Ignacio Garcia de Olalla Lopez

Scandinavian Accounting Research Conference

European Finance Association annual meeting

Seminar

EFA 2016

Midwest Finance Association Annual Meeting

Employing a press-based managerial overconfidence measure, we find that abnormal returns following share repurchases, while positive, are substantially lower when managers are classified as overconfident. This holds particularly for small, young, financially constrained, non-dividend paying and distressed firms, and firms with negative earnings, and poor past performance, all of which are more difficult to value. Corporate governance quality substantially improves the post-buyback stock performance when managers are overconfident, suggesting that governance quality is effective at curbing these managers. Overall, our results suggest that particularly when valuation is subjective and difficult, overconfident managers are more likely to misvalue their own stock prices than unconfident managers. Moreover, our results indicate that managers' perceived undervaluation of their shares is a central motive for share repurchase announcements. These results are only compatible with the overreaction hypothesis of the buyback anomaly.

American Accounting Association Annual Meeting

The dual income tax system, common in the Nordic countries from the early 90s, has been shown to provide a taxation arbitrage opportunity for medium and high income self-employed individuals, and for active owners of closely-held corporations. These individuals can reclassify their wages as capital income and distribute them in form of dividends, thereby minimizing tax paid on labor. In this paper, I show that high levels of trust in a region had a moderating effect on the dividend payout of Norwegian closely-held firms located in that region, in the period when dividends were exempt from taxes. The effect disappears on data after a taxation reform in 2006. To achieve these results, I use a unique database of high quality accounting information for Norwegian private companies. I argue that high levels of trust cause firm owners to be less inclined to engage in tax-arbitrage behaviors because they trust their tax money is being put to proper use. I also suggest that in communities where there are higher levels of trust and sociability, i.e., tighter communities, deviations from what is normative considered good citizenship are costlier for the deviant than in communities with lower levels of trust and sociability.

World Finance and Banking Symposium 2014

World Finance Conference