Asymmetric Reactions of Abnormal Audit Fees Jump to Credit Rating Changes
June Cao, Mong Shan Ee, Iftekhar Hasan, He Huang
British Accounting Review,
im Erscheinen
Abstract
Considering the inherent stickiness of abnormal audit fees, our study contributes to the literature by decomposing abnormal audit fees into a jump component and long-run sticky component. We investigate whether and how changes in credit ratings asymmetrically affect the jump component of abnormal audit fees. We document a positive association between rating downgrades and the jump component. We find that heightened bankruptcy risk and misstatement risk are the mechanisms that drive this relationship. Further analysis shows that firms experiencing rating downgrades are more likely to receive a going concern opinion and experience longer audit report lags. Taken together, our findings provide direct evidence that credit ratings are significantly associated with abnormal audit fees, particularly with the jump component. Given the serial correlation of abnormal audit fees, our study sheds light on the importance of disaggregation of the abnormal audit fee residuals into the jump and long-run sticky components.
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The Labor Effects of Judicial Bias in Bankruptcy
Aloisio Araujo, Rafael Ferreira, Spyridon Lagaras, Flavio Moraes, Jacopo Ponticelli, Margarita Tsoutsoura
Journal of Financial Economics,
Nr. 2,
2023
Abstract
We study the effect of judicial bias favoring firm continuation in bankruptcy on the labor market outcomes of employees by exploiting the random assignment of cases across courts in the State of São Paulo in Brazil. Employees of firms assigned to courts that favor firm continuation are more likely to stay with their employer, but they earn, on average, lower wages three to five years after bankruptcy. We discuss several potential mechanisms that can rationalize this result, and provide evidence that imperfect information about outside options in the local labor market and adjustment costs associated with job change play an important role.
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05.04.2023 • 9/2023
Ostdeutsche Wirtschaft bisher gut durch Energiekrise gekommen – Implikationen der Gemeinschaftsdiagnose Frühjahr 2023 und amtlicher Länderdaten für die ostdeutsche Wirtschaft
Im Jahr 2022 hat die ostdeutsche Wirtschaft mit 3,0% deutlich stärker expandiert als die Wirtschaft in Westdeutschland (1,5%). Hintergrund ist eine robustere Entwicklung der Arbeitnehmer- und Rentnereinkommen. Auch für das Jahr 2023 prognostiziert das Leibniz-Institut für Wirtschaftsforschung Halle (IWH) deshalb mit 1% eine höhere Zuwachsrate des Bruttoinlandsprodukts in Ostdeutschland als in Deutschland insgesamt (0,3%). Die Arbeitslosenquote dürfte mit 6,8% im Jahr 2023 und 6,7% im Jahr darauf in etwa stagnieren.
Oliver Holtemöller
Pressemitteilung lesen
Corporate Culture and Firm Value: Evidence from Crisis
Yiwei Fang, Franco Fiordelisi, Iftekhar Hasan, Woon Sau Leung, Gabriel Wong
Journal of Banking and Finance,
January
2023
Abstract
Based on the Competing Values Framework (CVF), we score 10-K text to measure company culture in four types (collaborative, controlling, competitive, and creative) and examine its role in firm stability. We find that firms with higher controlling culture fared significantly better during the 2008–09 crisis. Firms with stronger controlling culture experienced fewer layoffs, less negative asset growth, greater debt issuance, and increased access to credit-line facilities during the crisis. The positive effect of the controlling culture is stronger among the financially-constrained firms. Overall, the controlling culture improves firm stability through greater support from capital providers.
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Financial Linkages and Sectoral Business Cycle Synchronization: Evidence from Europe
Hannes Böhm, Julia Schaumburg, Lena Tonzer
IMF Economic Review,
December
2022
Abstract
We analyze whether financial integration leads to converging or diverging business cycles using a dynamic spatial model. Our model allows for contemporaneous spillovers of shocks to GDP growth between countries that are financially integrated and delivers a scalar measure of the spillover intensity at each point in time. For a financial network of ten European countries from 1996 to 2017, we find that the spillover effects are positive on average and much larger during periods of financial stress, pointing towards stronger business cycle synchronization. Dismantling GDP growth into value added growth of ten major industries, we observe that spillover intensities vary significantly. The findings are robust to a variety of alternative model specifications.
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