An Examination of Earnings Surprises for Urban and Rural Firms

백복현,임지해,장윤석 한국회계학회 2014 會計學硏究 Vol.39 No.2

In this paper, we examine the association between firm location and earnings surprises at earnings announcements. Prior studies show that firms located in urban areas draw more attention from the investment community, which may lead to more capital market pressures. In turn, urban firms could have stronger incentives to present “better” performance measures at earnings announcements. Consistent with this view, we find that (1) urban firms are more likely to report non-negative earnings surprises than rural firms; (2) urban firms are more likely to report non-GAAP earnings numbers; and (3) urban firms are more likely to make income-increasing adjustments to GAAP earnings to arrive at non-GAAP earnings than rural firms. We also find that the earnings response coefficient (ERC) of urban firms is smaller than that of rural firms, which suggests that more opportunistic earnings metrics of urban firms are factored into stock prices.

미국 기관투자자 행동주의 현황과 시사점

백복현 한국회계정보학회 2018 한국회계정보학회 학술대회발표집 Vol.2018 No.2

외국인투자유한회사의 배당성향에 관한 연구

백복현,오승빈 금융감독원 2016 금융감독연구 Vol.3 No.1

In this paper, we examine whether organizational form and the home country of investment capital are associated with the dividend policy of invested companies. Specifically, we compare the differences of dividend policy between companies invested by foreign capital and by domestic capital and between limited liability companies and corporations. Our evidence, based on 44,087 firm-year observations spanning from 2007 to 2012, shows that the average limited liability company exhibits a lower dividend payout ratio than that of the average corporation, and that the average company invested by foreign capital shows a higher dividend payout ratio than that of the corresponding domestic capital. However, we find that limited liability companies invested by foreign capital are more likely to pay dividends even after controlling for other factors that might affect dividend policy. Our findings suggest that the legal form of companies and the home country of investment capital are associated with the dividend policy of invested companies.

The Effect of Local Holdings on Audit Policy and Outcomes

백복현 서울대학교 경영연구소 2011 Seoul Journal of Business Vol.17 No.2

This paper examines whether local block holdings are associated with audit policy and outcomes. For local investors are long-term investors and they tend to invest a larger portion of their total investment in local companies, I posit that local block holders will be dedicated investors and have strong incentives to monitor management. Consistently I find that companies with local block holders are less likely to have unclean/going-concern opinions, and more likely to have long-term relationships with auditors. In addition, although I find weak evidence that the existence of local block investors affects audit fees, I do not observe any significant difference of audit fees between firms with local block holdings and firms with nonlocal block holdings. Overall, this paper shows that information advantage of local investors can have real effects on audit process through monitoring activities.

Self-Selection Bias in Consensus Analysts' Earnings Forecasts

백복현 한국증권학회 2006 Asia-Pacific Journal of Financial Studies Vol.35 No.6

Self-selection arises when analysts choose not to release earnings forecasts if unfavor-able future prospects are expected. This behavior makes the observed distribution of earn-ings forecasts appear overoptimistic. By using two firm specific measures of the degree of self-selection, I provide evidence suggesting that some portion of observed optimism stems from self-selection, rather than from incentives or analysts’ underreaction. Firms experi-encing financial distress, low long-term growth, and stock price declines appear more likely to be subject to self-selection by analysts. Moreover, I find empirical evidence sug-gesting that investors do not fully recognize self-selection and overprice firms which are dropped by analysts.

A Re-examination of Analyst Under-reaction

백복현,이수정 한국증권학회 2013 Asia-Pacific Journal of Financial Studies Vol.42 No.5

Prior studies suggest that analysts under-react to past information (Klein, 1990; Abarbanell and Bernard, 1992; Easterwood and Nutt, 1999). We examine whether evidence interpreted as analyst under-reaction to negative news can be attributed to analyst self-selection. Analyst self-selection arises when analysts’ information production efforts are focused toward stocks that analysts expect to perform well. Using a large sample of firms for the period of 1983–2004, we find evidence suggesting that self-selection is responsible, at least in part, for analyst under-reaction to past negative information about the firm’s performance.

Erratum to: Research on Financial Reporting and Disclosure: Recent Literature Review

백복현,한승엽,정재경,백원선 한국회계학회 2017 會計學硏究 Vol.42 No.3

Do Analysts Account for Accruals? Evidence from the Insurance Industry

백복현,김영준,Yongoh Roh 한국증권학회 2021 Asia-Pacific Journal of Financial Studies Vol.50 No.1

Property-casualty (PC) insurers are mandated by the Securities and Exchange Commission (SEC) to report managers’ revisions of loss reserve estimates (“development”) in 10-K supplemental disclosures. Using manually collected PC insurers’ development, we examine whether analysts’ earnings forecasts incorporate information in development. We initially show that development has incremental power to predict insurers’ future profitability. Although analysts revise earnings forecasts in response to the updates on development in 10- K filings, their forecast errors are positively related to development. We also find that analysts exhibit greater errors for firms that exert more discretion over development. Overall, our findings suggest that analysts do not fully incorporate the information in managers’ estimates.

Conditional Conservatism: An Analysis of Nonlinearity and Lead-Lag Relations

백복현,황이석 서울대학교 경영연구소 2019 Seoul Journal of Business Vol.25 No.1

Recent studies have provided evidence that the association between earnings and contemporaneous returns is stronger when returns are negative, reflecting accounting conservatism. In this paper, we investigate two important aspects in this asymmetric timeliness of earnings: (1) whether the contemporaneous earnings-return relation is concave and (2) whether earnings show asymmetric timeliness with respect to lagged returns. We show that the relation between earnings and stock returns is more salient for extreme negative returns, implying a concave relationship between earnings and returns. We also find asymmetric timeliness with respect to lagged returns. Moreover, we find similar results using earnings line items such as special items and discontinued items. Overall, our evidence suggests that the Basu-type regression without considering these two aspects biases the extent of conditional conservatism.

Research on Financial Reporting and Disclosure: Recent Literature Review

백복현,한승엽,정재경,백원선 한국회계학회 2017 會計學硏究 Vol.42 No.2

In this paper, we review recent literature on financial reporting and disclosure published in the Korean Accounting Review post Asian financial crisis (2000-2016). We survey empirical research on the role of financial accounting and reporting (1) as information in a non-strategic setting and (2) as information in a strategic setting. We summarize the research areas and questions examined over the past two decades and what we have learned from the work. We provide our thoughts as to the interesting and important issues for future research.