Phillip T. Lamoreaux, Lubomir P. Litov and Landon M. Mauler
We document the emergence of the Lead Independent Director (LID) board role in a sample of U.S. firms from 1999–2015. We find that firms that adopt an LID board role are larger…
Abstract
We document the emergence of the Lead Independent Director (LID) board role in a sample of U.S. firms from 1999–2015. We find that firms that adopt an LID board role are larger and have more independent boards, higher institutional investor holdings, and an NYSE listing. Firms with greater anticipated benefits from monitoring also adopt an LID role, e.g., firms with dual CEO-Chairman, with more takeover defense mechanisms, and with higher cash holdings. Using an event study methodology, we find that investors respond positively to the adoption of an LID board role. Lastly, using instrumental variables to address endogeneity in the LID board role, we find that firms with an LID are more likely to terminate poorly performing CEOs. Taken as a whole, these results suggest that the LID board role enhances firm value and improves the quality of corporate governance.
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Shailendra Singh, Mahesh Sarva and Nitin Gupta
The purpose of this paper is to systematically analyze the literature around regulatory compliance and market manipulation in capital markets through the use of bibliometrics and…
Abstract
Purpose
The purpose of this paper is to systematically analyze the literature around regulatory compliance and market manipulation in capital markets through the use of bibliometrics and propose future research directions. Under the domain of capital markets, this theme is a niche area of research where greater academic investigations are required. Most of the research is fragmented and limited to a few conventional aspects only. To address this gap, this study engages in a large-scale systematic literature review approach to collect and analyze the research corpus in the post-2000 era.
Design/methodology/approach
The big data corpus comprising research articles has been extracted from the scientific Scopus database and analyzed using the VoSviewer application. The literature around the subject has been presented using bibliometrics to give useful insights on the most popular research work and articles, top contributing journals, authors, institutions and countries leading to identification of gaps and potential research areas.
Findings
Based on the review, this study concludes that, even in an era of global market integration and disruptive technological advancements, many important aspects of this subject remain significantly underexplored. Over the past two decades, research has lagged behind the evolution of capital market crime and market regulations. Finally, based on the findings, the study suggests important future research directions as well as a few research questions. This includes market manipulation, market regulations and new-age technologies, all of which could be very useful to researchers in this field and generate key inputs for stock market regulators.
Research limitations/implications
The limitation of this research is that it is based on Scopus database so the possibility of omission of some literature cannot be completely ruled out. More advanced machine learning techniques could be applied to decode the finer aspects of the studies undertaken so far.
Practical implications
Increased integration among global markets, fast-paced technological disruptions and complexity of financial crimes in stock markets have put immense pressure on market regulators. As economies and equity markets evolve, good research investigations can aid in a better understanding of market manipulation and regulatory compliance. The proposed research directions will be very useful to researchers in this field as well as generate key inputs for stock market regulators to deal with market misbehavior.
Originality/value
This study has adopted a period-wise broad-based scientific approach to identify some of the most pertinent gaps in the subject and has proposed practical areas of study to strengthen the literature in the said field.
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This paper aims to investigate the implications of governance quality on a firm’s information environment in the context of voluntary changes in hedging disclosures made by oil…
Abstract
Purpose
This paper aims to investigate the implications of governance quality on a firm’s information environment in the context of voluntary changes in hedging disclosures made by oil and gas companies.
Design/methodology/approach
The research utilizes a Factiva-guided search to hand-collect public disclosures related to changes in hedging policies along with the hand collection of financial derivatives positions and operational hedging contracts data using 10-K filings. The paper addresses self-selection bias, which typically plagues voluntary disclosure studies, by implementing a Heckman (1979) two-step model to estimate the decision process, make changes in their hedge program and, conditional on making changes to their hedging activities, provide disclosure.
Findings
Oil and gas firms with relatively poor governance are more likely to voluntarily disclose hedging changes and do so more frequently (substitution hypothesis). There is evidence that poorly governed firms in the presence of large shareholders (i.e. high institutional ownership) are more likely to provide transparency of hedging policy changes.
Originality/value
This is the first study to combine hand-collected changes in hedging voluntary disclosures and hand-collected derivative position data to investigate the interaction of corporate governance and voluntary disclosure. The sample allows for analysis between three sub-samples: companies that do not make changes in hedging and do not hedge, firms that make changes in their hedging policies but do not disclose the changes during a given year and companies that change their hedging activities and provide voluntary disclosure. This unique setting helps to alleviate concerns of self-selection bias associated with voluntary disclosure.