Accounting Seminar（2015-01）

Topic:Managerial entrenchment and corporate voluntary disclosure: evidence from shareholder vote

Speaker:Wensi Xie(TheUniversity of Hong Kong)

Time:: Tuesday,3 March, 08:30-10:00 am

Location:Room 217, Guanghua Building 2

Organizer:Department of Accounting,MPAcc GSM, PKU

Abstract：

In this paper, I explore the impact of managerial entrenchment on firms’ voluntary disclosure. To establish a causal link, I employ a Regression Discontinuity Design(RDD) on the outcomes of shareholder voting on entrenchment-related proposals. A proposal that passes or fails by a small margin generates some exogenous variations in entrenchment. The empirical evidence suggests that mitigated managerial entrenchment promotes information disclosure. Specifically, passing a shareholder proposal leads managers to (a) become are more likely to provide forward-looking information in the form of earnings forecasts, and issue forecasts more frequently; (b) make more precise and timely forecasts; (c) improve their forecasts accuracy; and (d) become more conservative and disclose more negative information. The empirical evidence is consistent with an Aligned Incentive Hypothesis: with better aligned incentives, less entrenched managers are induced to disclose more information, thereby enhancing transparency.

Your participation is warmly welcomed!