Faculty Profile

Ole-Kristian Hope

Adjunct Professor - Department of Accounting and Operations Management

Publications

Hope, Ole-Kristian; Wu, Han & Zhao, Wuyang (22)

Blockholder exit threats in the presence of private benefits of control

Review of accounting studies, 22(2), s. 873- 902. Doi: 10.1007/s11142-017-9394-2

Chy, Mahfuz & Hope, Ole-Kristian (2021)

Real effects of auditor conservatism

Review of accounting studies Doi: 10.1007/s11142-020-09568-3

Hope, Ole-Kristian; Huang, Zhongwei & Moldovan, Rucsandra (2021)

Wall street analysts as investor relations officers

Journal of Corporate Finance Doi: 10.1016/j.jcorpfin.2021.101893

This paper examines the practice of hiring financial analysts as investor relations officers (IRO). We posit that analysts-turned-IROs (AIROs) have a competitive advantage in communicating with investors, thereby lowering the effort expended by the investment community to process corporate disclosures. Using a unique manually-collected dataset on the employment history of IROs (compiled from LinkedIn, Capital IQ, RelationshipScience.com, and appointment press releases), we show that disclosure readability in 8-K and 10-K filings improves and that companies are more likely to host analyst/investor days after hiring former analysts as IROs. Most importantly, we find increases in analyst following, institutional investors, and stock liquidity after hiring a former analyst as IRO. We conclude that both a disclosure and a network channel are at play in the relation between AIROs and increased interest from the investment community. Overall, our findings suggest that firms benefit from hiring Wall Street analysts as IROs.

Hope, Ole-Kristian; Li, Congcong, Lin, An-Ping & Rabier, MaryJane (2020)

Happy analysts

Accounting, Organizations and Society Doi: 10.1016/j.aos.2020.101199

This paper is thefirst to investigate the role of work-life balance infinancial analysts’performance andcareer advancement. Using a large sample of Glassdoor reviews byfinancial analysts, wefind a significantnon-linear relation between perceived work-life balance and analyst performance and analyst careeradvancement. Specifically, when perceived work-life balance is relatively low, an increase in work-lifebalance is associated with better analyst performance and career advancement; however, whenperceived work-life balance is already high, a further increase in work-life balance is associated withworse analyst performance and career advancement.

Hope, Ole-Kristian; Jiang, Shushu & Vyas, Dushyantkumar (2020)

Government procurement and financial statement certification: Evidence from private firms in emerging economies

Journal of International Business Studies Doi: 10.1057/s41267-020-00382-2

In this paper, we examine the monitoring role of government customers in emerging markets, a setting where public procurement is significant but the procurement institutions are weak. In these countries, financial statement certifications could be an important mechanism for a private firm to facilitate contracting with governments. Employing a sample of private firms across 98 emerging economies, we first document in-depth private-firm audit regulations for each country. We find that firms are more likely to have financial statements certified by an external auditor when they have government contracts. We further find that the association is less pronounced when governments have weaker monitoring incentives – when suppliers are subject to monitoring from tax authorities or creditors, when government contracting officials receive bribes, and when government spending is less transparent. We corroborate our inferences using the staggered adoption of an E-Procurement system to infer changes in governments’ monitoring incentives and several other robustness checks.

Fang, Bingxu; Hope, Ole-Kristian, Huang, Zhongwei & Moldovan, Rucsandra (2020)

The effects of MiFID II on sell-side analysts, buy-side analysts, and firms

Review of accounting studies, s. 855- 902. Doi: 10.1007/s11142-020-09545-w

This paper provides early but broad empirical evidence on MiFID II, which requires investment firms to unbundle investment research from other costs they charge to clients. Employing difference-in-differences matched-sample research designs with firm fixed effects, we find a decrease in the number of sell-side analysts covering European firms after MiFID II implementation, particularly for firms that are less important to the sell-side. However, research quality improves; specifically, individual analyst forecasts are more accurate and stock recommendations garner greater market reactions. In addition, sell-side analysts seem to cater more to the buy-side after MiFID II by providing industry recommendations along with stock recommendations. Importantly, we predict and find evidence that buy-side investment firms turn to more in-house research after MiFID II implementation. Equally interesting, buy-side analysts increase their participation and engagement in earnings conference calls, compared to the control group. We find some evidence that stock-market liquidity decreases post MiFID II.

Fang, Bingxu & Hope, Ole-Kristian (2020)

Analyst teams

Review of accounting studies Doi: 10.1007/s11142-020-09557-6

This paper examines the impact of teamwork on sell-side analysts’ performance. Using a hand-collected sample of over 50,000 analyst research reports, we find that analyst teams issue more than 70% of annual earnings forecasts. In contrast, most research implicitly assumes that forecasts are issued by individual analysts. We document that analyst teams generate more accurate earnings forecasts than individual analysts and that the stock market reacts more strongly to forecast revisions issued by teams. Analyst teams also cover more firms, issue earnings forecasts more frequently, and issue less stale forecasts. Analysts working in teams are more likely to be voted as All-Star analysts in the future. Among analyst teams, we show that team size and team member ability are significantly associated with forecast accuracy. Moreover, using detailed analyst background information from LinkedIn, we find that forecast accuracy is positively associated with team diversity based on sell-side experience, educational background, and gender. Additional analyses suggest that analyst teams, especially more diverse ones, are more likely to issue cash-flow forecasts and use discounted cash-flow valuation models in their reports. These findings suggest that teamwork and team diversity play a crucial role in understanding sell-side analysts’ performance.

Hope, Ole-Kristian & Lu, Haihao (2020)

Economic consequences of corporate governance disclosure: Evidence from the 2006 SEC regulation on related-party transactions

Accounting Review, 95(4), s. 263- 290. Doi: 10.2308/ACCR-52608

This paper examines economic consequences of a 2006 Securities and Exchange Commission regulation that mandated public firms to disclose their governance policies on related-party transactions (RPTs). Employing hand-collected RPT data for S&P 1500 firms, we find that the initiation of RPT governance disclosure significantly reduces the occurrence of RPTs, and that the reduction in RPTs is negatively associated with the implied cost of capital (ICC) and positively related to Tobin's Q. These effects are more pronounced for low-monitored firms and for firms with RPTs that are more likely to be opportunistic. We further find that firms with a formal written policy, a designated committee to review and approve RPTs, or more extensive disclosure on RPT governance benefit in terms of lower ICC.

Hope, Ole-Kristian; Yue, Heng & Zhong, Qinlin (2020)

China's Anti-Corruption Campaign and Financial Reporting Quality

Contemporary Accounting Research, 37(2), s. 1015- 1043. Doi: 10.1111/1911-3846.12557

We examine the impact of China's anti‐corruption campaign on firm‐level financial reporting quality (FRQ). As an important component of the anti‐corruption campaign, in October 2013, “Rule 18” was issued to prohibit party and government officials from serving as directors for publicly listed firms. The regulation led to a large number of official directors resigning from their roles as directors involuntarily. As such, Rule 18 has effectively weakened, if not fully discontinued, the political connections of the firms that previously hired officials as directors. Our empirical analyses employ a difference‐in‐differences research design with firm fixed effects and propensity‐score matching to examine the pre‐ and post‐period FRQ around the enactment of Rule 18. We find that, compared to propensity‐score‐matched control firms, FRQ of firms with resigned official directors increases after Rule 18. Further evidence suggests that the impact is stronger when firms are located in regions with more developed financial markets and in regions with higher judiciary efficiency. We also find that the effect is more pronounced when firms are non‐state‐owned, received preferential credits, and face refinancing pressure.

Che, Limei; Hope, Ole-Kristian & Langli, John Christian (2020)

How Big-4 Firms Improve Audit Quality

Management science, 66(10), s. 4552- 4572. Doi: 10.1287/mnsc.2019.3370 - Full text in research archive

This paper studies whether and how Big-4 firms provide higher-quality audits than non-Big-4 firms. Specifically, we first examine a Big-4 effect and then explore three sources of the Big-4 effect. To test the Big-4 effect, we use a unique data set of individual audit partners for a large sample of private companies and a novel research design exploiting the fact that auditees may follow the auditor who switches affiliation from a non-Big-4 firm to a Big-4 firm. Thus, we compare audit quality and audit fees of the same partner–auditee pairs before and after the switch. The results show that the Big-4 effect exists in the private-firm segment. More important, we find evidence for three sources of the Big-4 effect. First, Big-4 firms are able to recruit non-Big-4 partners who deliver higher audit quality than other non-Big-4 partners in the preswitch period. Second, enhanced learning has taken place after the switch. Third, the increased audit quality can also be attributed to stronger incentives/monitoring. These are new findings to the literature.

Bova, Francesco; Dou, Yiwei & Hope, Ole-Kristian (2019)

Health Insurer Bargaining Power and Firms’ Incentives to Manage Earnings: Evidence From an Economic Shock

Journal of Accounting, Auditing and Finance, 34(3), s. 483- 508. Doi: 10.1177/0148558X17726141 - Full text in research archive

Hope, Ole-Kristian; Lu, Haihao & Saiy, Sasan (2019)

Director compensation and related party transactions

Review of accounting studies Doi: 10.1007/s11142-019-09497-w - Full text in research archive

This paper examines whether independent directors’ compensation is associated with related party transactions. We focus both on directors’ total compensation and their equity-based compensation. Employing hand-collected data for S&P 1500 firms, we find that independent directors’ compensation is significantly associated with related party transactions. Specifically, we find that the level of compensation is positively related to these transactions, but we do not find equity-based compensation to be associated with them. Next, we decompose the compensation measures into “market” (i.e., predicted) level and “excessive” components and find that the results are driven by the excessive components. This association between related party transactions and director compensation is moderated by corporate governance mechanisms, suggesting that the association between the two reflects a conflict of interest between insiders and shareholders.

Dou, Yiwei; Hope, Ole-Kristian, Thomas, Wayne B. & Zou, Youli (2018)

Blockholder Exit Threats and Financial Reporting Quality

Contemporary Accounting Research, 35(2) Doi: 10.1111/1911-3846.12404

Recent theoretical and empirical studies suggest that blockholders (shareholders with ownership ≥ 5 percent) exert governance through the threat of exit. Blockholders have strong incentives to gather private information and sell their shares when managers are perceived to underperform. To prevent blockholders from selling their shares and the firm from suffering a stock price decline, managers align their actions with the interests of shareholders. As a result of the greater manager‐shareholder alignment, managers' actions are more likely to be in shareholders' best interest, and consequently there is less need for managers to manipulate earnings. Consistent with these predictions from economic theory, we find evidence that as exit threat increases, firms have higher financial reporting quality. Theory also predicts that the impact of blockholders' exit threat on financial reporting quality (FRQ) should increase as the manager's wealth is tied more closely to the stock price, and this is what we find. Our study contributes to the research on the impact of shareholders on FRQ and to an emerging literature on the impact of blockholders in financial markets. Blockholders play an important role in managers' reporting outcomes through their actions as informed investors.

Hope, Ole-Kristian & Wang, Jingjing (2018)

Management deception, big-bath accounting, and information asymmetry: Evidence from linguistic analysis

Accounting, Organizations and Society, 70(October), s. 33- 51. Doi: 10.1016/j.aos.2018.02.004

Accounting big baths are pervasive in practice. While big baths can improve the information environment and reduce information asymmetry, they can also degrade the information environment and obscure operating performance. In this study, we examine the role of management ethics. Specifically, we investigate whether managers’ truthfulness (or conversely, deceptiveness) affects how investors perceive big baths. Using linguistic analysis on earnings-conference calls to measure managerial deception and employing a difference-in-differences research design with propensity-score matching, we find that information asymmetry is significantly higher following big baths taken by deceptive CEOs, compared with big baths taken by less deceptive CEOs.

Akamah, Herita; Hope, Ole-Kristian & Thomas, Wayne B. (2018)

Tax havens and disclosure aggregation

Journal of International Business Studies, 49(1), s. 49- 69. Doi: 10.1057/s41267-017-0084-x

Hope, Ole-Kristian & Zhao, Wuyang (2017)

Market reactions to the closest peer firm?s analyst revisions

Accounting and Business Research, 48(4), s. 345- 372. Doi: 10.1080/00014788.2017.1407628

Prior analyst literature focuses on the impact of financial analysts on the firms they cover, and prior information-transfer literature concentrates on the externalities of information provided by management. This paper fills gaps in both streams of literature by examining the focal firm’s market reactions to the closest peer firm’s (identified by product similarity) analyst revisions. We find that the focal firm’s stock price reacts to the closest peer’s analyst revisions made by analysts who are not covering the focal firm. The focal firm’s cumulative abnormal return for a five-day window centered on the revision date is 0.54% higher if the peer firm’s analyst revision magnitude is in the top decile than if it is in the bottom decile. Cross-sectional tests show that the sensitivity of the focal firm’s market reactions to the peer firm’s revisions increases with the revision informativeness and the similarity between the focal firm and the peer firm. In addition, we find that focal firms do not react to peer firms’ revisions in industries with strong competition where the competitive effects cancel out the spillover effects. Finally, we find that the focal firm’s market reactions can predict its own future analyst revisions, suggesting that the reactions are at least partially rational.

Chen, Feng; Hope, Ole-Kristian, Li, Qinyuan & Wang, Xin (2017)

Flight to Quality in International Markets: Investors? Demand for Financial Reporting Quality during Political Uncertainty Events

Contemporary Accounting Research, 35(1), s. 117- 155. Doi: 10.1111/1911-3846.12355

We examine whether international equity mutual fund managers shift their portfolios toward stocks with higher financial reporting quality (FRQ) during periods of high political uncertainty. Our study is motivated by two primary factors. First, prior research shows evidence of fund managers’ “flight to quality” (e.g., to less risky securities) during periods of uncertainty. Second, recent theoretical research concludes that stocks with higher FRQ are assessed as less sensitive to systematic risk (such as political uncertainty). We employ national elections as exogenous increases in systematic risk in the local markets and accordingly use an international sample of mutual funds that focus on local markets. We find that mutual fund managers shift their equity holdings to stocks with higher FRQ during election periods when political uncertainty is higher. Such a flight‐to‐quality effect is less pronounced for elections with larger expected electoral margins in the pre‐election period (i.e., when the incumbent is more likely to win the election) and for countries with higher transactions costs. In contrast, the effect is more pronounced when governments have greater involvement in the local economy. Our inferences are robust to alternative proxies for political uncertainty and FRQ and to numerous other sensitivity analyses.

De Franco, Gus; Hope, Ole-Kristian & Lu, Haihao (2017)

Managerial ability and bank-loan pricing

Journal of Business Finance & Accounting, 44(9-10), s. 1315- 1337. Doi: 10.1111/jbfa.12267

Hope, Ole-Kristian; Hu, Danqi & Zhaoa, Wuyang (2017)

Third-party consequences of short-selling threats: The case of auditor behavior

Journal of Accounting, 63(2-3), s. 479- 498. Doi: 10.1016/j.jacceco.2016.09.006

Hope, Ole-Kristian; Thomas, Wayne B. & Vyas, Dushyantkumar (2017)

Stakeholder demand for accounting quality and economic usefulness of accounting in U.S. private firms

Journal of Accounting and Public Policy, 36(1) Doi: 10.1016/j.jaccpubpol.2016.11.004

Yiwei, Dou; Hope, Ole-Kristian, Thomas, Wayne B. & Zou, Youli (2016)

Individual Large Shareholders, Earnings Management, and Capital-Market Consequences

Journal of Business Finance & Accounting, 43(7-8), s. 872- 902. Doi: 10.1111/jbfa.12204

Hope, Ole-Kristian; Hu, Danqi & Lu, Hai (2016)

The benefits of specific risk-factor disclosures

Review of accounting studies, 21(4), s. 1005- 1045. Doi: 10.1007/s11142-016-9371-1

Hope, Ole-Kristian; Langli, John Christian & Thomas, Wayne B. (2012)

Agency conflicts and auditing in private firms

Accounting, Organizations and Society, 37(7), s. 500- 517. Doi: 10.1016/j.aos.2012.06.002

Hope, Ole-Kristian & Langli, John Christian (2010)

Auditor Independence in a Private Firm and Low Litigation Risk Setting

Accounting Review, 85(2), s. 573- 605. Doi: 10.2308/accr.2010.85.2.573

Che, Limei; Hope, Ole-Kristian & Langli, John Christian (2017)

Does the Big-4 Effect Exist in Private-Client Segment? Evidence from Audit-Partner – Auditee Pair Switches

[Academic lecture]. Ninth European Auditing Research Network Symposium 2017.

Che, Limei; Hope, Ole-Kristian & Langli, John Christian (2016)

Does the Big-4 Effect Exist? Evidence from Audit-Partner Switches

[Academic lecture]. NHH mini-conference.

Che, Limei; Hope, Ole-Kristian & Langli, John Christian (2016)

Does the Big-4 Effect Exist When Reputation and Litigation Risks are Low? Evidence from Audit-Partner – Auditee Pair Switches

[Academic lecture]. Research presentation at Umeå University.

Che, Limei; Hope, Ole-Kristian & Langli, John Christian (2016)

Does the Big-4 Effect Exist When Reputation and Litigation Risks are Low? Evidence from Audit-Partner – Auditee Pair Switches

[Academic lecture]. Research presentation.

Che, Limei; Hope, Ole-Kristian & Langli, John Christian (2016)

Does the Big-4 Effect Exist? Evidence from Audit-Partner Switches

[Academic lecture]. 39th European Accounting Association Annual Congress 2016.

Langli, John Christian; Hope, Ole-Kristian & Che, Limei (2016)

Does the Big-4 effect exist? Evidence from Audit-Partner Switches

[Academic lecture]. Workshop.

Hope, Ole-Kristian; Che, Limei & Langli, John Christian (2016)

Does the Big-4 Effect Exist when Reputation and Litigation Risks are Low? Evidence from Audit-Partner – Auditee Pair Switches

[Academic lecture]. 6th Workshop on Audit Quality.

Hope, Ole-Kristian; Langli, John Christian & Thomas, Wayne B. (2011)

Agency Conflicts and Auditing in Private Firms

[Academic lecture]. EARNet 2011.

Langli, John Christian; Hope, Ole-Kristian & Thomas, Wayne B. (2010)

Agency Conflicts and Auditing in Private Firms

[Report]. Handelshøyskolen BI.

Hope, Ole-Kristian & Langli, John Christian (2009)

Er høye honorarer for revisjon og rådgivning en trussel mot uavhengigheten?

[Article in business/trade/industry journal]. Praktisk økonomi & finans, 25(4), s. 55- 63.

Academic Degrees
Year Academic Department Degree
--N/A-- Norwegian School of Economics (NHH) Master of Science in Business
2001 Kellogg School of Management, Northwestern University PhD
Work Experience
Year Employer Job Title
2011 - Present Rotman School of Management, University of Toronto Professor
2007 - 2011 Rotman School of Management, University of Toronto Associate professor
2001 - 2007 Rotman School of Management, University of Toronto Assistant professor