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Abstract:
We examine the association between CEO reputation (proxied by the extent of press coverage) and the quality of the firm's earnings (proxied by two accruals-based measures). We test three explanations for an association between these constructs: the efficient contracting hypothesis suggests that reputed CEOs are associated with good earnings quality, while the rent extraction and matching explanations argue that reputed CEOs are associated with poor earnings quality. Using a simultaneous equations system to capture the endogeneity of the constructs, we find (consistent with the rent extraction and matching arguments) that more reputed CEOs are associated with poorer earnings quality than are less-reputed CEOs. Further tests find little support for the rent extraction hypothesis. We conclude that the reason more reputed CEOs are associated with poor earnings quality firms is that such firms require more talented managers and, therefore, employ more reputed CEOs.

Abstract:
We examine the association between CEO reputation (proxied by the extent of press coverage) and the quality of the firm's earnings (proxied by two accruals-based measures). We test three explanations for an association between these constructs: the efficient contracting hypothesis suggests that reputed CEOs are associated with good earnings quality, while the rent extraction and matching explanations argue that reputed CEOs are associated with poor earnings quality. Using a simultaneous equations system to capture the endogeneity of the constructs, we find (consistent with the rent extraction and matching arguments) that more reputed CEOs are associated with poorer earnings quality than are less-reputed CEOs. Further tests find little support for the rent extraction hypothesis. We conclude that the reason more reputed CEOs are associated with poor earnings quality firms is that such firms require more talented managers and, therefore, employ more reputed CEOs.

Abstract:
We examine the relation between security analysts' annual earnings forecast boldness ("bold analysts") and changes in the inferred flow of earnings-related information from managers of the forecasted firm to bold analysts. We find that unfavorably bold analysts experience an improvement in their subsequent relative forecast accuracy. Favorable forecasters, however, experience a decrease in subsequent relative forecast accuracy. Our forecast revisions tests suggest that the market recognizes the improvement in subsequent relative forecast accuracy for unfavorably bold analysts and places no additional weight on forecast revisions from favorably bold analysts.

Management communication, Earnings forecasts, Security analysts

Abstract:
This study examines individual analysts' relative strengths in earnings forecasting skill and stock picking skill. We define analysts with skill specialization when he has one skill substantially stronger than the other, and analysts with non-specialization when he has balanced skills. We follow theories on skill specialization in labor market research, and model skill specialization decisions as the optimal outcomes of analysts maximizing their human capital. Our empirical results are consistent with the predictions from the model. We find that an analyst's choice of specialization is negatively related with his brokerage size, brokerage reputation, his all-star status, and the industry skill spillover effect, all of which capture the inverse of his skill development cost. We also find that the economies of scope in skill development, determined by the characteristics of the firms covered by the analyst are negatively related with his choice of skill specialization. Using earnings persistence, earnings predictability, and earnings fixation to measure investors' demand for analysts' earnings forecasting skill, and firms' shareholder base to measure the demand for analysts' stock picking skill, we show that they explain analysts' choices between specializing in forecasting earnings and picking stocks. We also find analysts who specialize in forecasting earnings utilize the skill more intensively by issuing more frequent and more innovative earnings forecast revisions.

Analyst, Earnings Forecast, Stock Recommendation, Stock Picking, Analyst Specialization, Skill Specialization

Abstract:
In July 2000, Australia implemented a new tax system of goods and services tax (GST). Since then Australia has experienced significant rises in mortgage costs and decline in housing affordability. Although prior research has attempted to investigate the impact of the GST on the general price level, a central question of what extent to which the GST has impacted on mortgage costs remains unanswered. Using unique data of 38 mortgage corporations in Australia (covering 36 months), this paper empirically examines and quantitatively measures the changes of non-bank lender mortgage costs in the pre- and post-GST periods. Results of t-tests and regression analysis provide robust evidence that the non-bank lenders significantly increased their mortgage charges in the post-GST periods. For example, the increase is found to be, on average, 50.5 basis points. It is also found that the rise in mortgage costs is not a one-off impact. This study is the first one internationally that examines the impact of the GST on non-bank lender mortgage costs and the findings should have important financial, economic and policy implications.

GST, Mortgage costs, Non-bank lender pricing behaviour

Abstract:
In July 2000, Australia implemented a new tax system of goods and services tax (GST). Since then Australia has experienced significant rises in mortgage costs and decline in housing affordability. Although prior research has attempted to investigate the impact of the GST on the general price level, a central question of what extent to which the GST has impacted on mortgage costs remains unanswered. Using unique data of all banks in Australia (covering 36 months), this paper empirically examines and quantitatively measures the changes of mortgage costs in the pre- and post-GST periods. Results of t-tests and regressions provide robust evidence that the banks significantly increased their mortgage charges in the post-GST periods. For example, the increase is found to be, on average, 52.4 basis points. It is also found that the rise in mortgage costs is not a one-off impact. This study is the first one internationally that examines the impact of the GST on bank mortgage costs and the findings should have important financial, economic and policy implications.

GST, Mortgage costs, Lender pricing behaviour

Abstract:
In July 2000, Australia implemented a new tax system of goods and services tax (GST). Since then Australia has experienced significant rises in mortgage costs and decline in housing affordability. Although prior research has attempted to investigate the impact of the GST on the general price levels, a central question of how and to what extent the GST has impacted on mortgage costs remains unanswered. Using unique data of all banks and major mortgage corporations in Australia (covering 36 months with 2282 observations), this paper empirically examines and quantitatively measures the changes of mortgage costs in the pre- and post-GST periods. Results of t-tests and regressions suggest that the lenders significantly increased their mortgage charges in the post-GST periods. For example, the increase is found to be, on average, 51.4 basis points. It is also found that the rise in mortgage costs is not a one-off impact. This study is the first one internationally that examines the impact of the GST on mortgage costs and the findings have important economic and policy implications.

GST, Mortgage costs, Lender pricing behaviour