http://ac.els-cdn.com/S0378426615000497/1-s2.0-S0378426615000497-main.pdf?_tid=9ad2743e-e276-11e4-8bf7-00000aacb35e&acdnat=1428996156_eb8b1090d68c37bcad8b0b4a0d381fcb

Journal of Banking & Finance Volume 55, June 2015, Pages 92–106

Protection or expropriation: Politically connected independent directors in China 

Lihong Wang^, 

Abstract

This paper empirically investigates politically connected independent directors among Chinese listed firms using 7487 firm-year observations from the Shanghai stock exchange during the period of 2003–2012. We distinguish between privately controlled firms and state-controlled firms. We find that the value effect and incentives of appointing independent directors with political ties are shaped by a firm’s ownership structure. More exactly, Chinese listed privately controlled firms with a large fraction of politically connected independent directors tend to outperform their non-connected counterparts, due to the ease of access to external debt financing and more subsidies from the government. However, the appointment of politically connected independent directors also enlarges the magnitude of related-party transactions with the controlling party in listed privately controlled firms. In contrast, having politicians as independent directors does not help to add value to listed state-controlled firms, especially firms controlled by the local government, due to the expropriation of minority investors via more related-party transactions and more severe over-investment problems.

http://ac.els-cdn.com/S0165410115000312/1-s2.0-S0165410115000312-main.pdf?_tid=7b0c6c92-e274-11e4-b145-00000aacb35e&acdnat=1428995243_88868503ca92042acd1d3c8e73351d13

Journal of Accounting and Economics Volume 60, Issue 1, August 2015, Pages 36–55

Market (in)attention and the strategic scheduling and timing of earnings announcements 

Ed deHaan^a, , Terry Shevlin^b, , ,  Jacob Thornock^c, 

Abstract

We investigate whether managers “hide” bad news by announcing earnings during periods of low attention, or by providing less forewarning of an upcoming earnings announcement. Our findings are consistent with managers reporting bad news after market hours, on busy days, and with less advance notice, and with earnings receiving less attention in these settings. Paradoxically, our findings indicate that managers also report bad news on Fridays, but we do not find lower attention on Fridays. Further, we find negative returns when the market is notified of an upcoming Friday earnings announcement, which is consistent with investors inferring forthcoming bad news.

http://ehis.ebscohost.com.libproxy.smu.edu.sg/ehost/pdfviewer/pdfviewer?sid=6ebe14f1-cd81-4fe9-98dd-ea04e99cae6b%40sessionmgr113&vid=0&hid=108

Does Internal Audit Function Quality Deter Management Misconduct?

Ege, Matthew S.¹

Accounting Review. Mar2015, Vol. 90 Issue 2, p495-527. 33p. 7 Charts.

Abstract:

Standard-setters believe high-quality internal audit functions (IAFs) serve as a key resource to audit committees for monitoring senior management. However, regulators do not enforce IAF quality or require disclosures relating to IAF quality, which is in stark contrast to regulatory requirements placed on boards, audit committees, and external auditors. Using proprietary data, I find that a composite measure of IAF quality is negatively associated with the likelihood of management misconduct even after controlling for board, audit committee, and external auditor quality. This result is robust to a variety of other specifications, including controlling for internal control quality and separate estimation during the pre- and post-SOX time periods. A difference-indifferences analysis indicates that misconduct firms have low IAF quality and competence during misconduct years and improve IAF quality and competence in the post-misconduct years. These findings suggest that regulators, audit committees, and other stakeholders should consider ways to improve IAF quality