Governance and Financial Reporting

This dissertation investigates contemporary issues in corporate governance and financial reporting through three distinct but interrelated essays. The first study examines the economic impact and stock market consequences of a potential delisting threat faced by U.S.-listed Chinese companies under the Holding Foreign Companies Accountable Act (HFCAA). Using a large sample of cross-listed firms from China and other Asian economies, the analysis documents significant underperformance of Chinese firms during the HFCAA Legislative and Effective Periods, translating into substantial wealth losses for U.S. shareholders. Although a bilateral agreement later mitigated the delisting risk, these findings highlight the importance of transparent auditing standards and consistent regulatory enforcement in cross-border listings. The second essay centers on short sellers’ informational advantages in predicting firms’ financial misstatements. Drawing on a comprehensive set of restatement announcements, the study challenges prior research that portrays a pronounced inverted U-shaped pattern of short interest around misstatements. Instead, the evidence suggests that heightened short-selling activity is closely tied to short sellers’ ability to process adverse public information—such as analyst downgrades, poor earnings releases, and legal or regulatory troubles—rather than their exclusive access to non-public insights. The third essay focuses on discussions of racial diversity and Diversity, Equity, and Inclusion (DEI) commitments within corporate settings. By investigating firms’ public communications and subsequent policy outcomes, this paper sheds light on how board-level or organizational discourse surrounding racial diversity correlates with tangible DEI initiatives and broader stakeholder responses. The results emphasize how transparent communication and inclusive leadership practices can shape organizational reputation and performance. Collectively, these three essays underscore the essential role of governance, regulatory oversight, and transparent disclosure in safeguarding investors and preserving market integrity. By examining cross-listing regulations, short-selling behavior around misstatements, and corporate diversity commitments, the dissertation offers new insights for policymakers, practitioners, and scholars seeking to foster responsible financial reporting and equitable business environments.