17. - 20. März 2020 in Frankfurt am Main | 18. März Digital Day
Eine Übersicht aller Sessions/Sitzungen dieser Tagung.
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|Ort: Virtueller Raum 5|
|Datum: Dienstag, 17.03.2020|
|12:30 - 14:00||ORG2|
Chair der Sitzung: Blagoy Blagoev, Leuphana Universität Lüneburg
|Virtueller Raum 5|
The nexus between standards and innovation – an explanation of contradictory results through the concept of social agency
1Linköping University, Schweden; 2Friedrich Schiller University Jena, Germany; 3Tshwane University of Technology, Pretoria, South Africa
The paper connects to previous studies on the standard-innovation nexus and the question how standards affect innovation in organizations. These studies address, for instance, standards from the ISO 9000 series and ask how their implementation affects product innovation. Summarized on can say that they show contradictory results and point to either enabling or constraining effects of standards on innovation. We suppose that it is misleading to search for a universal explanation of how standards affect innovation and argue that this might be a ‘blind alley’. Therefore, we analyze the microfoundations of the standard-innovation nexus in this paper and focus on the relationship between standards and innovation as dependent on its specific organizational context. Further, we suggest an agentic turn when investigating the standard-innovation nexus and refer to the concept of social agency. We compare agentic orientations towards the standard-innovation nexus in three organizations and show how the concept of social agency helps to understand earlier conflicting findings. All three cases point to different agentic orientations regarding the standard-innovation nexus. It turns out that organizational members have a much greater leeway to enact standards than assumed in standardization research so far. Future research should therefore further investigate the varieties of agentic orientations regarding the standard-innovation nexus and should develop e.g. typologies rather than seeking a universal answer.
The Dynamics of Prioritizing: Person-Roles, Routines, and the Emergence of Temporal Coordination in Complex Work Settings
1Radboud Universität Nijmegen, Niederlande; 2Leuphana Universität Lüneburg, Deutschland
This paper examines the emergence of temporal coordination among multiple interdependent routines in a complex work setting that did not allow for up-front scheduling. We propose that when actors continuously have to juggle their expected contributions to multiple interdependent routines, they will address this challenge by orienting not just towards routines, but also towards two additional types of patterns: person-roles and time-use patterns. Drawing on an ethnographic study of a consulting project team faced with continued scheduling failures, we demonstrate how the dynamics of prioritizing enabled the actors to resolve what in the beginning appeared to be an essentially irresolvable and highly complex problem of temporal coordination. We add to the literature on routine dynamics and temporality, by setting forth the dynamics of prioritizing as a so far unrecognized explanation for the temporal patterning of complex work settings. We introduce the notion of role routine ecologies as a novel way to conceptualize such complex work settings and contribute to developing a performative theory of person-roles and their significance for coordinating.
|Datum: Mittwoch, 18.03.2020|
|9:00 - 10:30||Digital Day: Consumer Privacy on the Internet|
Lennart Kraft (Goethe Universität Frankfurt): Privacy and the Prevalence of Inconsistencies in Third-Party Consumer Profiling
|Virtueller Raum 5|
|10:45 - 12:15||WI1: Organization and processes of digital transformation|
Chair der Sitzung: Rainer Alt, Universität Leipzig
|Virtueller Raum 5|
Crowdworking Platforms in Germany: Business Insights from a Study & Implications for Society
1Universität Kassel, Deutschland; 2Universität St.Gallen, Schweiz
The competitiveness of organizations and whole economies depends on how successfully they are able to cope with the digital transformation and new technological trends. In the area of digital work, crowdworking platforms emerged as intermediaries that support a new form of service delivery and work organization. Despite their increasing importance, there is only few data about key characteristics of such platforms such as number of employees or revenues. Furthermore, extant data often focusses only on a few platforms, mostly from the US. Based on results from a study about the 32 crowdworking platforms that have their headquarters or a physical location in Germany, we provide data that for the first time allows to draw conclusions for the “total population” of crowdworking platforms in a defined larger region (Germany as Europe’s largest and the world fourth largest economy). These results are valuable for various stakeholders from economy and politics, allowing them to make economic or political decisions on a more informed basis. Furthermore, we develop an evaluation framework that depicts the implications for these groups along the dimensions costs, flexibility, “humanity”, quality, and time: Crowdworking platforms on the one hand provide several opportunities: Individuals gain more flexibility, groups can benefit from additional contributors, organizations have the potential to process work faster and cheaper. On the other hand, this novel form of work organization also includes potential threats for all groups: Low payments and ‘tayloristic’ work, insufficient quality or irritation of internal employees. Based on 12 interviews with company representatives and crowdworkers, we evaluate implications of this novel form of work organization for society.
More Self-Organization, More Control – Or Even Both? Inverse Transparency As A New Digital Leadership Concept
The rise of digital technologies leads to vast amounts of data inside companies. Moreover, they facilitate the analysis and processing of data, leading to an increase in organizational transparency. While the use of data to innovate firms’ business models or to increase processes’ efficiency have been investigated by many contributions, research on the use of employees’ data for innovative leadership is sparsely available. Traditional leadership theories fall short in explaining the influence of digitalization and increasing transparency. In a digitized world, managers often face a dilemma as they are trying to use data for management purposes. On the one hand, transparency leads to decreasing information asymmetries, allowing the manager to monitor the employees’ actions at low cost. On the other hand, employees demand for self-organization and empowerment. Thus, multiple tensions arise when leadership and transparency are combined.
With our conceptual paper, we aim to provide a solution for using transparency in leadership in a mutual beneficial and sustainable way by introducing the concept of “inverse transparency”. The concept builds on existing literature on transparency and leadership. We enhance current research on innovative leadership approaches and create a theoretical basis for further research.
The General Data Protection Regulation in Financial Services Industries: How Do Companies Approach the Implementation of the GDPR and What Can We Learn From Their Approaches?
1Zurich University of Applied Sciences, Switzerland; 2University of St.Gallen, Switzerland; 3Massachusetts Institute of Technology, United States
This research study sets out to explore the General Data Protection Regulation in financial services industries grounded on the pivotal question: “How do companies approach to General Data Protection Regulation and what can we learn from their approaches?”. Regarding the former, a three-stage iterative and risk-based implementation approach was unveiled, regarding the latter, good practices for implementation at a strategy-, organization-, management-, process-, and technology-related level were identified. Notwithstanding the inherent limitations by the applied case study research at leading companies in finance and insurance business, it can be concluded that companies strive with the utmost effort to ensure compliance with the General Data Protection Regulation, yet there exists a gap between strategy and implementation.
|12:30 - 14:00||BA-FI1: Financial Intermediation: Portfolio Choice|
Chair der Sitzung: Raimond Maurer, Goethe Universität Frankfurt
|Virtueller Raum 5|
Dynamic Asset Allocation with Relative Wealth Concerns in Incomplete Markets
1Goethe Universiät; 2Universität Trier
In dynamic portfolio choice problems, stochastic state variables such as
stochastic volatility lead to adjustments of the optimal stock demand referred to
as hedge terms or Merton-Breeden terms. By deriving an explicit solution in a
multi-agent framework with a stochastic opportunity set, we show that relative
wealth concerns give rise to new hedge terms beyond the ordinary ones. This is
because the agents hedge against both exogenous changes in the state variable
and endogenous decisions of the other agent. Depending on the parametrization
of the model, these new terms can significantly change the investors’ hedging
demands. We also show that both heterogeneity in risk aversion or relative
wealth concerns can have similar effects on the heterogeneity in portfolio deci-
sions. Formally, we study a non-cooperative, non-zero sum stochastic differential
game for which we prove a verification theorem in a setting with an unspanned
Automated Portfolio Rebalancing: Automatic Erosion of Investment Performance?
Otto-Friedrich-Universität Bamberg, Deutschland
Robo-advisers enable investors to establish an automated rebalancing-strategy for a portfolio usually consisting of stocks and bonds. Since households’ portfolios additionally include further frequently tradable assets like real estate funds, articles of great value, and cash(-equivalents), we analyze whether households would benefit from a service that automatically rebalances a portfolio which additionally includes the latter assets. In contrast to previous studies, this paper relies on real-world household portfolios which are derived from the German central bank’s (Deutsche Bundesbank) Panel on Household Finances (PHF)-Survey. We compute the portfolio performance increase/decrease that households would have achieved by employing rebalancing strategies instead of a buy-and-hold strategy in the period from September 2010 to July 2015 and analyze whether subsamples of households with certain sociodemographic and socioeconomic characteristics would have benefited more from portfolio rebalancing than other household subsamples. The empirical analysis shows that the analyzed German households would not have benefited from an automated rebalancing service and that no subgroup of households would have significantly outperformed another subgroup in the presence of rebalancing strategies.
Implications of Money-Back Guarantees for Individual Retirement Accounts: Protection Then and Now
1Goethe University Frankfurt; 2Wharton School, University of Pennsylvania
In the wake of the financial crisis and continued volatility in international capital markets, there is growing interest in mechanisms that can protect people against retirement account volatility. This paper explores the consequences for savers’ wellbeing of implementing market-based retirement account guarantees, using a life cycle consumption and portfolio choice model where investors have access to stocks, bonds, and tax-qualified retirement accounts. We evaluate the case of German Riester plans adopted in 2002, an individual retirement account produce that includes embedded mandatory money-back guarantees. These guarantees influenced participant consumption, saving, and investment behavior in the higher interest rate environment of that era, and they have even larger impacts in a low-return world such as the present. Importantly, we conclude that abandoning these guarantees could enhance old-age consumption for over 80% of retirees, particularly lower earners, without harming consumption during the accumulation phase. Our results are of general interest for other countries implementing default investment options in individual retirement accounts, such as the U.S. 401(k) defined contribution plans and the Pan European Pension Product (PEPP) recently launched by the European Parliament.
|14:15 - 15:45||MARK: Digital Day: Consumer Behavior in the Digital Age|
|Virtueller Raum 5|
Providing Personal Information to the Benefit of Others
1Otto-von-Guericke-Universität Magdeburg, Deutschland; 2Universität zu Köln, Deutschland
The provision of personal information can create public benefits, e.g., reporting traffic jams to a radio station or sharing your health status to improve disease control. We experimentally study the willingness to provide personal information to an information-based public good and compare this to the provision of money to a public good. We find that the provision of information may – next to potentially explicit monetary provision costs – incur implicit (“emotional”) costs that make subjects reluctant to provide the information. This reluctance may lead to under-provision in information public goods compared to monetary provision.
Do Ads Harm News Consumption?
Goethe University Frankfurt, Germany
News are often bundled with ads, but how ads impact news consumption is understudied. Using 1.8 million anonymized browsing sessions from 76,348 users on a news website and the quasi-random variation created by ad blocker adoption, we find that not seeing ads leads to a 20% increase in the quantity and a 10% increase in the variety of news consumption. The increase persists over time and is largely driven by the increase consumption of hard news. Our findings open an important discussion on the suitability of advertising as a monetization model for valuable digital content.
Does Digital Transformation in B2B Sales Really Pay Off? – Contingent Effects of Sales Digital Maturity on Firm Performance
Ruhr-Universität Bochum, Deutschland
New digital technologies disrupt traditional business-to-business (B2B) sales processes and exert pressure on firms to evolve quickly. To cope, managers invest in the digitalization of their sales organizations, seeking to achieve digital maturity. However, whether and in which circumstances such investments in new, digital technologies pay off for B2B sales organizations and contribute to firm performance is not well understood. The current large-scale, cross-industry study with 719 B2B firms uses objective firm performance data and survey data from high-ranking key informants to identify the consequences of sales digital maturity for firm performance. The results indicate that digital maturity in B2B sales organizations increases firms’ financial performance on average, though this effect is strongly contingent. Positive effects are stronger when selling complexity is low and firms serve small rather than key accounts; sales digital maturity only marginally improves the performance of firms marked by high selling complexity. Overall, this article provides novel insights on the firm performance consequences of sales digitization at a macro organizational level.
|16:00 - 17:30||BA-FI2: Financial Intermediation: Credit Ratings and Financial Stability|
Chair der Sitzung: Matthias Horn, Otto-Friedrich-Universität Bamberg
|Virtueller Raum 5|
Losing funds, or losing face? Reputational and Accountability Mechanisms in the Credit Rating Industry
1Universität Liechtenstein, Liechtenstein; 2Universität Hamburg, Deutschland
The three major credit rating agencies Standard & Poor’s, Moody’s and Fitch all rely on an issuer-pays remuneration model. As a consequence, they are criticized for having a conflict of interest and assigning inflated ratings. This paper uses an experimental approach to evaluate whether reputational concerns can effectively discipline credit rating agencies and reduce rating inflation in a competitive environment. Our standard treatment represents a duopolistic rating agency market structure without further manipulations, while our experimental treatment features a reputation-based feedback system that allows investors to evaluate published reports. Although our results suggest that rating inflation occurs less frequently in such an environment, it still persists at some level. In a second step, we analyze how explicit accountability mechanisms (i.e. expectation to justify one’s actions to others) enhance this disciplining effect. We find that accountability in conjunction with reputation mechanisms effectively extinguish rating inflation. Furthermore, we explain how this decrease in rating inflation affects the issuer’s and investors’ decision-making. Finally, we discuss our results in the context of past academic research findings and their implications for regulatory practices.
Can CoCo-bonds Mitigate Systemic Risk?
Universität zu Köln, Deutschland
After the 2007 financial crises, the idea of contingent convertible (CoCo) capital was revived and manifold proposed as a means to stabilize individual banks, and hence the entire banking system. The purpose of this paper is to empirically test, whether CoCo-bonds indeed improve the stability of the banking system and reduce systemic risk. Using the broadly applied SRISK metric, we obtain contradicting results, based on the classification of the CoCo-bond as debt or equity. We remedy this short-coming by proposing an adjustment to the original SRISK formula that now correctly accounts for CoCo-bonds. Using empirical tests, we show that the undue disparity has been solved by our adjustment, and that CoCo-bonds reduce systemic risk.
|17:45 - 19:45||BA-FI3: Financial Intermediation: Banking|
Chair der Sitzung: Susanne Homölle, University of Rostock
|Virtueller Raum 5|
Relationship Lending and the Quality of Social Interactions: Evidence from Small Business Lending in Germany
1Ruhr-Universität Bochum, Deutschland; 2University of Applied Sciences Europe
This paper analyzes how the quality of social interactions shapes the benefits of lending relationships between SMEs and banks in the bank-based system of Germany. Using unique survey data of 715 SMEs from 2008 and 2012, we ﬁnd lending relationships built on high quality social interactions between the SME-management and a bank’s loan officer to have a positive impact on the SME’s financing conditions. Lending relationships based on high levels of perceived trust and satisfaction have lower cost of debt, an enhanced credit availability, more financing and lender choices, face lower collateral requirements and achieve better rating decisions, even when we explicitly control for information sharing of the SME. Furthermore, consistent with the view that relationship lending provides a kind of liquidity insurance our findings suggest that the benefits of relationship lending are even more pronounced in times of crises.
Innovating Banks And Local Lending
1HHU Düsseldorf; 2Universität Leipzig, Deutschland
We study the effects of financial and technological innovation by banks on local competition for deposits and credit supply. Banks that innovate increase their local market power by gaining deposits in a zero sum game at the expense of local non-innovating competitors. Innovative banks make use of both the additional liquidity as well as process innovations itselves and expand aggregate local mortgage lending. Banks allocate their additional funding efficiently with loan performance improving for banks that innovate. We employ two instrumental variable approaches that relate the number of patents awarded to a bank holding company to the human capital available to the bank as well as to the leniency of patent examiners to identify the causal effect of bank innovation on deposits and lending.
Measuring the Effect of Digitalization Efforts on Bank Performance
Westfälische Wilhelms-Universität Münster, Deutschland
There is an ongoing debate on whether digitalization can increase bank performance and more specifically which technologies do so. The debate to date suffers from a lack of data. We suggest new measures of digitalization efforts in banks by applying text mining methods to annual reports. Our results on all banks listed on the New York Stock Exchange imply that digitalization efforts improve performance for some successful cases but not in all cases. Practitioners should therefore carefully monitor the implementation of digitalization efforts. Considering technologies, business intelligence and IT infrastructure are most crucial in generating profits. Distribution channels are less important in comparison.
|Datum: Donnerstag, 19.03.2020|
|9:00 - 10:30||BA-FI4: Asset Pricing|
Chair der Sitzung: Oliver Entrop, Universität Passau
|Virtueller Raum 5|
The Remarkable Relevance of Characteristics for Momentum Profits
1Darmstadt University of Technology, Deutschland; 2German Graduate School of Management and Law, Deutschland
This paper provides a comprehensive analysis of a large set of momentum enhancing strategies for global equity markets. Our findings reveal the relevance of characteristics in enhancing and explaining momentum after accounting for possible interrelations with idiosyncratic volatility and extreme past returns. Out of a set of eighteen stock characteristics, we find particularly age, book-to-market, maximum daily return, R2, information diffusion, and 52-week high price to matter for momentum profits. Overall, and consistent with behavioral explanation attempts, momentum appears to work best for hard-to-value firms with high information uncertainty. There are however substantial cross-country differences with regard to which characteristics truly enhance momentum. Our results imply that the link between idiosyncratic volatility, extreme past returns, and momentum profits itself is unable to comprehensively explain enhanced momentum returns and corroborate the heterogeneity of stock markets around the globe.
The Foreign Exchange Risk Premium in the Cross-Section of Stock Returns: International Evidence
1Haile/US Bank College of Business, Northern Kentucky University; 2School of international Business, Hochschule Bremen, Deutschland
Using the framework of the International Capital Asset Pricing (ICAPM), we explore two central topics associated with equity foreign exchange (FX) risk premia. First, we estimate ICAPM-consistent FX risk premia for a large cross-section of firms. Second, we study the diversifiability of FX risk. Using equity data from six major financial markets, we find overall support for FX risk being a priced factor in the unconditional setting. While FX risk appears to be priced in the cross-section of stock returns, the estimates of pre-formation exposures are informative to investors, the predictive power of future stock’s risks seems to exist, the ICAPM’s limited predictive power for stock returns is of concern. Nevertheless, empirical estimates of FX risk premia are economically meaningful for most of the sample markets, and FX risk only seems to be diversifiable for U.S. firms.
Capital Share Risk in International Asset Pricing
1Darmstadt University of Technology, Deutschland; 2Technical University of Munich, Deutschland
We study whether growth in the capital share (KS) of aggregate income (GDP) can explain equity portfolio returns in international stock markets as proposed by Lettau et al. (2019) for the U.S. market. We find that growth in local capital share has positive explanatory power for equity portfolio returns within North America, Japan, and Emerging Markets. Unlike the U.S. market, though, the information contained in the KS risk factor of these international markets does not subsume information contained in alternative factor models as for instance the Fama-French three factor or q-factor models, but rather adds additional explanatory content to these model specifications. At an aggregate level, a growth in capital share does hardly imply any growth in equity portfolio returns in the European and Pacific regions. Lastly, we report an apparent strong explanatory power of the U.S. KS factor for international equity markets, which however seems to be almost entirely driven by equity portfolio return correlations between the U.S. and international markets.
|12:30 - 14:00||RECH2: Financial Accounting|
Chair der Sitzung: Jörg-Markus Hitz, Georg-August University Goettingen
|Virtueller Raum 5|
Global standards without the United States? Institutional work and the U.S. non-adoption of IFRS
1Universität Innsbruck, Österreich; 2Copenhagen Business School, Dänemark; 3Universität Mannheim, Deutschland
The most significant setback to the global spread of IFRS has been their non-adoption for U.S. issuers. To better understand the dynamics underlying U.S. non-adoption, we employ an institutional theory perspective and investigate how U.S. actors used institutional work to prevent or enable the adoption of IFRS for U.S. issuers. Based on a content analysis of U.S. actors’ feedback to the SEC’s invitations for comment over the period 2007-2011, we provide an in-depth account of the U.S. discourse on the desirability of adopting IFRS. Our paper shows how the institutional context enabled and restricted U.S. actors’ institutional work. At first, transnationally operating U.S. actors dominated in 2007, highlighting the importance of isomorphic pressures and suggesting ways of how to address adoption challenges. However, fostered by a change in the SEC’s proposal (mandatory instead of voluntary adoption) as well as by the financial crisis, in 2008/2009 nationally oriented U.S. actors took the lead, challenging the relevance of isomorphic pressures and emphasizing the insurmountability of adoption chal-lenges. In 2011, U.S. actors continued to struggle over the effects and the urgency of a move towards IFRS, mirroring the SEC’s inability to come to a final conclusion.
Fighting Climate Change with Disclosure? The Real Effects of Mandatory Greenhouse Gas Emission Disclosure
1Technische Universität München, Deutschland; 2DIW Berlin; 3PriceWaterhouseCoopers
We examine whether mandatory disclosure of greenhouse gas (GHG) emissions influences companies’ GHG emission levels. We identify the disclosure effect by exploiting a mandate requiring UK-incorporated listed companies to disclose information on GHG emissions in their annual reports. Using a difference-in-differences design, we show that disclosing GHG emissions in annual reports reduces emission levels by about 18% over three years. In addition, we find evidence that emission reductions also occur for firms who already voluntarily reported GHG information prior to the mandate. Further, we find that the emission reductions are permanent rather than transitory and we obtain stronger results for firms with larger savings potentials. Our effects are robust to various sample specifications, i.e., analysis at the installation- and firm-level, alternative control groups, and propensity score matching.
|14:15 - 15:45||BA-FI6: Corporate Financial Management and Communication|
Chair der Sitzung: Marliese Uhrig-Homburg, KIT
|Virtueller Raum 5|
Share repurchases, undervaluation, and corporate social responsibility
RWTH Aachen University, Deutschland
Share repurchases experienced growing popularity in recent years. However, a repurchase of an undervalued firm goes along with wealth distribution from selling to ongoing shareholders. The interest of this paper lies in the potentially opportunistic exploitation of selling sharehold-ers through buybacks in times of undervaluation. Our results show that undervalued firms with superior CSR performance are less likely to repurchase shares and thus exploit their un-dervaluation to the disadvantage of selling shareholders. In addition, those firms will rather opt for a dividend increase than for a share repurchase to distribute excess cash. Furthermore, managers of undervalued firms with high CSR scores engage in fewer insider trades. These results are consistent with managers being aware of exploiting selling shareholders. Firms with high CSR performance behave less opportunistic.
Improving bargaining power or putting safety first? Ownership structure and the effect of labor market regulation on leverage
Philipps-Universität Marburg, Deutschland
Using staggered EPL changes across the OECD, we analyze the differential effect of shifts in labor power on financial leverage in firms with different ownership structures. We find that high ownership concentration mitigates the positive effect of labor protection on debt. This result does not seem to be due to pretreatment trends and is robust after accounting for endogeneity. The ownership-related differential EPL effect is most evident for firms with strategic blockholders and labor-intensive industries. Our results help to reconcile two competing theoretical predictions, while highlighting the importance of considering the contracting relationships between various firm stakeholders.
Goethe University Frankfurt, Germany
It is relatively easy for humans to detect that the question they asked has not been answered -- we teach this skill to a computer. More specifically, we develop a measure that detects the avoidance, dodging or rejection of answering in a Q&A setup. Using a supervised machine learning framework, on a large training set of 48,197 classified answers, we identify 703 trigrams that signal that the respondent tries to avoid to answer the question he was asked. We show that this dictionary has economic relevance by applying it to a validation set of contemporaneous stock market reaction after earnings conference calls. Our finding shows that obstructing the flow of information leads to significantly lower cumulative abnormal stock returns. This result holds in the cross-section of earnings calls as well as in the within-management team variation. Our metric is designed to be of general applicability for Q&A situations, and hence, can be applied outside the contextual domain of earnings conference calls.
|16:00 - 17:30||BA-FI7: Finance Slam|
Chair der Sitzung: Olaf Korn, Georg-August-Universität Göttingen
|Virtueller Raum 5|
Is hedging for believers? The role of expectations in optimal production and hedging decisions
1LMU München, Institut für Finance & Banking, Deutschland; 2University of Iowa, Department of Finance, USA
We study theoretically how firms incorporate their market view into production and hedging decisions. Several motivating examples suggest that optimism reduces the demand for hedging while ambiguity raises it when the firm’s market view is favorable. We analyze the production and hedging decisions of Sandmo’s (1971) competitive firm in a general model of smooth ambiguity aversion (Klibanoff et al., 2005). We distinguish between concordant and discordant uncertainty depending on whether the profitability and behavioral effects of ambiguity go in the same or opposite direction. We then identify restrictions on the firm’s ambiguity preferences that allow for clear comparative static effects of optimism, pessimism, and greater ambiguity on production and hedging. Our results explain how differences in market views and ambiguity preferences generate cross-sectional variation in the demand for hedging and shed new light on so-called “selective hedging.”
Managerial Bullshitting and M&A Performance
Ludwig-Maximilians-Universität München, Deutschland
This study examines takeover motives stated by CEOs in press releases and general media. I find that the more motives are claimed by the manager for pursuing M\&As, the poorer the transaction. Specifically, managers use special merger rhetoric to whitewash a deal which leads to inferior short- and long-term performance. For example, if a long-short portfolio strategy is applied on single vs. multi-motive bidders, excess returns of approx. 13\% can be achieved after five years. Claiming many M\&A synergies is linked to a bullshitting behavior and managerial overconfidence to which an average shareholder overreacts. However, institutional investors see the manager’s impression management through and correctly incorporate the single- vs. multi-M\&A information into prices already at deal announcement. If complexities with regard claimed synergies are reduced, the average shareholders' behavioral bias of overreaction is decreased. When computational linguistics are applied to objectively quantify M\&A synergies, the results are even more significant.
M&A communication and analysts’ forecasts: Evidence from conference calls
Ruhr-Universität Bochum, Deutschland
In this paper, I examine the impact of voluntary disclosure around M&A announcements on analysts’ forecast properties. Using conference calls held in conjunction with M&A transactions (M&A calls), I find that analysts’ earnings forecasts for firms providing additional transparency are more accurate and less dispersed relative to those that do not. I also find that these relations are stronger for larger deals, higher analyst participation, and M&A calls that provide more precise information. My results are robust for different econometric specifications, including controlling for fixed-effects, confounding events and self-selection bias. Overall, these findings underscore the importance of capital market communication for financial analysts, especially when confronted with increased uncertainty in non-routine accounting events.
|17:45 - 19:45||RECH4: Financial Accounting|
Chair der Sitzung: Ulrich Schäfer, Universität Zürich
|Virtueller Raum 5|
Value-Based Management Control Systems and Strategic Change
1Philipps-Universutät Marburg, Deutschland; 2University of Groningen
We investigate the relationship between shareholder-value-oriented management control systems and strategic change, and the moderating effect of institutional control. Based on hand-collected data on 136 German listed firms between 2002 and 2015, we find that the pursuit of shareholder value maximization is negatively associated with the level of strategic change in the pattern of resource allocation. Further, we recognize institutional ownership as an important moderator of this relationship. Our findings suggest that access to information and the monitoring expertise of institutional investors are able to mitigate the negative effect of the shareholder-value concept. Our results extend strategic change research by not only integrating the management control perspective, but also considering the complementarities among the different forms of formal control.
Can You Trust the Blockchain? The (limited) Power of Peer-to-Peer Networks for Information Provision
1Skema Business School, Frankreich; 2Universität Mannheim
We investigate the potentials and limits of privacy-preserving blockchain technology to inform the capital market. In our model, heterogeneous firms rely on traditional institutions or adopt a blockchain to generate information. The blockchain leverages its peer-to-peer architecture to analyze firms and disseminates an aggregate signal about each firm's valuation while ensuring data privacy. Within this system, firm-specific information provision depends on two critical factors: (i) the blockchain's fit for analyzing a given firm's data, and (ii) its reach into the economy as provided by the proportion of firms adopting the blockchain in equilibrium. The technology can improve information provision in two ways. The adoption decision itself may serve as a credible signal of a firm's valuation, and the blockchain may generate more information than traditional institutions when its reach is sufficiently high. However, we characterize an equilibrium in which high-value and low-value firms are present both inside and outside the blockchain, which limits both channels' ability to generate information. We show that the overall information provision can even fall below the benchmark case in which blockchain technology is not available, and investigate when such an undesirable situation is more likely to materialize.
Deceiving Two Masters: The Effects of Financial Incentives and Reputational Concerns on Reporting Bias
Universität Zürich, Schweiz
We study managers’ decisions to bias financial reports if these reports are used by capital and labor markets to learn about firm value and managerial talent. If managers have private information on their financial and reputational incentives, we identify interactions in the capital and labor markets’ use of reports: The reception of reports in one market motivates reporting bias, which reduces value relevance and price efficiency in the other market. This interaction changes established results and has implications for financial reporting standard setters: We characterize environments where capital market efficiency can be improved by eliminating information on managerial talent from financial reports – even if this information is relevant for investors. This is particularly the case if there is high uncertainty about managers’ reputational concerns and if talent uncertainty represents a small part of the overall fundamental uncertainty.
The use of data analytics tools in audit practice: extent & explanations
TU Dortmund, Deutschland
While conventional auditing is increasingly supplemented by the use of information technology, several data analytics tools have not yet arrived or are used only infrequently in practice. We conduct expert interviews with well-experienced practitioners in the auditing field (both Big 4 and second-tier) to find reasons for the present extent of the use of a subset of available data analytics tools. To this end, we use a qualitative content analysis approach. Surprisingly, many data analytics tools declared as suitable for audit practice from the literature’s point of view are only known by name, especially in smaller audit firms. The lack of knowhow, the challenges relying on different generations, and, in contrast to the expectations of the literature, insufficient digitization of clients are cited as the main reasons for rejecting the use of technology. To conclude, we give recommendations on the best way to incorporate data analytics tools in practice.
|19:50 - 21:20||BA-FI5: Risk and Risk Pricing|
Chair der Sitzung: Olaf Korn, Georg-August-Universität Göttingen
|Virtueller Raum 5|
Doing Safe by Doing Good: Risk and Return of ESG Investing in the U.S. and Europe
1Justus Liebig University Giessen, Chair of Banking & Finance; 2Justus Liebig University Giessen, Research Network Behavioral and Social Finance and Accounting
We examine the protability of investing along environmental, social and governance
(ESG) criteria. A four-factor model shows that a long-short portfolio in stocks with the
highest respectively lowest ESG scores yields a signicantly negative alpha, hinting at
an insurance-like character of corporate social responsibility. Indeed, we demonstrate
that ESG activity reduces rm risk, with a positively moderating role of market volatil-
ity. ESG-inactive rms are nevertheless shown to deliver the highest contemporaneous
return per unit of risk. Corporate social responsibility rather reveals its benet only
gradually: Value-increasing eects signicantly lag ESG scores by several years.
Pricing of counterparty credit risk in OTC derivatives
This paper documents how counterparty credit risk is priced in FX OTC derivatives. We employ a novel dataset of bank-specific bid-ask quotes and use the Swiss franc decoupling from the euro on January 15, 2015 as an exogenous event to describe two channels that affect counterparty risk.
First, the exogenous increase in the EURCHF FX spot price volatility following the decoupling event translates in a widening in quoted bid-ask-spreads for CHF currency pairs in the FX swap market. Second, the large price movements in the EURCHF FX spot price following the decoupling announcement remembered markets of a potential jump risk for fixed currencies and thus, spilled-over to the pricing of other currencies with a fixed exchange rate regime.
The second result finding implies that there was a central bank induced risk discount through credible currency pegs.
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