ORCID Profile
0000-0002-7416-9090
Current Organisation
UNSW Sydney
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Publisher: Informa UK Limited
Date: 29-08-2020
Publisher: Wiley
Date: 20-05-2023
Abstract: Using influenza epidemic data, we examine how constraints on corporate information production affect disclosure policies. We find that firms in areas with higher flu activity are less likely to issue short‐run earnings forecasts and more likely to issue long‐run earnings forecasts. These results are more pronounced when the information production process is more complex, when managers face a greater reputational loss for issuing low‐quality short‐run forecasts, and when firms’ costs of switching the forecast horizon are lower. Further analysis implies that the effect of flu activity on these forecast issuance decisions is not driven by firm performance or information uncertainty. Our results suggest that managers do not simply avoid issuing forecasts in response to information production constraints. Instead, they shift the forecast horizon from short‐run to long‐run, appearing to balance the costs of issuing low‐quality forecasts with those of not issuing forecasts at all.
Publisher: Wiley
Date: 21-07-2022
DOI: 10.1111/ACFI.12828
Abstract: This study examines whether chief executive officers’ (CEOs’) external labour market competitions affect their firms’ stock price crash risks. Using CEOs’ exposure to the prestigious media‐award‐winning events of competitor CEOs, we document a significant increase in stock crash risk for firms with award‐exposed CEOs, compared with firms without such CEOs, and this treatment effect is attenuated by strong external monitoring and a high‐quality information environment, yet exacerbated by CEOs’ similarity with award winners and likelihood of winning the award. We further find that withholding bad news, risk taking and financial misreporting are the possible channels through which competitor CEOs’ award events affect stock price crash risk. Our study sheds new light on the formerly under‐researched adverse effects of CEO awards by suggesting that external labour market competition associated with CEO awards plays an important role in influencing extreme downside risk in the equity market.
Publisher: Wiley
Date: 04-01-2023
DOI: 10.1111/JELS.12340
Abstract: We examine the effect of managerial litigation risk on corporate investment efficiency. Exploiting the staggered adoption of universal demand (UD) laws in the United States and employing a stacked regression approach, we find that the exogenous reduction in litigation risk induced by UD laws leads to lower investment efficiency. Our results are robust to the use of alternative partitioning variables and variations in s le composition. We also find that the decrease in investment sensitivity and excessive risk‐taking are channels through which the reduced litigation rights lead to less efficient investments. Our results support the notion that weakened shareholder litigation rights lead to more severe agency conflicts and thus less efficient investment decisions.
Publisher: Elsevier BV
Date: 04-2021
Publisher: Wiley
Date: 19-01-2023
DOI: 10.1111/ACFI.13056
Abstract: The Securities and Exchange Commission has associated readability with a range of linguistic features largely determined by the language style of the information producers, including sentence length and the use of personal pronouns, familiar words, surplus words and active voice. We examine the impact of a firm's workforce ethnic ersity on its financial statement readability. Based on linguistic literature, we argue that a more erse workforce increases the linguistic heterogeneity of the inputs into financial statements, hindering financial statement readability. We show that financial statement readability decreases with the ethnic ersity of the workforce, and that this effect is more pronounced for firms located in a community with a high crime rate or low social capital. We also find that the market reacts less to the earnings surprises of firms with less readable financial statements. We further find that the impact of white‐collar employee ersity on readability is greater than that of blue‐collar employee ersity. The results of robustness tests suggest that workplace ersity does not reduce firms' overall information production quality, which rules out the alternative explanation that employee ersity hinders financial statement readability through increasing employee conflict and communication errors. Overall, our study suggests that workforce ersity is an important determinant of financial statement readability.
Publisher: Elsevier BV
Date: 10-2022
Publisher: Wiley
Date: 14-06-2023
DOI: 10.1111/IJAU.12322
Abstract: Our study investigates the causal relationship between managerial litigation risk and auditor choice decisions. Exploiting the staggered adoption of universal demand (UD) laws at the state level in the United States, we use a stacked regression approach and find a lower propensity for affected firms to switch to higher‐quality auditors after the exogenous reduction of managerial litigation risk. This result supports the managerial entrenchment hypothesis that lower litigation risk leads to more managerial entrenchment, which allows managers to be opaque in order to enjoy private benefits. This negative effect is mitigated for firms with more audit committee industry expertise and for firms that are more reliant on external finance. Our study contributes to our understanding of how regulatory changes that have an impact on agency problems affect firms' demand for auditing.
Publisher: Wiley
Date: 15-04-2020
DOI: 10.1111/ACFI.12642
Publisher: Elsevier BV
Date: 04-2016
No related grants have been discovered for Leonard Leye Li.