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Article
Publication date: 17 July 2020

Suwongrat Papangkorn, Pattanaporn Chatjuthamard, Pornsit Jiraporn and Piyachart Phiromswad

This study aims to examine whether co-opted directors influence analysts’ recommendations. As information intermediaries, financial analysts should incorporate the quality of…

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Abstract

Purpose

This study aims to examine whether co-opted directors influence analysts’ recommendations. As information intermediaries, financial analysts should incorporate the quality of corporate governance into their valuation because well-governed firms are associated with lower agency costs and better performance. Co-opted directors are those appointed after the incumbent chief executive officer assumes office. The authors investigate whether board co-option has an effect on analyst recommendations.

Design/methodology/approach

The present study uses univariate analysis, multi-variate regression analysis and conduct a natural experiment using the Sarbanes-Oxley as an exogenous shock.

Findings

The results show that firms with fewer co-opted directors tend to receive more favorable recommendations, suggesting that analysts favor firms with strong corporate governance. The results hold even after controlling for various firm characteristics, including the traditional measures of board quality, i.e. board size and independent directors.

Originality/value

The paper is the first of its kind and offers evidence on the effect of co-opted directors on analyst recommendations. The results contribute to the literature both in corporate governance and in financial intermediaries, where analysts play a crucial role in providing information to the various participants in financial markets.

Details

Corporate Governance: The International Journal of Business in Society, vol. 20 no. 6
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 12 December 2023

Pattanaporn Chatjuthamard, Suwongrat Papangkorn, Pornsit Jiraporn and Piyachart Phiromswad

The purpose of this study is to shed light on the impact of economic policy uncertainty (EPU) on asset redeployability. Capitalizing on a novel measure of asset redeployability…

154

Abstract

Purpose

The purpose of this study is to shed light on the impact of economic policy uncertainty (EPU) on asset redeployability. Capitalizing on a novel measure of asset redeployability, the authors explore the effect of economic policy uncertainty (EPU) on redeployable assets using a unique text-based measure of EPU. Asset redeployability is an important aspect of sustainability that has been largely overlooked. More redeployable assets can be repurposed for a variety of uses, lessening the necessity for new products and thus conserving natural resources.

Design/methodology/approach

In addition to the standard regression analysis, the authors execute a variety of robustness checks, i.e. propensity score matching, entropy balancing, instrumental-variable analysis, GMM dynamic panel data analysis and use Oster’s (2019) approach for testing coefficient stability. Importantly, the authors incorporate firm fixed effects in the analysis, which helps mitigate endogeneity due to unobservable firm characteristics.

Findings

Based on an immense sample of over 200,000 observations over three decades, the results reveal that greater uncertainty raises asset redeployability significantly. The findings corroborate the managerial prudence hypothesis. The future deployment of assets is less predictable in times of increased uncertainty. Consequently, during uncertain times, it is more prudent to have assets that can be redeployed for multiple purposes.

Originality/value

To the best of the authors’ knowledge, this is the first study to explore the impact of EPU on asset redeployability, which is a critical aspect of sustainability that has rarely been investigated in the literature. The authors fill this important void in the literature. The authors extend the literature in EPU, asset redeployability as well as sustainability.

Details

International Journal of Accounting & Information Management, vol. 32 no. 1
Type: Research Article
ISSN: 1834-7649

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