Ph.D. - Business Administration

Permanent URI for this collectionhttps://hdl.handle.net/10125/50836

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Essays in behavioral finance
(University of Hawai'i at Manoa, 2025) Essaidi, Hamza; Ai, Jing; Kim, Joon Ho; Business Administration
In the first essay, I examine the effect of tournament incentives on employee turnover and productivity. Using the 2018 mandatory disclosure of the CEO-median employee salary ratio as the experimental setting, I find that firms with a high CEO-employee pay gap experience increased post-disclosure inventor employee turnover. The inventors who leave (“leavers”) are more likely to switch jobs to firms with a lower pay gap. Inventors with fewer pre-disclosure patents and citations are more likely to leave. The inventors who remain (“stayers”) in high pay gap firms show an increase in post-disclosure productivity. Conversely, stayers with high job-switching costs exhibit lower productivity. Overall, these findings are consistent with the ahead-behind asymmetry in tournament theory. In the second essay, I examine disparities in insurance outcomes across racial and ethnic minority groups. Flood insurance by the NFIP is the most important risk management infrastructure in the U.S. to protect vulnerabilities and build resilience to increasing natural disasters. Using a combined dataset of nationwide flood insurance policies and claims, and census tract level demographics, I find that minorities tend to pay higher premium, obtain less coverage per premium dollar, and have a lower likelihood of getting claims paid. They also have lower insurance take-up rates. To aid identification, I utilize an exogenous shock of losing the Minority Tract designation. The results add to the discussions on discrimination by institutions and have significant public policy implications.
The price impact of ESG ratings: Evidence from market reactions to earnings surprises
(University of Hawai'i at Manoa, 2025) Huang, Zefan; Huang, Wei; Business Administration
We explore the impact of the rapidly evolving ESG investment landscape on investors’ trading behaviors. This study examines market reactions to earnings surprises for high-ESG firms, characterized by heightened responses to positive developments and more contained reactions to negative outcomes. Investors exhibit pronounced enthusiasm for positive surprises while moderating their disappointment in negative surprises, leading to distinct market responses. Analyst forecast dispersion increases when earnings surprise signs switch, indicating biased belief updates. Using Propensity Score Matching (PSM), we confirm that ESG-driven market reactions stem from investor bias rather than firm fundamentals. Post announcement returns for high-ESG firms exhibit sustained momentum, suggesting persistent optimism. These findings reveal confirmation bias as a key factor in ESG valuation premiums, influencing asset pricing, investment strategies, and behavioral finance.
Deep learning, deeper insights: A multilevel exploration of ‘value’
(University of Hawai'i at Manoa, 2025) Dunn, Sheldon Thomas; Ghumman, Sonia; Business Administration
This dissertation advances a holistic understanding of “value” that goes beyond standard economic metrics by integrating insights from anthropology, business, economics, psychology, and sociology. By applying advanced computational linguistics to analyze over 72,000 scholarly articles, I develop discipline-specific psychometric dictionaries that reveal a dual dynamic in value creation: it is not solely governed by the measurable logic of the market – centered on price and profit – but is equally shaped by the nurturing of trust, ethical norms, and communal identities, reflective of the logic of the home. This interplay unfolds across individual, organizational, and societal levels.A key methodological contribution is the creation of deep learning pipelines that uncover field-specific language patterns related to self-enhancement (e.g., profit, power) and self-transcendence (e.g., altruism, fairness). The findings indicate that while corporate social responsibility and other self-transcendent practices are on the rise, traditional frameworks (e.g., resource-based view, transaction cost economics, competitive positioning) remain insufficient to fully capture non-financial drivers of value creation. Building on these insights, the dissertation proposes (a) a comprehensive multilevel framework showing how value creation processes operate across individuals, organizations, industries, and societies, and (b) a distinct typology of value that categorizes its various dimensions. In closing, it offers practitioners and policymakers actionable strategies for nurturing inclusive stakeholder relationships, managing intangible resources, and navigating the complex ethical terrain of contemporary market systems.
Learning to fail: Three essays on risk attitudes, uncertainty, and entrepreneurship education
(University of Hawai'i at Manoa, 2025) Rowan, Peter; Bhawuk, Dharm P.S.; Business Administration
This dissertation examines the impact of Entrepreneurship Education (EE) on first-time entrepreneurs (or nascent entrepreneurs) employing multiple methods in three separate studies. Essay one empirically examines regional differences in risk attitudes among first-time entrepreneurs to test the influence of culture on risk-taking and entrepreneurship. Essay two examines the impact of the Lean Startup Methodology (LSM) (embedded in an experiential learning program and a university startup accelerator) on the risk attitudes of nascent entrepreneurs using longitudinal data. Finally, essay three examines the persistence of nascent entrepreneurs, employing a qualitative methodology, in the early years of building an enterprise, wherein six cases of nascent entrepreneurs are described and compared. These studies contribute to the literature on entrepreneurship education research and provide insights to practice, especially for Entrepreneurship Support Organizations (ESOs), in educating and serving nascent entrepreneurs.
Rank and Sign Momentum in Japan
(University of Hawai'i at Manoa, 2024) Lee, Summer K.; Rhee, S. Ghon; Business Administration
While momentum has remained one of the most persistent equity anomalies in empirical asset pricing, Japan has stood out as a country where the phenomenon does not exist. This is unusual given Japan's sophisticated and comprehensive capital market system that rivals its peers in other developed nations such as the United States and the United Kingdom. This paper offers a challenging perspective: Japan's market does exhibit momentum but the process to identify momentum profits needs to be more refined. A non-parametric measure may be better at identifying momentum profits since Japan's stock market returns are skewed and leptokurtic. The driver of this phenomenon in Japan is due to limited attention and how investors respond to salient versus non-salient price movements. A non-parametric measure dampens the effects of salient stocks allowing for a more stable profit strategy and can capture non-salient stock information held within stock returns that normally causes an underreaction in investors. This paper demonstrates that using a non-parametric form of momentum does produce statistically significant profits in Japan that are not as prone to the effects of salient stocks thus producing an underreaction.
Competing Effects of Income Inequality on Corporate Innovation: Incentive and Deprivation
(University of Hawai'i at Manoa, 2024) Kim, Hyeonjo; Rhee, S. Ghon; Business Administration
This study examines the effect of state income inequality on corporate innovation, focusing on its psychological dimensions. Income inequality is characterized by monetary incentives and relative deprivation. I investigate how these two characteristics of income inequality influence employee motivations, which in turn affects innovation quantity and quality. While monetary incentives boost innovation quantity, relative deprivation primarily hampers innovation quality. However, even when relative deprivation among employees remains low, income inequality can still positively impact both innovation quantity and quality. Policies aimed at reducing deprivation can enhance corporate innovation and contribute to social sustainability.
AMBIGUITY, MARKET UNDERREACTION, AND POST-EARNINGS ANNOUNCEMENT DRIFTS
(University of Hawai'i at Manoa, 2024) Liang, Xiaobo; Rhee, S. Ghon; Liu, Qianqiu; Business Administration
We demonstrate that investors underreact to earnings news of firms with high levels of ambiguity, which is associated with distinct post-earnings announcement drifts (PEAD). The effect of ambiguity is stronger than many factors in explaining underreaction and PEAD. The market underreaction is associated with less information acquisition during the earnings announcement period. The market underreaction is stronger for firms with poorer information environments, higher limits to arbitrage, and higher levels of closest peers’ ambiguity, while it is weaker for firms with higher (non-transient) institutional ownership. Taking advantage of the market underreaction, we demonstrate that a “fund-of-funds” portfolio formed on firms’ ambiguity and earnings surprises yields an annual abnormal return of 15.7%. Overall, our results show that ambiguity leads to stock market inefficiency.
Diffusion Through Interdependent Co-Origination
(University of Hawai'i at Manoa, 2024) Vaughan, Claudia Maria; Vargo, Stephen L; Business Administration
This dissertation advances the thesis that the discursive process entailed in phenomena of diffusion constitutes a genuine aspect of market innovation – that is in the innovation of a value proposition that can be meaningful to some segment of society. This claim runs counter to much of current diffusion research in marketing which still limits the conceptual and empirical boundaries of diffusion to processes of interpersonal influence and there upon traces an innovation’s -- that is its value proposition’s -- simple acceptance or adoption.By drawing on social psychological thought and scholarship that studied the social creation of knowledge, this dissertation aims to show that the dimension of market novelty of an innovation, that is its dimension of unfamiliarity, creates the necessity for its re-presentation around familiar images, concepts and ideas. As each discourse is socially situated, representations are constantly elaborated and enlarged to achieve new alignments with a particular social and cultural reality while they grow semantically remote from the conceptions and core images of a technical or engineering context from which they were initially drawn.
Asset Volatility and Wealth Transfers: Evidence from Stock Repurchase Announcements
(University of Hawai'i at Manoa, 2024) Arabaci, Murat; Rhee, Ghon; Business Administration
This paper helps reconcile the mixed empirical results concerning the wealth effects of stock repurchase announcements for bondholders. Traditional rating matching introduces: (i) an upward bias, particularly pronounced with smaller illiquid bonds, in estimating abnormal bond returns; and (ii) failure in identifying negative significance due to the reliance on size-weighted matching index returns. Increases in asset volatility intensify wealth transfers from bondholders to shareholders. Contrary to traditional interpretations, the positive association between abnormal bond and stock returns may not solely support the signaling hypothesis, as it already exists in absence of any announcement signal.
Two Essays on Non-GAAP Reporting
(University of Hawaii at Manoa, 2023) Hinton, Matthew; Zhou, Jian; Business Administration
Essay #1: SEC Investigations and Opportunistic Non-GAAP ReportingAbstract: This study examines whether an investigation by the United States Securities and Exchange Commission (SEC) affects a firm’s non-GAAP reporting choices and a potential mechanism for the effect, Turnover-Performance Sensitivity (TPS). Using a list of all closed SEC investigations between January 1, 2000 and August 2, 2017 provided by Blackburne et al. (2021), I examine my research question. I find that, when under an SEC investigation, firms with opportunistic motives increase their non-GAAP reporting, while those with informative motives reduce their opportunistic non-GAAP reporting. Further, I find TPS increases for firms with opportunistic motives that are under investigation and that opportunistic non-GAAP reporting choices exacerbate this effect. Opportunistic firms also have less persistent non-GAAP earnings during an SEC investigation. Conversely, firms with informative motives do not see such a change to TPS. I also find that the effect of an investigation on opportunistic reporting is stronger for (i) informative firms in the post-financial crisis period, (ii) firms that have a high level of financial expertise on the board of directors and the nomination committee, (iii) firms with dual board chair-CEO positions, and (iv) firms with low Earnings Response Coefficients (ERC). This paper has implications for regulators and investors, as my research shows that SEC interventions have unintended consequences related to opportunistic non-GAAP reporting and managers’ career prospects. Essay #2: Firm-Level Political Risk and Opportunistic Non-GAAP Reporting Abstract: Firm-level political risk is the likelihood a firm will face losses due to political factors and can influence investment and other aspects of firm behavior. I examine the effect of firm-level political risk on opportunistic non-GAAP reporting using the novel political risk measure developed by Hassan et al. (2019). Using 129,937 firm-quarter observations between 2003 and 2020, I find that firms with opportunistic motives are less likely to report non-GAAP earnings opportunistically as political risk increases. Also, I find that non-GAAP earnings are more persistent for opportunistic firms when political risk is high. However, I do not find these effects for firms with informative motives. In additional analysis, I find that economic policy risk has the strongest effect on non-GAAP reporting among eight topic-specific measures. I also find evidence that the effect of political risk is stronger following the 2007-2008 financial crisis and during the COVID-19 pandemic. This study has implications for regulators, investors, and analysts. Regulators can apply pressure on firms to reduce opportunistic behaviors and investors and analysts should be wary of non-GAAP reporting for firms with low levels of political risk.
Family Firm Goals and Their Influences on Firm Opportunism: A Utility Perspective
(University of Hawaii at Manoa, 2023) Zhang, Zhibiao; Doktor, Robert; Business Administration
Purpose–Although prior studies on family firms have contributed considerably to the understanding of family firm goals and their impacts on firms’ decision making, there is little known about how the family systematically influence socioemotional wealth (SEW), how economic wealth (EW) and SEW correlate to each other, and how managers trade off the gains of one type of wealth and the losses of the other when playing mixed gambles. To fulfil these voids, the present research develops a model to examine the influences of generations, siblings, family cohesion, and owner-managers seniority on SEW and the moderation effects of ownership and owner-managers on these influences. Building on the utility theory, this research addresses the correlation between EW and SEW and investigates how they affect firms’ opportunism. Design/methodology/approach – Data were collected through a questionnaire survey of owner-managers of family firms in Yiwu City, China. Findings – (1) Generations and family cohesion are positively related to SEW; (2) Seniority is negatively related to SEW; (3) EW and SEW have a positive inter-correlation; (4) SEW is positively associated with opportunism; (5) EW and SEW have an interaction effect on opportunism; (6) Owner-managers moderates the relationship between seniority and SEW; and (7) Ownership moderates the relationship between seniority and SEW and the relationship between SEW and opportunism.
Corruption Distance And Foreign Ownership Strategies
(University of Hawaii at Manoa, 2023) Phan, Anh Trung; Ito, Kiyohiko; Business Administration
The research on corruption in international business is still developing, and the limited studies on the effect of the difference in corruption levels between countries, or corruption distance, on foreign entry strategies have yielded mixed findings. The present study contributes to this literature by investigating the links between corruption distance, foreign ownership strategies, and the pervasiveness of petty corruption using theoretical frameworks from multiple theories of the firm. By incorporating available measures to develop a composite index for corruption distance, I account for various aspects of this complex phenomenon. Using Tobit regression models to analyze 3,341 unique entries in 64 host countries by 32 large US firms between 2001 and 2016, I find that, for a one-unit increase in home-host corruption distance, the parent firms’ ownership decreases by more than 12.5 percentage points. This relationship only holds, however, for the host markets that are more corrupt than the US. The pervasiveness of petty corruption in the host country is negatively related to equity ownership by almost 13 percentage points while not significantly moderating the corruption distance–foreign ownership relationship. These findings suggest that corruption distance should be analyzed independently of the overarching concept of institutional distance while taking into account the direction of comparative corruption. Overall, the findings suggest the need to develop national and multinational anti-corruption measures and promote international standards and practices to enhance integrity and accountability in international business. Amid the corruption risks in both their home countries and host countries, managers of multinational companies should develop effective entry strategies while also fostering ethical corporate culture and engagement in stakeholder management.
Essays on Trust and Its Economic Consequences
(University of Hawaii at Manoa, 2022) Shou, Ming; Liu, Qianqiu; Business Administration
The first essay examines how trust, a cultural and societal factor, can influence the profitability of momentum strategies in international stock markets. Using the trust measure developed by the World Values Survey and European Values Study for 65 markets over the period 1981–2019, I find that trust is positively associated with the magnitude of momentum profits. The trust effect on momentum is stronger in advanced economies; the positive relation is robust across size, after risk adjustment, controlling for firm characteristics and information environment, and using alternative trust measures. Empirical evidence supports the notion that trust increases stock market participation and adds disagreement in the market, which leads to momentum. Trust has stronger explanatory power than uncertainty avoidance on momentum profitability, and it includes unique information not in individualism. In the second essay, I argue that distrust significantly increases people’s perceived information asymmetry and has important economic consequences. Using the occurrence of financial restatements from 1995 to 2019 as a proxy for significant credibility reduction in financial information, I show that firms rely more on trade credit as an external financing choice after restatements because suppliers have an information advantage and address information asymmetry problems better. After comparing the predictability of sales by trade credit before and after restatements, I find that the informativeness of trade credit about firms’ prospects changes during restatement periods. In the pre-restatement periods, firm sales monotonically increase with trade credit. In the post-restatement periods, firms with the most trade credit do not have the best future performance, while firms with the least trade credit experience the lowest subsequent sales. I also find that investors in the stock market do not realize such informativeness change and underreact to the valuable negative information from suppliers.
An Answer to the Corporate COVID-19 Crisis: Examining Pandemic-Related Internal and External Corporate Social Responsibility and Its Impact on Worker Motivation Through Differential Mediation Pathways
(University of Hawaii at Manoa, 2022) Wampole, Ashley; Alden, Dana L.; Business Administration
As one of the most historically devastating disasters, the COVID-19 pandemic has claimed the lives of millions and led to the demise of thousands of businesses. Surviving organizations have been faced with the question of how to keep their employees motivated. This study suggests that corporate social responsibility (CSR) initiatives may contribute to solving this challenge. Integrating theoretical perspectives from Maslow’s theory of motivation, social exchange theory, and social identity theory with previous research on CSR, this investigation develops a framework for determining whether employee perceptions of their company’s internal and external CSR efforts during the coronavirus pandemic, labeled as pandemic-related internal and external CSR, are directly and significantly related to worker motivation and whether these relationships are mediated through two pathways (via basic and non-basic needs fulfillment). To test this theory-based model, survey data was collected from a sample of union members (n = 510) working within the hospitality, food service, and healthcare industries in Hawaii during the COVID-19 pandemic. Results of structural equation modeling (SEM) revealed a significant positive relationship between pandemic-related internal CSR and worker motivation, and a significant negative association between pandemic-related external CSR and worker motivation. Analysis revealed that both basic and non-basic needs fulfillment competitively mediated the relationships between these two types of pandemic-related CSR and worker motivation. No significant differences were found, however, between the total effects of pandemic-related internal and external CSR on worker motivation. By bringing to light the complexities of these relationships, this study contributes to the literature on CSR, worker motivation, and disaster management and considers managerial implications that may help businesses survive the COVID-19 pandemic and other future crises that threaten the sustainability of the global economy.
Empowering Sustainable Behavior Through The Enhancement Of Subjective Knowledge
(University of Hawaii at Manoa, 2022) Kitkuakul, Sakawrat; Alden, Dana L.; Chen, Qimei; Business Administration
Sustainability is undoubtedly one of the most urgent issues of the twenty-first century. Academics and practitioners alike have stressed the importance of sustainability-related education for the future. Surprisingly, the impact of knowledge about sustainability on pro-environmental behaviors has been rather mixed. This dissertation aims to shed light on the inconsistencies in relationships between environmental knowledge and the attitude and behaviors regarding sustainability reported in the literature. Specifically, the current research examines the role of subjective knowledge and its impact on consumer attitude toward the brand and intention to purchase green products. It also investigates the mediation effect of perceived consumer effectiveness and the moderating role of a time versus money construct on subjective knowledge. The results show that high (low) subjective knowledge increases (decreases) positive attitude toward the brand and intention to purchase utilitarian green products. The dissertation also finds initial evidence that the green hedonic (versus utilitarian) product category may serve as a boundary condition to the positive relationships between subjective knowledge, attitude toward the brand, and intention to purchase. Perceived consumer effectiveness mediates the main effect. Last, the interaction effect shows that participants in the high (versus low) subjective knowledge condition express less intention to purchase the utilitarian green product when thinking about time (versus money). An additional experiment is conducted beyond the initial hypotheses, exploring high versus low construal level as a potential alternative moderator. From a theoretical perspective, this dissertation is one of the few to establish the causal relationships among subjective knowledge, perceived consumer effectiveness and consumer choice within the sustainability domain. It also appears to be the first to examine the interaction effect between subjective knowledge and a time versus money mindset. Managerially, these studies provide alternative intervention tools to businesses, governments, and non-profits to encourage sustainable behaviors as it demonstrates that providing consumers with scientific facts, in isolation, may not be as effective in driving behavioral changes. Additional interventions that make people feel they are knowledgeable about the subject area are recommended with a caveat that the tool appears to work well with utilitarian as opposed to hedonic green products.
Two Essays On Analysts’ Forecasts And Their Implications For Asset Pricing
(University of Hawaii at Manoa, 2022) Zhao, Yiwei; Liu, Qianqiu; Business Administration
Essay One: When Analysts Repeat, Do Investors Listen?The majority of earnings forecasts issued by sell-side equity analysts conclude with a reiteration of the analyst’s existing earnings forecast for a firm. Yet, previous literature focuses on earnings forecast changes while ignoring earnings forecast reiterations. The first issue is that researchers assume that earnings forecast reiterations do not have information content and do not matter. Database limitation is the second primary issue for this kind of research. Using a large sample of earnings forecast reiteration data for S&P 100 firms during the 2006-2016 time period from Bloomberg, I investigate whether earnings forecast reiterations are informative. I find that reiterations are associated with smaller earnings forecast errors. I also find that reiterations are associated with positive stock market reactions. When more analysts give reiterations, there is no post-earnings-announcement-drift (PEAD). My results show that analyst earnings forecast reiterations are informative and investors listen and pay attention when analysts reiterate earnings forecasts. Essay Two: Analyst Self-disclosure v.s. Non-self-disclosure: An Introduction to Bloomberg Analyst Earnings Forecast DataIn this study, I compare the performance between self-disclosure analysts and non-self-disclosure analysts using Bloomberg analyst earnings forecast data from 2006 to 2016. I find that, even though non-self-disclosure analysts outperform self-disclosure analysts in earnings forecast accuracy, investors do not realize this performance difference, causing more non-self-disclosure analysts to publicize themselves. This finding is consistent with the Bloomberg analyst display structural change on 06/04/2018.
A Multi-Theory Approach to Understanding Anti-Consumption for Environmental Sustainability
(University of Hawaii at Manoa, 2021) KIM, JAISANG; Chen, Qimei; Alden, Dana; Business Administration
As environmental concerns deepen, interest in green demarketing, which promotes anti-consumption lifestyle is increasing. However, a major barrier to the anti-consumption lifestyle is the perception that it might signal economic resource constraints rather than a voluntary choice by consumers. This dissertation shows that consumers have an implicit association between anti-consumption behavior and low social status (Study 1); as a result, when facing socioeconomic status threat, consumers have a negative attitude toward green demarketing (Study 2); the mere presence of an aspirational group does not have a positive effect on consumers’ attitude toward green demarketing when they are under high socio economic threat in comparison to consumers under low socioeconomic threat, (Study 3); and finally, facilitated affiliation with an aspirational group can help alleviate this negative effect by reaffirming damaged self-worth and mitigating the socioeconomic status threat (Study 4).The results will add to the environmental literature by highlighting how consumer’s self-presentation purpose (i.e., avoidance of signaling low socioeconomic status) might inhibit pro-environmental behavior. In addition, this study will help identify green demarketing policies that consider and accommodate consumers’ self-presentation needs.
Information System Experience, Extended Use, And Efficiency: A Quantitative Analysis Of Individual Electronic Health Record Use
(University of Hawaii at Manoa, 2021) Barnes, Bruce Wayne; Davidson, Elizabeth; Business Administration
Implementing an Electronic Health Record (EHR) system is a costly and complex organizational endeavor that may result in users, particularly physicians, using the EHR’s rich features in a limited manner. The goal of EHR implementation is to move beyond limited, mandatory use towards the full extended and productive use of the EHR system to realize the full scope of benefits. To realize these benefits, users must utilize an EHR effectively; this is challenging due to the time and effortrequired to document patient encounters in an electronic system. Utilizing an organizational learning perspective and theorizing around extended use for EHRs, this study investigates how EHR System Use Experience may affect EHR Task Length for physicians, how EHR Extended Use is influenced by EHR System Use Experience, and in turn how EHR Extended Use may affect EHR Task Length. This study utilizes a longitudinal dataset of individual EHR use metrics (e.g., EHR features used, navigation clicks, time spent documenting) accumulated during the four-year rollout of an EHR system across a network of military hospitals and clinics. This study will utilize a combination of statistical approaches including correlation, factor analysis, t-tests, linear regression and structural equation modeling to investigate these relationships. Utilizing a large data set of actual system log data in this analysis, this study indicates that as EHR System Use Experience (measured as months of use and cumulative patients seen) increases, EHR Task Length (measured as time in EHR and time spent documenting) decreases. Empirical analyses also indicate that EHR Extended Use increases with experience, contributing to a modest increase in task length. Comparative analyses of EHR user experience for physicians vs. nurses and students, in clinics vs. hospitals, for earlier adopters vs. later adopters, and for the subset of advanced users vs. basic users of the EHR highlight nuances in these relationships. The study informs practice by demonstrating how to identify extended users, how to develop additional organizational and usage insights from system-generated performance metrics, and how to better assess the potential return on investment on an electronic health record system.
Labor Union And Linguistic Attributes In Firm Disclosure
(University of Hawaii at Manoa, 2020) Zhang, Jiarui; Jung, Boochun; Business Administration
Little research examines managers’ language itself in the presence of labor unions, especially using a rich communication channel such as earnings conference calls. By disentangling the two latent components of linguistic complexity (i.e. information and obfuscation) using conference call transcripts, I find that firms with stronger labor unions tend to disclose less information and, surprisingly, employ less obfuscation. However, the negative relation between obfuscation and union strength is driven by the loss firms subsample, indicating that the strategic obfuscation of negative news is less likely for firms with a powerful labor union in order to be forthcoming about negative information to gain bargaining power. Furthermore, I document that unionized firms tend to provide more non-factual language to add noise to disclosure, reveal less forward-looking information, and use more negative words in their narratives. This study provides a comprehensive view on the nuanced linguistic styles and contents via which firms react to labor unions.
Two essays on gift card liabilities
(University of Hawaii at Manoa, 2020) Yeh, Ting-Tsen; Zhou, Jian; Business Administration
PART 1. GIFT CARD LIABILITIES AND EARNINGS MANAGEMENT ABSTRACT This study examines whether managers use gift card liabilities to manage earnings through breakage income recognition. Breakage income is recognized when gift card liabilities are written off in managerial discretions. A clear guidance for recognizing the breakage income from gift cards was absent until 2005. Since gift card liabilities are less visible, managers can take advantage of them and use them to achieve earnings targets. I utilize hand-collected data to examine this issue and find that managers use gift card liabilities to manage earnings and to meet or beat earnings targets. The Credit Card Accountability Responsibility and Disclosure Act of 2009 includes several provisions limiting abuses by gift card issuers. I find that in the year of the implementation of this Act, managers decreased the earnings management relating to gift card liabilities. I also examine whether firms in the later stages of their life cycle are more likely to use gift card liabilities to engage in earnings management, and I find some supporting evidence. This study shows how and why managers use gift card liabilities to manage earnings and contributes significantly to the earnings management literature by documenting that managers use the discretion in accounting rules to achieve earnings targets. PART 2. GIFT CARD LIABILITIES AND INVESTMENT EFFICIENCY ABSTRACT Using manually collected gift card data, I examine whether gift card liabilities can serve as a source of investment funds and influence corporate investment efficiency. Investment efficiency is usually proxied by the residuals from a regression model that predicts normal capital expenditures. I find a significantly negative relationship between gift card liabilities and the magnitude of investment residuals. I also investigate whether the relationship between gift card liabilities and investment efficiency differs between financially constrained and unconstrained firms. The results indicate that financially unconstrained firms are more likely to improve investment efficiency with a higher balance of gift card liabilities than financially constrained firms. Overall, I find that gift card liabilities can provide funds for corporate investment and influence investment efficiency. This study contributes significantly to the investment efficiency literature by providing evidence of an underinvestigated phenomenon – gift card liabilities and investment efficiency.

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