Search results

The purpose of this paper is to investigate the spillover effects of a bright-line disclosure regulation that required Chinese listed firms to provide earnings forecasts if they anticipated specified, large earnings changes.

The paper examines the discontinuity of the earnings change distribution of firms listed on the Shenzhen Stock Market between 2010 and 2014. The paper finds that firms no longer subject to the bright-line test still exhibited discontinuity in earnings change distribution. The discontinuity lasted for at least three years with magnitude comparable to that of the firms still subject to the bright-line test. In addition, newly listed firms that had never experienced the bright-line test showed similar tendency to avoid the same threshold. There is some evidence that these firms’ avoidance of the −50 per cent changes was partly because of market pressure.

Research on bright-line tests has to date focused on their immediate and direct effects on firms currently subject to such tests. This study finds that a bright-line disclosure regulation’s influence is not limited to the firms directly governed by the regulation. It could lead to widespread and long lasting distortions in financial reporting behaviors of firms not currently subject to such tests.

The paper has implications for regulators who study the economic consequences of bright-line regulations in general and analysts of the Chinese capital market in particular.

This is the first empirical report that bright-line disclosure regulations affected the financial reporting behavior of firms that were not directly subject to the bright-line tests.

Systemic risks affect financial market participants in many ways. However, the literature insists firmly that they are and, in fact, should be of little concern to (private) banks (as opposed to regulators). The purpose of this paper is to argue for the relevance of systemic risks for private banks as opposed to regulators only by making use of causal loop models as being traditionally used in the discipline of systems dynamics. In contrast to the starting point for all common risk-management frameworks in banks, which is the classification of risks into risk categories, the authors show that risk has been compartmentalized too much and provide a strong case for a really holistic approach.

Systems thinking, causal loop models and conceptual approach.

Relevance of systemic risks for private banks as opposed to regulators only. In contrast to the starting point for all common risk-management frameworks in banks, which is the classification of risks into risk categories, the authors show that risk has been compartmentalized too much and provide a strong case for a really holistic approach, which stems from using explanatory models such as causal loop diagrams. On top of that more explanatory models ought to be used for risk management purposes while banks currently rely too much on statistical-descriptive approaches.

Integration of systems thinking into risk management, which is novel: in contrast to the starting point for all common risk-management frameworks in banks, which is the classification of risks into risk categories, the authors show that risk has been compartmentalized too much and provide a strong case for a really holistic approach.

This study aims to evaluate whether the Big-4’s commenting efforts influence the characteristics of Financial Accounting Standards Board’s (FASB’s) Final_Standards using the content of their comment letters. Whether auditors lobby standard-setters to help their clients or to help themselves and whether they are successful are questions highly relevant to issues of auditor independence and audit effectiveness.

Based on components of Mergenthaler (2009), this study develops a rules-based continuum change score to measure how much more (less) rules-based a Final_Standard is compared to its exposure draft to evaluate the influence of the Big-4 on the FASB’s standard-setting for 63 accounting standards.

The findings show that extensive comment letters and increased uncertainty language are associated with increases in the rules-based attributes included in Final_Standards. These results suggest the Big-4 prioritize a reduction in their own litigation risk over the possible preferences of their clients for less rigid standards. Moreover, the results are consistent with their comment letters influencing the FASB’s decision to include more rules-based attributes in Final_Standards.

This study develops a potential proxy for audit risk by assessing the changes in the rules-based characteristics of proposed accounting standards and using the content of the comment letters to evaluate whether the Big-4 accounting firms may influence the FASB’s Final_Standards. Overall, this study provides a unique perspective on the influence of constituents on the FASB’s standard-setting.

The purpose of this paper is to discuss the implications of an SEC Risk Alert and two FINRA regulatory notices concerning the use of social media by registered investment advisers.

The paper analyzes the SEC Office of Compliance and Inspections National Examination Risk Alert dated January 4, 2012, including general observations and factors for investment advisors to consider such as usage guidelines, content standards, policies for representatives and solicitors, monitoring procedures and third‐party content and testimonials. It discusses FINRA's detailed, bright‐line guidance in Regulatory Notice 11‐39 (August 2011) and Regulatory Notice 10‐06 (January 2010).

The paper recommends ways for investment advisers to address the use of social media.

Until more concrete guidance and market practice has emerged, firms may benefit from taking a conservative approach by limiting the use of social media and the ability of non‐firm personnel to “like” or post content to the firm's social media website, and by retaining all records of social media interactions in case of examinations.

The paper presents analysis and practical guidance from experienced financial services lawyers.

Association to Advance Collegiate Schools of Business (AACSB) member schools often compare their faculties’ research records to journal lists of their “peer and aspirational” programs. They often survey faculty and administrators’ perceptions of journal quality; number of Social Sciences Citation Index downloads; or “count” the number of faculty publications – but rarely analyze accounting programs’ actual journal quality lists. To examine this issue, we use a survey of national accounting programs. We identify a set of quality-classified journal lists by sampling 38 programs nationwide, varying by mission (e.g., urban or research), degrees granted (e.g., doctoral degrees in accounting), and national ranking (e.g., classified as a Top 75 Research Program) – from which we derive 1,436 data points that classify 359 journals that appear on these 38 programs’ journal lists. We also describe a case study that an accounting program used to revise its old journal list. We also find that while programs generally use generally accepted “bright lines” among the top three categories (A+, A, A−), they tailor their listings from the wide variety of B or C classified journals to create their own sets of acceptable journals in these categories. The study provides guidance and data for accounting programs who wish to develop or revise their own journal lists. While many studies have examined journal rankings, this is the first study to document the use of journal lists by accounting programs with a wide array of missions.

The purpose of this paper is to test existing theoretical models relating to management agreements and “developer abuse” in relation to multi‐unit housing developments through applying them to a new jurisdiction: New Zealand.

The paper uses a combination of case studies from reported legal cases, and a socio‐legal framework, to apply existing models to New Zealand.

The analysis shows that existing models are accurate, but can be improved and refined through a deeper examination of the issues arising from decided cases. New phenomena were identified that require more attention.

This analysis is restricted to decided cases and empirical research may allow further findings. The research was also limited to New Zealand as a test of existing models.

The analysis in this paper shows that there are difficulties with recent law reforms, and more attention is needed to legislative solutions to the problems identified in existing literature and decided cases.

This research may help educate the public about the issues arising from management agreements.

By applying existing models relating to body corporate management agreements and “developer abuse” to a new jurisdiction, this paper shows the usefulness of those models. The models remain to be tested in other jurisdictions, and this paper adds to existing frameworks for those scholars who do so. It will also have use for policy makers in this area.

The aim of this article is to provide a description of the rule proposals and other events that preceded the SEC's adoption of the 2005 Final Rule, a summary of the terms of the 2005 Final Rule, and a brief update regarding the status of the 2005 Final Rule.

Describes the SEC's 1999 proposed rule, “Certain Broker Dealers Deemed Not to Be Investment Advisers,” questions that led to that proposed rule, commentary on that proposed rule regarding advisory activities for which broker‐dealers receive special compensation, commentary regarding differences between the regulation of broker‐dealers and the regulation of investment advisers, commentary regarding investors' understanding of the differences between broker‐dealers and investment advisers, the five‐year period without a formal rule, the 2005 Proposed Rule, the 2005 Final Rule, and concerns that remain after issuance of the 2005 Final Rule.

The Chairman of the SEC directed the SEC staff to investigate and report within 90 days on ways in which the policy issues raised by the 2005 Final Rule could be addressed. In addition to the investigation of issues raised by the 2005 Final Rule by the SEC staff, and although the 2005 Final Rule was adopted, to some extent, in response to the lawsuit filed against the SEC by the Financial Planning Association (the “FPA”) in July 2004, the FPA filed a new lawsuit against the SEC on April 28, 2005.

A useful summary of the background and remaining issues related to the SEC's 2005 Final Rule on application of the Adviser's Act to broker‐dealers offering certain non‐traditional brokerage programs.

This paper addresses the role of principles-based accounting standards as a potential mechanism for reducing firms' time delay of annual reporting disclosure while improving the timeliness of accounting information. The paper also contributes to the existing literature by addressing the mediating effects of the financial reporting complexity and the audit workload on the link between principles-based accounting standards and the time delay of annual reporting disclosure.

The focus is placed on an unbalanced panel of 20,943 samples over the period of 2007–2017.

The results show that the more principles-based the accounting standards are, the lower the time delay of annual reporting disclosure is, and the timelier the disclosure of accounting information is. The relationship between the two is more significant especially in the first two months after the end of the fiscal year. The findings are all robust after controlling for a series of sensitivity checks and endogenous concerns. From the mediating effect results, the authors find that principles-based accounting standards decrease the financial reporting complexity and the audit workload which in turn can help lower time delay of annual reporting disclosure. In addition, the negative effect of principles-based accounting standards on the time delay of annual reporting disclosure is more significant in the case that the company has “good news” including with no losses and receiving the standard auditing opinions. The results confirm the law of “good news announces early, bad news announces late.” Furthermore, the moderating effect results show that the higher the economic policy uncertainty index and the legal environment index, the lower the benefit of principles-based accounting standards to the timeliness of annual reports. The results of the economic consequences of timeliness suggest that the timely disclosure of accounting reporting will bring greater market reaction and contain more information, and the information of companies that disclose annual reports timely are more transparent.

This paper studies the impact of accounting standards on the timeliness of annual report disclosure, which enriches the literature in the field of macro policies and micro-enterprise behaviors.

This article provides an analysis of the economic incentives and financial reporting for Special Purpose Entities (SPEs) over the last four decades. The analysis explains economic factors motivating business use of SPEs and the origins of SPEs in lease accounting and securitization transactions. Related financial reporting standards are identified and discussed, including the historical shift from a traditional control viewpoint to a primary beneficiary viewpoint for financial reporting for consolidation for SPEs (recently renamed Variable Interest Entities (VIEs) in U.S. Financial Accounting Interpretation 46R). The article also includes illustrative journal entries explaining SPE transactions from both the viewpoint of the creating company(s) and the SPE. Actual financial reporting examples and/or journal entries for SPEs created by Bank of America, General Motors Acceptance Corporation, Lucent Technologies and Alza Pharmaceuticals Corporation are also provided.