I study how insider trading interacts with the political economy, regulators, and other corporate governance mechanisms. In the first section, I examine the impact of insider trading restriction enforcement on firm innovation. U. S. Securities and Exchange Commission enforcement actions are intended to protect investors and limit expropriation by firm insiders, but enforcement could impact insiders’ incentives to contribute to value enhancing activities. Therefore, I explore how corporate innovation and performance respond to insider trading restrictions imposed by firms and regulators. Using manually collected data on SEC indictments against corporate insiders, I document more innovative activity following external insider trading restrictions. External restrictions are also followed by higher corporate investment, capital access, and operating performance. Similarly, internal blackout restrictions to insider trading are also linked to more patents. SEC and congressional rule changes serve as quasi-natural experiments resulting in shocks in enforcement and indictments for identification and inference. Overall, the results suggest insider trading restrictions and enforcement actions impact subsequent firm activities and managerial decisions by protecting outside investment, resulting in more investment and innovation. In the second section, I explore the relation between political uncertainty and insider trading. With political uncertainty elevated recently, I examine the role of political uncertainty among insiders. By measuring firm-specific political risk measured from conference calls, I observe insiders trade more actively during uncertain periods with trading volume and transaction value increasing alongside political uncertainty. The results are driven by non-routine insider transactions and purchases at firms with CEO duality and fewer insider trading restrictions. Next, I observe similar results when exploiting variation in election timing across states and alternative external measures. Moreover, I find evidence of informed insider trading by observing higher abnormal returns following insider trades amidst political uncertainty. Finally, I find political uncertainty is linked to lower bid-ask spreads and leverage but observe higher outstanding shares with more insider trading when experiencing positive political uncertainty, consistent with insiders informing markets and improving liquidity. Overall, these results suggest insiders purchase more actively and opportunistically amidst political uncertainty, improving market information quality, especially when internal governance is accommodating.

abstract: In this study, I test whether firms reduce the information asymmetry stemming from the political process by investing in political connections. I expect that connected firms enjoy differential access to relevant political information, and use this information to mitigate the negative consequences of political uncertainty. I investigate this construct in the context of firm-specific investment, where prior literature has documented a negative relation between investment and uncertainty. Specifically, I regress firm investment levels on the interaction of time-varying political uncertainty and the degree of a firm's political connectedness, controlling for determinants of investment, political participation, general macroeconomic conditions, and firm and time-period fixed effects. Consistent with prior work, I first document that firm-specific investment levels are significantly lower during periods of increased uncertainty, defined as the year leading up to a national election. I then assess the extent that political connections offset the negative effect of political uncertainty. Consistent with my hypothesis, I document the mitigating effect of political connections on the negative relation between investment levels and political uncertainty. These findings are robust to controls for alternative explanations related to the pre-electoral manipulation hypothesis and industry-level political participation. These findings are also robust to alternative specifications designed to address the possibility that time-invariant firm characteristics are driving the observed results. I also examine whether investors consider time-varying political uncertainty and the mitigating effect of political connections when capitalizing current earnings news. I find support that the earnings-response coefficient is lower during periods of increased uncertainty. However, I do not find evidence that investors incorporate the value relevant information in political connections as a mitigating factor. / Dissertation/Thesis / Doctoral Dissertation Accountancy 2014

This paper applies event study analysis on stock and bond market data in 14 European countries between 1990 and 2012 in order to assess market reaction to key economic policymaker changes. The analysis relies on methodological framework is based on article of Kuttner & Posen (2010) and on an original database of political events. The empirical results show that policymaker changes are not reflected in markets as single-day events, rather they are associated with several days of increased volatility following the event. Furthermore, elections are shown to be linked with market volatility on the event day as well as in postevent period.

Purpose: The purpose of this study is to examine the bi-directional causality between political uncertainty and the market risk premium in the US. Design/methodology/approach: I use a theoretical model to motivate signs and then check signs based on a vector autoregression. Findings: I find that political uncertainty has a small positive, delayed effect on the market risk premium. The market risk premium, on the other hand, has a large permanent, negative effect on political uncertainty. Originality/value: This is the first research paper to consider the bi-directional effects of political uncertainty on the market risk premium and vice versa. It also finds interesting empirical results.

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In recent years, corporate textual disclosure has gained considerable attention in accounting and finance research. The textual disclosures complete the picture of a firm's economic performance in addition to the quantitative information. Many studies have investigated various determinants and consequences of textual disclosure attributes. This thesis aims to contribute to this growing strand of literature that studies the drivers of the textual attributes of narrative disclosure. The thesis consists of three essays related to political uncertainty, CEO characteristics, and corporate social responsibility. The first essay (Chapter 2) investigates the impact of political uncertainty on the informativeness of a firm's narrative disclosure. Using conference calls, the results show that firms exposed to political uncertainty provide less readable disclosure, more ambiguous tone, and rely more on scripted responses to analysts. Further analysis reveals that obfuscatory disclosure has predictive power over a firm's future poor performance, suggesting that managers use obfuscation to opportunistically mask poor future performance during high political uncertainty periods. The second essay (Chapter 3) examines the impact of the CEO's tenure on the firm's disclosure complexity. Based on upper echelon theory, the results show that early tenured CEOs with greater career concerns have more incentive to provide more readable disclosure to affect the market perception about their ability. However, long-tenured managers get more entrenched and provide obfuscated disclosure. In addition, the results indicate that the effectiveness of different governance mechanisms in improving the quality of a firm narrative disclosure depends on the CEO's tenure. In particular, board oversight (internal governance by subordinate executives) is more effective in constraining new (long-tenured) CEOs' myopic disclosure practices. The third essay (Chapter 4) explores the relationship between corporate social responsibility (CSR) orientation and textual attributes of financial disclosures. The results show that firms with high CSR orientation provide more readable disclosures and use a less ambiguous tone in their annual reports. These findings are consistent with the notion that managers in CSR-conscious firms adhere to high ethical standards and commit to improving the transparency of their firms' financial disclosures. In addition, the study provides evidence that corporate governance mechanisms and CSR are substitutes for each other to ensure transparent disclosure. Overall, the findings of these studies provide insights to the investing community, the firm's board of directors, and standards-setters to better understand the implications of firm CSR engagement, political exposure, and CEO characteristics in financial reporting contexts beyond quantitative metrics.

The drivers of CO2 emissions are a widely studied subject of great importance to both individual countries and the global community. However, the inclusion of a quantitative measure of political uncertainty, national and global, has until now been largely overlooked. We investigate how geopolitical uncertainty (GPU) and income interact with CO2 emissions using a panel quantile regression approach for a set of 63 nations over the period 1985-2014. Our key findings are; (i) a consistent negative (positive) relation between global (local) uncertainty and the different CO2 emission distribution levels, (ii) the relation between uncertainty and emissions is heterogeneous across different income groups, (iii) clear and consistent evidence for the Environmental Kuztnet Curve hypothesis with respect to uncertainty, (iiii) when deciding on environmental policy, it is of great importance to consider political uncertainty and whether to use a local or global measure.

Background: The world is currently experiencing an economic and socio-political crisis causing the global environment to be characterized by increased uncertainty and risk (Carter et al., 2021). After severe years of the COVID-19 pandemic havoc, the world has been presented with yet another setback of the Russian invasion of Ukraine (Assaf et al., 2023) resulting in significant inflation, increasing energy prices, and serious impact causing financial struggles for individuals. Together with an increasing awareness of environmental deterioration and environmentally conscious demanding sustainable products, consumer behaviors are being shaped (Du et al., 2014). Despite the increase in environmental consciousness among the public, a gap exists between an individual’s sustainable consumption intention and behavior becoming particularly apparent during times of uncertainty. To explore how individual sustainable consumption intentions/attitudes and behavior are affected by the current economic and socio-political uncertainty this study seeks to build upon previous research analyzing determining factors to better understand and strengthen sustainable consumption behaviors. Purpose: The purpose of this study is to identify how perceived risk and uncertainty due to economic and socio-political uncertainty affects individuals’ ability to act on the intended consumption behavior, to generate a better understanding of how sustainable consumption behavior can be supported during times of uncertainty. Method: This study is conducted using a qualitative research strategy through an inductive approach following a more positivistic epistemological stance and an internal realism from the ontological viewpoint, where ten semi-structured interviews have been collected. Conclusion: After generating data from our interviews and analyzing the results in connection to relevant studies and theories, different factors have become apparent to affect respondents during uncertainty. The results have shown that among the most determinant factors affecting consumption behavior during times of increasing uncertainty are price, quality, longevity, social norms, time, and energy. The study has thereby also identified factors with a tendency to encourage sustainable consumption behavior during times of uncertainty such as environmental concern and strong personal values and attitudes as well as behavioral motivation originating from altruistic values can enhance individual ability to act on one's intention even during times of uncertainty. These findings identify the need for and the importance of increasing the environmental knowledge and risk perception of how the environment is affected by production and consumption as well as developing personal norms and moral obligations by ascribing an individual responsibility for preventing environmental degradation with the belief that the sustainable consumption actions performed will generate the desired outcomes.

[pt] Neste trabalho é desenvolvida uma teoria sobre como a opinião pública influencia as decisões de política econômica implementadas por governantes em uma economia. Mostra-se que a distribuição na população do acesso à informação a respeito das decisões dos governantes pode ter grande impacto sobre a forma como a opinião pública influencia essas decisões. Busca-se assim explicar como diferenças na maneira pela qual a informação a respeito das decisões dos governantes é difundida na população de uma economia podem gerar importantes mudanças nas decisões de política econômica nela implementadas. A análise é apresentada a partir de um modelo de career concern onde governantes tomam decisões de política econômica envolvendo um conflito de interesses entre grupos que observam imperfeitamente suas decisões. Os resultados obtidos permitem explicar o fato aparentemente contraditório de determinados países da América Latina apresentarem simultaneamente um favorecimento arraigado de grupos abastados por parte da estrutura de gastos públicos e uma alta incerteza associada às decisões de política econômica. Eles também permitem se propor um canal explicando como a distribuição do acesso à informação sobre os governantes pode reduzir a taxa de crescimento de uma economia e assim limitar seu desenvolvimento. Ressalta-se então a importância das instituições políticas e do comportamento da imprensa para países em desenvolvimento. / [en] A theory explaining how public opinion may impact the choice of economic policies made by incumbents is developed in this work. Mentioned impact it s shown to be influenced in important ways by the distribution of access to information about incumbent s choices in the population. Thus, the importance of that distribution for economic policies chosen by politicians in an economy is highlighted. The analysis is based on a career concern model where incumbents choose an economic policy involving conflicting interests among voters who are imperfectly informed about their decisions. Based on the obtained results, an explanation for a fact observed in many Latin American countries it s provided. In those countries, although wealthier groups of society are systematically favored by governmental spending, there is a high degree of uncertainty associated with economic policies chosen by governments. A mechanism explaining how the distribution of access to information about incumbent s choices can hinder economic growth and development in an economy is also presented. The analysis suggests that media behavior and the design of political institutions are important factors for the economic development of developing countries.

Governments across the globe are experiencing enormous budget deficits. The governments of South Africa and Australia felt that taxes on mining have not been reflecting a ‘willing buyer-willing seller’ relationship. This in essence means that mining companies in these two countries were not paying an arm’s length value to governments for extracting the resources. In Australia the authorities introduced the Resources Super Profits Tax to be charged at 40% of assessable profits. Mining companies still have to assess how to deal with this new tax when it is enacted on 1 July 2012. However, a change advantageous for the companies is the reduction in the corporate tax rate from 30% to 28% by the 2014/15 tax year. This Resources Super Profits Tax will also be deductible from the calculation of taxable income. South Africa enacted the Mineral and Petroleum Resources Royalty Acton 1 March 2010. Mining companies would now pay royalties based on a charging formula specifically for refined and unrefined minerals. The minimum royalty charging formula is 0.5% of gross sales regardless of whether the mining company incurs losses. This royalty charging formula is capped at 5% for refined minerals and 7% for unrefined minerals. However, any existing arrangement between mining companies and land owners for special royalties payable is not replaced by the Mineral and Petroleum Resources Royalty Act. A mining company such as Kumba Resources Limited never paid royalties in 2009, but were paying royalties in 2010 at 5.61% of accounting earnings before interest and taxes and 5.51% in 2011. Despite the additional royalties mining companies still invest in South Africa. The main drive for investment is managing risks and investing in projects that yield positive net present values. Typical risks to be managed are taxation laws, political uncertainty and social issues. These risks should be kept under control as the likelihood of mining companies walking away from investments is high when these risks spiral out of control. AFRIKAANS : Regerings dwarsoor die wêreld ondervind wesenlike begrotingstekorte. Die regerings van Suid Afrika en Australië glo dat die belasting op mynbou-maatskappye nie die ‘gewillige koper-gewillige verkoper’ verhouding weerspieël nie. In beginsel beteken dit dat die mynbou-maatskappye in die twee lande nie armlengte-waarde betaal aan regerings vir die ontginning van minerale nie. In Australië het owerhede die Minerale Super Winste Belasting gepromulgeer wat 40% heffings van berekende winste vereis. Mynbou-maatskappye is steeds in die donker oor hoe om hierdie nuwe belasting te hanteer wanneer dit op 1 Julie 2012 in werking tree.Die verlaging van die korporatiewe belastingkoers van 30% na 28% oor ’n tydperk tot en met die 2014/15 belastingjaaris egter ’n verandering wat voordelig is vir die maatskappye. Hierdie Minerale Super Winste Belasting sal ook van belasbare inkomste van mynbou-maatskappye aftrekbaar wees. Suid Afrika het die Minerale en Petroleum Reserwes Tantieme Wet op 1 Maart 2010 gepromulgeer. Mynbou-maatskappye sal in die vervolg tantieme betaal wat gebaseer word op ’n heffingsformule spesifiek ontwerp vir verwerkte en onverwerkte minerale. Die minimum tantieme heffingsformule is 0.5% van bruto verkope ongeag of die mynbou-maatskappy verliese ly. Hierdie tantieme heffingsformule word wel beperk tot 5% vir verwerkte minerale en 7% vir onverwerkte minerale. Enige huidige ooreenkoms met grondeienaars vir die betaling van spesiale tantieme word ongelukkig nie oorskryf deur die Minerale en Petroleum Reserwes Tantieme Wet nie. ’n Mynbou-maatskappy soos Kumba Resources Beperk het geen tantieme in 2009 betaal nie. In 2010 was Kumba Resources Beperk se tantieme 5.61% van rekeningkundige wins voor rente en belasting en in 2011 was dit 5.51%. Ondanks hierdie addisionele tantieme belê mynbou-maatskappye steeds in Suid Afrika. Die hoof-dryfveer vir beleggings is die bestuur van risiko en belegging in projekte wat positiewe netto huidige waardes lewer. Tipiese risiko’s wat bestuur moet word, is belastingwette, politieke onsekerheid en sosiale kwessies. Hierdie risiko’s moet te alle tye onder beheer gehou word omrede mynbou- maatskappye heel waarskynlik van beleggings kan onttrek indien die risiko’s buite beheer raak. Copyright / Dissertation (MCom)--University of Pretoria, 2013. / Taxation / unrestricted