| Abstract: |
Since 2000, several states enacted corporate opportunity waiver (COW) laws, which allow companies to waive fiduciaries’ duty of not pursuing business opportunities that could otherwise benefit their firms. Using the staggered enactment of COW laws, we find that firms in COW-law states reduce the likelihood and frequency of their capital expenditure forecasts following the laws’ enactment. This finding suggests that the managers of these firms withhold disclosure of firms’ investment plans via capital expenditure forecasts to retain the ability to appropriate their firms’ business opportunities. In support of this inference, we also find that the reduction in capital expenditure forecasts is more pronounced for firms with CEOs who are more likely to appropriate business opportunities and less pronounced for firms with stronger shareholder monitoring. Finally, we show that while firms in COW-law states exhibit reduce investments, the reduction is less pronounced for firms that provide more capital expenditure forecasts.
Keywords: corporate opportunity waivers, fiduciary duty, monitoring, capital expenditure disclosures
JEL: D23, G34, G38, K22
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Biography:
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Professor Jeffrey Ng has been a professor at The University of Hong Kong since July 2022. Prior to this appointment, he was an assistant professor at MIT Sloan School of Management from 2008 to 2012 and an associate professor at Singapore Management University School of Accountancy from 2012 to 2016, and a professor at The Hong Kong Polytechnic University from 2016 to 2022.
Professor Ng is interested in interdisciplinary research involving accounting issues. He has published in several top journals including Journal of Accounting Research, Journal of Accounting and Economics, The Accounting Review, Review of Accounting Studies, Contemporary Accounting Research, Journal of Financial and Quantitative Analysis, and Management Science. He is an associate editor at the European Accounting Review. He is on the Editorial Board of The Accounting Review and a member of the Business Studies Panel, Hong Kong Research Grants Council. His teaching interests include financial accounting, corporate reporting, and financial statement analysis.
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