Accounting Theses and Dissertations

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Browsing Accounting Theses and Dissertations by Author "Matsunaga, Steven"

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    Are Critics Right About Quarterly Earnings Guidance? An Examination of Quarterly Earnings Guidance and Managerial Myopia
    (University of Oregon, 2020-09-24) Quinto, Claire; Matsunaga, Steven
    I examine the claim that managers who issue quarterly earnings guidance sacrifice long-term value to enhance short-term performance, i.e., that quarterly earnings guidance encourages myopic behavior. I find that quarterly guiders are more likely to meet quarterly earnings expectations and tend to use more short-term language in their corporate disclosures, supporting the view that quarterly earnings guidance shifts a manager’s attention to the short term. However, quarterly earnings guidance does not appear to have a negative impact on a firm’s long-term performance. Using an entropy-balanced sample, I find that quarterly guiders outperform non-guiders over the next three and five years across a variety of performance measures. Also inconsistent with the claims of critics, I find no evidence that quarterly earnings guidance is associated with more earnings management or underinvestment. Taken together, my results do not support the view that quarterly earnings guidance leads to managerial myopia. Instead, it appears that among the firms that choose to provide it, the benefits of quarterly earnings guidance outweigh the costs.
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    Do Financial Expert Directors Affect the Incidence of Accruals Management to Meet or Beat Analyst Forecasts?
    (University of Oregon, 2013-10-03) Hsu, Pei Hui; Matsunaga, Steven
    Evidence that firms adjust accruals to just meet or beat analyst forecasts is pervasive. However, the implications for earnings quality are not clear. Managers can use this practice either to mislead investors, resulting in lower quality earnings, or to signal future earnings growth and thereby improve the decision usefulness of earnings. Assuming that boards are concerned about providing higher quality financial information and that they can discern the proper earnings signal, they should discourage managers from adjusting earnings to beat the analyst forecast target if such adjustment diminishes earnings quality. Consistent with this prediction, I find a significantly negative relation between the probability that a firm beats the target by adjusting accruals and the presence of at least one independent audit committee financial expert for firms with poor future performance. I also find that the negative impact of an independent financial expert on the odds of beating the target by adjusting accruals is significantly stronger for firms with poor future performance than for firms with strong future performance. These findings are consistent with financial expertise on the audit committees improving corporate governance by protecting shareholders from accruals management that reduces the decision usefulness of earnings.
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    Individual Executive Characteristics and Firm Performance: Evidence from CEO Narcissism
    (University of Oregon, 2017-09-06) Perez, Rebeca; Matsunaga, Steven
    Narcissism refers to persistent feelings of grandiosity, a need for admiration, and a lack of empathy (American Psychiatric Association 2013). The literature has found narcissism to be associated with individuals making decisions for a firm that fulfill their egos rather than maximize firm value. The literature in psychology, however, suggests that when firms face financial distress, narcissism could be a desirable trait in an individual, enabling the CEO to take the necessary risks and make the necessary decisions for the firm to recover. I study the context under which a firm may benefit from a narcissistic CEO. In this study, I use two measures from prior literature (CEO photo prominence in the annual report and a CEO’s use of first-person personal pronouns) to form a combination measure to investigate whether firms in financial distress are more likely to appoint a CEO with more narcissistic traits. I find some evidence to support this hypothesis. I also examine whether the association between narcissism and future firm performance is affected by the economic conditions of a firm and the visibility of the firm. I find results consistent with firm financial distress increasing a narcissistic CEO’s effect on firm performance in low-visibility firms.