Estimating the effect of corporate integrity culture on tax avoidance using a text-based approach: A research note.

Tax avoidance holds immense importance due to its substantial implications for government revenues and the fair allocation of resources. Consequently, understanding the factors that shape tax avoidance is critically important. Exploiting a cutting-edge measure of corporate integrity derived from state-of-the-art machine learning algorithms and textual analysis, we explore the effect of corporate integrity on tax avoidance. Our text-based measure is based on a textual analysis of earnings conference call transcripts. Our findings show that companies with greater corporate integrity are significantly less involved in tax avoidance. Further analysis corroborates the results, i.e., propensity score matching, entropy balancing, and an instrumental variable analysis. Our findings are especially noteworthy as they demonstrate that corporate culture, although intangible in nature, exerts a substantial influence on corporate behavior.

Stock price crash risk and military connected board: Evidence from Thailand.

Based on the agency and stakeholder theories, effective boards, acting as an internal governance mechanism, reduce agency costs. This paper asks whether military connected boards represent a good governance tool by exploring how military connected boards affect stock price crash risk. Using instrumental variable analysis, we document that firms with military connected boards have lower risk of stock price crashes. Our findings are unlikely to have endogeneity concerns and shed light on the role of military connected boards as an effective internal governance tool. Consistent with the conservatism hypothesis and stakeholder theory, by being transparent about firm-specific bad news, military connected boards could effectively monitor managers to ensure they act on all stakeholders' interests.

Infectious diseases, dividend policy, and independent directors: Evidence from textual analysis.

We investigated the effect of uncertainty associated with infectious diseases on corporate dividend policy. We used a unique text-based measure of infectious diseases that includes not only the Covid-19, but also other important diseases, such as SARs, MERs, and Ebola. Based on a sample of 287,151 firm-year observations across four decades (from 1985 to 2021), our results show that a higher level of uncertainty associated with infectious diseases significantly reduce dividends. Interestingly, we also found that having more independent directors on the board mitigates the negative effect of uncertainty associated with infectious diseases on dividends which implies that the reduction in dividends was partly driven by agency conflicts. We performed several robustness checks which confirm that our findings are unlikely to be affected by endogeneity issues.

The future of digital donation crowdfunding.

Amidst the Coronavirus crisis, many fundraising projects have emerged to relieve financial burdens resulting from social distancing policies. Crowdfunding is a way to raise money to fund a business, project or charity, through either social media or other online platforms to reach hundreds of potential sponsors. We developed guidelines for effective donation-based crowdfunding through online platforms. Using Futures Research (FR) technique, we conducted our analyses in 3 phases. In Phase 1, we reviewed relevant literature and conducted in-depth interviews of related parties. In Phase 2, we interviewed experts using Ethnographic Futures Research (EFR) technique. In Phase 3, we visualized the future using the principles of Futures Wheel, Cross-impact Matrix and Scenarios. Based on our findings, effective donation-based crowdfunding platforms should adopt Blockchain technology for transparency and accountability, and incentivize donations to keep backers loyal. Founders should be required to obtain fundraising licenses from relevant regulators. Finally, laws and regulations that protect platform users should be standardized internationally. Our proposed guidelines hope to improve the quality and transparency of future fundraising activities.

The effect of shareholder litigation rights on female board representation: A quasi-natural experiment.

Employing as a quasi-natural experiment an unexpected judgment by the Ninth Circuit Court of Appeals that raised the difficulty of shareholder litigation, we explore the effect of shareholder litigation rights on board gender diversity. Our difference-in-difference estimates show that an exogenous reduction in shareholder litigation risk results in significantly less female board representation, a decline by 11.44% in particular. Our findings corroborate the view that strong shareholder litigation rights strengthen internal governance such as board oversight. Therefore, when shareholder litigation rights are weakened, there is a drop in board quality. Additionally, we document a decline in board independence and an increase in board size following the Ninth Circuit ruling, both of which are associated with poorer board monitoring. Further analysis validates the results. i.e., propensity score matching, entropy balancing, GMM dynamic panel data estimation, and Oster's (2019) testing for coefficient stability. Based on a quasi-natural experiment, our conclusion probably reflects a causal influence, rather than a mere correlation.

Do hostile takeover threats matter? Evidence from credit ratings.

Exploiting a novel measure of takeover vulnerability mainly based on state legislations, we explore the effect of hostile takeover threats on credit ratings. Our results reveal that companies with more takeover exposure are assigned significantly better credit ratings. In particular, a rise in takeover vulnerability by one standard deviation results in an improvement in credit ratings by 7.89%. Our findings are consistent with the view that the disciplinary mechanism associated with the takeover market mitigates agency problems and ultimately raises firm value. Further analysis corroborates our conclusion, including propensity score matching, entropy balancing, and an instrumental-variable analysis. As our proxy for takeover susceptibility is plausibly exogenous, our results are more likely to show a causal effect.

Does board gender diversity weaken or strengthen executive risk-taking incentives?

We investigate the effect of board gender diversity on managerial risk-taking incentives. Our results demonstrate that companies with stronger board gender diversity provide more powerful executive risk-taking incentives. It appears that female directors' risk aversion exacerbates managers' risk aversion, resulting in a sub-optimal level of risk-taking. To offset this tendency for too little risk, companies are induced to provide stronger risk-taking incentives. Specifically, an increase in board gender diversity by one standard deviation raises vega by 10.3%. Further analysis corroborates the results, including propensity score matching, entropy balancing, and an instrumental-variable analysis. Endogeneity appears to be unlikely, suggesting that female directors are not merely associated with, but probably bring about stronger risk-taking incentives.

Do algorithm traders mitigate insider trading profits?: Evidence from the Thai stock market.

This paper asks whether algorithm traders (AT) mitigate insider trading profits in the Thai stock market over the period of 2010-2016. We find that in general it does but not in the case of buy side, big trades nor the executive trades. Our findings suggest that, to some extent, AT can take important role to increase an efficiency in stock market by processing the public information and incorporating it into price at ultra-fast speed. Additional robustness checks based on the instrumental variable approach confirm our findings.

Jumps and Cojumps analyses of major and minor cryptocurrencies.

This paper empirically examines jumps and cojumps of both major and minor cryptocurrencies. Understanding the nature of their jumps and cojumps plays an important role in risk management, asset allocation and pricing of derivatives. We find that all cryptocurrencies display significant jumps. Furthermore, minor cryptocurrencies appear to have significantly higher jump intensity and jump size than major cryptocurrencies. Finally, we find that cojumps of the Thai stock market index and minor cryptocurrencies have a greater intensity than that of major cryptocurrencies.