The objective of this study was to analyze the impact of three Audit Committee (AC) characteristics, financial expertise, diversity and activism on aggressive earnings management. We hypothesized that these AC characteristics are negatively related to aggressive earnings management. To test or hypothesis, we conducted an empirical test with a sample of 10 Canadian corporations listed on the Toronto stock exchange: 5 companies that were accused of aggressive earnings management and 5 other corporations used as a control group. We analyzed the 5-year period prior to the accusation (1999-2003). We measured earnings management by the level of discretionary accruals (using the modified Jones model (1995). Our results show that activism and the financial expertise of AC members are negatively related to aggressive earnings management; however, we did not find a significant relationship between diversity and aggressive earnings management. These results contribute to help governance oversight organizations identify AC characteristics that have the most influence on the detection of aggressive earnings management, which could help agencies develop and enforce methods to detect and reduce aggressive earnings management practices.
This paper analyzes the relative trading activity of securities cross-listed on two highly integrated international stock exchanges. We find that traders choose an exchange on the basis of superior market quality, as measured by better quoted prices, greater depth at the market in its limit order book and better price continuity. As well, clientele effects influence trade location. From the perspective of a US investor, the price impacts of the total sample of trades for these securities, are statistically significantly lower on the New York Stock Exchange than on the Toronto Stock Exchange; but are not economically different. The results are consistent with the order splitting hypothesis and the co-existence of multiple markets.
The effects of various market conditions of the New York Stock Exchange (NYSE) on non-USA markets are investigated in this article. On the basis of an empirical investigation, evidence is presented which suggests that the influence of the NYSE on non-USA markets differs during different market conditions of the NYSE. For example, it was found that during declining market conditions on the NYSE the influence was greater on non-USA markets than during rising market conditions on the NYSE. A model designed to yield detailed risk statistics of individual non-USA securities was also implemented to investigate the impact of various market conditions of the NYSE.
This study was an attempt to analyze the impact of general and presidential elections on stock market returns of Karachi Stock Exchange. The event study methodology was employed and the data from 1997 to 2013 was used to identify the impact. This study investigated the impact of general and presidential elections held in Pakistan individually and collectively. The results established that there was a significant impact of elections on stock market returns of Karachi Stock Exchange.
The aim of this research study is to examine the impact of domestic portfolio diversification strategies in Toronto Stock
Exchange (TSX) on Canadian textile manufacturing industry in order to obtain attractive investment opportunities.
Dissipation of benefits of globally diversified portfolios due to overwhelming convergence among the international and
regional stock markets around the globe have given rebirth to the idea of domestic portfolio diversification particularly
after the global financial crisis of 2008. Textile industry in Canada is challenging but can achieve higher performance
based on Toronto Stock Exchange behavior. Therefore, this is a complex applied research focused on investigating TSX
as standalone stock market for domestic diversification opportunities. For this purpose, correlation coefficients, pairwise
cointegration, multiple cointegration and causality of sectors in TSX have been examined. The empirical results show
that majority of the sectors in TSX do not share high correlation with each other and they are also not highly
cointegrated. These empirical findings indicate that TSX presents attractive opportunities for domestic portfolio
diversification.
Technological innovation is propelling the move in financial markets away from fractional trading and towards decimal trading, as in the example of The New York Stock Exchange (NYSE) tick size changed from $1/16 to $0.01 on January 29, 2001. This chapter examines the impact of that trend as it relates to market quality and trading behaviour, and draws on comparisons between NYSE and NASDAQ, as well as evidence from other markets and market-traded securities, in demonstrating how decimalization leads to a decrease in the bid-ask spread and depth and an improvement in the probability of information-based trading, while having seemingly no effect on the frequency of limit orders. Our examination also demonstrates how the 1996 decimalization of the Toronto Stock Exchange (TSX, formerly TSE) has had little impact on its giant competitor, NYSE.
The Impact of Audit Committee Characteristics on Earnings Management: A Canadian Case Study