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We examine the association between conditional conservatism in initial public offering (IPO) underpricing and post-issue stock market survival in the U.S.

We adopt an archival approach by collecting data for 1,761 U.S. IPO issuers for the period 1990–2017. Regression analyses are conducted to evaluate the association between conditional conservatism in initial public offerings with underpricing and post-issue stock market survival. We identify firms that went public in the period 1990–2012. These firms are then followed for five years after the IPO to assess their stock market survival.

We find that pre-issue conditional conservatism is significantly associated with less IPO underpricing. We also detect that IPO firms with higher levels of conditional conservative reporting are more likely to survive in the post-IPO stock market in the three-, four-, and five-year periods after the IPO. Our main findings are robust after controlling for other factors in our models, such as IPO cycles, venture capitalists, research and development investment, and pre-IPO accounting performance.

We extend research by demonstrating that conditional conservative reporting practices help firms reduce their indirect costs of raising their initial public capital. Additionally, our research introduces new evidence on the association between pre-IPO conditional conservatism and after-issue stock market survival. Our findings empirically support the International Accounting Standards Board’s (IASB) decision to reintroduce the concept of prudence into the conceptual framework, by showing how conservative reporting can reduce information asymmetry in IPO firms.

The role of chief executive officer (CEO) personal characteristics in shaping corporate policies has attracted increasing academic attention in the past two decades. In this review, the authors synthesize extant research on CEO attributes by reviewing 232 articles published in 29 journals from the accounting, finance and management literature. This review provides an overview of existing findings, highlights current trends and interdisciplinary differences in research approaches and identifies potential avenues for future research.

To review the literature on CEO attributes, the authors manually collected peer-reviewed articles in accounting, finance and management journals from 2000 to 2021. The authors conducted in-depth analysis of each paper and manually recorded the theories, data sources, country of study, study period, measures of CEO attributes and dependent variables. This procedure helped the authors group the selected articles into themes and sub-themes. The authors compared the findings in various disciplines and provided direction for future research.

The authors highlight the role of CEO personal attributes in influencing corporate decision-making and firm outcomes. The authors categorize studies of CEO traits into three main research themes: (1) demographic attributes and experience (including age, gender, culture, experience, education); (2) CEO interactions with others (social and political networks) and (3) underlying attributes (including personality, values and ideology). The evidence shows that CEO characteristics significantly affect a wide range of specific corporate policies that serve as mechanisms through which individual CEOs determine firm success and performance.

CEO selection is one of the most crucial decisions made by corporations. The study findings provide valuable insights to corporate executives, boards, investors and practitioners into how CEOs’ personal characteristics can impact future firm decisions and outcomes that can, in turn, inform the high-stake process of CEO recruitment and selection. The study findings have significant practical implications for corporations, such as contributing to executive training programs, to assist executives and directors attain a greater level of self-awareness.

Building on the theoretical foundation of upper echelons theory, the authors offer an integrated theoretical framework to consolidate existing empirical research on the impacts of CEO personal attributes on firm outcomes across accounting and finance (A&F) and management literature. The study findings provide a roadmap for scholars to bridge the interdisciplinary divide between A&F and management research. The authors advocate a more holistic and multifaceted approach to examining CEOs, each of whom embodies a myriad of personal characteristics that comprise their unique identity. The study findings encourage future researchers to expand the investigation of the boundary conditions that magnify or moderate the impacts of CEO idiosyncrasies.

To determine whether the abnormal returns accruing to UK companies undertaking a divestiture are different when the unit sold is in the UK or elsewhere and to specifically hypothesize that returns generated by a domestic sale will be higher than those resulting from an overseas sale.

Using a sample of 668 divestitures reported on securities data corporation (SDC) Platinum database, and share price data from DataStream, both abnormal returns and cumulative abnormal returns (CARs) are calculated around the announcement date using the market model.

That the announcement of a divestiture generates positive abnormal returns for shareholders. Further, that the announcement of a UK divestiture generates a significantly larger positive market reaction than the announcement of an overseas divestiture. For the divestiture of units located outside the UK it is found that the largest CARs are generated when the buying firm is based in the UK.

Here the existing work on divestiture announcement effects is extended by taking into account the location of the divested unit and the location of the buying firm. This allows one to investigate whether market reaction to an announcement of a divestiture is influenced by both the location of the unit sold and the location of the buying company.

This research aims to examine hedge funds’ performance, risk and flow before and after the implementation of the Stop Trading on Congressional Knowledge (STOCK) Act.

This paper includes the use of different factor models to highlight the performance and risk of hedge funds before and after the implementation of the STOCK Act. Hedge fund holdings are retrieved from Thomson Reuters Lipper Hedge Fund Database (TASS).

This study finds significant differences before and after the implementation of the STOCK Act. The results for the entire sample period indicate that hedge funds suffered lower-alpha, standard deviation and idiosyncratic risk after the implementation of the STOCK Act.

The paper’s originality and value lie in addressing the relationship gap between the STOCK Act and hedge fund performance.

This paper investigates the differential and interactive effects of sectoral and aggregate uncertainty on the corporate debt structure of credit-constrained and credit-unconstrained firms in India.

The panel fixed-effect model was used to examine the effect of sectoral and aggregate uncertainty on corporate debt structure using annual data of 2,405 firms from 1997 to 2020.

An increase in sectoral and aggregate uncertainty leads to a greater increase in total and short-term debt and a decrease in long-term debt for credit-constrained firms than in unconstrained ones. However, sectoral uncertainty affects firms’ debt maturity structure more than aggregate uncertainty. Credit-constrained firms use short-term debt to finance capital expenditure during periods of high sectoral uncertainty and working capital requirements during periods of high aggregate uncertainty. When both sectoral and aggregate uncertainty are high, credit-constrained firms decrease total and short-term debt usage more than credit-unconstrained firms do. Our results are robust to a variety of tests, such as different measures of uncertainty, the use of instrument variables and controlling for economic conditions and financial crises.

This study addresses the differential and interactive effects of sectoral and aggregate uncertainty on corporate debt structure.

This paper examines the effect of restrictions on executive pay and high CEOs’ compensation on bank performance following the “2008 UK bank rescue policy”.

Using the difference-in-difference estimation technique we assess the relationship between executive compensation and financial performance of rescued banks relative to non-rescued banks over the period 1999–2019.

Our main finding indicates that the relationship between executive compensation and financial performance declines in rescued banks relative to non-rescued banks. Further, we document that performance continues to deteriorate in rescued banks relative to non-rescued banks. Our results are robust to different estimation techniques.

This study contributes to the literature that examines the efficacy of government bailouts during the 2008 crisis. To the best of the author’s knowledge, this study is among the first to examine the long-term implications of bank rescue and pay restrictions on executive compensation and performance post–rescue.

The study tests risk-taking and risk-aversion capabilities while distinguishing between business group firms and stand-alone firms and considering oil price volatility. Second, this attempt to study the linkage between risk-taking during market down movements and when the firms have established themselves as product market leaders. Third, this study analyses the “sentiment” state, where it explores the reaction of corporations when the market is in the negative direction, and lastly, it explores the linkage between product market competition and risk-aversion.

This study uses financial information for 1,273 non-financial companies and other required data from various sources. The study employs panel data and utilizes different empirical methodologies, including the generalized method of moments (GMM) estimator, to test the stated hypotheses.

We find that the business group firms have more risk-taking proficiencies compared with the stand-alone firms. Moreover, this study discovers that the corporates avoid taking risks when the market is not performing well. Also, when the market is down and crude prices are high, the management expects high earnings in the future, willingly takes risks and shows that product market leaders do not follow the risk-aversion strategy.

The empirical results indicate that oil price movement can restrict management’s behaviour when choosing a risky investment project. Management should develop a robust policy that follows the group of firms. In the policy, the management should describe the level of risk that may be taken by the firm and implement it when required.

Since we do not find any studies in this context, then there is a major and essential gap in the literature that this study should fill.

This paper examines the effect of firms’ takeover susceptibility on the manipulation of financial statements through classification shifting.

The paper applies ordinary least squares regression (OLS) with fixed effects analyses to a sample of United States listed firms over the period 1992–2014. We use takeover index as a proxy for takeover susceptibility of firms, with high values representing higher takeover susceptibility and lower values representing lower takeover susceptibility.

The study finds that firms engage in classification shifting through core expenses, suggesting that takeover threats reduce the incentive to manage earnings through classification shifting. We also find that takeover susceptibility improves the monitoring mechanism for firms with low profitability because these firms have greater incentives to engage in classification shifting. Finally, we find that the Sarbanes–Oxley Act strengthens the monitoring mechanism influenced by takeover threats. Overall, the results provide evidence of the important role of takeover susceptibility in mitigating classification shifting. Our results are robust to a battery of sensitivity tests.

The results emphasise the disciplinary role of the legal environment around corporate takeovers. The study suggests that policymakers and regulators should be cognisant of antitakeover laws which may increase agency conflicts between managers and shareholders and promote managerial self-seeking behaviours such as classification shifting.

The paper highlights the important role of takeover threats as an external governance mechanism to mitigate classification shifting which is detrimental to investors’ value. From prior literature, this study is the first to provide evidence of the effect of takeover threats on classification shifting.