:00ZStock Price Discovery in Earnings Season
http://hdl.handle.net/10211.3/213878
Stock Price Discovery in Earnings Season
Sun, Qi
This study investigates whether the timing of earnings announcement in earnings season affects stock price discovery process. This paper documents that market reaction is more favorable for earnings announcements made at the beginning of earnings season (“timing effect”). Price reaction on earnings announcement dates and post-announcement price drift are significantly stronger for positive earnings
surprises released at the beginning of earnings season. Negative earnings surprises announced at the end of earnings season have the most pronounced post-announcement price decline. The timing effect associated with positive earnings surprises is consistent with industry information transfer theory. The
timing effect associated with negative earnings surprise is mainly driven by market penalty on companies’ strategic delay of bad news announcements.
Journals are published under a Creative Commons 4.0 License
2015-01-01T00:00:00ZDividend Yields, Stock Returns, and Reputation
http://hdl.handle.net/10211.3/213875
Dividend Yields, Stock Returns, and Reputation
Kang, Eun; Kim, Ryumi; Oh, Sekyung
The relationship between dividend yields and stock returns is an unresolved issue in finance. Previous papers show mixed results on the relationship. In this paper, a reputation model of dividend is presented, and its implications on the relationship between dividend yields and stock returns are discussed. A stock with a short history of dividend payments has not yet established a reputation, so its signal, such as unexpected dividend increases, is not as reliable as the signal from a stock with a long history of consistent dividend payments. For old firms, the stock price adjusts fully to a new signal because of a reputation. On the other hand, the stock price of a young firm adjusts partially to a new signal because of some doubt on the credibility of the signal. As a result, if we have young firms in our sample mixed with old firms, it could distort the relationship between stock returns and dividend yields. Firms with a reputation tends to have less risk compared to firms without reputation, and the expected return will be lower given dividend yield, which is called ‘reputation effect’. We group stocks according to the existence of reputation and analyze the relationship between dividend yields and stock returns using quarterly yields and returns. As we expected, the reputation effect is strongest for established firms
2017-07-01T00:00:00ZEffect of Institutional Ownership on Dividends: An Agency-Theory-Based Analysis
http://hdl.handle.net/10211.3/212982
Effect of Institutional Ownership on Dividends: An Agency-Theory-Based Analysis
Chang, Kiyoung; Kang, Eun; Li, Ying
This study examines the effect of institutional ownership on dividend payouts through the lens of agency theory. We hypothesize that only institutions with certain traits are likely to monitor.
Monitoring institutions will use dividend payouts as a tool to mitigate firms’ agency problems, conditional on those firms’ financial performance. We find that (1) there is a positive relation between lagged long-term institutional ownership with a large stake and the dividend payout ratio; (2) the positive relation is more salient in firms with high agency costs; and (3) the positive relation is more salient when external monitoring is weak. These findings support that (1) concentrated and long-term institutional investors play a monitoring role and (2) monitoring institutions use dividend payouts as a monitoring device. Our findings are robust to endogeneity tests, level and change models, alternative income-based dividend payout measures, alternative measures of long-term institutions, and sub-period analyses.
Released with a Creative Commons Attribution Non-Commercial No Derivatives License
2016-07-01T00:00:00Z