This study investigates whether product market competition reduces agency problems between controlling shareholders and minority shareholders in Japan. We study Japan because of its salient weakness in investor protection and the severity of agency conflicts. In a large sample of Japanese firms we find that Japanese firms in more competitive industries pay more dividends than firms in less comp...

This paper, based on the Brockman and Chung (2003) framework, tests the hypothesis that H-shares registered under Chinese law (with lower level of investor protection and legal enforcement) are associated with higher levels of opportunistic earnings management than local shares registered under Hong Kong law, which are traded on the same Hong Kong equity market. The results using a sample of 85...

An equity-indexed annuity (EIA) is a hybrid between a variable and a fixed annuity that allows the investor to participate in the stock market and earn at least a minimum interest rate. The investor sacrifices some of the upside potential for the downside protection of the minimum guarantee. Because EIAs allow investors to participate in equity growth without the downside risk, their popularity...

This paper analyzes investor behavior depending on the flow-through capability (FTC) in the US stock market, because investors seek protection from inflation rate changes, and the FTC (a firm's ability to transmit inflation shocks to the prices of its products and services) is a key factor in investment decisions. Our estimates of the FTC of firms listed on the US stock exchange at the sector l...

Recent research studying the link between law and finance has concentrated on country-level investor protection measures and focused on differences in legal systems across countries and legal families. We use recent data on firm-level corporate governance rankings across 14 emerging markets and find that there is wide variation in firm-level governance across countries in our sample and that th...

Since the Sarbanes-Oxley Act was enacted in U.S., there has been a general tendency to globally harmonize regulations and practices of board governance. The purpose of this study is to compare among countries how well the board of directors constrains earnings management. Using a sample of firms from 23 countries, we document some evidence that higher outside directorship on the board is associ...

We examine the impact of excess cash on non-U.S. firms’ mergers and acquisitions behavior to test the effectiveness of U.S. investor protections in improving the corporate governance of cross-listed firms. We find that firms with higher excess cash make more acquisitions and experience lower announcement abnormal returns. While acquisition likelihood is similar, crosslisted firms make better M&...

We develop a dynamic incomplete-markets model where an entrenched insider, facing imperfect investor protection and non-diversifiable illiquid business risk, makes interdependent consumption, portfolio choice, expropriation, corporate investment, ownership, and business exit decisions. Unlike in the first-best, the insider’s tradeoff between private benefits and under-diversification costs lead...