Author's School

Olin Business School

Language

English (en)

Date of Award

5-2-2024

Degree Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Chair and Committee

Xiumin Martin

Committee Members

na

Abstract

This dissertation focuses on the intersection of regulations and accounting issues. While policies often have stated intentions, the question remains whether they can achieve stated goals or could have other implications. The three chapters delve into the relationship between regulation, the consequent corporate actions, and their myriad implications for stakeholders. The first chapter, titled “When Speed Trumps Sustainability: Environmental Disclosure Frequency and Environmental Investment Myopia,” investigates if the frequent environmental disclosure requirement could counterintuitively impede the sustainability goal. More frequent disclosure mandates, while enhancing transparency, impose a shorter measurement interval on companies, inducing them to focus on short-term goals. More specifically, I study whether mandating more frequent emission disclosures leads to companies’ myopia in environmental investment decisions, making them switch from short-term-oriented environmental projects (end-of-pipe solutions) to long-term beneficial initiatives (clean technology). Utilizing hand-collected project-level data, I am able to classify environmental projects into end-of-pipe solutions and clean technologies. Examining a Chinese regulation transitioning from annual to daily mandatory emission reporting, I find that regulated firms increase end-of-pipe investments and reduce clean technology investments. This myopia pattern sheds light on the neglected costs of such mandates. Building on the exploration of unintended regulatory consequences, the second chapter, titled “Uncle Sam’s Stimulus and Crypto Boom," is joined by Xiumin Martin and Jeremy Bertomeu from Washington University in Saint Louis. This paper highlights another aspect of regulation and policy: the unintended effects of government stimulus packages. Our study found that during the COVID-19 pandemic, government financial aid inadvertently influenced the crypto asset market. By employing a Bartik instrument, we discovered that a notable portion of the stimulus, meant to strengthen employment and the economy, was redirected into crypto investments. This calls into question the effectiveness of such broad stimulus initiatives. The third chapter, titled “Friendship Message for Coworkers: Social Connection between IR Officers and Analysts,” investigates the Regulation of Fair Disclosure against the backdrop of interpersonal ties. To identify interpersonal ties, I collected data for over 2000 IR officers. I find that Wall Street analysts moving to investor relations roles might lean towards selective disclosure, particularly if they retain close ties with past colleagues. I find connected analysts consistently outperformed their peers in forecast accuracy, price influence, and timeliness in issuing earnings forecasts post-IR transition. This information advantage appears to be attributable more to enforcement frictions rather than the “mosaic” theory.

Comments

Accounting

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