Mei Cheng

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Journals/Publications

• Cheng, M., Jaggi, J., & Young, S. (2021). Customer Concentration of Target in Mergers and Acquisitions. Journal of Business, Finance and Accounting, 1-42.
• Bens, D. A., Cheng, M., & Neamtiu, M. (2016). The Impact of SEC Disclosure Monitoring on the Uncertainty of Fair Value Estimates.. The Accounting Review, 91(2), 349-375. doi:http://dx.doi.org/10.2308/accr-51248
• Cheng, M., Dhaliwal, D., & Zhang, Y. (2013). Does investment efficiency improve after the disclosure of material weaknesses in internal control over financial reporting?. Journal of Accounting and Economics, 56(1), 1-18.
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  Abstract: We provide more direct evidence on the causal relation between the quality of financial reporting and investment efficiency. We examine the investment behavior of a sample of firms that disclosed internal control weaknesses under the Sarbanes-Oxley Act. We find that prior to the disclosure, these firms under-invest (over-invest) when they are financially constrained (unconstrained). More importantly, we find that after the disclosure, these firms' investment efficiency improves significantly. © 2013 Elsevier B.V.
• Cheng, M., Dhaliwal, D. S., & Neamtiu, M. (2011). Asset securitization, securitization recourse, and information uncertainty. Accounting Review, 86(2), 541-568.
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  Abstract: In this study, we examine some of the consequences of asset securitization. Specifically, using a sample of bank holding companies, we investigate whether the difficulty in assessing the true extent of risk transfer, between securitizing banks and investors in asset-backed securities, affects bank information uncertainty. We find that when market participants have a greater difficulty in estimating risk transfer, banks face greater information uncertainty (i.e., larger bid-ask spreads and analyst forecast dispersion). In addition, we find that this effect is mitigated for banks that operate in a higher quality information environment. We also find that banks that securitize financial assets have higher spreads and analyst forecast dispersion as compared to non-securitizing banks.
• Cheng, M., & Neamtiu, M. (2009). An empirical analysis of changes in credit rating properties: Timeliness, accuracy and volatility. Journal of Accounting and Economics, 47(1-2), 108-130.
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  Abstract: In recent years, credit rating agencies have faced increased regulatory pressure and investor criticism for their ratings' lack of timeliness. This study investigates whether and how rating agencies respond to such pressure and criticism. We find that the rating agencies not only improve rating timeliness, but also increase rating accuracy and reduce rating volatility. Our findings support the criticism that, in the past, rating agencies did not avail themselves of the best rating methodologies/efforts possible. When their market power is threatened by the possibility of increased regulatory intervention and/or reputation concerns, rating agencies respond by improving their credit analysis. © 2008 Elsevier B.V. All rights reserved.
• Mei, C., & Subramanyam, K. R. (2008). Analyst following and credit ratings. Contemporary Accounting Research, 25(4), 1007-1043+951+959.
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  Abstract: This paper examines the relation between financial (equity) analyst following and default risk, which we proxy by issuer credit ratings. We hypothesize that analyst following reduces default risk because of both the monitoring and the informational roles of financial analysts. Using a large sample of firms, we find evidence consistent with this conjecture. In particular, we find that analyst following is negatively related to a firm's default risk (credit rating). The effect of analyst following on credit ratings is less pronounced for firms with a superior information environment and stronger controls. Similarly, the effect of analyst following on a firm's credit rating is lower when analysts' information quality is poor. Our results are robust to controlling for several factors including the endogenous relation between credit ratings, institutional holdings, and analyst following. Our study documents important spillover effects of financial (equity) analysts to the debt market. © CAAA.

Presentations

• Cheng, L., Cheng, M., Dhaliwal, D. S., Cheng, L., Cheng, M., & Dhaliwal, D. S. (2015, October). Bank Auditor Information Transfer and Audit Quality. Arizona State University and University of Arizona Accounting Conference.