Chen-Lung Chin

Does Innovation Matter to Conference Calls

The main purpose of this study is to investigate whether the likelihood, frequency, and information content of conference calls are positively associated with innovation. The study is based on 534 conference calls conducted in 340 firm-years from 1997 to 2001 in Taiwan. Our findings indicate that more innovative firms are more likely to conduct conference calls and conduct them more frequently than less innovative firms. Consistent with prior research, high-growth firms and larger firms are more likely to hold conference calls, and hold them more frequently, than other firms. Low price-earnings firms are, nonetheless, more likely and frequent to host conference calls when their stock price has been undervalued. We also find supporting evidence that cumulative abnormal returns surrounding the event dates of conference calls are positively associated with the level of and change in innovation investments. In addition, our empirical results of market reaction driven by conference calls are still robust after controlling the effect of selection bias, market expectation, and timing of conducting conference calls. Finally, we also find that firms that are more innovative are more likely to discuss innovation activities during conference calls.

The impact of financial forecasts regulation on IPO anomalies: Evidence from Taiwan

This study examines whether a regulation on mandatory disclosure of financial forecasts since June 1991 and further sanction imposition since March 1998 contribute to lower IPO firms’ initial and aftermarket returns, and shorten honeymoon periods. The study is based on 423 IPO firms after the regulation required them to disclose their forecasts and 53 IPO firms prior to the regulation. The findings report that initial and aftermarket returns are lower, and honeymoon periods are shorter in the post‐regulation period than those in the pre‐regulation. The findings also report that initial and aftermarket returns are relatively smaller, and the honeymoon periods are shorter after the March 1998 regulatory sanction was imposed after controlling other variables. These results document that the financial forecasts disclosure regulation evidently contributes to mitigating information asymmetry.

The Effect of Innovative Activity on Firm Performance: The Experience of Taiwan

Abstract Firm performance is, among other factors, a function of tangible and intangible assets that the firm possesses and utilizes to maximize value. While research has examined the impact of advertising and R&D on firm performance, in this chapter we, in addition, examine the extent of innovation as measured by patents granted on firm performance. Our findings indicate that overall, innovative activity as measured by number of patents granted, significantly influences firm performance as measured by Tobins q. Hence patenting activity is value relevant to investors. Further, this relationship is more pronounced when the patents are granted in the United States. We conclude that markets tend to give greater credence to innovative activity when patents are granted to foreign firms by the U.S. Patenting Office. Finally, the stage of the product in the industry chain moderates the influence of patenting activity on firm performance. When patents are granted in the design stage the impact on firm performance is stronger relative to when patents are granted in the manufacturing and packaging and testing stages. The evidence indicates that patents by companies in the manufacturing end of the chain have a more pronounced impact on firm performance relative to patents granted in the packaging and testing stage.

Weather effects on earnings response coefficients: international evidence

We examine the relationship between weather effects and investor response to a firms quarterly earnings announcements using data from 20 countries. Our results show that market cumulative abnormal returns are associated with unexpected earnings and with weather measures. Investors in some countries respond more negatively (less positively) to bad (good) earnings news when earnings are announced on cloudy days than on sunny days. We also find an asymmetric weather effect that is more significant for bad earnings announcements, on average. Moreover, the extent of this weather effect is less for countries with higher financial information transparency and those with common-law systems.

International diversification and conference calls

This paper explores the impact of international diversification on the decision to hold conference calls. In addition, we examine the mitigating roles of legal environment and agency problems in holding conference calls. Using a sample drawn from Taiwan, we find that greater corporate internationalization (INT) is associated with a higher likelihood of holding conference calls. We also find that firms are more likely to conduct conference calls when companies invest in a higher proportion of common law countries. We also find that the positive association between the likelihood of holding conference calls and corporate INT is less pronounced when the control divergence of controlling owners increases.