Found 8 article(s) for author 'Suraj Srinivasan'

The Role of Gatekeepers in Capital Markets

The Role of Gatekeepers in Capital Markets. Suraj Srinivasan, May 2019, Paper, “Gatekeepers in financial markets have the power to provide the institutional stability, fortitude and direction necessary for the development and the smooth functioning of capital markets. At the same time, they are often motivated by their own private incentives. This, along with the trade-offs they face and the at-times unintended consequences of the regulations they propose and enforce, can undermine their effectiveness. A thorough understanding of gatekeepers and their roles can thus illuminate academics, the financial community and regulators on how such gatekeepers can be the most effective and generate the greatest benefits for capital markets. Since gatekeeping roles and the literature they have inspired encompass a wide array of institutions and agencies, our overview concentrates on those that the conference papers appearing in this volume focus on. We conclude that collectively, the papers contribute to significant progress, point out some crucial areas that call for further investigation, and offer opportunities for future research.Link

Tags: , , , , ,

Going Digital: Implications for Firm Value and Performance

Going Digital: Implications for Firm Value and Performance. Suraj Srinivasan, May 19, 2019, Paper, “We examine the firm value and performance implications of the growing trend of non-technology (non-tech) companies adopting digital technologies such as artificial intelligence, big data, cloud computing, machine learning. For the entire universe of US public listed firms, we identify companies that are going digital using textual analysis of disclosure of digital-related words in corporate financial reports and conference calls. We first show that digital adoption by non-tech firms has dramatically grown in recent years. Non-tech digital adopters exhibit greater stock price co-movement with technology companies than with their industry peers, suggesting that the digital activities are making them similar to tech firms. The digital adopters hold more cash and are larger, younger, and less CapEx-intensive. Digital adoption is associated with higher valuation — market-to-book ratio is higher by 7-21% than industry peers – and is higher for firms that are younger, more CapEx-intensive, exhibit higher sales growth and are in industries where digital adoption is prevalent.Link

Tags: , ,

The Changing Landscape of Auditor Liability

The Changing Landscape of Auditor Liability. Suraj Srinivasan, October 2018, Paper, “We provide a comprehensive overview of shareholder litigation against auditors since the passage of the PSLRA. The number of lawsuits per year has declined, dismissals have increased, and settlements in recent years have declined. Our study asks why. Because we find that the likelihood an auditor is sued following a severe restatement has significantly declined in recent years, it does not appear that the decline can be attributed solely to increases in audit quality. Instead, we consider whether the recent wave of Supreme Court cases limiting the scope of Rule 10b-5 against private actors may have led to the decline. To study this possibility, we focus on the Supreme Court’s 2007 and 2011 rulings in Tellabs v. Makor and Janus v. First Derivative, respectively.Link

Tags: , ,

The Changing Landscape of Auditor Liability

The Changing Landscape of Auditor Liability. Suraj Srinivasan, March 1, 2018, Paper, “We document the declining role of Rule 10b-5 (a general catch-all antifraud provision) in securities class-action lawsuits against auditors since the passage of the PSLRA. The decline is perhaps most noticeable in dismissal rates, which increased monotonically over each three-year period from 1996 to 2013. Further, the likelihood that an auditor will be sued following a severe restatement has significantly declined, and settlements have decreased. One explanation for this trend is the recent wave of Supreme Court cases limiting the scope of Rule 10b-5 against private actors.Link

Tags: , , ,

Can analysts assess fundamental risk and valuation uncertainty? An empirical analysis of scenario-based value estimates

Can analysts assess fundamental risk and valuation uncertainty? An empirical analysis of scenario-based value estimates. Suraj Srinivasan, September 2016, Paper, “We use a data set of sell-side analysts’ scenario-based equity valuation estimates to examine whether analysts can assess the state-contingent risk surrounding a firm’s fundamental value. We find that the spread in analysts’ scenario-based valuations captures the riskiness of operations and predicts the absolute magnitude of long-run valuation errors and future changes in firm fundamentals. We also show that analysts’ assessment of fundamental risk and its predictive ability systematically improved after the financial crisis, consistent with the macroeconomic shock raising analysts’ awareness of firms’ systematic risk exposures.Link

Tags: , , , , , ,

Market competition, earnings management, and persistence in accounting profitability around the world

Market competition, earnings management, and persistence in accounting profitability around the world, Paul Healy, George Serafeim, Suraj Srinivasan, Gwen Yu, January 14, 2014 , Paper. “We examine how cross-country differences in product, capital, and labor market competition, as well as earnings management affect mean reversion in accounting return on assets. Using a sample of 48,465 unique firms from 49 countries, we find that accounting returns mean revert faster in countries where there is more product and capital market competition, as predicted by economic theory…” Link

Tags: , , , , ,

SOX after Ten Years: A Multidisciplinary Review

SOX after Ten Years: A Multidisciplinary Review. Suraj Srinivasan, John C. Coates, October 21, 2013, Paper. “We review and assess research findings from 120+ papers in accounting, finance, and law to evaluate the impact of the Sarbanes-Oxley Act. We describe significant developments in how the Act was implemented and find that despite severe criticism, the Act and institutions it created have survived almost intact since enactment. We report survey findings from informed parties that suggest that the Act has produced financial reporting benefits. While the direct costs of the Act were substantial and fell disproportionately on smaller…”  Link verified March 28, 2014

Tags: , ,

Accountability of Independent Directors – Evidence From Firms Subject to Securities Litigation

Accountability of Independent Directors – Evidence From Firms Subject to Securities Litigation. Francois Brochet, Suraj Srinivasan, June 2013, Paper. “We examine which independent directors are held accountable when investors sue firms for financial and disclosure related fraud. Investors can name independent directors as defendants in lawsuits, and they can vote against their re-election to express displeasure over the directors’ ineffectiveness at monitoring managers. In a sample of securities class-action lawsuits from 1996 to 2010, about 11% of independent directors are named as defendants…” Link verified March 28, 2014

Tags: , ,