Review of Pacific Basin Financial Markets and Policies

This concept paper synthesizes two theories of executive remuneration. Soundly motivated, the two manifestations of agency theory of equity examine the market for managerial labor. The first theory models two families of determinants of Chief Executive Officer remuneration: economic factors and wealth expropriation. The second theory models equilibrium corporate governance quality by treating the Chief Executive Officer as a rational maximizer of her own wealth utility. This theory complements the first by facilitating consideration of the contextual role played by Chief Executive Officer greed, in undermining equilibrium pricing of economic factors and the efficacy of corporate governance mechanisms.

We investigate whether firms with greater financial technology (FinTech) application experience a difference in audit and financial reporting’s timeliness from other firms. We also examine the extent to which FinTech’s application relates to reporting lags. Using 32,196 US-listed firm-year observations from 2012 to 2021, we find that the Top 25 FinTech firms experience greater reporting audit and financial lags than other firms, suggesting that strict financial regulations, cybersecurity concerns, and reconciling mixed transactions affect financial reporting’s timeliness. Moreover, higher-ranked Top 25 FinTech firms experience greater reporting lags than lower-ranked firms. Furthermore, higher-ranked FinTech firms have greater audit and financial reporting lags.

Auditing standards instruct external auditors to read public information to mitigate management’s information advantage in hiding earnings management and fraud. The transparency of this information, and thus the cost of becoming informed using public information, varies across firms. We argue this cost of becoming informed creates an opportunity for earnings management, increasing audit risk. This study finds that higher costs of becoming informed are related to higher audit fees. In addition, we show that executive equity risk-taking incentives and an attitude towards aggressive reporting exacerbate the effect of the cost of becoming informed on audit fees, suggesting complementary effects of these fraud dimensions on audit pricing. These results are more likely due to audit firms charging risk premiums rather than doing additional audit work. This paper contributes to recent research on the costs of becoming informed and to research on the relation between management compensation and auditor compensation.

The book-to-market ratio’s numerator adds assets and liabilities differing in risk. We propose a test for the value premium and its sources. Individual balance sheet holdings are divided by firm size. When associated risk premium coefficients are equal, an overall book-to-market is appropriate. Otherwise, there are different risks in assets and liabilities.

For U.S. firms, for four decades since 1980, the excess return is regressed on seven ratios relative to size for cash, receivables, tangibles, intangibles, payables, short and long-term debt, and controls. The seven value premiums are not equal. Firms earn higher returns for cash and receivables and lower for short-term debt. Tangible and intangible assets earn no value premium.

This study examines the association between gender and financial activities among middle- and old-aged adults in Taiwan. We conduct a survey of 221 respondents who attended a seminar on financial activities of older adults held by the Trust Association of Taiwan and participated in subsequent surveys on the community during 2017 and 2018. We found that females are more likely to participate in a greater number of financial activities compared with their male counterparts. In particular, we found evidence to support the positive association between female adults and riskier financial activities, such as stocks and mutual funds. Our findings support the information process hypothesis in which gender is an important factor for determining an individual’s participation in financial activities.

Our study investigates the consequences of the 2019 Australian bushfire regarding its financial, economic, and environmental effects. Using an augmented version of the event study methodology, we show that depressed investors’ mood leads to a countrywide financial impact, which tends to be long-lasting. On the other hand, regional effects are self-correcting, bringing financial valuations back to their fundamental values. We observe that polluting firms experience an increase in their stock market returns during bushfire seasons– consistent with the theory of increased risk premiums in times of uncertainty. Regarding economic activity, we confirm that the countrywide tourism sector, which employs a significant fraction of Australia’s labor force, continues to be severely impaired by regional fires. Unlike previous studies in finance, we demonstrate that bushfires have a substantial and harmful impact on Australia’s air quality. The battery of robustness tests (range of event windows, controlling for information leakage, and changing macroeconomic conditions) validates our findings.

Today’s Indian cities are confronted with a wide range of problems due to social equity and urban housing policy failures, including rising populations, shifting family structures, increasing numbers of people living in informal communities and slums, inadequate urban infrastructure, growing environmental concerns, and an increase in migration. India has a severe housing shortage. A significant chasm separates housing demand from the supply. The discrepancy has led to the proliferation of urban slums, where millions of people are subjected to the lowest sanitation and hygiene standards. Housing policies in Indian cities include increasing taxes on unused or uninhabited land to fund the construction of low-cost dwellings, altering zoning laws to mandate that builders, and promoting higher densities of houses to spread out infrastructure costs among a larger population. Many people who have been the beneficiaries of land acquisition or other forms of forcible relocation are eligible for assistance through the Rehabilitation and Housing Resettlement Program. The proposed method included the city’s slums in the Advanced Smart Urban Missions (ASUM) planning process to overcome housing policy failures. A three-dimensional social equity framework with dispersion, identification, and protocol dimension aspects is applied to evaluate formal recovery plans’ objectives, priorities, and tactics. One of the most critical aspects of providing more housing alternatives for more people is ensuring everyone can afford it. Human rights, different perspectives, development initiatives in India, and policy inclusivity were also investigated. It makes suggestions for improving intelligent city policy that considers the needs of the city’s disadvantaged populations. This study looks into the problems that slum dwellers have with relocation and evictions and is limited to establishing various Smart Urban Missions. The research will help streamline the intelligent city development process sequentially, improving conditions for the urban poor and disadvantaged.

This study aims to identify the role of contextual variables, especially the interest rate, in affecting the relationship between a firm’s capital structure and firm value. This study investigates the capital structure of Pakistani-listed firms in light of rising interest rates, declining “Domestic credit to the private sector” and emerging Islamic banking in the country. The study uses GMM (Two-Step) to examine the linear, and dynamic Panel threshold model to examine the quadratic relationship between leverage firm value and how other contextual variables affect this relationship. The study found that there is a negative relationship between leverage and firm value in the presence of the majority of contextual variables. Except for tax, depreciation, and free cash flow, leverage shows a negative relationship with firm value in presence of all other contextual variables. Further results show that there is a quadratic relationship present between leverage and firm value. Also, the interest rate and inflation has a negative effect on firm value in long term, while in short term this relationship is positive. The study supports the pecking order & Trade-off theory but does not support the agency theory. The study is using new methodologies, just as the panel threshold model which is never used before for Pakistani industries. The panel threshold model is using some variables for the first time in research. Previously only size and debt were used in panel threshold models, this time we used debt, firm value, profitability, tax, and tangibility, which will be a significant contribution to the literature.