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Essays on the capital market consequences of disclosures

University of British Columbia

This thesis examines the capital market consequences of two new forms of disclosure: foreign cash holdings in 10-K filings, a semi-voluntary disclosure, and firms’ presentations at conferences hosted by a variety of third-party organizations, a voluntary disclosure. The first essay exploits the recent trend of disclosing foreign cash holdings by US multinational firms in 10-K filings and investigates the valuation of foreign cash holdings, both relative to domestic cash holdings and cross-sectionally. Firms whose filings in prior years receive a comment on foreign cash from the SEC are much more likely to disclose foreign cash, but internal and external governance structures also affect the likelihood of disclosure. I find that the valuation of foreign cash is similar to the valuation of domestic cash for the same firm. Cross-sectionally, I find that firms who need to pay higher repatriation tax to access foreign cash do not have less valuable foreign cash. Firms whose foreign operations have more severe agency problems have less valuable foreign cash, but firms with higher foreign growth opportunities have more valuable foreign cash. The second essay studies how managers’ presentations at different types of conferences affect firms’ information environments, including analyst forecast properties, stock price informativeness and liquidity. Despite their popularity, little is known about conference presentations’ impact on capital market efficiency, other than some studies implying that these disclosures might give conference participants an informational edge. I classify conferences based on sponsors into three categories: conferences hosted by brokerage houses (broker-hosted conferences), trade organizations (trade shows), and other parties (investor relation, or IR conferences), and calculate the frequency of attending these conferences for each firm. I find that information quality and uncertainty of the presentations differ across conferences. Broker-hosted conferences have a positive effect on all the information environment measures, IR conferences have a milder or no effect, whereas trade shows actually have a negative effect across the board. Among all the conferences, only presentations at trade shows are followed by stock price reversals, indicating an initial overreaction to such presentations, possibly due to managers’ incentive to oversell new products.

Text

2015-06-15

Attribution-NonCommercial-NoDerivs 2.5 Canada

http://hdl.handle.net/2429/53906

Business Administration

University of British Columbia

UBCV

http://creativecommons.org/licenses/by-nc-nd/2.5/ca/