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Three essays on the impact of analyst recommendations in the banking industry
Title
Three essays on the impact of analyst recommendations in the banking industry.
Creator
Premti, Arjan, Madura, Jeff, Florida Atlantic University, College of Business, Department of Finance
Abstract/Description
By analyzing the information provided by analyst recommendations in the banking industry, I find that analyst recommendations trigger an immediate impact on the value of banks (Essay 1), they profitably guide the investment decisions of investors for periods of up to three months (Essay 2), and they also have an immediate impact on the values of rival banks (Essay 3). In addition, I find that analysts’ ability to provide new information depends on the information environment of the bank. The...
Show moreBy analyzing the information provided by analyst recommendations in the banking industry, I find that analyst recommendations trigger an immediate impact on the value of banks (Essay 1), they profitably guide the investment decisions of investors for periods of up to three months (Essay 2), and they also have an immediate impact on the values of rival banks (Essay 3). In addition, I find that analysts’ ability to provide new information depends on the information environment of the bank. The degree of information asymmetry, the degree of complexity, the risk of the bank, the risk of the time period, as well as regulatory reforms that affect these characteristics, have a significant impact on the analyst’s ability to provide new information to the investors. Specifically, I find that analyst recommendations are more informative when banks suffer from a high degree of information asymmetry. In addition, regulatory reforms that reduced the information asymmetry of the banking industry also diminished the analyst’s ability to provide new information. Similarly, I find that analyst recommendations have a greater impact on the values of the rated and the rival banks when these banks operate in a risky environment. This result is robust to several measures of bank risk, period risk, and regulatory events that affected the risk of the banking industry. However, the results of Essay 2 show that positive recommendations that occur during riskier periods or after regulatory events that increased the risk of the banking industry result in lower value for the investors over the following 1-month or 3- month periods. Lastly, I find that as banks become more complex, analyst recommendations have a smaller immediate impact on the value of the bank, deliver a smaller investment value for the investors, and also have a smaller immediate impact on the value of the rival banks.
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Date Issued
2014
PURL
http://purl.flvc.org/fau/fd/FA00004151, http://purl.flvc.org/fau/fd/FA00004151
Subject Headings
Financial engineering, Investment analysis, Portfolio management, Risk management
Format
Document (PDF)
Managerial reputation and Non-GAAP earnings disclosures
Title
Managerial reputation and Non-GAAP earnings disclosures.
Creator
Cheng, Yun, Kohlbeck, Mark, Florida Atlantic University, College of Business, School of Accounting
Abstract/Description
I examine how managerial reputation affects the quality of non-GAAP earnings disclosures and how the market reacts to non-GAAP earnings disclosures associated with managerial reputation. Although there was an initial dip in the frequency of non-GAAP earnings disclosures after SOX and Regulation G, the frequency of non-GAAP earnings disclosures has increased in recent years (Brown, Christensen, Elliott and Mergenthaler 2012). Motivated by the efficient contracting theory and managerial...
Show moreI examine how managerial reputation affects the quality of non-GAAP earnings disclosures and how the market reacts to non-GAAP earnings disclosures associated with managerial reputation. Although there was an initial dip in the frequency of non-GAAP earnings disclosures after SOX and Regulation G, the frequency of non-GAAP earnings disclosures has increased in recent years (Brown, Christensen, Elliott and Mergenthaler 2012). Motivated by the efficient contracting theory and managerial reputation incentives, I investigate whether reputable managers are associated with higher quality non-GAAP earnings disclosures. I also investigate whether the market is more responsive to non-GAAP earnings disclosed by reputable managers. Using empirical models modified from prior research, I find that reputable managers are less likely to disclose non-GAAP earnings, which is consistent with the efficient contracting explanation. I also find that reputable managers exclude more recurring items that are related to future operating earnings when they disclose non-GAAP earnings, which is consistent with the rent extraction explanation in prior research. Finally, I find that managerial reputation has an incremental effect on the market reaction and that the market is more responsive to non-GAAP earnings disclosed by reputable managers if the unexpected earnings are positive. The study contributes to both non-GAAP earnings disclosures literature and managerial reputation incentives literature. It also has implications for investors, managers, and regulators.
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Date Issued
2014
PURL
http://purl.flvc.org/fau/fd/FA00004185, http://purl.flvc.org/fau/fd/FA00004185
Subject Headings
Capital productivity -- Measurement, Disclosure in accounting, Industrial management, Investment analysis, Risk management
Format
Document (PDF)
Maturity of IT risk management practices and reporting structure: an it manager perspective
Title
Maturity of IT risk management practices and reporting structure: an it manager perspective.
Creator
Vincent, Surani, Higgs, Julia, Florida Atlantic University, College of Business, School of Accounting
Abstract/Description
In December 2009, the Securities Exchange Commission (SEC) approved enhanced proxy disclosure rules requiring companies to disclose the board’s leadership structure and the board’s role in risk oversight. Apart from general business risks, boards are increasingly interested in Information Technology (IT) risks as it affects all aspects of the organization (PricewaterhouseCoopers [PwC], 2013). Since the effectiveness of IT risk management depends on senior managers’ actions, this dissertation...
Show moreIn December 2009, the Securities Exchange Commission (SEC) approved enhanced proxy disclosure rules requiring companies to disclose the board’s leadership structure and the board’s role in risk oversight. Apart from general business risks, boards are increasingly interested in Information Technology (IT) risks as it affects all aspects of the organization (PricewaterhouseCoopers [PwC], 2013). Since the effectiveness of IT risk management depends on senior managers’ actions, this dissertation attempts to answer the question of whether the maturity of IT risk management practices (the extent to which management performs particular activities to identify, assess, monitor and respond to IT-related risks) in organizations depends on the Chief Information Office (CIO) reporting structure and the board’s leadership structure.
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Date Issued
2014
PURL
http://purl.flvc.org/fau/fd/FA00004336, http://purl.flvc.org/fau/fd/FA00004336
Subject Headings
Corporate governance, Decision making, Information technology -- Management, Information technology -- Social aspects, Management information systems, Risk management, Strategic planning
Format
Document (PDF)