Research Seminars

TBD

Accounting & Management Control

Speaker: Paul Pronobis
ESCP Europe Business School

19 October 2018 - HEC Paris - Room T004 - From 2:00 pm to 4:00 pm


TBD

Accounting & Management Control

Speaker: Kalle Kraus
Stockholm School of Economics

14 September 2018 - HEC Paris - Room T004 - From 2:00 pm to 4:00 pm


Disclosure and Financing Choice: PIPEs vs. SEOs

Accounting & Management Control

Speaker: Shiva Sivaramakrishnan
Rice University

15 June 2018 - HEC Paris - Room X120 - From 2:00 pm to 4:00 pm


Firms in competitive industries have natural incentives to avoid wide dissemination of proprietary information. We test this proprietary cost hypothesis (PCH) by examining the impact of corporate disclosure policy on a firm’s equity financing choice between Private Investments in Public Equity (PIPEs) and Seasoned Equity Offerings (SEOs). PIPEs offer firms a way to share proprietary information privately with a small group of investors. We employ several concentration and competition constructs to proxy for proprietary costs, but fail to find support to this hypothesis. Consistent with the literature, our results indicate that an “urgent need for cash” explains firms’ choice of PIPEs over SEOs. We also find that firms that choose SEOs over PIPEs are characterized by higher holdings by dedicated institutions, transient institutions and quasi-indexers. However, the PCH does not receive support even after controlling for these other determinants of the financing choice. Finally, we estimate a two-stage endogenous treatment-effect model to explain discounts associated with PIPEs and SEOs. Preliminary results indicate that discounts are lower when unobservables (e.g., private information) seem to influence the choice of PIPE over SEO.

Parent−Subsidiary Common Managers and Corporate Tax Planning

Accounting & Management Control

Speaker: Xin Wang
Hong Kong University

8 June 2018 - HEC Paris - Room T004 - From 2:00 pm to 4:00 pm


As an interesting but neglected governance mechanism of a firm’s subsidiaries, corporate headquarters managers often take a position in significant subsidiaries (“parent-subsidiary common manager” hereafter), either as the board member or the operations manager. These parent-subsidiary common managers have direct access to divisional information and, therefore, possess greater knowledge useful for them to identify tax opportunities and coordinate tax-motivated activities across business units. Using senior executives’ subsidiary positions disclosed in Chinese listed firms’ annual reports, we examine the impact of parent-subsidiary common managers on corporate tax planning and find a lower effective income tax rate for firms appointing common managers. Additional analyses show that the tax-avoiding effect of common managers is more pronounced for firms with more intangible assets, more related-party transactions involving subsidiaries, and more diversified business. Moreover, we find stronger effects for those common managers who take a position in economically significant subsidiaries or subsidiaries entitled to preferential tax treatments. The effect is also stronger when common managers work as operations managers of the subsidiaries. Collectively, our study is the first to analyze the appointment of parent-subsidiary common managers and to show the impact of such an appointment on corporate decisions.

Accounting for tacit coordination

Accounting & Management Control

Speaker: Hendrik Vollmer
University of Leicester

25 May 2018 - HEC Paris - Room T020 - From 2:00 pm to 4:00 pm


Tacit coordination is a pervasive aspect of accounting practice. This paper teases out insights on tacit coordination from existing scholarship, starting with studies of everyday life accounting, then turning to professional practice. It develops an understanding that, in the application of rules and accounting standards, in producing, framing, auditing and using statements, records, apologies or excuses, accounting practitioners tacitly coordinate towards the passing of accounts. This passing can be articulated in terms of structures, agencies and processes of tacit coordination involved in making accounting happen. The implications of this understanding of accounting practice and the importance of the wider domain of enquiry it is indicating are discussed with respect to the stewardship position of accounting professionals and to the further development of accounting theory. The paper identifies a need for broad-based forms of accounting theory to support accounting practitioners in the stewardship of silence and provide an antidote against the idea that any account, any slice of information, or any amount of ‘big data’, could speak for itself – or that it should.

“Processing the Future: Venture Project Evaluation at the American Research and Development Corporation (1946–1973)”

Accounting & Management Control

Speaker: Martin Giraudeau
LSE/Sci. Po

4 May 2018 - HEC Paris - Room T025 - From 2:00 pm to 4:00 pm


This chapter is an analysis of the project appraisal procedures in place at American Research and Development Corporation (ARD) between 1946 and 1973, under the management of Georges F. Doriot. It shows the importance of knowledge technologies and administrative procedures in the way the venture capital company dealt with uncertain futures. The origins of these knowledge practices are traced back to Georges F. Doriot’s own views on business, and more generally to the pragmatist movement in business administration, of which he was a member. The conduct of project appraisal at ARD is then observed directly, and this reveals its reliance on a rich set of knowledge and diagnostic techniques, as well as administrative procedures. These observations allow for a specification of the nature and role of imagination in the entrepreneurship and venture capital practices examined here—in particular, its close relationship with organized knowledge.

“States of Mind: the many forms of government influence on the Accounting Profession in China”

Accounting & Management Control

Speaker: Crawford Spence
King’s College London

20 April 2018 - HEC Paris - T004 - From 2:00 pm to 4:00 pm


Literature examining dynamics between the State and the Accounting Profession is well established and points towards the crucial interrelations between the two. However, this literature evinces an occidental orientation, privileging the notion of a State characterised by self-limiting, liberal ideology and that is captured by dominant interests. An extension of this view portrays professional bodies as largely autonomous from State structures and effectively avatars for said dominant interests. This paper starts from the premise that studying State-Profession dynamics in China has the potential to invigorate this literature given the non-liberal, expansive nature of the Chinese State and the situation of a professional body that is effectively under the tutelage of the Ministry of Finance. Drawing on archival analysis and interviews with over 60 regulators, State actors, practitioners in local and foreign firms in China, we show that the State successfully shapes the accounting profession by performing multiple roles: as field-maker, as regulator and as a consumer of accounting services. Accounting firms, in turn, need to develop variable strategies in order to successfully position themselves in the face of this complexity. Conceptually, this permits us to demonstrate that the State is a deep rooted cultural phenomenon existing in the cognitive structures of key actors in the accounting field in China, thereby drawing attention to further reaching forms of State influence than have hitherto been recognised in extant literature analysing State-Profession dynamics.

Strategic trading at the preopening after earnings announcements

Accounting & Management Control

Speaker: Shai Levi
Tel Aviv University

23 March 2018 - HEC Paris - Room T004 - From 2:00 pm to 4:00 pm


Prior literature finds the price adjustment after earnings announcements is not immediate. This paper shows that informed investors act strategically to prevent their information from immediately affecting prices after announcements. Specifically, we examine the price discovery at the preopening auction after earning announcements. We show that traders place more orders at the end of the preopening after earnings announcements, a behavior that reduces the market’s ability to learn their information, and we find they profit from these late orders.

Managerial Power and CEO Pay

Accounting & Management Control

Speaker: Robert F Göx
University of Zurich

16 March 2018 - HEC Paris - Room T004 - From 2:00 pm to 4:00 pm


We study the consequences of the CEO’s power over the board of directors in the context of a standard agency model. Our results indicate that a CEO-friendly board affects the structure of the optimal compensation contract in a more subtle way than suggested by the managerial power approach. First, we find that the optimal compensation level is not an increasing function of the CEO’s power. According to our analysis, a friendly board generally raises CEO pay for low performance levels but reduces it for high performance levels. Second, we find that the pay-performance sensitivity (PPS) typically varies with the firm’s performance. Third, we identify conditions for which the optimal contract implemented by a friendly board exhibits a higher PPS than the contract that maximizes the utility of shareholders. As a special case of the general model, we derive an optimal quadratic contract. In this setting, a more friendly board always proposes a contract with a higher salary, more stocks, and the same number of options. In an extension of our base model, we examine how a friendly board affects the optimal use and the rules for aggregating multiple performance measures into a single performance index. While we find that both decisions are generally not affected by the friendliness of the board, we identify conditions under which the sensitivity of CEO pay-to-peer-performance is increasing in the CEO’s power over the board. Overall, our results suggest that neither high pay levels nor the magnitude of the sensitivities of the CEO’s pay to the firm’s own performance or the performance of its peers can be taken as indicators for or against the soundness of firms’ compensation practices without relating these measures to the realized values of the performance measures used in the optimal compensation contract.

Societal Trust and Corporate Tax Avoidance

Accounting & Management Control

Speaker: Kiridaran Kanagaretnam
Schulich School of Business

14 March 2018 - HEC Paris - Room T004 - From 2:00 pm to 4:00 pm


Using an international sample of firms from 25 countries and a country-level index for societal trust, we document strong evidence that societal trust is negatively associated with tax avoidance, even after controlling for other institutional determinants such as home country legal institutions, capital market development, and tax system characteristics. We then explore the effects of two country-level institutional characteristics – strength of legal institutions and capital market pressure – on the relation between societal trust and tax avoidance. We predict and find that the relation between trust and tax avoidance is more pronounced when the legal institutions in a country are weaker and the capital market pressure is stronger. Finally, we examine the relation between societal trust and tax evasion. We show that societal trust is negatively related to tax evasion, an extreme and illegal form of tax avoidance, and the negative relation is more pronounced when the legal institutions are weaker.


JavaScriptSettings