Template-Type: ReDIF-Article 1.0 Author-Name: Fang Sun Author-Name: Xiangjing Wei Author-Name: Yang Xu Title: DO PROPERTY-LIABILITY INSURERS CATER THEIR LOSS RESERVE TO INVESTOR SENTIMENT? Abstract: We investigate the relation between investor sentiment and property-liability insurers’ loss reserves. We use the Michigan Consumer Confidence Index as a proxy for sentiment, we show that during high sentiment periods, property-liability insurers intend to under-estimate loss reserves. In contrast, during periods of low sentiment, property-liability insurers intend to over-estimate loss reserves. We interpret this finding as evidence that insurers cater to investors’ optimism (pessimism), driven by investor sentiment, via loss reserve claims. Further analysis indicates that insurers with loss or small profit are more sensitive to investor sentiment, in terms of adjusting loss reserves while insurers with higher earnings are less sensitive to investor sentiment in terms of adjusting loss reserves, consistent with catering theory. The findings of insurers cater their loss reserves to investor sentiment show the need for increased attention from boards of directors, auditors and regulators to earnings reported on the financial statements, especially during periods of high investor sentiment when insurers are more likely to understate loss reserves and accordingly to report optimistic earnings Classification-JEL: G2, L1 Keywords: Insurers, Loss Reserve, Investor Sentiment Journal: The International Journal of Business and Finance Research Pages: 1-12 Volume: 11 Issue: 1 Year: 2017 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v11n1-2017/IJBFR-V11N1-2017-1.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:11:y:2017:i:1:p:1-12 Template-Type: ReDIF-Article 1.0 Author-Name: Fu-Chuan Lee Title: CAPITAL STRUCTURE POLICY: EVIDENCE FROM TAIWAN Abstract: Capital structure literature shows that, in static tradeoff theory, a firm’s target leverage is related to its size and profitability. However, it remains unclear as to whether target leverage even exists. Assuming that it does, two key questions arise. First, how does the company adjust to the target? Second, is there a contradiction between pecking order theory and static tradeoff theory? This study classifies a sample of companies listed on the Taiwan Stock Exchange into four quadrant clusters by the average method based. The classification is based on factors related to firm size and profitability to determine whether firms in these clusters engage in different financing policies. This study explores whether pecking order or static tradeoff theory are conducted through independent and conventional four-factor joint testing. Results show the target-adjustment model is more efficient than the pecking order model. In addition, I conduct robustness checks by the quartile method. The results show the large firms with low profitability and no financing gaps adhere to both the pecking order and target-adjustment models. These results provide support for the hypothesis that financing policies employed by companies listed on the Taiwan stock market vary as a function of the quadrant in which they are classified Classification-JEL: G32 Keywords: Capital Structure, Financing Deficit, Pecking Order Theory, Static Tradeoff Theory Journal: The International Journal of Business and Finance Research Pages: 13-35 Volume: 11 Issue: 1 Year: 2017 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v11n1-2017/IJBFR-V11N1-2017-2.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:11:y:2017:i:1:p:13-35 Template-Type: ReDIF-Article 1.0 Author-Name: Amod Choudhary Author-Name: Nikolaos Papanikolaou Title: U.S. PUBLIC PENSION FUNDS AND RISK SEEKING BEHAVIOR OF MONEY MANAGERS: THE PATH TO ALTERNATIVE INVESTMENTS Abstract: State Public Pension funds have increased their portfolios into riskier alternative investments to meet their annual required contributions (ARC). Our paper uses The Public Plans Data (PPD) to analyze the differences in alternative investments for 2001 to 2013 by Democrats and Republican lawmakers. The shift in funds from traditional to alternative investments ushers in a new era for public pension fund money managers and their appetite for taking on higher levels of risk. This paper shows that the shift from traditional low risk – low return investments to alternative high risk – high return investments of state public pension funds are due to changes in governance and risk seeking investment behavior of the money managers Classification-JEL: H75, J38, E6, P16 Keywords: Public Pensions, Funding Ratio, Alternative Investments, Democrats, Republicans, Panel Data & OLS Regression, Random Effects Model, Risk Seeking Behavior Journal: The International Journal of Business and Finance Research Pages: 37-47 Volume: 11 Issue: 1 Year: 2017 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v11n1-2017/IJBFR-V11N1-2017-3.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:11:y:2017:i:1:p:37-47 Template-Type: ReDIF-Article 1.0 Author-Name: Taewoo Park Title: THE INCREMENTAL INFORMATION CONTENT OF SALES IN EXPLAINING STOCK RETURNS: A CROSSINDUSTRY STUDY Abstract: In this paper we examine the industry specific determinants of the information content of sales incremental to earnings in explaining stock returns. We find that across industries the information content of sales beyond earnings in explaining contemporaneous return is significantly associated with the timeliness of earnings and sales information to the market. We find evidence of income smoothing which can arise from firms’ accounting and operating decisions. The increase in 2 R due to sales in explaining returns varies widely across industries and is with and due to adding sales in addition to earnings with mean 57% after controlling for the effects of the timeliness of sales and earnings Classification-JEL: M21, M40 Keywords: Information Content, Stock Returns, Sales, Earnings Journal: The International Journal of Business and Finance Research Pages: 49-63 Volume: 11 Issue: 1 Year: 2017 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v11n1-2017/IJBFR-V11N1-2017-4.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:11:y:2017:i:1:p:49-63 Template-Type: ReDIF-Article 1.0 Author-Name: Jia Wang Title: CROSS SECTIONAL VARIATION IN RISK ARBITRAGE Abstract: In this study, we are interested in understanding the price formation process of bidders’ and targets’ shares after the merger announcement and seek to explore the impacts of liquidity risk, price pressure, and limited arbitrage theory on the cross sectional variation in risk arbitrage. Using a sample of 1046 merger offers and regression technique, we find that arbitrage spread is positively correlated with deal completion risk, positively correlated with liquidity risk in a concave way: arbitrage spread increases at a decreasing speed as the liquidity risk increases. This finding is consistent with the literature on stock returns. We also find that price pressure is significant in determining arbitrage spread. However, we fail to find evidence that is consistent with the limited arbitrage theory: limitation on the supply of arbitrage capital is not significantly correlated with the deviation of arbitrage spread, in either direction, from the efficient level. The risk factors and limits of arbitrage identified in the paper help explain the profits and cross sectional variation in risk arbitrage Classification-JEL: G10, G12, G34 Keywords: Risk Arbitrage, Deal Completion Risk, Liquidity Risk, Price Pressure, Limited Arbitrage Journal: The International Journal of Business and Finance Research Pages: 65-75 Volume: 11 Issue: 1 Year: 2017 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v11n1-2017/IJBFR-V11N1-2017-5.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:11:y:2017:i:1:p:65-75 Template-Type: ReDIF-Article 1.0 Author-Name: Olayinka Akinlo Author-Name: John Olayiwola Title: HUMAN CAPITAL REPORTING AND CORPORATE EARNINGS: EVIDENCE FROM NIGERIA Abstract: This study investigated the influence of human capital reporting on earnings of quoted manufacturing companies in Nigeria. The study used secondary data from 2007 to 2014 collected from selected Annual Report and Accounts of 50 listed manufacturing companies, and Fact Books published by the Nigeria Stock Exchange. Pooled least squares were used in the analysis. The results indicate that total earnings present a positive relationship with all the components of human capital but a significant one with salaries and wages and labour turnover. This then suggests that capitalization of corporate investment on its human resource has the aptitude of increasing the total earnings of quoted manufacturing companies in Nigeria Classification-JEL: M40, M41 Keywords: Total Earnings, Human Capital Cost, Capitalization, Corporate Success, Nigeria Journal: The International Journal of Business and Finance Research Pages: 77-85 Volume: 11 Issue: 1 Year: 2017 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v11n1-2017/IJBFR-V11N1-2017-6.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:11:y:2017:i:1:p:77-85 Template-Type: ReDIF-Article 1.0 Author-Name: Ebrahim Mansour Author-Name: Wasfi AL Salamat Author-Name: Walid Masadeh Title: THE IMPACT OF RELIABILITY ELEMENTS ON PERFORMANCE INDICATORS OF JORDANIAN COMMERCIAL BANKS Abstract: This study aims to examine the reliability of accounting information systems and its impact in improving the performance indicators of Jordanian commercial banks through the adoption and use of ( Sys Trust ) model. The concept of performance indicators (according to this study) includes: financial, operational, and stock performance and management of market value. The study has drawn upon qualified questionnaire sent to all the Jordanian commercial banks listed in Amman Stock Exchange to obtain the data with a response rate over 75%. A number of illustrative hypotheses have been tested statistically to examine the readiness of and the relation between accounting information systems’ reliability and quality of performance. The results have indicated high level about the readiness of (SysTrust) principles in accounting information systems environment of the Jordanian Commercial Banks ;( availability (78%), security (77%), confidentiality and privacy (70%), and Processing integrity (57%)). In addition, an independent sample R2 test confirmed a positive relation between applications of (SysTrust Model) and parameters of banking performance matrix (Net profit margin and Return on assets). While the statistical tests have shown negative relation in regard to banking performance parameters (Market value-added, Return on investment, Earnings per share, and Price-earnings ratio) Classification-JEL: M410 Keywords: AIS Availability, AIS Security, AIS Confidentiality and Privacy, AIS Processing Integrity, AIS Market Value-Added, Return on Investment, Net Profit Margin, Return on Assets, Earnings Per Share, Price-Earnings Ratio Journal: The International Journal of Business and Finance Research Pages: 87-107 Volume: 11 Issue: 1 Year: 2017 File-URL: http://www.theibfr2.com/RePEc/ibf/ijbfre/ijbfr-v11n1-2017/IJBFR-V11N1-2017-7.pdf File-Format: Application/pdf Handle: RePEc:ibf:ijbfre:v:11:y:2017:i:1:p:87-107