I provide two versions of my research portfolio to help you
understand my research interests. This is the Story Version which
lists my research by main topics. The following button will lead you to the standard
version which lists my research by status.
My research interests include corporate
disclosure, executive
personality
traits,
financial reporting quality,
internal control and capital markets, and information technology and accounting. My research
portfolio
can be
summarized into three categories: (1) textual analysis of corporate disclosure, (2) internal
control,
and (3)
information technology and accounting. My current research focuses on textual analysis of corporate
disclosure. My
earlier research mainly focuses on the determinants of internal control quality and the capital
market
consequences.
My new research interest is in information technology and accounting.
Textual Analysis of Corporate Disclosure
I have been passionate on textual analysis since I started my PhD at the University of Kentucky.
Figure 1 shows
my textual analysis research framework. My research mainly utilizes two text datasets, the
earnings
conference
call transcripts … and the financial reports. I completed and published one literature review paper in Journal of
Information Systems. One co-authored working paper introduces text data analytics. Three working papers analyze
the executive language in the earnings conference calls. My dissertation applies three key nature language
process techniques—document similarity, topic modeling and bag-of-words modeling—to two main text datasets in
accounting, the earnings conference call transcripts and 10K/10Q filings.
Figure 1 My Textual Analysis Research Framework
Dissertation
Earnings Conference Calls and Lazy Prices
2020
Changes to the language and construction of
financial reports are indicative of firms’ future returns and
operations. Investors, however, are often inattentive to these changes;
consequently, price reactions to these changes are delayed— resulting in
“lazy” prices (Cohen, Malloy, and Nguyen, 2020). Earnings conference
calls have become a prevalent voluntary disclosure medium for U.S. firms
but are also criticized as an irrelevant “show” between executives and
analysts. In this study, I examine whether earnings conference calls can
mitigate lazy prices. Specifically, I examine whether the topic overlap
between conference call transcripts and 10K/10Q content and whether the
comparison language used on conference call transcripts can trigger
investors’ attention to firms’ financial reports and changes therein,
and thus attenuate the predictive ability of changes in textual
narratives for future returns. The preliminary results support that the
earnings conference calls do mitigate the lazy prices. Specifically, the
comparison language used in the Presentation session of the conference
call can mitigate the lazy prices. This study contributes to earnings
conference call literature by providing new insights into the role of
earnings conference calls in the capital markets and contributes to
textual analysis literature by providing best practices of applying
topic modeling methods to accounting research.
Abstract Audio:
To be added…
Working
on Data
Analysis
Literature
Review
–
Textual Analysis in Accounting
Text Data Sources in Archival Accounting Research:
Insights
and Strategies
for Accounting Systems’ Scholars
This paper reviews the emerging computer-aided
text
analysis
(CATA) accounting literature through proposing a model of the corpus
linguistic research
production process, followed by analysis of the main text archival data
sources in
published papers in the Top Six accounting journals from 2010 to 2016.
Reviewed papers
appear in a 5 × 5 matrix that includes five categories of text data
(i.e.,
SEC filings,
conference call transcripts, earnings press releases, financial analyst
reports, and
other sources) and five categories of text measures (i.e., tone,
readability,
similarity, firm characteristics and environment, and other measures). A
brief review of
the CATA literature published in two AIS journals is followed by a
summary
of the tools
and KS (knowledge and skills) observed in the reviewed research.
Finally, we
offer
implications by discussing four issues related to CATA accounting
research.
We conclude
that the emerging CATA accounting research offers unique opportunities
for
knowledgeable
AIS scholars.
The automated text analysis of corporate earnings
conference calls
is an increasingly important data source for understanding accounting
information and
financial markets. However, the advanced text analysis of corporate
earnings
conference
calls requires unique extract, transform, and loading (ETL) skills for
harvesting,
cleaning, managing, analyzing and displaying data. This case describes
one
approach to
harvesting, cleaning, and analyzing the text data found in corporate
earnings conference
call transcripts. Using a web crawler, we harvested 115,882 earnings
conference call
transcripts which were then parsed and structured using regular
expressions
in Stata.
Because our project included analysis using emerging text analytic
software
(i.e.,
Coh-Metrix3), the only feasible alternative for analysis was cloud-based
virtual
hardware, which we ran on Amazon Web Services (AWS), through Amazon
Elastic
Compute
Cloud (Amazon EC2). One important insight of the case study is the
necessity
of
automating ETL and analyses processes that have historically been
manually
and locally
executed in accounting research. We estimate that manually conducting
the
ETL process
and running the analyses on local computing resources would have
required
about 2 years.
In contrast, automating ETL and running cloud-based analyses required
about
38 days.
This case describes the tools and processes used in achieving these
results.
This study examines the association between
language
cohesion in
earnings conference calls and information asymmetry/the cost of equity
capital, using
earnings conference call transcripts from 2005-2017. Using an emerging
automated
discourse analysis tool, Coh-Metrix, we explore Coh-Metrix measures as
proxies for
management language cohesion. Results indicate that larger values of two
Coh-Metrix
measures of conference calls, the word concreteness and temporality, are
associated with
lower information asymmetry and cost of equity capital. Further, adding
traditional
readability metrics to regression analysis only increase R2 by 0.05%
over
the benchmark
model. In contrast, adding Coh-Metrix measures increases R2 by 0.9%-2.5%
over the
benchmark model. The results suggest that Coh-Metrix language cohesion
measures are
potentially stronger measures of linguistic complexity in
accounting-relevant documents
compared with traditional readability measures. This study contributes
to
the textual
analysis literature in accounting by introducing a new discourse
analysis
method,
Coh-Metrix, for assessing text cohesion and understandability.
Abstract Audio:
To be added…
Presentations
AAA
Annual
Meeting, 2018
AAA
Southeast
Region Meeting, 2018
University
of
Louisville, 2017*
Working
Paper
The Role of Linguistic Style on Successor CEO Selection
after
Accounting
Restatements
This study examines whether the linguistic style
of
successor
CEO signals a
firm’s effort to restore damaged reputation following an accounting
restatement.
Applying a new measure of language cohesion (i.e., Coh-Metrix measures)
on
earnings
conference call transcripts, we find that restatement firms are more
likely
to appoint a
successor CEO with a linguistic style that conveys high integrity than
non-restatement
firms. Further, appointing a successor CEO with high language cohesion
result in a less
negative market reaction proxied by the short-term cost of capital,
consistent with the
notion that linguistic style signals to investors effectively about a
firm’s
effort to
restore its reputation damaged from an accounting restatement. We also
find
evidence
that linguistic style that conveys high integrity of the successor CEO
relates to with
long-term benefits proxied by lower long-term cost of capital, higher
subsequent ROA,
and Tobin’s Q. Collectively, the findings suggest that restatement firms
can
benefit
from choosing a successor CEO with a linguistic style that conveys high
integrity.
Abstract Audio:
To be added…
Presentations
University
of
Kentucky, 2018
Working
Paper
The Dark Side of CFO Extraversion: The Effect on Financial
Reporting
Quality, and the Consequences from the Capital Market
This study examines how CFO extraversion affects
firms’ financial
reporting quality and how investors perceive the risk of the firms with
extraverted
CFOs. Based on the two fundamental features of extraversion, reward
sensitivity and
social attention, I predict that CFO extraversion is negatively
associated
with firms’
financial reporting quality, because (1) extraverted CFOs have stronger
attempts to
actively ingratiate themselves with CEOs which reduces the bottom-up
monitoring role of
the CFO and (2) the close relationship between the extraverted CFO and
other
C-suites
executives facilitates the passive acquiescence or active collusion in
accounting
manipulation. I do not have predictions about the sign of the effect of
CFO
extraversion
on firms’ cost of equity capital, because investors may have different
perceptions about
CFO extraversion. The preliminary results show that CFO extraversion is
positively
associated with accruals earnings management and accounting reporting
complexity, and
positively associated with firms’ cost of equity capital. These results
indicate that
CFO extraversion reduces firms’ financial reporting quality and
increases
firms’ cost of
capital. This study contributes to financial disclosure literature by
showing that
extraversion is an important personality trait that can affect CFO’s
financial
disclosure decisions.
Abstract Audio:
To be added…
Need to
update
the data
Work
in Progress
Internal Control
My earlier research mainly focuses on the determinants of internal control
quality and the
capital market consequences. Three of co-authored papers are published on top accounting and
auditing journals
in China. Another co-authored working paper is under the second-round review at Journal of
International
Accounting Research.
Determinants
of
Internal
Control Quality
Product Market Competition, State Ownership and Internal
Control
Quality
Based on a sample of Chinese A-share listed firms
on
the Shenzhen
Stock Exchange and the Shanghai Stock Exchange between 2007 and 2012, we
examine the
effect of product market competition on the internal control quality of
Chinese listed
firms and the difference in this effect between state owned firms and
non-state owned
firms. Using the internal control index constructed by Chen et al.
(2013) as
the proxy
for internal control quality, we find that product market competition
has a
significant
effect on the internal control quality of Chinese listed firms: the more
intense the
product market competition is, the higher the internal control quality
will
be. However,
the effect is only significant for non-state owned firms, not for state
owned firms. In
addition, we find that high quality internal control can improve product
market
competition advantage, providing support for our main findings. Overall,
our
study
extends the literature on internal control and product market
competition,
provides
evidence on whether internal control can help firms realise their
development
strategies, and offers advice to related government departments and
firms on
improving
internal control quality.
China
Economic
Studies,
Volume 4, 2014, Pages 61-74
Using data on Chinese A-share listed companies
from
2007 to
2011,we study whether internal control helps to inhibit the impact of
investor sentiment
on stock market response to earnings news. We find that for companies
with
low internal
control quality,stock market responses to earnings news are more likely
to
be influenced
by investor sentiment,with high( low) investor sentiment increasing
earnings
response
coefficients of good( bad) news. However,for companies with high
internal
control
quality,the impact of investor sentiment on earnings response
coefficients
is in the
opposite direction,with high( low) investor sentiment decreasing
earnings
response
coefficients of good( bad) news. These results show that high internal
control quality
not only can inhibit the improvement effect of investor sentiment on
earnings response
coefficients,but also has a safe harbor effect. In addition,we find that
the
above
phenomenon is more evident for small companies and non-state owned
companies. In
contrast,earnings response coefficients are not influenced by investor
sentiment in
either large companies or state owned companies.
There is important value on internal control
relevant
policy
formulation and implementation to study individual investors’ reaction
mechanism of
internal control information disclosure.This research examines the
influence
of internal
control deficiency information disclosure on individual investors’
investment risk
perception with experimental research method.We find that the severity
of
internal
control deficiency significantly influences individual investors’
expected
investment
risk assessment,but there is no significant difference between the
disclosure of none
deficiency and the disclosure of significant deficiency on individual
investors’ risk
perception. The description of internal control deficiency has no
significant effect on
individual investors’ expected investment risk assessmentthe. The trust
on
managers is
an important intermediary variable between the severity of internal
control
deficiency
and individual investors’ investment risk perception.We also find that
internal control
audit report has significant effect on individual investors’ investment
risk
perception.The higher the level of individual investors using the
internal
control audit
report is,the more it will strengthen the negative influence of internal
control
deficiency to individual investors’ risk perception.
The role of internal control on reasonably
assuring
the
reliability of financial report has been verified by extensive empirical
evidences,however few literatures explores the role of internal control
on
detail firms’
operational activities. Therefore,taking merger and acquisition( MA)
activity as
example,with sample of MA events which listed firms are buyers and have
been
finished in
2008 and 2009,we find that buyer’s internal control quality is
negatively
associated
with increasing of bankruptcy risk in right and subsequent 3 years when
MA
has been
completed; consistent with this,the higher firm’s internal control
quality
is,the better
MA performance will be.These findings indicate that higher quality
internal
control can
improve firm’s integration ability and performance after MA. This study
enriches and
broadens literatures on internal control and MA,and has certain
implication
for firms’
internal control practice.
In this study, we explore the inverted U-shaped
association between internal control quality and firm operational
efficiency. Although effective internal controls can facilitate and
improve operational efficiency, excessive internal controls can
negatively affect operational efficiency by (1) influencing management
energy, attention, risk-taking, and innovation motivations; (2)
hindering employees’ creativity, enthusiasm, and trust. Our findings
support the inverted U-shaped association. We further explore and prove
the two channels through which internal controls affect firm operational
efficiency: the “information channel” (the quality of internal
management reports), and the “application channel” (the enforcement of
internal controls). Additionally, we show that the inverted U-shaped
association only exists in non-state-owned firms. We do not find
significant association between internal control quality and operational
efficiency in state-owned firms. Overall, this study suggests that firms
should not only establish an optimal level of internal controls, but
also enforce the internal controls effectively to achieve their intended
goals.
Abstract Audio:
To be added… …
To be added… …
Published
Information Technology and Accounting
The disruptive technologies, such as artificial intelligence and machine
learning, along
with “Big Data” have transformed our economy from traditional economy to digital economy and
have
brought new
challenges to accounting. I firmly believe I need to update my knowledge and skillsets to be
well
prepared to
explore new accounting questions in the new economy and produce valuable research that is useful
to
academics,
practitioners, and regulators.
