Article ID Journal Published Year Pages File Type
5092900 Journal of Contemporary Accounting & Economics 2013 18 Pages PDF
Abstract
In this paper, we examine timely loss reporting for U.S. firms with a dual-class share structure, i.e., firms characterized by a divergence (wedge) between insiders' voting rights and cash flow rights. In our primary analysis, we find compelling evidence that the wedge (quantified by excess voting rights) is associated with less timely loss reporting for these firms. In our secondary analysis, in which we match our sample of dual-class share observations with a sample of single-class share observations, we find similar results. Our paper informs public policy by showing that weakened outside shareholder rights matter, even in the U.S., where, despite a strong investor protection environment, dual-class firms are less timely in recognizing bad news in reported earnings.
Related Topics
Social Sciences and Humanities Business, Management and Accounting Business, Management and Accounting (General)
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