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Mei Cheng's
Scholarly Papers
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Aggregate Statistics |
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Total
Downloads
914 |
Total
Citations
14 |
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1.
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Mei Cheng
University of Arizona - Department of Accounting K.R. Subramanyam
University of Southern California - Leventhal School of Accounting Yuan Zhang
Columbia University - Columbia Business School
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25 Nov 05
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18 Feb 06
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752
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Abstract:
We examine whether firms that frequently issue quarterly earnings guidance behave myopically, where myopic behavior is defined as sacrificing long-term growth for the purpose of meeting short-term goals (Porter [1992]). We find that dedicated guiders invest significantly less in research and development (R&D) than occasional guiders. We also find that, in comparison to occasional guiders, dedicated guiders meet or beat analyst consensus more frequently. However, we find that dedicated guiders' long-term earnings growth rates are significantly lower than those of occasional guiders. Overall, our results are consistent with dedicated guiders engaging in myopic R&D investment behavior and meeting short-term earnings targets with possible adverse effects for long-term earnings growth.
Earnings guidance, managerial myopia
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2.
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Mei Cheng
University of Arizona - Department of Accounting K.R. Subramanyam
University of Southern California - Leventhal School of Accounting
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30 Sep 05
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Last Revised:
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13 Mar 08
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162
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Abstract:
This paper examines the relation between financial (equity) analyst following and default risk, which we proxy by issuer credit ratings. We hypothesize that analyst following reduces default risk because of both the monitoring and the informational roles of financial analysts. Using a large sample of firms, we find evidence consistent with this conjecture. In particular, we find that analyst following is negatively related to a firm's default risk (credit rating). The effect of analyst following on credit ratings is less pronounced for firms with a superior information environment and stronger controls. Similarly, the effect of analyst following on a firm's credit rating is lower when analysts' information quality is poor. Our results are robust to controlling for several factors including the endogenous relation between credit ratings, institutional holdings, and analyst following. Our study documents important spillover effects of financial (equity) analysts to the debt market.
analyst following, credit rating, cost of debt,
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3.
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Mei Cheng
University of Arizona - Department of Accounting Monica Neamtiu
University of Arizona - Eller College of Management
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10 Nov 08
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10 Nov 08
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Abstract:
In recent years, credit rating agencies have faced increased regulatory pressure and investor criticism for their ratings' lack of timeliness. This study investigates whether and how rating agencies respond to such pressure and criticism. We find that the rating agencies not only improve rating timeliness, but also increase rating accuracy and reduce rating volatility. Our findings support the criticism that, in the past, rating agencies did not avail themselves of the best rating methodologies/efforts possible. When their market power is threatened by the possibility of increased regulatory intervention and/or reputation concerns, rating agencies respond by improving their credit analysis.
credit ratings, rating properties, regulatory pressure, investor criticism
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