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This paper aims to examine how economic freedom impacts the initial choice of legal structure for startup firms. The authors do this by first exploring whether economic freedom is an essential determinant of the initial legal form of organization (LFO). The authors then explore the impact of economic freedom on firms' choice of changing their initial legal structure over time and how this change impacts their survival rate.

The authors employ a multinomial logistic regression model to measure the initial determinants of LFO by utilizing an eight-year panel data set of 4,928 startups in the USA through the Kauffman firm survey and merge it with the Economic Freedom in North American index from the Fraser Institute. The authors then employ a logistic regression model to examine the determinants facilitating a change in legal structure over time.

The results show that economic freedom is a significant determinant in the choice of legal structure. The findings also report that the majority of startups do not change their legal form, but of those that do change the legal structure show a higher survival rate.

Major limitations are the size of the data and the nature of somewhat limited economic freedom differences with the USA. More nuanced measures of economic freedom would be highly desirable.

Policymakers should take note that limited red tape, smoothly working labor markets and straightforward processes for changes of legal structures of organizations would improve survival and growth odds for entrepreneurs.

Drawing on the theory of institutions, the authors attempt to bridge a gap in the literature by explicitly analyzing the determinants of the legal structure in startups in light of economic freedom. Institutional factors do not work in isolation; therefore, the authors also employ traditional entrepreneur-specific variables that affect the choice of legal structure in addition to the institutional framework.

The purpose of this paper is to investigate the effects of individual provisions of firm‐level shareholder rights on the cost of equity capital in the USA setting.

Prior literature has shown that strong shareholder rights, as measured by aggregated shareholder rights indices, could mitigate the agency costs and reduce the cost of equity capital. Stepwise regression method with control variables for financial risks and corporate governance risks is used to empirically test whether individual shareholder rights provisions have varying degrees of impacts on a firm's cost of equity capital.

Of the 24 shareholder rights provisions in the shareholder rights index, four provisions are found to be the most significant determinants of cost of equity capital with the absence of three provisions (poison pill, golden parachute, and control share cash out) and the presence of fair value provision reducing the firm's cost of equity capital.

First, the results suggest that a few individual provisions are major determinants of firm value. Hence, investors and regulators should pay the most attention to these provisions. Second, the result that some provisions that limit shareholders' rights actually reduce cost of equity capital suggests that investors and regulators should not view all aspects of weak shareholder rights negatively.

This paper tests the impact of shareholder rights on cost of equity capital from an individual provision basis.

The purpose of this paper is to investigate whether managerial ownership affects the association between shareholder rights and the cost of equity capital.

Prior literature has shown that strong shareholder rights are associated with a lower level of cost of equity capital. This paper empirically tests the interaction between managerial ownership and shareholder rights on affecting the cost of equity capital, using Gompers et al.'s governance score and Ohlson and Juettner‐Nauroth's estimate of cost of equity capital. To mitigate the endogeneity arising from other governance variables affecting both shareholder rights and the cost of equity capital, the paper adopts both OLS and two‐stage regression.

The results indicate that managerial ownership aligns managers' interests with those of shareholders, leading to a lesser degree of agency problems and lower cost of equity capital. Furthermore, the evidence suggests that managerial ownership could substitute for shareholder rights in affecting the cost of equity capital, making strong shareholder rights less important in a high managerial ownership setting.

Findings in this paper suggest that firms need to consider the interaction between managerial ownership and shareholder rights in designing their governance structure to minimize their cost of equity capital.

This paper reveals the interaction between two major governance variables in affecting firm valuation.

Accounting standards for goodwill may intensify the agency conflict. Since auditors evaluate intangible asset valuations, this study examines to what extent being an auditor (including Big 4 auditors) and being female as indicators of professional skepticism and conservatism predict accounting professionals' critical views of goodwill accounting under US GAAP.

Statistical analyses of a survey of accounting professionals in the Pacific Northwest region of the United States.

The respondents' views are dispersed from trust in GAAP to views reflecting management opportunism in goodwill accounting. While being an auditor (including Big 4 auditors) does not predict a critical perception, being a female auditor is correlated with critical views to some extent.

The survey was carried out in a limited geographical area and personal contacts were used to maximize the response rate, which may limit generalizability.

Standard setters can use the results to learn how practitioners perceive the current accounting standards for goodwill. The results provide users and preparers knowledge about potential pitfalls of goodwill accounting. Preparers could increase transparency to alleviate user concerns regarding managerial opportunism in goodwill accounting.

This paper extends the IFRS-based literature exploring practitioners' perceptions of accounting standards by focusing on goodwill accounting in the US GAAP environment. This study also contributes to the auditing literature by providing further evidence on how gender moderates an auditor's perception of accounting standards.

This study aims to investigate the impact of the development of high-speed rail (HSR) network on earnings management, especially on the trade-off between the usage of accruals-based earnings management (AM) and real earnings management (RM) techniques, and consequently, examines the extent to which the HSR network–earnings management nexus is moderated by governance and religion factors.

Using a sample of Chinese A-listed firms over an 11-year period, this study uses regression techniques as the baseline methodology while controlling for industry and year-fixed effects. The authors also use endogeneity tests (including instrumental variable method, Generalized Methods of Moments estimation and difference-in-difference) and different robustness checks.

The key findings are threefold. First, the HSR network development reduces AM. This suggests that the presence of HSR network is effective in reducing information asymmetry. Second, the use of RM technique increases with the HSR network development. This indicates that managers do not seem to engage in less earnings management with the HSR network development but instead appear to switch from the easy-to-detect AM to the more costly RM approach. Finally, the HSR network and earnings management nexus is moderated by governance and religion factors.

This study provides new evidence on the trade-off between AM and RM by managers and pioneers in examining the impacts of governance and religion factors on the relationship between the HSR network and the trade-off of earnings management techniques.

The purpose of this paper is to analyze the merger and acquisition (M&A) strategy focusing on Indian company’s approaches and to understand steps of the process adopted by them. It focuses on the rationality of M&A and its impact on the profitability. This paper also discusses whether financial transaction in terms of value is right or done because of eagerness to expand by calculating the financial value of brand equity independently.

The operating performance, capital adequacy and solvency measures were compared to three-years pre- and post-merger from the financial statements of the organizations through financial valuation of brands. Inter-brand and RKS model are used to calculate the brand value. The perception study on M&A is also conducted by interviewing stakeholders. This paper provides a theoretical and practical basis to decide on whether M&A. The present paper has taken recent mega M&A of Ranbaxy Lab by Sun pharmaceuticals for the analysis.

The results of the paper showed that Return on investment did not indicate significant improvement, but on average, it can be concluded that overall performance of the acquirer improves as a result of M&A activity as per the study. The decisions on M&A are more emotional than rational. The present paper reveals that M&A of pharmaceutical company was riskier because of emotional decisions. Research has proposed “Merger, acquisition Theory (RERC MA theory) based on rational, emotion, risk taking ability culture” to understand the M&A.

This paper is more focused on emerging markets which is more active with better gross domestic product (GDP) growth. It is more on analysis of financial decisions and has not taken customer equity, employee morale and engagement. A further study is suggested in the same areas. Managerial Implications: This paper will enable the managers to withstand the emotional influence and will help them to be more professional approach which will benefit the organization and stakeholder better. Mangers should look for long-term impact than short-term impact the present paper will also help them to understand on how financial calculations will help them to take more rational decisions.

Although the topic is not very new, a lot of literature is available on M&A, but the pharmaceutical sector is comparatively new for such kind of studies. Specifically, the selection of respondents and brand valuation mechanism has got practical implications. Earlier papers on M&A paper are more focused on customers’ equity, but a financial analysis of M&A is done in the present paper will help to evaluate merger and acquisition process more analytically. Financial calculation for evaluating M&A is the highlight of this research paper. Study of M&A from emerging markets will help to increase the knowledge as such papers are few. Research uses two important financial tools to measure financial brand equity and tries to justify the need for more rational rather than emotional approach. Research has proposed “Merger, acquisition Theory (RERC MA theory) based on rational, emotion, risk taking ability culture” to understand the M&A.