Navigation auf zora.uzh.ch

Search ZORA

ZORA (Zurich Open Repository and Archive)

When Companies Use Their Wiggle Room, Which Investors Care?

Ceccarelli, Marco (2018). When Companies Use Their Wiggle Room, Which Investors Care? Swiss Finance Institute Research Paper 18-62, University of Zurich.

Abstract

This paper investigates whether certain investors either prefer or dislike holding firms that exploit more of the available regulatory wiggle room and if such a strategy pays off. Exploited wiggle room (WR) is captured by relatively aggressive tax planning, financial reporting, and earnings management practices. I find that long-term, low-turnover investors hold firms with 3% higher exploited WR than those held by short-term, high- turnover investors. After experiencing misconduct that breaches their trust, investors significantly reduce the exploited WR of their holdings. Overall, investors seem to have heterogeneous preferences for WR exploitation and a liking for cautious firms that cannot be explained by a prot maximization motive alone.

Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Finance
Dewey Decimal Classification:330 Economics
Scope:Discipline-based scholarship (basic research)
Language:English
Date:30 August 2018
Deposited On:12 Sep 2018 14:00
Last Modified:27 May 2024 15:24
Series Name:Swiss Finance Institute Research Paper
Number of Pages:67
OA Status:Green
Free access at:Official URL. An embargo period may apply.
Official URL:https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3247044#
Other Identification Number:merlin-id:16757
Download PDF  'When Companies Use Their Wiggle Room, Which Investors Care?'.
Preview
  • Content: Published Version

Metadata Export

Statistics

Downloads

116 downloads since deposited on 12 Sep 2018
13 downloads since 12 months
Detailed statistics

Authors, Affiliations, Collaborations

Similar Publications