Browsing by Author "Wu, Qiang"

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  • Francis, Bill; Hasan, Iftekhar; Wu, Qiang; Yan, Meng (2014)
    Bank of Finland Research Discussion Papers 16/2014
    Published in Journal of American Taxation Association Volume 36, Issue 2 2014: 171-202
    This paper investigates the effect of CFO gender on corporate tax aggressiveness. Focusing on firms that experience a male-to-female CFO transition, the paper compares those firms' degree of tax aggressiveness during the pre- and post-transition periods. Using the probability of tax sheltering, the predicted unrecognized tax benefits, and the discretionary permanent book-tax differences to measure tax aggressiveness, we find that female CFOs are associated with less tax aggressiveness as compared to their male counterparts. The main findings are supported by additional tests based on propensity score matching, difference-in-difference tests, and tests with a female-to-male CFO transition sample. Overall, our study establishes CFO gender as an important determinant of tax aggressiveness.
  • Hasan, Iftekhar; Wu, Qiang; Zhang, Hao; Hoi, Chun-Keung (Stan) (2014)
    Bank of Finland Research Discussion Papers 3/2014
    Published in Journal of Financial Economics, 113 (2014) 109-130
    We find that firms with greater tax avoidance incur higher spreads when obtaining bank loans. This finding is robust in a battery of sensitivity analyses and in two quasi-experimental settings including the implementation of Financial Accounting Standards Board Interpretation No. 48 and the revelation of past tax sheltering activity. Firms with greater tax avoidance also incur more stringent non-price loan terms, incur higher at-issue bond spreads, and prefer bank loans over public bonds when obtaining debt financing. Overall, these findings indicate that banks perceive tax avoidance as engendering significant risks. JEL Classification: G21; H26 Keywords: Tax avoidance; Cost of bank loans; Information risk; Agency risk; Audit risk; FIN 48
  • Francis, Bill B.; Hasan, Iftekhar; Sun, Xian; Wu, Qiang (2016)
    Bank of Finland Research Discussion Papers 5/2016
    Published in in Journal of Corporate Finance 2016 ; 38 ; june ; https://doi.org/10.1016/j.jcorpfin.2016.03.003
    ​We show that firms led by politically partisan CEOs are associated with a higher level of corporate tax sheltering than firms led by nonpartisan CEOs. Specifically, Republican CEOs are associated with more corporate tax sheltering even when their wealth is not tied with that of shareholders and when corporate governance is weak, suggesting that their tax sheltering decisions could be driven by idiosyncratic factors such as their political ideology. We also show that Democratic CEOs are associated with more corporate tax sheltering only when their stock-based incentives are high, suggesting that their tax sheltering decisions are more likely to be driven by economic incentives. In sum, our results support the political connection hypothesis in general but highlight that the specific factors driving partisan CEOs’ tax sheltering behaviors differ. Our results imply that it may cost firms more to motivate Democratic CEOs to engage in more tax sheltering activities because such decisions go against their political beliefs regarding tax policies.
  • Francis, Bill; Hasan, Iftekhar; Wu, Qiang; Koetter, Michael (2012)
    Bank of Finland Research Discussion Papers 14/2012
    Published in Journal of Financial Research, Volume 35, Issue 4, December 2012: 521-552
    We investigate the role of corporate boards in bank loan contracting. We find that when corporate boards are more independent, both price and nonprice loan terms (e.g., interest rates, collateral, covenants, and performance-pricing provisions) are more favorable, and syndicated loans comprise more lenders. In addition, board size, audit committee structure, and other board characteristics influence bank loan prices. However, they do not consistently affect all nonprice loan terms except for audit committee independence. Our study provides strong evidence that banks tend to recognize the benefits of board monitoring in mitigating information risk ex ante and controlling agency risk ex post, and they reward higher quality boards with more favorable loan contract terms. JEL Classification: G21, G34
  • Francis, Bill B.; Hasan, Iftekhar; Shen, Yinjie (Victor); Wu, Qiang (2021)
    Journal of Financial Economics 1 ; July
    Using a comprehensive US hedge fund activism dataset from 2003 to 2018, we find that activist hedge funds are about 52% more likely to target firms with female CEOs compared to firms with male CEOs. We find that firm fundamentals, the existence of a “glass cliff,” gender discrimination bias, and hedge fund activists’ inherent characteristics do not explain the observed gender effect. We also find that the transformational leadership style of female CEOs is a plausible explanation for this gender effect: instead of being self-defensive, female CEOs are more likely to communicate and cooperate with hedge fund activists to achieve intervention goals. Finally, we find that female-led targets experience greater increases in market and operational performance subsequent to hedge fund targeting.
  • Francis, Bill; Hasan, Iftekhar; Wu, Qiang (2012)
    Bank of Finland Research Discussion Papers 11/2012
    Published in Review of Financial Economics, Volume 21, Issue 2, April 2012: 39-52
    This study uses the current financial crisis as a quasi-experiment to examine whether and to what extent corporate boards affect the performance of firms. Using cumulative stock returns over the crisis to measure of firm performance, we find that board independence, as traditionally defined, does not significantly affect firm performance. However, when we re-define independent directors as outside directors who are less connected with current CEOs, a measure we call true independence, there is a positive and significant relationship between this measure and firm performance. Second, outside financial experts are important for firm performance. Third, board meeting frequencies, director attendance behaviors, and director age also affect firm performance during the crisis. Overall, our results suggest that firm performance during a crisis is a function of firm-level differences in corporate boards. JEL Classification: G01; G30; G34 Keywords: Financial crisis; Boards of directors; Firm performance; True independence
  • Hasan, Iftekhar; Hoi, Chun-Keung (Stan); Wu, Qiang; Zhang, Hao (2017)
    Journal of Accounting Research 3 ; June
    BoF DP 21/2017
    We investigate whether the levels of social capital in U.S. counties, as captured by strength of civic norms and density of social networks in the counties, are systematically related to tax avoidance activities of corporations with headquarters located in the counties. We find strong negative associations between social capital and corporate tax avoidance, as captured by effective tax rates and book-tax differences. These results are incremental to the effects of local religiosity and firm culture toward socially irresponsible activities. They are robust to using organ donation as an alternative social capital proxy and fixed effect regressions. They extend to aggressive tax avoidance practices. Additionally, we provide corroborating evidence using firms with headquarters relocation that changes the exposure to social capital. We conclude that social capital surrounding corporate headquarters provides environmental influences constraining corporate tax avoidance. Copyright ©, University of Chicago on behalf of the Accounting Research Center, 2016
  • Hasan, Iftekhar; Hoi, Chun-Keung (Stan); Wu, Qiang; Zhang, Hao (2017)
    Bank of Finland Research Discussion Papers 21/2017
    Published in Journal of Accounting Research, Volume 55, Issue 3, June 2017: 629-668
    We investigate whether the levels of social capital in US counties, as captured by strength of civic norms and density of social networks in the counties, are systematically related to tax avoidance activities of corporations with headquarters located in the counties. We find strong negative associations between social capital and corporate tax avoidance, as captured by effective tax rates and book-tax differences. These results are incremental to the effects of local religiosity and firm culture toward socially-irresponsible activities. They are robust to using organ donation as an alternative social capital proxy and fixed effect regressions. They extend to aggressive tax avoidance practices. Additionally, we provide corroborating evidence using firms with headquarter relocation that changes the exposure to social capital. We conclude that social capital surrounding corporate headquarters provides environmental influences constraining corporate tax avoidance.
  • Francis, Bill; Hasan, Iftekhar; Wu, Qiang; Park, Jong Chool (2014)
    Bank of Finland Research Discussion Papers 1/2014
    Published in Contemporary Accounting Research, Volume 32, Issue 3, September 2015: 1285–1318
    This paper investigates the effect of CFO gender on corporate financial reporting decision-making. Focusing on firms that experience changes of CFO from male to female, the paper compares the firms' degree of accounting conservatism between pre- and post-transition periods. We find that female CFOs are more conservative in their financial reporting. In addition, we find that the relation between CFO gender and conservatism varies with the levels of various firm risks such as litigation risk, default risk, systematic risk, and CFO specific risk such as job security risk. We further find that risk-aversion of female CFOs is associated with less equity-based compensation, lower firm risk, higher tangibility level, and lower dividend payout level. Overall, the study provides strong support for the notion that female CFOs are more risk averse than male CFOs, which leads female CFOs to adopt more conservative financial reporting policies. Keywords: Accounting Conservatism; Gender; CFO; Risk-Aversion. JEL Classification: M41; J16
  • Hasan, Iftekhar; Hoi, Chun-Keung (Stan); Wu, Qiang; Zhang, Hao (2020)
    Journal of Corporate Finance June
    We find that social capital in U.S. counties, as captured by strength of social norms and density of social networks, is positively associated with innovation of firms headquartered in the county, as captured by patents and citations. This relation is robust in fixed-effect regressions, instrumental variable regressions with a Bartik instrument, propensity score matching regressions, and a difference-in-differences design that isolates the effects of over time variations in social capital due to corporate headquarter relocations. Strength of social norms plays a more dominant role than density of social networks in producing these empirical regularities. Cross-sectional evidence indicates the prominence of the contracting channel through which social capital relates to innovation. Additionally, we find that social capital is also positively associated with trademarks and effectiveness of corporate R&D expenditures.
  • Francis, Bill; Hasan, Iftekhar; Wu, Qiang (2014)
    Bank of Finland Research Discussion Papers 15/2014
    Published in Financial Management, Volume 44, Issue 3, 1 September 2015, Pages 547-581
    Directors from academia served on the boards of around 40% of S&P 1,500 firms over the 1998-2011 period. This paper investigates the effects of academic directors on corporate governance and firm performance. We find that companies with directors from academia are associated with higher performance and this relation is driven by professors without administrative jobs. We also find that academic directors play an important governance role through their advising and monitoring functions. Specifically, our results show that the presence of academic directors is associated with higher acquisition performance, higher number of patents and citations, higher stock price informativeness, lower discretionary accruals, lower CEO compensation, and higher CEO forced turnover-performance sensitivity. Overall, our results provide supportive evidence that academic directors are valuable advisors and effective monitors and that, in general, firms benefit from having academic directors.
  • Hasan, Iftekhar; Hoi, Chun Keung; Wu, Qiang; Zhang, Hao (2017)
    Journal of Financial and Quantitative Analysis 3; June
    Published in BoF DP 21/2015.
    We find that firms headquartered in U.S. counties with higher levels of social capital incur lower bank loan spreads. This finding is robust to using organ donation as an alternative social capital measure and incremental to the effects of religiosity, corporate social responsibility, and tax avoidance. We identify the causal relation using companies with a social-capital-changing headquarters relocation. We also find that high-social-capital firms face loosened nonprice loan terms, incur lower at-issue bond spreads, and prefer public bonds over bank loans. We conclude that debt holders perceive social capital as providing environmental pressure that constrains opportunistic firm behaviors in debt contracting.
  • Hasan, Iftekhar; Hoi, Chun-Keung (Stan); Wu, Qiang; Zhang, Hao (2015)
    Bank of Finland Research Discussion Papers 21/2015
    Published in Journal of Financial and Quantitative Analysis, 52, 3, 2017: 1017-1047
    We find that firms headquartered in U.S. counties with higher levels of social capital incur lower bank loan spreads. This finding is robust to using organ donation as an alternative social-capital measure and incremental to the effects of religiosity, corporate social responsibility, and tax avoidance. We identify the causal relation using companies with a social-capital-changing headquarter relocation. We also find that high-social-capital firms face loosened nonprice loan terms, incur lower at-issue bond spreads, and prefer bonds over loans. We conclude that debt holders perceive social capital as providing environmental pressure constraining opportunistic firm behaviors in debt contracting.
  • Francis, Bill; Hasan, Iftekhar; Wu, Qiang (2013)
    Bank of Finland Research Discussion Papers 8/2013
    Using the recent financial crisis as a natural quasi-experiment, we test whether and to what extent conservative accounting affects shareholder value. We find that there is significantly positive and economically meaningful relation between conservatism and firm stock performance during the current crisis. The result holds for alternative measures of conservatism and is validated in a series of robustness checks. We further find that the relation between conservatism and firm value is more pronounced for firms with weaker corporate governance or higher information asymmetry. Overall, our paper complements LaFond and Watts (2008) by providing empirical evidence to their argument that conservatism is an efficient governance mechanism to mitigate information risk and control for agency problems, and that shareholders benefit from it. JEL Classification: M41; M48; G01 Keywords: Accounting conservatism, Shareholder value, Financial crisis
  • Hasan, Iftekhar; Kim, Incheol; Teng, Haimeng; Wu, Qiang (2016)
    Bank of Finland Research Discussion Papers 26/2016
    This study examines whether foreign institutional investors (FIIs) help explain variation in corporate tax avoidance and whether mechanisms such as tax morality, investment horizon, and corporate governance underlie the relation between FIIs and tax avoidance. We find robust evidence that FIIs are negatively associated with corporate tax avoidance. Moreover, this negative association is dominated by FIIs from countries with high tax morality, FIIs with long-term investment horizons, and FIIs from countries with high corporate governance quality. We conclude that FIIs play an active role in shaping corporate tax avoidance policy.
  • Francis, Bill; Hasan, Iftekhar; Wu, Qiang (2011)
    Bank of Finland Research Discussion Papers 18/2011
    Motivated by recent studies that show female CFOs are more risk averse than male CFOs when making various corporate decisions, we examine whether banks take into consideration the gender of CFOs when pricing bank loans. We find that in our sample, firms under the control of female CFOs on average enjoy about 11% lower bank loan price than firms under the control of male CFOs. In addition, loans given to female CFO-led companies have longer maturities and are less likely to be required to provide collateral than loans given to male CFO led companies. Our results are robust to a series of robustness tests, such as a firm and year-fixed effect regression, a Heckman two-stage self selection model, a propensity score match method and a differences-in-differences approach. Overall, our results suggest that banks tend to recognize the role of female CFOs in providing more reliable accounting information ex ante and reducing default risk ex post, and grant firms with female CFOs lower loan price and more favourable contract terms.