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- The spillover effect of ADR activity on stock price synchronicity: empirical evidence in emerging marketsPublication . Viana Junior, Dante Baiardo C.This study investigates the intra-industry spillover effect of American Depositary Receipt (ADR) issuance on the stock price synchronicity of non-ADR firms from emerging markets. Based on a sample of listed firms from six Latin American countries, although I find some evidence of a decrease in stock price synchronicity among ADR issuers in post-ADR issuance periods, the main findings suggest that non-ADR firms from industries with ADR issuance activity have higher levels of synchronicity on average than non-ADR firms from industries with no ADR issuance activity. These cross-country average results are robust to different regression methods and alternative subsamples employed to mitigate endogeneity concerns. Even though this trend is confirmed for the majority of the Latin American countries under review, individual-country analyses indicate a synchronicity-decreasing effect of ADR industry activity, particularly for non-ADR Chilean firms. Complementary, more in-depth empirical analyses suggest that country-level factors and ADR firm characteristics play an essential role in this issue. My main findings document that the overall positive spillover effect of ADR activity on the stock price synchronicity of non-ADR firms in Latin America is non-monotonic. These exploratory findings contribute to the active debate regarding the impact of ADR issuance on local economies, particularly with respect to the informativeness of financial reporting available in the capital markets.
- Earnings management and financial distress: european evidencePublication . Paiva, Inna; Viana Junior, Dante Baiardo C.; Lourenço, Isabel; Nunes, RicardinaPurpose – This study aims to analyse the relationship between financial distress and earnings management (EM) in a setting of European listed firms and the role of external monitoring factors in the relationship. Design/methodology/approach – This study uses multivariate analysis to analyse firms from 28 European countries (2011–2021). The independent variable is financial distress, measured by the Altman Z-score, while the key dependent variable is EM based on Dechow et al. (1995). Moderating factors include the number of analysts, auditor type and American Depositary Receipt (ADR) listing status. Findings – This study shows empirically that in the European setting the level of financial distress is negatively associated with the level of EM, and this association is moderated by the companies’ listing status (cross-listing in the USA) and by the number of analysts following the company. The type of auditor (Big 4 vs non-Big 4) does not seem to affect the relationship between financial distress and EM. Practical implications – The findings offer valuable insights for European investors and lenders to refine investment strategies and credit risk models. Additionally, regulatory bodies can use these conclusions to shape policies on financial reporting standards and oversight. Originality/value – While most of the existing literature in developed countries focuses on single-country analysis, often yielding mixed results, the authors provide robust conclusions on an international scale by analysing the combined impact of financial distress on EM in firms from 28 European countries. Additionally, they examine the role of monitoring factors in the relationship between financial distress and EM.