Accounting and Finance research themes
Research in the group focuses on four main areas with considerable overlap between these areas, with members contributing to more than one area as well as collaborating with colleagues in other academic groups across the School.
There are number areas that the group focuses on in corporate finance.
One common area is the consequences of strategies employed by firms and their impact of firm value, performance and other outcomes. In this thread, Huainan Zhao looks at corporate takeovers and mergers, in particular examining the drivers of three-way bids and why companies acquire acquirers. Nhung Vu investigates how corporate outcomes and firm value change when they are faced with a range of challenges such as financial concerns, management, climate change, and regulations.
Looking at pay-out strategies, Panagiotis Asimakopoulos examines firms’ dividend policies, seeking to understand the factors that influence dividend decisions and the manner in which these factors interact. Jingsi Leng studies the determinants of corporate dividend pay-outs and the interaction between dividend pay-outs and firm performance.
Firm financing choices and determinants of security issuance is another strand of corporate finance research. In this respect, Frank Hong Liu looks at how differences in stated uses of proceeds when issuing securities impact on firm value and Huainan Zhao examines whether firms use debt issuances for hedging purposes or lowering their cost of capital. Jingsi Leng investigates the equity issuance in SEO and IPO markets. In particular, she looks at how the corporate characteristics affect firms’ ability to attract capitals from market and how equity issuance behaviour influences firms’ future performance.
Relation between market frictions and corporate decisions is another area. For instance, Ahmet Karpuz looks at how labour market frictions affect corporate decisions. He also investigates factors that impact firms’ financing and liquidity management choices.
From the perspective of firm’s behaviour, Frank Hong Liu studies firm’s behaviour, including corporate social responsibility, accounting practises, and mergers & acquisitions, etc., when they are financially constraint, and also how government regulation can help firms to ease their financial constraints and then shape their other behaviours. Cynthia Gong examines how behavioural factors affect firms’ capital structure decisions.
Group members are interested in a number of topics that can be classified under the general title of financial markets.
One strand in this research area is predictability and forecasting of equity and other asset prices in financial markets. In this direction, Andrew Vivian focuses on the fundamental determinants of security returns and their predictability in emerging and developed countries’ financial and commodity markets. He also looks at market efficiency investigating stock market 'anomalies' and the response of the market to information and the volatility of markets. Stavroula Yfanti focuses on modelling and forecasting financial volatility using conditional variance models with long memory, asymmetries, time-varying coefficients, mixed-frequencies, important macro-factors, and option implied information.
In a parallel strand, Kavita Sirichand looks at asset predictability in the context of portfolio composition choice, density forecasting, forecast uncertainties and evaluation.
Looking at similar issues in fund management, Kai-Hong Tee focuses on hedge and investment fund managers' forecast ability in managing risk and its impact on fund performance. Similarly, Huainan Zhao investigates the effects of various trading strategies in determining price momentum.
At a more macro level, Kavita Sirichand investigates the term structure of interest rates and co-movements of international yield curves. Within the macro-financial linkages research field, Stavroula Yfanti relates high-frequency financial data to high- or low-frequency economic data and explores the spillovers/channels of the bidirectional effects in the first and second moment of financial and economic time series.
Complementing these areas, Mark Wohar focuses on the modelling and forecasting of financial and economic time series, including stock returns, interest rates and exchange rates. Also in this area, Giovanni Calice investigates the dynamics of the sovereign CDS term premiums and the link between CDX index term premiums and equity premiums.
Another sub-topic in this area is the impact of financial innovation on financial stability. In this direction, Giovanni Calice researches on how shocks in credit defaults swaps (CDS) can impact the value of systematically important financial institutions and systemic risk and the impact of securitization on banks’ equity prices. Stavroula Yfanti explores financial markets’ dynamic interdependence (eg equity, commodity, real estate, CDS markets) attributed to common economic fundamentals and leading to contagion during crisis periods.
This work also ties in with on-going research looking at banking and financial intermediation. Keith Pond’s work on corporate insolvency and bank lending to SMEs fits in this thread. Similarly, Ahmet Karpuz investigates how bank lending impacts corporate decisions. Jingsi Leng examines the association between firms’ credit rating and ability to attract capitals from both equity and debt markets.
From a behavioural perspective, Cynthia Gong studies how prospect theory explains investors’ gambling preferences in the stock market and home sellers’ endowment effect in housing transactions.
Management accounting research in the group focuses on the performance of organisations, as well as analysing the efficiency and effectiveness of systems.
In this context, Anna Raffoni examines the design and use of performance measurement systems and their effect on business performance, particularly for customer-firm relationship in B2B settings.
Another strand of management accounting research extends to new organisational forms. Suzana Grubnic works on performance management in both local government and the private finance initiative. Also within this strand, Anna Raffoni looks at advanced cost management techniques to support and improve the efficiency and effectiveness of processes.
Corporate governance and sustainability
A number of topics are researched under corporate governance and sustainability.
In terms of corporate governance and corporate boards, Noel O’Sullivan’s work examines the use and usefulness of non-executive directors, including the market for non-executives. Jingsi Leng examines how managerial behaviour and corporate governance drives the consequences of corporate failure.
In a similar vein, both Noel O’Sullivan and Ayuni Mohd-Kharuddin study audit committees, specifically their impact on audit quality.
In terms of financial reporting, Yasser Eliwa studies the association between earnings quality and the cost of equity capital.
In terms of auditing research, Noel O’Sullivan continues his long-standing work on the determinants of audit pricing, while Ayuni Mohd-Kharuddin develops her work on auditor industry specialisation and the market for audit services.
Finally, a number of group members undertake research in the area of sustainability accounting. Suzana Grubnic seeks to understand the outworking and transformative potential of sustainability accounting in the public and private sectors, while Petros Vourvachis’ research focuses on the reporting and measurement aspects of corporate social responsibility (CSR) information and how this can be embedded into reporting templates.