Accounting Webinar (2021-02)

Topic: The Dark Side of Fair Disclosure in a Relational Economy: Evidence from China

Speaker: Aaron Seokhyun Yoon, Kellogg School of Management, Northwestern University

Time: Friday, Mar 19^th, 10:00-11:30 a.m

Place: Microsoft Teams

Abstract:

Firms in emerging markets often channel information to capital providers in their private network where trust-based dissemination enables the recipients to better verify and interpret information. In this paper, we use a regulation change that required Shenzhen firms for a more timely and transparent disclosure of analyst site visits and examine its impact on private information dissemination and analyst information production. We find that firms offer substantially fewer site visits after the regulation, and the frequency of single analyst site visits also decreases significantly. In addition, overall analyst forecast accuracy declines and site visits have a smaller impact on improvement of forecast accuracy. Lastly, connected analysts experience a more salient decline in improvement of forecast accuracy after site visits. However, their overall forecast accuracy improves substantially vis-à-vis unconnected analysts. In sum, the results highlight a potential unintended consequence of the regulation. Specifically, managers seem less willing to disseminate information through site visits and analysts’ overall information environment suffers, yet connected analysts still find ways to preserve their information advantage.

Introduction:

Professor Aaron Seokhyun Yoon is an assistant professor at the Kellogg School of Management. He is interested in examining the role of accounting information and governance in emerging institutions and presented his research around the world to academics and practitioners. His works have been regularly and widely cited in media outlets such as Barron's, Bloomberg, Financial Times, Forbes, The New York Times, and The Wall Street Journal.

One area of Professor Yoon's research is on how to better quantify a firm's Environment Social Governance (ESG) efforts and integrate the information into equity portfolios to generate excess return. According to the Financial Times, his research on ESG was a turning point on how investors viewed and integrated ESG information. The methodology suggested in his research has been widely implemented by asset owners and investment managers. He also received the 2020 Crowell Prize for best paper in quantitative investing that is awarded by PanAgora Asset Management.

Another area of his research is on the emerging markets. In his dissertation, for example, he examined how Chinese firms met foreign institutional investors privately through the host of reputable foreign brokers to overcome the weak institutional environment. This work was selected as the best international accounting dissertation from the American Accounting Association in 2019.

Professor Yoon currently teaches Financial Accounting Core (ACCT 430) to Kellogg MBA students and received MBA Chair's Core Teaching Award in 2020.

Professor Yoon earned his Doctor of Business Administration from Harvard University; he also earned his masters in Economics and bachelors in Economics and Mathematical Methods in the Social Sciences (MMSS) from Northwestern University in four years. Prior to academia, he previously worked as an equities salestrader and research analyst at Credit Suisse, and also controlled air traffic in the 8th US Army as a Korean augmentee.

https://www.kellogg.northwestern.edu/faculty/directory/yoon_aaron/

Your participation is warmly welcomed!