Anywhere (Siko) Sikochi is an assistant professor in the Accounting and Management unit, where he teaches the Financial Reporting and Control course in the MBA required curriculum. His research is directed at information disclosure, debt contracting, and credit risks associated with firm operations and organizational forms.
Professor Sikochi earned his PhD in business administration at the Penn State Smeal College of Business, where he taught financial accounting in the Executive MBA program. He previously received an MBA from the University of Virginia Darden School of Business. Before his graduate studies, Professor Sikochi worked at a branch of FTI Consulting and at Charles River Associates.
A native of Zimbabwe, Professor Sikochi came to the United States to attend Middlebury College, graduating with majors in economics and Russian. He is active in the EducationUSA United States Student Achievers Program, which helped him prepare for U.S. higher education. He is also engaged in the PhD Project, an organization with a mission to increase the diversity of U.S. business school faculty. He and his wife are parents of three children.
We examine the influence of peer firms on trade credit policies of listed firms in the United States. We posit and find evidence that firms mimic their peers in formulating trade credit policies. The findings are more pronounced for firms in highly competitive product markets. Our results also show that firms not only mimic peers in similar circumstances, but they also mimic their more and/or less successful peer firms. These within-group and bidirectional effects highlight the importance of trade credit as a competitive tool in the product markets. Our results are robust to different methods of selecting peers, sampling, different proxies and estimation techniques.
Gyimah, Daniel, Michael Machokoto, and Anywhere (Siko) Sikochi. "Peer Influence on Trade Credit." Harvard Business School Working Paper, No. 19-053, November 2018. (Please contact the authors to request copy of this paper.)
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This study examines whether rating agencies assign more stringent and accurate rating adjustments for issuers with higher default risk and whether this leads to adjustments that are more relevant to financial markets. We expect that rating agencies will make more informative adjustments to limit their reputation risk for issuers with a higher likelihood of default—an event that can reveal the quality of assigned ratings. For all issuers, we find that adjustments are more stringent and accurate as issuers' default risk grows. We also find that the relevance of adjustments increases with issuers' default risk, as evidenced by adjustments being more predictive of issuer default and offering yields and an increased market reaction to adjustment changes. For defaulting issuers, especially those with a higher pre-failure default risk, we find that adjustments grow more stringent and accurate in the months leading up to default and better predict lender default recovery rates.
Bonsall, Samuel B., IV, Kevin Koharki, Karl A. Muller III, and Anywhere (Siko) Sikochi. "Issuer Default Risk and Rating Agency Conflicts." Harvard Business School Working Paper, No. 17-050, December 2016. (Revised November 2018. Please contact the authors to request copy of this paper.)
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Alhusaini, Badryah, Rick Laux, Henock Louis, and Anywhere Sikochi. "Does the Non-Repatriation of Foreign Cash Negatively Affect U.S. Firms' Operations? Evidence from Product Market Competitiveness." Harvard Business School Working Paper, No. 17-049, December 2016.
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This study examines how a corporate legal structure may affect borrowing costs. Corporate legal structure refers to the legal fragmentation of a firm into multiple, separately incorporated entities. This fragmentation is bound to be a factor when lenders determine the pricing of debt and design of contract terms because they can enter into legally enforceable agreements only with specific legal entities. Using a sample of bank loans issued to U.S. parent companies, I find that a more complex corporate legal structure is associated with higher loan spreads. The findings are robust to several firm and loan characteristics and are incremental to the effects of other forms of organizational structure, namely business and geographic diversification. I also find that the level of debt at subsidiaries affects the parent company's borrowing costs. However, the subsidiary debt does not moderate the relationship between legal structure and borrowing costs. Evidence suggests that this is, at least partly, explained by recovery costs. There is also some evidence that a corporate legal structure affects the design of the debt contracts.
Sikochi, Anywhere (Siko). "Corporate Legal Structure and Bank Loan Spreads." Harvard Business School Working Paper, No. 17-047, December 2016. (Revised November 2018. Please contact the author to request copy of this paper.)
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I document the causal link between shareholder litigation risk and cross-listed firms’ information environment by exploiting a quasi-natural experiment in the form of a reduction in litigation risk resulting from the 2010 Supreme Court ruling in Morrison v. National Australia Bank. I first show that the ruling reduced litigation risk faced by cross-listed firms as evidenced by lower directors’ and officers’ insurance premiums for Canadian firms after the ruling. I then show that the information environment deteriorated for cross-listed firms after the ruling. The results are more pronounced for firms with low U.S. share activity, in bad-news firm quarters, and for firms from countries with weak legal institutions. By implication, these findings suggest that improvements in foreign firms’ information environment upon listing in the U.S., as documented in prior literature, stem in part from the greater litigation risk associated with the U.S. listing.
In early 2014, Corporate Learning, one of three business units at Harvard Business Publishing (HBP), was in the process of revamping its flagship product, Harvard Manage-Mentor (HMM) from version 11.0 (HMM11) to version 12.0 (HMM12). The revamped software would be hosted exclusively on HBP’s server, allowing updates to take place continuously. Given the change, accounting standards required HBP to change the recognition of revenue from the date of software delivery (for HMM11) to ratable recognition over its contract life (for HMM12). As Paul Bills (CFO of HBP) and David Wan (HBP’s CEO) discussed the accounting change, they recognized that its impact on Corporate Learning’s and HBP’s performance could be material and would have to be reflected in the budget. In addition, they wondered how the new accounting would affect the company’s policy for awarding sales incentive compensation on HMM, as well as how they communicated with employees and the firm’s sole shareholder, the Harvard Business School.
Sikochi, Siko, Suraj Srinivasan, and Quinn Pitcher. "Tesla, Inc. in 2018." Harvard Business School Case 119-013, November 2018. (Revised February 2019.)
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In early 2014, Paul Bills, CFO of Harvard Business Publishing (HBP), sat down with David Wan, the company’s CEO, to discuss budget preparations for the coming year. Bills noted that the performance of Corporate Learning, one of HBP’s three business units, would be affected by a business model change for its largest product that required a change in the timing of revenue recognition. Corporate Learning was in the process of revamping its flagship product, Harvard Manage-Mentor (HMM) from version 11.0 (HMM11) to version 12.0 (HMM12). The revamped software would be hosted exclusively on HBP’s server rather than on its clients’ servers, allowing updates to take place continuously. Given the change, accounting standards required HBP to change the recognition of revenue from the date of software delivery (for HMM11) to ratable recognition over its contract life (for HMM12).
As Bills and Wan discussed the accounting change, they recognized that its impact on Corporate Learning’s and HBP’s performance could be material and would have to be reflected in the budget. In addition, they wondered how the new accounting would affect the company’s policy for awarding sales incentive compensation on HMM, as well as how they communicated with employees and the firm’s sole shareholder, the Harvard Business School.
On December 5, 2017 an accounting scandal broke out at one of South Africa’s most important and global companies, Steinhoff International Holdings N.V. (Steinhoff). The supervisory board of Steinhoff announced that the chief executive officer, Markus Jooste, had resigned with immediate effect after information had come to light which related to accounting irregularities at the company. In the wake of the news, Steinhoff lost over 90% of its market value (see Exhibit 1 for Steinhoff Market Value).
Nicky Newton-King, the Chief Executive Officer of the Johannesburg Stock Exchange (JSE), was put in a difficult position. Not only had a scandal broken out at a JSE-listed company under her watch, but she had to act swiftly regarding the listing status of Steinhoff’s debt and equity securities. There were calls to suspend listing of Steinhoff securities from the exchange. The scandal threatened to erode investor confidence in the credibility of South Africa’s capital markets, seriously impacting “investments, pension funds and the reputation of the company, of business and the nation.”
Sikochi, Siko, and Austin Lim. "Steinhoff International: Accounting Irregularities and Financial Markets." Harvard Business School Case 118-066, February 2018. (Revised January 2019.)
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Sikochi, Siko, and Suraj Srinivasan. "Fair Value Accounting Controversy at Noble Group (A) and (B)." Harvard Business School Teaching Note 118-063, January 2018. (Revised March 2018.)
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Following a series of reports by Iceberg Research alleging that Noble Group was too aggressive in its fair value accounting for contracts and investments in producers, Noble’s stock price continued to fall and stakeholders began to call for improved transparency in financial reporting. This case contains two actions that the company took in an attempt to signal confidence in and credibility of its financials. This case supplements the (A) case HBS No. 118-034.
Noble Group was a large commodities trader based in Hong Kong and listed on the Singapore Stock Exchange. In 2012, Noble shifted its business strategy towards an asset-light model. Under this model, Noble did not own mines or farms to produce commodities but built commodity sourcing capacity by working with and investing in producers in exchange for purchase and marketing contracts. Noble also worked with customers to secure supply contracts. Noble had a portfolio of 12,000 commodity contracts by the end of 2014. The contracts were measured at fair value. Iceberg Research, an anonymous blog, released a series of reports starting in February 2015 alleging that Noble was too aggressive in its fair value accounting for contracts and investments in producers. Iceberg did not accuse Noble of fraud but suggested that Noble’s profits and balance sheet were highly inflated and Noble was headed for disaster. The case explores Noble’s business and the valuation of its contracts.
