Fiduciary or loyalty? Evidence from top management counsel and stock liquidity

Michael, Michael; Ali, Muhammad Jahangir; Atawnah, Nader; Muniandy, Balachandran

doi:10.1016/j.gfj.2022.100709

Cited by 14 publications

(6 citation statements)

References 70 publications

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“…To address this concern, we conduct additional robustness checks. First, we follow Michael et al (2022) and use a propensity score matching (PSM) sample. Specifically, we define a treatment (control) firm as one located above (below) the median gambling culture in a province.…”

Section: Resultsmentioning

confidence: 99%

Gambling culture and internal control extensiveness

Tan,

Gao,

Chan

2023

Financ Manag Account

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While cultural traits in a firm's location impact corporate operation, the role of local cultures on a firm's internal control effectiveness (ICE) remains unclear. Using data from a sample of Chinese firms from 2009 to 2019, we examine how the gambling culture in Chinese provinces where firms are located impacts the firms' ICE. We use per capita lottery sales of the provinces to proxy for gambling culture in China and find that firms raise their ICE in environments with strong gambling cultures. The results are robust to five components of ICE (control environment, risk assessment, control activity, information and communication, and internal monitoring), alternative metrics of gambling metrics, and after accounting for endogeneity. A mediating analysis also shows that firms in regions with a strong gambling culture engage in risky activities, which increases their ICE. Additional analyses suggest that the effect is more salient for firms with poor internal corporate governance, firms located in poor legal environments, firms with poor audit quality, or firms with more local external stakeholders, echoing that ICE and monitoring are partial substitutes.

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Section: Resultsmentioning

confidence: 99%

Gambling culture and internal control extensiveness

Tan,

Gao,

Chan

2023

Financ Manag Account

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“…The dependent variable in the current study is SL. Most prior studies employed the Amihud illiquidity measure (2002) to estimate SL (e.g., Bazrafshan et al, 2021;Khan et al, 2022;Abidi and Nsaibi, 2022;Michael et al, 2022) because it is strongly associated with the high-frequency price impact benchmark, allows a better understanding of liquidity premium, and the simplicity of its construction (Lou and Shu, 2017). This measure can be illustrated by the ratio of the absolute stock return to the trading volume of the stock as follows (Amihud, 2002): Where ILLIQiy refers to the value of stock illiquidity for a firm (i), on a day (d), and a year (y).…”

Section: Variables Descriptionmentioning

confidence: 99%

“…Additionally, we use six control variables (firm size, financial leverage, firm age, earnings per share, market-to-book ratio, and audit firm size) which can be probably associated with SL (Bazrafshan et al, 2021;Michael et al, 2022;Khan et al, 2022;Abidi and Nsaibi, 2022). Firm size is estimated by the natural logarithm of total assets, financial leverage is measured by total liabilities divided by total assets, firm age is the natural logarithm of the number of years from the year of incorporation, earnings per share is calculated by net income divided by total shares outstanding, the market-to-book ratio is measured by dividing the market value of equity by the book value of equity, and audit firm size is calculated by a dummy variable that matches one when the auditor is a Big 4 firm and zero otherwise.…”

Section: Variables Descriptionmentioning

confidence: 99%

How Does Gender Diversity Moderate the Relationship between Income Smoothing and Stock Liquidity? Evidence from Egypt

Elsayed

Srour

Elsayed

2023

المجلة العلمیة للدراسات والبحوث المالیة والتجاریة

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Purpose -The study seeks to examine the impact of income smoothing (IS) on stock liquidity (SL). Further, it investigates the moderating impact of gender diversity (GD) which is represented by board gender diversity (BGD), and audit committee gender diversity (ACGD) in this relationship.Design/methodology/approach -The study relies on a quantitative research method to assess the impact of IS on SL and then the moderating impact of GD in (62) Egyptian firms from 2018 to 2021. Panel Data regression analysis and the Kruskal-Wallis's test are run to test the hypotheses. Findings -The results conclude a significant negative impact of IS on SL. Moreover, this relationship is enhanced by GD where BGD and BGD×ACGD weakens the negative impact of IS on SL. Also, the study demonstrates significant differences among Egyptian Stock Exchange (ESE) sectors regarding IS, besides, there are insignificant differences regarding SL.Originality/value -This study expands the extant literature by providing novel empirical evidence about the moderating impact of GD on the IS-SL relationship. The study is in line with the growing universal interest in increasing females' participation in boardrooms. Also, the focus of this study is Egypt which has cultural practices and traditional customs toward women. Moreover, the study supports the decisions of regulatory bodies in Egypt to raise the participation of women.

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“…As such, providing evidence that local gambling is related to higher risk-taking vis-à-vis earnings volatility is essential to the story of a positive effect of local gambling preference on earnings management. We follow Michael et al (2022) and use firm earnings volatility as the standard deviation of prior fiveyear return on equity (ROE), to test this prediction. The results in column ( 4) of Table 7 show that local gambling preference positively and significantly affects earnings volatility.…”

Section: Gambling Preferences Earnings Volatility and Earnings Manage...mentioning

confidence: 99%