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Volume 19, Issue No. 3, December 2012
- Philip Beaulieu, Shujun Ding and Baozhi Qu, Compensation disclosure in China, 252-277
- Keun-Yeob Oh and Taegi Kim, Measuring the welfare effects of intellectual property rights changes on the Korean pharmaceutical industry: the case of Korea–US Free Trade Agreement, 278-291
- Hye-Jeong Nam, Jong-Hag Choi, Joseph Comprix and Helen Hyejin, Firm location and earnings management: Korean evidence, 292-317
- Shujie Yao and Xiuyun Yang, Air transport and regional economic growth in China, 318-329
- Ting Luo and Wenjuan Xie, Industry information uncertainty and stock return comovement, 330-251
- Nan Hu, Fangjun Wang, Peng Wang and Lee J. Yao and Junrui Zhang, The impact of ultimate ownerships on audit fees: evidence from Chinese listed companies, 352-373
Compensation disclosure in China
Philip Beaulieua, Shujun Dingb and Baozhi Quc*
a University of Calgary
b University of Ottawa
c Moscow School of Management
Abstract
This study examines compensation disclosure and corporate governance in the Chinese stock market. China’s unfolding governance reform and the adoption of western-style disclosure present a quasi-experimental setting to examine the effect of governance mechanisms on levels of disclosure. We code annual reports of Chinese listed companies and use content analysis to obtain a disclosure index. The results are mixed: only two governance mechanisms, audit committees and the proportion of independent directors, affect compensation disclosure. Our results suggest that cultural and social-political factors play a role in compensation disclosure in China. We also find evidence that compensation disclosure is negatively associated with cost of capital of the firm.
JEL Classifications: G30, G34
Keywords: Compensation disclosure; corporate governance; audit committee; independent director |
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Measuring the welfare effects of intellectual property rights changes on the Korean pharmaceutical industry: the case of Korea–US Free Trade Agreement
Keun-Yeob Oha and Taegi Kimb*
a Chungnam National University
b Chonnam National University
Abstract
This paper shows how to measure the welfare effects of intellectual property rights (IPR) changes under the Korea–US Free Trade Agreement (FTA) on the Korean economy. After the FTA, patent lifetimes are expected to be extended. During such extension periods, Korean generic drug makers will not be able to sell their drugs, and consumers will have to pay more because of higher prices. The new concepts of effective patent term and price-change mechanism were employed, and patent data for the Korean pharmaceutical industry were used to estimate the parameters needed to measure the welfare effects. The empirical results indicate that the welfare effect will be much smaller than suggested by previous studies. These methods to evaluate the welfare effects can be applied to the cases of other recent FTAs and other kinds of IPR negotiations in international economics.
JEL Classifications: F15, O34
Keywords: Welfare effect; intellectual property rights; Free Trade Agreement; Korea |
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Firm location and earnings management: Korean evidence
Hye-Jeong Nama*, Jong-Hag Choib, Joseph Comprixc and Helen Hyejin Kwond
a Dongguk University
b Seoul National University
c Syracuse University
d Sogang University
Abstract
Using 7245 firm-year observations from Korean listed companies over 2000–2004, we find that firms located in Seoul (the capital city of Korea) or its surrounding metropolitan area (i.e. urban areas) are more likely to manage earnings than firms located in other areas (i.e. rural areas). Discretionary accruals are larger for urban firms than rural firms after controlling for variables that affect the level of accruals. Our findings suggest that due to greater attention from large numbers of investors and other market participants, urban firms face greater pressure to manipulate earnings to satisfy market expectations. However, we fail to find evidence of an association between firm location and increased earnings management for firms audited by Big 4 auditors or firms followed by analysts, which are likely to be more closely monitored by investors and other market participants. These findings are robust in various sensitivity analyses.
JEL Classifications: M42; M48; N20
Keywords: Earnings management; firm location; discretionary accruals; audit quality |
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Air transport and regional economic growth in China
Shujie Yaoa and Xiuyun Yanga*
a Xi’an Jiaotong University
Abstract
Air transport increased exponentially in China over the last 30 years, but studies on this issue are few. This paper aims to fill in this literature gap. It identifies the key determinants of air transport in the Chinese regions for the period 1995–2006. The empirical results based on an augmented production function indicate that air transport is positively related with economic growth, industrial structure, population density, and openness, but negatively related with ground transportation. The development of air transport, however, varies significantly across regions in terms of growth and competition with ground transport. The competition has become particularly intense in recent years, as high-speed railways have become a formidable challenge to air transport between the short- and mid-range transportation routes.
JEL Classifications: L93, L98, R41
Keywords: Air transport; regional economic growth; China |
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Industry information uncertainty and stock return comovement
Ting Luoa* and Wenjuan Xieb
a Tsinghua University
b University of New Hampshire
Abstract
This study investigates the association between industry information uncertainty and stock return comovement within industries. We test two predictions on industry comovement given correlated overweight among investors on past industry returns when there is greater industry-level uncertainty: (1) we find that stocks in high-uncertainty industries are more likely to move with other stocks in the same industry; (2) we find the higher prevalence of industry price continuation in high-uncertainty industries. The results suggest that stock comovement in industries with high information uncertainty is more likely driven by correlated bias in trading activities and is not related to common fundamental shocks.
JEL Classifications: M41
Keywords: Information uncertainty; non-fundamental stock comovement; price continuation. |
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The impact of ultimate ownerships on audit fees: evidence from Chinese listed companies
Nan Hua, Fangjun Wangb, Peng Wangb and Lee J. Yaoc and Junrui Zhangb*
a University of Wisconsin Eau Claire
b Xi’an Jiaotong University
c Loyola University New Orleans
Abstract
In a public-firm monopoly market, we investigate a welfare-maximizing government’s attitude towards the entry of a private firm with private information in cost and the government’s choices over two policy options: a menu of policies and a uniform policy. Two different cases are considered: the case of a domestic private firm and the case of a foreign private firm. In both cases, allowing the entry of the private firm is socially optimal. However, in the first case, policy menu is preferred to uniform policy; in the second case, separation equilibrium does not exist and uniform policy is adopted.
JEL Classifications: L13, L32, P20
Keywords: Asymmetric information; public firm; private firm; mixed oligopoly |
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