Suchergebnisse

Recent management literature shows that demographic characteristics of top management and corporate performance are related. Bamber et al. (2010) conclude that managers' voluntary disclosure styles are related to demographic characteristics. Also, Francis et al. (2008) demonstrate a negative relation between CEO reputation and earnings quality. We conjecture that, management demography affects auditor choice and earnings quality. Using a sample of 3,881 firm-year observations between 2001 and 2005 in China and controlling for board governance characteristics, we find that a chairperson with better reputation (i.e., holding titles) prefers well-known auditors on the national basis, regional basis and in the industry group. Furthermore, chairpersons with titles and longer tenure report earnings of higher quality. Our results are robust using different measures of auditor choice and earnings quality.

The main purpose of this paper is to examine the legal insider trading activities by directors of companies listed on the Hong Kong Exchange over the period 1993 to 1999. One characteristic of insider trading in Hong Kong is the high frequency of transactions and the large amounts of money involved. Inside purchases appear to signal and correct undervaluation and inside sales appear to signal and correct overvaluation. In contrast to research from Britain and the United States, insider sales are more informative than purchases. On average, insiders earn HK$91,297 per trade, while outsiders who mimic insiders' transactions earn minimal returns. Many firms suffer from infrequent trading and our results are consistent with directors engaging in inside transactions so as to help create a market for the shares. In additional tests, we find that the frequency of insider trading is a function of information asymmetry.

We use financial data on poorly performing firms in Hong Kong to examine the motives behind paying out cash dividends when they suffer an earnings decline. We test three hypotheses behind the cash dividend policy: the maturity hypothesis, the free cash flow hypothesis, and the self-interest hypothesis of directors (i.e., the cash channeling hypothesis of directors). The findings are largely consistent with the maturity hypothesis and the free cash flow hypothesis but do not support the cash channeling hypothesis, confirming good market transparency and governance of the Hong Kong market.