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Three essays on CEO career concerns, management forecasts, and regulatory scrutiny on disclosure practices
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Title
Three essays on CEO career concerns, management forecasts, and regulatory scrutiny on disclosure practices
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Ding
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Kexing
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1992-
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Kexing Ding
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Jaggi
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Bikki
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Bikki Jaggi
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Advisory Committee
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chair
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Zhang
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Li
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Li Zhang
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internal member
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Sarath
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Bharat
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Bharat Sarath
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Lee
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Picheng
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Picheng Lee
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Rutgers University
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Graduate School - Newark
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theses
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2019
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2019-05
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2019
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English
Abstract
The dissertation consists of three independent and interrelated essays focusing on CEO career concerns, management forecast characteristics, and regulatory scrutiny on disclosure practices.
The first essay argues that CEOs with career concerns may use a forecast precision strategy to highlight or obfuscate information disclosed in management forecasts. This study suggests that new CEOs are more likely to increase forecast precision when the underlying forecast news is more positive and reduce forecast precision when the news is more negative. Further, the findings suggest that CEOs especially use this approach when the career concern problem is more severe and when there are more opportunities for strategic disclosures.
The second essay investigates the changes in firms’ voluntary disclosure of forward-looking information after receiving critical comment letters issued by the Securities and Exchange Commission. The study focuses on revenue recognition comment letters and analyzes several management forecast characteristics. I find that firms tend to issue more management forecasts and supplement earnings forecasts with disaggregated forecasts on other line-items, especially the forecasts for revenue account. I also find that the effect is stronger for negative news forecasts and market reactions to the comment letter release are attenuated if managers provide more frequent and transparent forecasts.
The third essay evaluates the impact of Securities and Exchange Commission disclosure scrutiny on corporate hedging activities. I find that firms’ risk exposures decrease after receiving derivatives-related comment letters, possibly indicating hedging efficiency improvements. Further, derivatives comment letter receiver firms are more likely to stop or reduce derivatives usage during the post-letter period. The study adds to the research that examines how SEC regulatory scrutiny on disclosure practices may influence firms' real behaviors.
The first and the second essays respond to the call by Hirst et al. (2008) to extend research on the management forecast attributes. The first essay is also related to the literature that examines the impact of career concerns on managerial behaviors. The second and third essays add to the comment letter literature. I extend the growing research that examines the efficacy of the SEC comment letter review process and its impact on the information environment.
The first essay argues that CEOs with career concerns may use a forecast precision strategy to highlight or obfuscate information disclosed in management forecasts. This study suggests that new CEOs are more likely to increase forecast precision when the underlying forecast news is more positive and reduce forecast precision when the news is more negative. Further, the findings suggest that CEOs especially use this approach when the career concern problem is more severe and when there are more opportunities for strategic disclosures.
The second essay investigates the changes in firms’ voluntary disclosure of forward-looking information after receiving critical comment letters issued by the Securities and Exchange Commission. The study focuses on revenue recognition comment letters and analyzes several management forecast characteristics. I find that firms tend to issue more management forecasts and supplement earnings forecasts with disaggregated forecasts on other line-items, especially the forecasts for revenue account. I also find that the effect is stronger for negative news forecasts and market reactions to the comment letter release are attenuated if managers provide more frequent and transparent forecasts.
The third essay evaluates the impact of Securities and Exchange Commission disclosure scrutiny on corporate hedging activities. I find that firms’ risk exposures decrease after receiving derivatives-related comment letters, possibly indicating hedging efficiency improvements. Further, derivatives comment letter receiver firms are more likely to stop or reduce derivatives usage during the post-letter period. The study adds to the research that examines how SEC regulatory scrutiny on disclosure practices may influence firms' real behaviors.
The first and the second essays respond to the call by Hirst et al. (2008) to extend research on the management forecast attributes. The first essay is also related to the literature that examines the impact of career concerns on managerial behaviors. The second and third essays add to the comment letter literature. I extend the growing research that examines the efficacy of the SEC comment letter review process and its impact on the information environment.
Subject
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Management forecast characteristics
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Management
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Chief executive officers
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Topic
Hedging (Finance) -- Law and legislation
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Rutgers University Electronic Theses and Dissertations
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Graduate School - Newark Electronic Theses and Dissertations
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rucore10002600001
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ETD_9701
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doi:10.7282/t3-fvcc-b260
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1 online resource (viii, 96 pages)
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Ph.D.
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Includes bibliographical references
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ETD doctoral
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Ding
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Kexing
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2019-04-11 09:52:38
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KEXING DING
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Rutgers University. Graduate School - Newark
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Author Agreement License
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I hereby grant to the Rutgers University Libraries and to my school the non-exclusive right to archive, reproduce and distribute my thesis or dissertation, in whole or in part, and/or my abstract, in whole or in part, in and from an electronic format, subject to the release date subsequently stipulated in this submittal form and approved by my school. I represent and stipulate that the thesis or dissertation and its abstract are my original work, that they do not infringe or violate any rights of others, and that I make these grants as the sole owner of the rights to my thesis or dissertation and its abstract. I represent that I have obtained written permissions, when necessary, from the owner(s) of each third party copyrighted matter to be included in my thesis or dissertation and will supply copies of such upon request by my school. I acknowledge that RU ETD and my school will not distribute my thesis or dissertation or its abstract if, in their reasonable judgment, they believe all such rights have not been secured. I acknowledge that I retain ownership rights to the copyright of my work. I also retain the right to use all or part of this thesis or dissertation in future works, such as articles or books.
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2019-11-30
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Access to this PDF has been restricted at the author's request. It will be publicly available after November 30th, 2019.
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Open
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Permission or license
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