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Title: False News Implications for Auditors and Investors.
Creator: Vakilzadeh, Seyed Hamidreza, Kohlbeck, Mark, Florida Atlantic University, College of Business, School of Accounting
Abstract/Description: I examine the determinants and implications of false news on client business risk and firm credibility. False news is defined as information presented as factually accurate, but which contains fabricated facts and is deliberately made public to mislead the reader. Importantly, it is later denied by a credible source. There is a significant concern about the influence of false news on individuals’ decision-making and judgment processes. However, our knowledge regarding false news and its...
Show moreI examine the determinants and implications of false news on client business risk and firm credibility. False news is defined as information presented as factually accurate, but which contains fabricated facts and is deliberately made public to mislead the reader. Importantly, it is later denied by a credible source. There is a significant concern about the influence of false news on individuals’ decision-making and judgment processes. However, our knowledge regarding false news and its implications for financial markets is minimal. I investigate false news by focusing on negative false news that is not initiated from within the company. Building on financial and political motives behind incidents of false news, I examine whether industry competition and media coverage play a role in making a firm a target for false news. I further examine the impact of false news on the firm’s financial reporting behavior and investigate whether the firm’s auditor prices false news. Lastly, based on the argument that false news increases distrust and uncertainty, I examine whether false news decreases the credibility of the firm’s disclosures and test whether the earnings response coefficient (ERC) is lower after the release of false news. I find that lower competition and higher media coverage are associated with higher likelihood of false news. Consistent with my predictions, I also find that false news target firms have higher abnormal accruals, higher abnormal real earnings activities, and higher audit fees. However, I do not find support for the notion that false news reduces credibility of firm’s disclosure.
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Date Issued: 2019
PURL: http://purl.flvc.org/fau/fd/FA00013273
Subject Headings: Fake news, Investors, Auditors
Format: Document (PDF)

Title: Gender, Connections, and Social Responsibility: Implications for M&A and Compensation.
Creator: Shelton, Austin, Javakhadze, David, Garcia-Feijoo, Luis, Florida Atlantic University, College of Business, Department of Finance
Abstract/Description: In this work I investigate how executive social connections and executive gender diversity dually affect firm Corporate Social Responsibility (CSR), a set of firm policies implemented to benefit the social, economic, and environmental welfare of all stakeholders, and how the changes in CSR driven by executive social connections and executive gender diversity in turn affect a range of corporate policies. This research adds to the social networks, gender, and CSR literature within finance in...
Show moreIn this work I investigate how executive social connections and executive gender diversity dually affect firm Corporate Social Responsibility (CSR), a set of firm policies implemented to benefit the social, economic, and environmental welfare of all stakeholders, and how the changes in CSR driven by executive social connections and executive gender diversity in turn affect a range of corporate policies. This research adds to the social networks, gender, and CSR literature within finance in multiple ways. First, while much past work examines the impact on corporate policy of executive gender or executive social connections in isolation, no major work to date examines the impact of gender dependent executive social connections on corporate policy. Second, this work definitively ties the dual effects of executive gender diversity and social connections to firm CSR. The dual impact of social connections and gender diversity on CSR is shown to affect major corporate policies. In all, this work provides evidence that CSR helps drive important firm polices, including M&A and executive compensation policy, and that CSR is impacted by both a firm’s executive gender diversity and social network connections.
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Date Issued: 2019
PURL: http://purl.flvc.org/fau/fd/FA00013262
Subject Headings: Corporate social responsibility, Social responsibility of business, Executives--Social networks, Gender, Mergers and corporate policy, Executive compensation
Format: Document (PDF)

Title: ONLINE BRAND COMMUNITIES, INTERACTIVE COMMUNICATION, AND RETENTION.
Creator: Brynildsen, Gina, Sashi, C.M., Florida Atlantic University, Department of Marketing, College of Business
Abstract/Description: An estimated 90% of U.S. companies including Tesla, 3M, McDonald’s, and UnitedHealth Group use social media such as Facebook, Instagram, and Snapchat to connect with consumers and form community around their brands; yet little is known about the effects of different social media structures on consumer-brand relationships. The purpose of this research is to understand the unique nature of firm-hosted online brand communities on social networking sites and how they can be used to retain...
Show moreAn estimated 90% of U.S. companies including Tesla, 3M, McDonald’s, and UnitedHealth Group use social media such as Facebook, Instagram, and Snapchat to connect with consumers and form community around their brands; yet little is known about the effects of different social media structures on consumer-brand relationships. The purpose of this research is to understand the unique nature of firm-hosted online brand communities on social networking sites and how they can be used to retain customers. We review the literature on online brand communities as a tool for building relationships and apply network theory to understanding firm-hosted online brand communities on social networking sites. Relationship marketing provides a framework for how consumer-brand relationships are developed, built, and maintained. Network theory explains how different network structures interact with network processes to produce specific outcomes for individuals and groups.
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Date Issued: 2019
PURL: http://purl.flvc.org/fau/fd/FA00013360
Subject Headings: Social media, Online social networks, Customer loyalty, Relationship marketing, Brand loyalty, Online chat groups
Format: Document (PDF)

Title: Investor Connections and Non-GAAP Reporting.
Creator: Harwood, Chad, Kohlbeck, Mark, Florida Atlantic University, College of Business, School of Accounting
Abstract/Description: I investigate whether a firm’s social capital with investors impacts its non-GAAP reporting decisions. Critics of non-GAAP reporting suggest that non-GAAP earnings are incomplete, inaccurate, and can be misleading (Derby, 2001; Dreman, 2001; Elstein, 2001; Black et al., 2007). Firms might be hesitant to provide non-GAAP information if other means are available to transfer information. Social capital provides an alternate method of informing investors. However, social capital might also play...
Show moreI investigate whether a firm’s social capital with investors impacts its non-GAAP reporting decisions. Critics of non-GAAP reporting suggest that non-GAAP earnings are incomplete, inaccurate, and can be misleading (Derby, 2001; Dreman, 2001; Elstein, 2001; Black et al., 2007). Firms might be hesitant to provide non-GAAP information if other means are available to transfer information. Social capital provides an alternate method of informing investors. However, social capital might also play another role in the information environment by building trust between managers and investors (Gabarro, 1978; Gulati, 1995). This trust may reduce investor skepticism of non-GAAP information, enhancing the value of non-GAAP disclosures. Additionally, I examine what impact social capital might have on investors’ investment decisions with respect to non-GAAP reporting. Despite critics’ concerns over non-GAAP reporting, prior literature suggests investors’ reactions are more aligned with the non-GAAP definition of earnings (Bradshaw and Sloan, 2002; Bhattacharya et al., 2003), suggesting other factors might influence investors’ decisions. I investigate whether social capital plays a role in reducing skepticism in non-GAAP information leading to reduced information asymmetry and increased investor reaction to non-GAAP disclosures. I find that non-GAAP reporting is increasing in social capital with investors. However, I find no evidence that investor reactions to non-GAAP earnings information differ based on firms’ social capital with investors. I also find information asymmetry around earnings announcements is higher for non-GAAP reporting firms with greater social capital with investors in comparison to non-GAAP reporters with lower social capital. Taken together, my results suggest social capital impacts the decisions of firms in reporting non-GAAP earnings information, but not the decisions of investors. My results are relevant to the current disclosure environment in that non-GAAP reporting is a current topic of interest for regulators with several updates to non-GAAP guidance having recently occurred.
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Date Issued: 2019
PURL: http://purl.flvc.org/fau/fd/FA00013214
Subject Headings: GAAP (Accounting), Investors, Social capital (Economics)
Format: Document (PDF)

Title: THE IMPACT OF CEO PAST PROFESSIONAL EXPERIENCE AND SOCIAL CAPITAL ON CORPORATE POLICIES AND FIRM PERFORMANCE.
Creator: Faulkner, Matthew, Garcia-Feijoo, Luis, Florida Atlantic University, College of Business, Department of Finance
Abstract/Description: Increasing evidence suggests the personal traits of chief executive officers (CEOs) can influence corporate policies. We examine how one dimension, past professional experiences, can affect corporate payout policy. Exploiting exogenous CEO turnovers and future employment, we hypothesize that CEOs experiencing a distress event in their past career alter the corporate payout policy at their subsequent firm of employment. We discover that CEOs having experienced prior professional career...
Show moreIncreasing evidence suggests the personal traits of chief executive officers (CEOs) can influence corporate policies. We examine how one dimension, past professional experiences, can affect corporate payout policy. Exploiting exogenous CEO turnovers and future employment, we hypothesize that CEOs experiencing a distress event in their past career alter the corporate payout policy at their subsequent firm of employment. We discover that CEOs having experienced prior professional career distress are less likely to pay dividends and use repurchases and pay out lower levels for each type of payout. Additionally, when CEOs with distress do have a payout policy greater than zero dollars, there exists a preference toward the use of repurchases in the payout policy, adding to the literature of substitution and differences between the two forms of payout. We find that dividend smoothing is reduced by CEOs that have past professional distress.
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Date Issued: 2019
PURL: http://purl.flvc.org/fau/fd/FA00013305
Subject Headings: Chief executive officers, Social capital (Sociology), Experience, Dividends, Payouts
Format: Document (PDF)

Title: An Empirical Test of a Theoretical Model of Surprise in Marketing.
Creator: Toteva, Irina T., Shaw, Eric H., Florida Atlantic University, College of Business, Department of Marketing
Abstract/Description: The purpose of this research was to construct and empirically test a theoretical model of surprise and its impact on consumer affect and behavior. First the literature on the emotion of surprise was reviewed with particular emphasis on classification and process models of surprise. A theoretical model of surprise was constructed. A new concept called motivated meaning integration (MMI) was proposed. MMI takes place in a setting that includes the interaction of the appraisal process with...
Show moreThe purpose of this research was to construct and empirically test a theoretical model of surprise and its impact on consumer affect and behavior. First the literature on the emotion of surprise was reviewed with particular emphasis on classification and process models of surprise. A theoretical model of surprise was constructed. A new concept called motivated meaning integration (MMI) was proposed. MMI takes place in a setting that includes the interaction of the appraisal process with factors such as environmental uncertainty and consumers’ individual differences. These interactions impact outcomes such as consumer affect and buying behavior. Ten hypotheses were derived from the theoretical model and empirically tested using several pretests and two main studies. The present research designed and evaluated several surprise manipulations and MMI manipulation checks to effectively test the proposed relationships. Participants were recruited from Amazon Mechanical Turk (Mturk). Although many of the hypotheses were not supported, some important ones were. The results provide some support that a consumer’s sense of personal control interacts with MMI to impact a consumer’s likelihood of choosing unknown or mystery products ( e.g. products in a known category such as beauty products but the actual products are selected by the company). Specifically, consumers who experienced a low sense of personal control (compared to a high sense personal control) were more likely to choose mystery products (vs. objectively similar known products) after they encountered surprise with mystery (vs. with known) elements. The results also provided some support that productivity orientation interacts with surprise appraisal to impact consumer affect. Particularly, consumers with high productivity orientation (vs. low) were more likely to experience higher positive affect after encountering surprise with mystery (vs. with known) elements. The primary implication for theory involves refining the conceptualization of surprise appraisal, especially fast MMI, and adopting adequate measure for testing it. The most relevant implication for marketing management is to offer products with mystery elements because consumers are more likely to choose additional mystery products. If this dissertation stimulates others to pursue research on surprise theory in marketing, my efforts to continue developing scientific theory will be worth it.
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Date Issued: 2018
PURL: http://purl.flvc.org/fau/fd/FA00013102
Subject Headings: Marketing., Surprise., Empirical Research.
Format: Document (PDF)

Title: Essays in Return Predictability After Large Price Shocks.
Creator: Brady, Kevin P., Garcia-Feijoo, Luis, Florida Atlantic University, College of Business, Department of Finance
Abstract/Description: In Essay 1, I use cross-country differences in investors’ traits — trust, patience, overconfidence, and risk tolerance — to test the underreaction, overreaction, and uncertain information theories of stock returns. I find that investors’ reactions to large daily stock price shocks vary between lower and higher levels of these traits. Specifically, investors with lower levels of trust and more patience underreact more (or overreact less) to price shocks, which aligns with the predictions of...
Show moreIn Essay 1, I use cross-country differences in investors’ traits — trust, patience, overconfidence, and risk tolerance — to test the underreaction, overreaction, and uncertain information theories of stock returns. I find that investors’ reactions to large daily stock price shocks vary between lower and higher levels of these traits. Specifically, investors with lower levels of trust and more patience underreact more (or overreact less) to price shocks, which aligns with the predictions of the underreaction hypothesis. Investors with higher levels of overconfidence overreact more to positive price shocks and overreact less to negative price shocks. While this finding does not conform exactly to the predictions of the overreaction hypothesis, it is consistent with more refined theories of how overconfidence affects asset prices. Investors less tolerant of risk overreact less to positive price shocks. I also find that differences in institutional characteristics affect over/underreaction. Specifically, there is less overreaction in countries with stronger investor protections and less insider trading. Additionally, the ability to sell short is associated with more overreaction to negative shocks and less overreaction to positive shocks. In Essay 2, I investigate whether publicly available information (PAI) affects over/underreaction according to predictions of several theoretical models, and then I test if differences in investors’ traits modifies the association between publicly available information and returns. After identifying and correcting for a methodological issue in some prior research, I show that in a pooled international sample of stocks, investors overreact to price shocks not accompanied by information, and also overreact (or react efficiently in some models) to information-based price shocks. I find that the effect of PAI on returns is not the same in each country, which motivates my tests on how this variability relates to differences in investor traits. My results show that investors with higher trust tend to overreact less to shocks accompanied by PAI, while investors less tolerant of risk underreact to positive price shocks. Additionally, investors with higher overconfidence and self-attribution bias overreact more to positive price shocks, but less to negative price shocks, in accordance with behavioral theories.
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Date Issued: 2018
PURL: http://purl.flvc.org/fau/fd/FA00013153
Subject Headings: Investors, Securities--Prices, Individual investors--Attitudes
Format: Document (PDF)

Title: Entitlement in the Workplace.
Creator: Brant, Katarina K., Castro, Stephanie L., Florida Atlantic University, College of Business, Department of Management
Abstract/Description: The present research investigates entitlement in the workplace through three related papers—a review and two empirical studies. In the first paper, I conduct a review of entitlement and offer an agenda for future research. I examine entitlement’s various historical roots, definitions and conceptualizations, measures, theoretical frameworks, antecedents, consequences, and role as a moderator. I also outline avenues for future entitlement research and advocate for research that considers the...
Show moreThe present research investigates entitlement in the workplace through three related papers—a review and two empirical studies. In the first paper, I conduct a review of entitlement and offer an agenda for future research. I examine entitlement’s various historical roots, definitions and conceptualizations, measures, theoretical frameworks, antecedents, consequences, and role as a moderator. I also outline avenues for future entitlement research and advocate for research that considers the effects of perceived coworker entitlement from a state perspective. Following the research agenda of paper one, I empirically delve into the negative effects of perceived coworker entitlement in the second two papers. Specifically, in the second paper I explore how the individual can mitigate the negative effects associated with perceived coworker entitlement and in the third paper I explore how the organization can mitigate the negative effects associated with perceived coworker entitlement. In the second paper, I utilize equity theory and referent cognitions theory to examine the relationships between perceived coworker entitlement and individual outcomes including in-role behavior, organizational citizenship behavior, pay satisfaction, and counterproductive work behavior via psychological distress. I further explore the moderating role of individual difference variables including core-self evaluations, positive and negative affect, and equity sensitivity in the relationship between perceived coworker entitlement and psychological distress. Using a sample of 200 working adults, I found that core self-evaluations and equity sensitivity significantly moderate the relationship between perceived coworker entitlement and psychological distress. However, I did not find any significant mediation or moderated mediation relationships. In the third paper, I utilize fairness theory as a theoretical framework to study the relationships among perceived coworker entitlement, job satisfaction, organizational citizenship behavior, and emotional exhaustion. I further explore the moderating role of Colquitt’s (2001) four dimensions of organizational justice: distributive justice, procedural justice, interpersonal justice, and informational justice. Using the same sample of 200 working adults, I found that perceived coworker entitlement is negatively related to organizational citizenship behavior; distributive justice moderates the relationship between perceived coworker entitlement and emotional exhaustion; interpersonal justice moderates the relationship between perceived coworker entitlement and job satisfaction and emotional exhaustion; and informational justice moderates the relationship between perceived coworker entitlement and emotional exhaustion. Contributions to research, practical implications, strengths and limitations, and directions for future research are discussed.
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Date Issued: 2018
PURL: http://purl.flvc.org/fau/fd/FA00013043
Subject Headings: Entitlement attitudes, Workplace
Format: Document (PDF)

Title: A Historical Perspective on LP Marketing and Payola in 1962: The Case of Robby and the Troubadours.
Creator: Fagan, Kalman Sheppard, Rhorer, Marc A., Florida Atlantic University, College of Business, Department of Marketing
Abstract/Description: The music industry in 1962 reflected the political turmoil of the times. Dinner and dancing was a popular pastime. The music Americans heard and enjoyed over the airways was limited, however, by payola. Program directors adhered to criteria that supported the corporate fiscal model of their radio stations. Songs needed to attract listeners and major advertisers. Payola typically involved direct payments from major record labels to disc jockeys and the rewards were lucrative. Record labels fed...
Show moreThe music industry in 1962 reflected the political turmoil of the times. Dinner and dancing was a popular pastime. The music Americans heard and enjoyed over the airways was limited, however, by payola. Program directors adhered to criteria that supported the corporate fiscal model of their radio stations. Songs needed to attract listeners and major advertisers. Payola typically involved direct payments from major record labels to disc jockeys and the rewards were lucrative. Record labels fed them songs to play and disc jockeys became loyal to the payments. Thus, payola became a bottleneck to broader distribution of other artists, which hurt musicians, small record labels, and the public, and increased the price of music. Entertainment managers were ambitious band managers who took on additional roles due to the high costs of producing and promoting songs. The case of Robby and the Troubadours is shared through a historical simulated marketing plan.
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Date Issued: 2018
PURL: http://purl.flvc.org/fau/fd/FA00013059
Subject Headings: Long-playing records., Music trade--Marketing., Rock groups.
Format: Document (PDF)

Title: Acquisition of Private Firms.
Creator: Faifman, Leon, Ellis, Kimberly, Golden, Peggy, Florida Atlantic University, College of Business, Department of Management
Abstract/Description: Mergers and acquisitions (M&As) of private target firms is a common phenomenon and being acquired is the desired outcome for some private firms, as it is the path to wealth creation for these firm’s owners and investors. However, this M&A type has received limited attention in the literature, especially from the perspective of the target firm. Furthermore, neither a theoretical model to explain the phenomenon where the goal of the target firm is to be acquired in M&A, nor an indicator to...
Show moreMergers and acquisitions (M&As) of private target firms is a common phenomenon and being acquired is the desired outcome for some private firms, as it is the path to wealth creation for these firm’s owners and investors. However, this M&A type has received limited attention in the literature, especially from the perspective of the target firm. Furthermore, neither a theoretical model to explain the phenomenon where the goal of the target firm is to be acquired in M&A, nor an indicator to gauge wealth creation for such firms were identified in the review of the literature. This paper established that, because being acquired in a M&A may be the goal, the wealth generated from the M&A is the outcome or performance indicator for such firms. The outcomes of M&As depend, among other factors, on the acquiring firm’s perception of the target firm’s value. Thus, this paper coined the term ‘private firm’s attractiveness as an acquisition target’, and built on the resource based view of the firm and signaling theory to identify factors that influence a private firm’s attractiveness to acquirers. Furthermore, private firm’s attractiveness as an acquisition target was used as the bridge between the acquiring firm perspective and target firm perspective in a M&A. The resource-based view of the firm and the signaling theory were used jointly in building the theoretical framework for hypotheses development. Hypotheses were tested using a sample of 222 acquisitions of US private target firms by US public acquiring firms. Hierarchical regression with inverse mills ratio, as well as two-step Heckman model were used to address the potential selection hazard. Results provided strong support for most hypotheses, and showed that investor involvement, target firm’s industry innovativeness, and target firm’s emphasis on growth in human capital were positively related to the private firm’s attractiveness as an acquisition target. Furthermore, the effects of emphasis on growth in human capital were stronger when the target firm’s growth in revenue was lower and when the target firm operated in a more innovative industry. The effects of emphasis on growth in revenue were stronger when the target firm operated in a less innovative industry.
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Date Issued: 2018
PURL: http://purl.flvc.org/fau/fd/FA00013168
Subject Headings: Mergers and Acquisitions, Consolidation and merger of corporations, Private companies
Format: Document (PDF)

Title: Obfuscation of Rent Extraction Behavior: Evidence from Investment Inefficiency.
Creator: Mammadov, Babak, Thevenot, Maya, Florida Atlantic University, College of Business, School of Accounting
Abstract/Description: I investigate the association between rent extraction and qualitative/quantitative characteristics of 10-K filings (i.e. readability, financial statement comparability and earnings transparency), subject to existing monitoring constraints. This study focuses on one type of such rent extraction – investment inefficiency (i.e. overinvestment or underinvestment), as extant research provides evidence that it provides personal benefits to managers, often at the expense of shareholders. Managers...
Show moreI investigate the association between rent extraction and qualitative/quantitative characteristics of 10-K filings (i.e. readability, financial statement comparability and earnings transparency), subject to existing monitoring constraints. This study focuses on one type of such rent extraction – investment inefficiency (i.e. overinvestment or underinvestment), as extant research provides evidence that it provides personal benefits to managers, often at the expense of shareholders. Managers have incentives to invest inefficiently but such behavior may be undesirable and result in negative consequences to the manager, such as turnover. Therefore, I expect that managers are likely to obfuscate information in order to make it difficult for investors to detect investment inefficiency, although monitoring over financial reporting may limit their ability to do so. I test whether monitoring over financial reporting reduces information obfuscation. Last, I study the joint effects of investment inefficiency and information obfuscation on CEO turnover and compensation. I expect that investment inefficiency is positively associated with information obfuscation but this relation is weaker for firms with effective monitoring mechanisms over financial reporting. Further, I examine how these factors affect CEO disciplining. Managers get disciplined for inefficient investment decisions. Obfuscating information makes it difficult for investors to evaluate managers’ investment decisions. Therefore, I examine whether information obfuscation prevents managers from being disciplined as a result of inefficient investment behavior. I find that investment inefficiency is positively associated with information obfuscation. Managers are more likely to obfuscate information for overinvestment type of inefficiency as opposed to underinvestment. Further, the results suggest that, while internal monitoring does not reduce information obfuscation, external monitoring constrains information obfuscation. I find that external monitoring (i.e. auditors) provide more stringent monitoring by reducing information obfuscation. I do not find support for my last prediction that information obfuscation prevents disciplining of CEOs.
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Date Issued: 2018
PURL: http://purl.flvc.org/fau/fd/FA00005952
Subject Headings: Financial statements, Misleading financial statements, Investments--Accounting
Format: Document (PDF)

Title: The Effect of Financial Statement Transparency on the Likelihood of Restatement and the Effect of Restatement Announcements on Future Levels of Transparency.
Creator: Bressler, Paige D., Kohlbeck, Mark, Florida Atlantic University, College of Business, School of Accounting
Abstract/Description: I explore the impact financial statement transparency has on the probability of restatement and the effect a restatement announcement has on the levels of future financial statement transparency. Information theory suggests that a strong information environment increases accounting quality. Using financial statement transparency as a proxy for the information environment, I find that transparency is associated with a lower probability of financial statement restatement. There are competing...
Show moreI explore the impact financial statement transparency has on the probability of restatement and the effect a restatement announcement has on the levels of future financial statement transparency. Information theory suggests that a strong information environment increases accounting quality. Using financial statement transparency as a proxy for the information environment, I find that transparency is associated with a lower probability of financial statement restatement. There are competing theories to predict how restatement announcements affect future levels of transparency. Skinner’s (1953) theory of operant conditioning, which states that behavior is modified based on positive or negative conditioning suggests that the level of transparency increases after a restatement announcement. However, expectancy theory suggests that firms engage in certain behaviors in order to derive expected rewards or incentives. Motivation is eliminated if the rewards are deemed unobtainable thereby eliminating managers’ incentive to improve their reporting strategy suggesting that the level of transparency decreases after a restatement announcement. I find that restatement announcement has a negative association with the transparency measure and the magnitude of this effect decreases over time compared to non-restatement firms. These results are magnified if the restatement is due to fraud. However, the changes are not significant. Further, the transparency associations are mitigated if there is a change in CEO after the restatement announcement. In addition, using a sample of firms that made a restatement announcement matched with a sample of firms that did not make a restatement announcement, the difference in the transparency measure before and after the restatement announcement is statistically insignificant.
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Date Issued: 2018
PURL: http://purl.flvc.org/fau/fd/FA00013008
Subject Headings: Financial statements, Transparency
Format: Document (PDF)

Title: The Association of the Relative Informativeness of Market Risk Disclosures with Liquidity and Investment Efficiency.
Creator: Luo, Xin, Kohlbeck, Mark, Florida Atlantic University, College of Business, School of Accounting
Abstract/Description: In a 2016 comment letter, the SEC summarizes the ongoing debate regarding the usefulness of market risk disclosures and calls for additional discussion (SEC Concept Release 2016). In response to the SEC’s call, I investigate whether investors and firms benefit from market risk disclosures. Prior literature suggests that informative corporate disclosure is associated with improved liquidity and investment efficiency. I find that informative textual contents of market risk disclosures improve...
Show moreIn a 2016 comment letter, the SEC summarizes the ongoing debate regarding the usefulness of market risk disclosures and calls for additional discussion (SEC Concept Release 2016). In response to the SEC’s call, I investigate whether investors and firms benefit from market risk disclosures. Prior literature suggests that informative corporate disclosure is associated with improved liquidity and investment efficiency. I find that informative textual contents of market risk disclosures improve investors’ information environment, and as a result, are associated with higher liquidity level, lower liquidity uncertainty, and improved investment efficiency. My study is relevant to the ongoing debate regarding the usefulness of market risk disclosures, calls for more detailed regulatory guidance for market risk disclosures, and contributes to the literature on liquidity, investment efficiency, and risk factor disclosures.
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Date Issued: 2018
PURL: http://purl.flvc.org/fau/fd/FA00005979
Subject Headings: Investments, Financial statements, Financial risk
Format: Document (PDF)

Title: Two Essays on Mutual Funds Herding and the Information Content of Their Trades.
Creator: Carrete Rodriguez, Angel Francisco, Agapova, Anna, Florida Atlantic University, College of Business, Department of Finance
Abstract/Description: Information asymmetry literature has developed models that explain the relation between uninformed traders and informed traders. In general, these models have shown that first, information asymmetry is a driving force for investor buying and selling behavior. Second, the trades of informed investors reveal some of the information they possess suggesting that the trades of informed investors are informative to market makers. Third, when information about a stock enters the market, the...
Show moreInformation asymmetry literature has developed models that explain the relation between uninformed traders and informed traders. In general, these models have shown that first, information asymmetry is a driving force for investor buying and selling behavior. Second, the trades of informed investors reveal some of the information they possess suggesting that the trades of informed investors are informative to market makers. Third, when information about a stock enters the market, the characteristics of the firm can change, e.g., a better information environment reduces the cost of capital (Admati, 1985; Easley and O‟Hara, 2004; Wang, 1993). In this study, I apply information asymmetry theory to explore the trading behavior of active equity mutual fund managers and their role as facilitators of information. In the first essay, I study the information environment of firms mutual funds choose to add to their holdings and how it changes after the inclusion. I identify all new additions to the mutual fund holdings universe from 2002 to 2015 and compare them to the available universe of firms not yet owned by mutual funds. I find that active equity mutual fund managers behave as informed investors and prefer to buy stocks with more opaque information environments i.e., firms with larger spreads, lower trading volume, smaller firms with more growth opportunities, and firms that tend to use more accruals. Fund managers also show a preference for firms that have less analyst following, those in which analysts are less likely to agree on their EPS estimates, and firms in which analysts are more likely to err in their predictions. In other words, mutual fund managers prefer firms that are more likely to be mispriced. Once the funds include the firms, I document a strong improvement in their information environment. Firms attract more analyst coverage, reduce its use of accruals, produce more guidance, increase their market cap, and show increased turnover. The second essay focuses on the herding behavior of mutual funds. The study is the first to document the herding of mutual fund managers after creation of toehold positions by portfolio managers. I use a hand-collected dataset consisting of all toehold acquisitions reported to the SEC from 1995 to 2015 to document a strong herding reaction of active equity mutual funds after toehold announcements. This herding reaction is several times stronger than other mutual fund herding events reported by previous literature. I also document that the strength of the herding reaction varies depending on the identity of the filer or the characteristics of the firm acquired. The herding reaction is stronger for toehold announcements of firms with a smaller market capitalization, better growth opportunities, and those that are more illiquid. I also find that the herding reaction is weaker after the filings of hedge fund managers. My results support the informational herding cascade hypothesis.
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Date Issued: 2018
PURL: http://purl.flvc.org/fau/fd/FA00013127
Subject Headings: Information asymmetry, Mutual funds, Herding
Format: Document (PDF)

Title: Two Essays on Media Connections and Corporate Finance Policies.
Creator: Hossain, Md Miran, Javakhadze, David, Florida Atlantic University, College of Business, Department of Finance
Abstract/Description: The study examines the effects of executives’ media connection on corporate policies. Extant literature in finance, economics and journalism provide inconclusive evidence in determining whether media works as watchdog to the financial market or whether media facilitates bias through manipulation of corporate news events. I introduce two competing hypotheses that may explain the research question. Information Efficiency Hypothesis predicts that media connected firms mitigate information...
Show moreThe study examines the effects of executives’ media connection on corporate policies. Extant literature in finance, economics and journalism provide inconclusive evidence in determining whether media works as watchdog to the financial market or whether media facilitates bias through manipulation of corporate news events. I introduce two competing hypotheses that may explain the research question. Information Efficiency Hypothesis predicts that media connected firms mitigate information asymmetry among its investors, enjoy better governance, and are less likely to manipulate information on corporate policy choices. Manipulation Hypothesis, in contrary, suggests that firms may strategically utilize media connections to alter the information flow that may paint a tainted picture of the firm’s prospects, thereby facilitating greater misvaluation and devising of opportunistic corporate finance policies. I test these hypotheses on a set of investment policies (mergers outcomes and innovative efficiency) and financing policies (seasoned equity offerings and share repurchases). In the first essay, I find that media connection increases merger announcement return, reduces takeover premium, increases the likelihood of deal completion, although post-merger long term performance exhibit inconclusive results. Also, media connection reduces innovative efficiency and change in innovative efficiency attributable to media connections is harmful for the firm in the long run. Overall, results are consistent with the manipulation hypothesis to some extent though further investigation is required before disregarding the information efficiency effect. In the second essay, results show that media connection increases the likelihood of an SEO event, reduces the announcement period CAR. However, analysis of post SEO long term operating and stock performance show mixed results. For repurchasing firms, media connection increases announcement returns, increases the likelihood of repurchase and the amount repurchased. Media connection also increases the likelihood that repurchase is preferred over dividends as a mode of payout. Post repurchase long term operating and stock performance, however, provide inconsistent results. In general, results are consistent with the manipulation hypothesis though information efficiency hypothesis could not be ruled out entirely.
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Date Issued: 2018
PURL: http://purl.flvc.org/fau/fd/FA00013070
Subject Headings: Corporations--Finance., Mass media and business., Corporations--Public relations.
Format: Document (PDF)

Title: Two Essays on An Examination of Life Cycle Effects and Firm Policies.
Creator: Danso, Charles K. A., Garcia-Feijoo, Luis, Pennathur, Anita K., Florida Atlantic University, College of Business, Department of Finance
Abstract/Description: In Essay 1, I investigate the impact of corporate life cycle dynamics on the observed negative association between asset growth and stock returns in the crosssection. I find that the asset growth effect on average exists across some life cycle stages measured using cohorts. However, controlling for certain variables associated with the theoretical explanations, I find there is no relation between asset growth and returns. I argue this evidence is consistent with an agency-based explanation of...
Show moreIn Essay 1, I investigate the impact of corporate life cycle dynamics on the observed negative association between asset growth and stock returns in the crosssection. I find that the asset growth effect on average exists across some life cycle stages measured using cohorts. However, controlling for certain variables associated with the theoretical explanations, I find there is no relation between asset growth and returns. I argue this evidence is consistent with an agency-based explanation of the asset growth effect. Furthermore, a decomposition of the drivers of the effect shows that different components of assets (i.e. working capital and financing) drive asset growth effect at different life cycle stages. From a decomposition analyses, results show that in the youngest firms (cohort 1), asset growth effect is mostly driven by both operating liability and stock financing on one side (financing) and noncash current assets, PPE, and growth in other assets (for working capital) while cohort 3’s drivers appear to be stock issuances, together with noncash current assets, which I conclude offer further support for agency issues. In Essay 2, I examine how firms’ life cycle affect insider trading behavior, profits surrounding trades, price informativeness, and financing constraints. I argue that if firms’ policies and characteristics change over time as shown in lifecycle literature, then from firm characteristics that motivate insider-trading behavior, one should observe some differences across varying life cycle stages measured using age cohorts. I find that insiders are net sellers at all life cycle stages of a firm. Furthermore, insiders tend to trade more in younger firms than in older firms even though they have fewer numbers of insiders trading. Trading characteristics are generally statistically significant across cohorts. Overall, insiders appear to predict the correct direction for positive wealth generation when trading. Specifically, at all lifecycle stages, they appear to sell before negative CARs, and buy during periods associated with negative CARs that lead to positive CARs days after insider transactions. The findings on price informativeness suggest that in general insider purchases enhance price informativeness for firms at different lifecycle stages, however, this finding holds only for cohort 4 (oldest firms) in the case of insider sales. The implication of this finding is that regulation should be more lax towards purchases as compared to sales for firms, except for sales in firms that are older. Lastly, insider trades are linked with positive investment-cash flow sensitivities for both insider purchases and insider sales, which generally increase monotonically across cohorts. This finding is robust to using GMM approach.
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Date Issued: 2018
PURL: http://purl.flvc.org/fau/fd/FA00013057
Subject Headings: Corporations--Growth., Stocks--Rate of return., Insider trading in securities.
Format: Document (PDF)

Title: Operating Leverage’s Role in Stock Returns, The Value Premium, and the Profitability Premium: International Evidence.
Creator: Jansen, Benjamin A., Garcia-Feijoo, Luis, Florida Atlantic University, College of Business, Department of Finance
Abstract/Description: This dissertation investigates the association of operating leverage with stock returns, the value premium, and the profitability premium. Results in the first essay support the hypothesis that operating leverage is related to stock returns and the value premium across the sampled countries. Results are robust to cross-country differences, typical controls, multiple definitions of operating and financial leverage, and while controlling for the endogeneity of operating and financial leverage....
Show moreThis dissertation investigates the association of operating leverage with stock returns, the value premium, and the profitability premium. Results in the first essay support the hypothesis that operating leverage is related to stock returns and the value premium across the sampled countries. Results are robust to cross-country differences, typical controls, multiple definitions of operating and financial leverage, and while controlling for the endogeneity of operating and financial leverage. This suggests that the rational explanation for the presence of the value premium lies in the underlying risk exposure of fixed asset risk of operating leverage which is expressed through the value premium. Results further support the hypothesis of strengthening labor protection increasing operating leverage. In turn, increased labor protection marginally negatively associated with the value premium, suggesting that labor protection reduces the value premium through financial leverage. However, because operating and financial leverage are oppositely affected by employment protection, the joint effect of this association may be cumulatively washed out in estimating value premium with employment protection legislation. Results in the second essay further support the hypothesis that operating leverage is related to stock returns and additionally support the hypothesis of operating leverage being associated to the profitability premium. The profit premium tends to be insignificant when generated within operating leverage portfolios, and the profit premium only tends to be significantly positive in the higher operating leverage portfolios. Furthermore, once operating leverage and profitability are orthogonalized from one another, the estimated coefficient of profitability is reduced by a magnitude of roughly 10. These results provide evidence in support of the profit premium being based on the riskiness of the firm through operating leverage, and therefore the profit premium is a rationally priced risk factor in stock returns.
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Date Issued: 2018
PURL: http://purl.flvc.org/fau/fd/FA00013074
Subject Headings: Operating leverage., Stocks., Financial leverage., Corporations--Valuation., Labor--Protection.
Format: Document (PDF)

Title: An Examination of Factors Impacting Managerial Behavior towards Compliance Controls: Impact of the EPA Audit Policy.
Creator: Davis, Phebian, Higgs, Julia, Florida Atlantic University, College of Business, School of Accounting
Abstract/Description: The United States established the Environmental Protection Agency (EPA) to monitor and enforce compliance with environmental pollution standards through various programs and policies. One such policy, the Audit Policy, allows companies to voluntarily self-report violations to the Agency in exchange for elimination of certain penalties. Despite the policy, firms still incur large environmental penalties, thus indicating the need for better understanding of the policy. A necessary but not...
Show moreThe United States established the Environmental Protection Agency (EPA) to monitor and enforce compliance with environmental pollution standards through various programs and policies. One such policy, the Audit Policy, allows companies to voluntarily self-report violations to the Agency in exchange for elimination of certain penalties. Despite the policy, firms still incur large environmental penalties, thus indicating the need for better understanding of the policy. A necessary but not sufficient condition for penalty relief under the Audit Policy requires discovery of violations by an environmental audit or a compliance management system. This research explores the option of discovery by a compliance management system and examines the motivation of managers to invest in an environmental management system (EMS). The theory of reasoned action (TRA) argues that attitude and subjective norms precede intentions. I use this theory to investigate what factors cause a manager to invest in an environmental management system (EMS). Additionally, I examine whether environmental attitude, tolerance for ambiguity and willful blindness are antecedents to attitude towards an EMS. In this study, I develop and test a scale of the willful blindness construct and measure its impact on managerial decision-making. The willful blindness construct development produced a one-item measure. My results support all hypotheses except for the predicted link between tolerance for ambiguity and attitude.
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Date Issued: 2017
PURL: http://purl.flvc.org/fau/fd/FA00005924
Subject Headings: Dissertations, Academic -- Florida Atlantic University, United States. Environmental Protection Agency--Auditing., Compliance., Environmental pollution.
Format: Document (PDF)

Title: An Empirical Test of a General Theory of Problem-Solving.
Creator: Hall, Justin, Shaw, Eric H., Florida Atlantic University, College of Business, Department of Marketing
Abstract/Description: The purpose of this research is to better understand how marketers and consumers solve problems. This research first reviews the problem-solving literature, discusses several areas of confusion related to problem-solving, and offers solutions. After resolving the confusion, this research then develops a theoretical model of problemsolving. Four hypotheses are derived from the model, and then empirically tested. The model states that the distinct cognitive domain of problem-solving begins with...
Show moreThe purpose of this research is to better understand how marketers and consumers solve problems. This research first reviews the problem-solving literature, discusses several areas of confusion related to problem-solving, and offers solutions. After resolving the confusion, this research then develops a theoretical model of problemsolving. Four hypotheses are derived from the model, and then empirically tested. The model states that the distinct cognitive domain of problem-solving begins with problem recognition. Given a problem, associative memory and associative activation provide a solution (H #1). This solution is either satisfactory or unsatisfactory. If satisfactory, the individual engages in the satisficing process and accepts the solution (H#2). If unsatisfactory, the individual engages in the decision-making process and searches for information related to an alternative solution (H #3). Thus, the difference between satisficing and decision-making is the search for information (H #4). Problemsolving ends when an intended solution is chosen. A pretest and two studies are conducted to test the four hypotheses. The Pretest demonstrated situations that elicited problem recognition. Study 1 tested hypothesis #1 and found that at least 75 percent of the time associative memory and associative activation provided a solution. Study 2 tested hypotheses #2, #3, and #4. Hypotheses #2 and #3 were tested using a two-way ANOVA, Chi-Square, and Point Biserial Correlation and hypothesis #4 was tested using an independent sample t-test and Point Biserial Correlation. Results of all empirical tests confirm each of the hypotheses, which in turn support the theoretical model.
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Date Issued: 2017
PURL: http://purl.flvc.org/fau/fd/FA00004807, http://purl.flvc.org/fau/fd/FA00004807
Subject Headings: Game theory., Problem solving., Decision making., Management science., System theory., Creative thinking., Creative ability in business.
Format: Document (PDF)

Title: Corporate Tax Aggressiveness, Auditor Provided Tax Services, And Audit Quality: Evidence From Recent PCOAB Rules Concerning Independence And Tax Services.
Creator: Carr, Kellie M., Cao, Jian, Florida Atlantic University, College of Business, School of Accounting
Abstract/Description: Using tax accrual quality as a proxy for audit quality, I investigate whether companies that significantly decreased APTS surrounding the effective date of the Public Company Accounting Oversight Board’s 2006 Rules on Ethics, Independence, and Tax Services experienced an improvement in audit quality after the change. Given the specific target of the PCAOB 2006 restrictions is companies aggressively avoiding taxes with the assistance of APTS, I also investigate whether companies associated...
Show moreUsing tax accrual quality as a proxy for audit quality, I investigate whether companies that significantly decreased APTS surrounding the effective date of the Public Company Accounting Oversight Board’s 2006 Rules on Ethics, Independence, and Tax Services experienced an improvement in audit quality after the change. Given the specific target of the PCAOB 2006 restrictions is companies aggressively avoiding taxes with the assistance of APTS, I also investigate whether companies associated with tax aggressive services are also more likely to experience an improvement in audit quality following the reductions in APTS. Results suggest an increase in audit quality due to a reduction in economic bonding following APTS restrictions. Consistent with the economic bonding theory, companies that significantly reduced APTS experienced a larger improvement in audit quality after the change compared to companies that did not significantly reduce APTS. For tax aggressive companies, those that reduced APTS did experience a significant increase in audit quality after the change compared to tax aggressive companies that did not significantly reduce APTS. Moreover, companies considered important tax clients by their audit firms that significantly reduced APTS did experience a marginally greater increase in audit quality after the change compared to other important tax clients that did not significantly reduce APTS. Overall, my results indicate that the PCOAB 2006 restrictions were effective in decreasing APTS and economic bonding, thereby leading to improved audit quality, especially among companies associated with tax aggressive services. Accordingly, concerns for loss of knowledge spillover seem to be minimal. There are few studies that investigate the effectiveness of the PCAOB 2006 restrictions on audit quality. Therefore, my study fills this void by using a tax specific measure of audit quality, tax accrual quality, to specifically examine the target of the restrictions— audit clients that are associated with aggressive tax services. My study confirms and expands APTS, economic bonding, audit quality, tax accrual quality, and tax aggressive research, and also provides insight into and support for current policy debates concerning APTS and tax aggressive services.
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Date Issued: 2017
PURL: http://purl.flvc.org/fau/fd/FA00004884, http://purl.flvc.org/fau/fd/FA00004884
Subject Headings: Auditing--Standards--United States., Corporations--Standards--United States., Corporations--Auditing., Organizational effectiveness--Measurement., Financial services industry--Management.
Format: Document (PDF)

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