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This study investigates the association of various corporate governance attributes and financial characteristics with the survival likelihood of distressed firms. To…
This study investigates the association of various corporate governance attributes and financial characteristics with the survival likelihood of distressed firms. To address the manner in which firms evolve over time, we employ survival analysis techniques by incorporating Cox Proportional Hazards regressions. We longitudinally track an ex ante sample of 176 financially distressed firms. The results suggest that firms that replaced their CEO with an outsider, were more than twice as likely to experience bankruptcy. Furthermore, larger levels of blockholder and insider ownership over the sample period are positively associated with the likelihood of firm survival.
When making going concern assessments, Statement on Auditing Standards No. 59 (Auditing Standards Board 1988) directs auditors to consider the nature of management's plans…
When making going concern assessments, Statement on Auditing Standards No. 59 (Auditing Standards Board 1988) directs auditors to consider the nature of management's plans and ability to mitigate periods of financial distress successfully. Corporate governance factors reflect attributes of control, oversight, and/or support of management's plans and actions intended to overcome financial distress. Correspondingly, this study investigates the impact of certain corporate governance factors on the likelihood of a going concern modification. Using survival analysis techniques, we examine a sample of 161 financially distressed firms for the time period 1988–1996. We find that auditors are twice as likely to issue a going concern modification when the CEO is replaced. We also find that going concern modifications are inversely associated with blockholder ownership. We also confirm Carcello and Neal's (2000) findings with respect to the association between an independent audit committee and an increased likelihood of modification. In a repeated events setting, we find that insider ownership and board independence are inversely associated with repeated going concern modifications. Our study concludes by proposing implications for the current financial reporting environment (including the Sarbanes‐Oxley Act of 2002) and future research avenues.
The time dimension of a country is a key determinant of the time horizon prevalent in the business sector. The long‐term horizons of Japan compared with the short‐term…
The time dimension of a country is a key determinant of the time horizon prevalent in the business sector. The long‐term horizons of Japan compared with the short‐term horizons of the United States are integral parts of their distinct business ideologies. There is a direct impact on their respective financial practices. A comparative analysis of the financial management ideologies, practices and techniques, within the framework of time horizon, offers an explanation of Japan's inordinate economic success in the global market.
Studies that examine the relationship of economic value added (EVA) to market value did not isolate the EVA effect in conjunction with controlling for the economic effect…
Studies that examine the relationship of economic value added (EVA) to market value did not isolate the EVA effect in conjunction with controlling for the economic effect of the market. Since the EVA metric is viewed as value‐added apart from the market, operational managers will benefit from a procedure that separates the market driven versus firm driven (EVA) effects. Our paper examines the effects of the economy and EVA on MVA. The results indicate that EVA and GDP significantly affect MVA. Furthermore, the MVA‐EVA relationship shows a systematic bias between the largest MVA firms and the smallest MVA firms. Overall, our study provides implications for corporate executives utilizing EVA to evaluate managerial performance linked to MVA.
The purpose of this paper is to analyze the problems faced by Accounting and Finance (A&F) Departments concerning the hiring and retention of tenure/tenure‐track faculty…
The purpose of this paper is to analyze the problems faced by Accounting and Finance (A&F) Departments concerning the hiring and retention of tenure/tenure‐track faculty members.
Due to the rigorous Association to Advance Collegiate Schools of Business standards for “academically qualified” classification, increasing enrollment for A&F majors, and demographic trends of faculty members, it is becoming very challenging to hire and retain high‐quality academicians. This challenge is especially dire for public institutions of higher learning that are facing budget cuts and possible steep salary inversion. As an example, the average salary of US faculty members are compared to the salaries allowed under the California State University (CSU) collective bargaining agreement. The paper analytically argues that unless CSU A&F faculty members' salaries are allowed to reflect market conditions, severe negative externalities will impact the educational sector and A&F professionals.
Alumni, the A&F professionals, university administrators and other stakeholders must be made aware of the “perfect storm” on the horizon and the severe consequences that loom in its wake. It will take the collective “wisdom” to provide the necessary strength to resolve these critical issues. Hopefully, the distress siren will not only be heard, but listened to and addressed in a timely manner, so that rather solemn consequences can be avoided. The needs of the college communities at large should not be thwarted by existing inappropriate funding mechanisms.
Seth D. Baum, Stuart Armstrong, Timoteus Ekenstedt, Olle Häggström, Robin Hanson, Karin Kuhlemann, Matthijs M. Maas, James D. Miller, Markus Salmela, Anders Sandberg, Kaj Sotala, Phil Torres, Alexey Turchin and Roman V. Yampolskiy
This paper aims to formalize long-term trajectories of human civilization as a scientific and ethical field of study. The long-term trajectory of human civilization can be…
This paper aims to formalize long-term trajectories of human civilization as a scientific and ethical field of study. The long-term trajectory of human civilization can be defined as the path that human civilization takes during the entire future time period in which human civilization could continue to exist.
This paper focuses on four types of trajectories: status quo trajectories, in which human civilization persists in a state broadly similar to its current state into the distant future; catastrophe trajectories, in which one or more events cause significant harm to human civilization; technological transformation trajectories, in which radical technological breakthroughs put human civilization on a fundamentally different course; and astronomical trajectories, in which human civilization expands beyond its home planet and into the accessible portions of the cosmos.
Status quo trajectories appear unlikely to persist into the distant future, especially in light of long-term astronomical processes. Several catastrophe, technological transformation and astronomical trajectories appear possible.
Some current actions may be able to affect the long-term trajectory. Whether these actions should be pursued depends on a mix of empirical and ethical factors. For some ethical frameworks, these actions may be especially important to pursue.