Claude Laurin

The Management of Financial Disclosure on Corporate Websites: A Conceptual Model

This paper addresses the impact of Internet financial reporting (IFR) on financial accounting theory by incorporating it in the general Gibbins, Richardson, and Waterhouse 1990 (GRW) disclosure-management framework. The GRW model assumes that the firm has a relatively stable process of disclosure management. This process varies between two positions: one, ritualistic, and the other one, opportunistic. These dimensions can coexist in the same firm but, on average, the policy of a firm will either be more ritualistic or opportunistic. Our survey of the financial information disclosed in traditional financial reporting (TFR) as compared to websites disclosures of a random sample of Canadian companies documents a significant difference between TFR and IFR as well as a wide variability among the sample firms in their use of IFR content, format and technology. We interpret this variability in the incremental difference of IFR over TFR, as an indication that a firms ritualistic or opportunistic behaviour under IFR is not different from its behaviour under TFR. Thus, the adapted GRW (1990) conceptual model appears to have the potential to support future research in the management of financial disclosure on corporate websites.

Privatization and productivity improvement: the case of Canadian National

Abstract This paper analyzes how privatization can influence the efficiency of a firms operations. Canadian National (CN), a privatized firm, and its closest private sector competitor, Canadian Pacific (CP), are compared both before and after the privatization of CN. The total factor productivity of the two carriers is examined over a 17-year period (1981–1997). Accounting ratios and stock price returns are compared from 1995 to 1998. The results show that although CN was less efficient from 1981 to 1991, its performance increased to surpass that of CP during the post-privatization period.

Factors affecting the stock price performance of share issued privatizations

Shareholders in many share issued privatizations (SIPs) have enjoyed substantial increases in the value of their investments. This study examines the factors that influence the long-run stock price performance of an international sample of SIPs, focusing on three-year buy and hold returns. After controlling for market-wide changes in stock prices, one finds that the relative size of the company has a negative effect on stock price performance, retained government ownership has a positive effect, the presence of a golden share has a negative effect, initial underpricing has a positive effect, and the timing of the privatization has no effect. Performance also depends on the industry and home country.

A Cost-Benefit Analysis of the Privatization of Canadian National Railway

Dans cet article, nous évaluons, à partir d’une analyse coûts-avantages, les gains économiques qui ont résulté de l’une des plus importantes opérations de privatisation de l’histoire, celle de la Compagnie des chemins de fer nationaux (CN), en novembre 1995. Nous montrons également comment ces gains se répartissent entre les consommateurs (les expéditeurs), les producteurs (les actionnaires) et le gouvernement, ainsi que, plus largement, entre les Canadiens et les étrangers. Pour effectuer une comparaison plus exacte et fiable que celles qu’ont utilisées des études passées, nous avons eu recours aux chiffres du Canadien Pacifique. En nous basant sur une analyse hypothétique conservatrice, nous estimons que la privatisation du CN a engendré des gains d’au moins 4 milliards de dollars (en dollars de 1992) – et nous affirmons qu’ils pourraient se chiffrer à une somme allant jusqu’à 15 milliards de dollars. Les actionnaires ont profité de la plus grande partie de ces gains, et le gouvernement canadien de près de la moitié.

Law of Incorporation and Ownership Structure: The Law and Finance Theory Revisited

La Porta et al.s [La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. (1998). Law and finance. Journal of Political Economy, 106(6), 1113-1155] theory of law and finance predicts that minority controlled ownership structures, i.e. those that allow voting rights to exceed cash-flow rights, are more numerous in legal contexts that do not adequately protect investors against expropriation attempts by dominant shareholders. The purpose of our study is to test this prediction in a unique environment, that of the province of Quebec. Quebec owes its distinct status to the fact that it is the only jurisdiction among the 10 provinces of Canada to operate under civil law, while the other nine provinces operate under common law. We show that, in comparison to those in the rest of Canada, dominant shareholders in Quebec corporations hold a higher percentage of voting rights, with a wider gap between their voting rights and cash-flow rights.

The longer-run performance effects of agencification: theory and evidence from Québec agencies

Although governments worldwide are increasingly choosing to deliver services through organisations with greater autonomy than traditional bureaus, the implicit assumption that such agencification contributes to long-run efficiency remains largely untested. Agencification gives agency managers more autonomy and access to incentive mechanisms that lead to greater efficiency if they are not offset by inefficiencies resulting from managerial discretion. We test the hypothesis that agencification improves efficiency by examining the longer-run performance of 13 agencies in the province of QuA©bec, Canada over approximately 10 years. We find that these agencies experienced long-term productivity gains, but that these gains reached a plateau over the time period studied. In addition, we describe changes in several measures of performance. A survey of the managers of these agencies indicates that they perceive agencification as having a substantive impact, but worry about the sustainability of autonomy and their capacity to show continued gains in measured performance over time.

Incorporation Law, Ownership Structure, and Firm Value: Evidence from Canada

In this article, we reexamine the law and finance theory in the Canadian context, characterized by a dichotomy in the legal traditions that govern incorporation law across provinces. We specifically examine the relation between incorporation law, corporate ownership structure, and firm value, taking into account the endogeneity of ownership structure. Using a sample of 181 Canadian firms between 2002 and 2005, we show that firms from Quebec mostly choose to incorporate under the federal law (CBCA), perceived as more protective of shareholder rights, rather than under the provincial law (QCA). Our 2SLS regressions show that Quebec firms incorporated under the QCA tend to have more concentrated ownership and that ownership concentration is negatively related to firm value (Tobins Q). These results are in line with the previous literature, which, in different pieces, has identified the positive relationship between less stringent legal environment and ownership concentration, as well as the negative relationship between ownership concentration and firm value. In this study, we formalize these relationships while taking into consideration the fact that firm value could also influence ownership concentration, as shown by Cho (1998). These results take on a particular importance as many researchers and organizations dedicated to the protection of investors, in Europe and in many countries around the world, have criticized the existence of ownership concentration and excess voting rights (wedge). These results thus reinforce the need for better corporate governance regulations to minimize the risks of minority shareholders expropriation.

The relation between excess control and cost of capital

Purpose - – The purpose of this study is to investigate the relationship between dominant shareholders, whose voting rights exceed cash flow rights (excess control), and firms’ cost of capital, including both equity capital and debt. Design/methodology/approach - – This research is conducted in Canada over a four-year period from 2002 to 2005 and uses panel data of 155 S&P/TSX firms. The weighted average cost of capital is regressed on excess control using fixed-effect regressions in a two-stage least squares framework. Findings - – The paper finds evidence that the cost of capital increases with excess control. The paper also confirms that for firms incorporated under the less protective Quebec incorporation law the excess control and, therefore, cost of capital is higher than for firms incorporated in the other provinces under the common law regime. Originality value - – Prior work examined the relationship between excess control and firm value, mostly Tobins

The Long-run Performance of Decentralized Agencies in Québec

In this study, we examine the performance of autonomous agencies in the province of Quebec following administrative decentralization and the concurrent implementation of Results-based Management (RBM).2 Facing heavy fiscal and political pressures, during the mid 1990s, Quebec’s authorities followed in the wave of ‘New Public Management’ (NPM) and post NPM government reforms of Western economies over the last twenty some years (Borins 2002). Emphasizing autonomy and performancebased as opposed to process-based management of the traditional public administration, these reforms focus on service delivery and efficiency (Pollitt & Talbot 2004; Verhoest et al. 2004a). More specifically, Quebec has created agencies that are under an integrated RBM programme including agency performance agreements, strategic plans, performance reports and responsibility to parliamentarians along with RBM integration in civil servants performance evaluations.

The Financial Impact of the French Government's Nationalization/Privatization Strategy

In 1982, the newly elected French government initiated an unprecedented move by undertaking a massive nationalization plan. This plan involved firms which, at the time, played a crucial role in the French economy. The governments move was short-lived, however, as a program leading to the privatization of some of the firms that had been nationalized in 1982 was initiated in 1986. This paper investigates the value that was created (destroyed) during the nationalization period for each of the French firms nationalized in 1982 and re-privatized between 1986 and 1997. This paper also investigates the extent to which the French citizens registered a gain or a loss as a consequence of the governments nationalization/privatization strategy. Our results show that the French government did not destroy value through the nationalization process. They also show that the French government, and thereby the French citizens, did not register any gain from the nationalization process because of the magnitude of both the premiums paid to shareholders of nationalized firms and the underpricing of shares at the time of privatization.