Determining The Impact Of Multiple Consecutive Years Of Financial Reporting Quality Issues On Investment Efficiency
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Determining The Impact Of Multiple Consecutive Years Of Financial Reporting Quality Issues On Investment Efficiency
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Author : Amanda L. Wilford
language : en
Publisher:
Release Date : 2012
Determining The Impact Of Multiple Consecutive Years Of Financial Reporting Quality Issues On Investment Efficiency written by Amanda L. Wilford and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012 with categories.
Financial Reporting Quality And Investment Efficiency
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Author : Rodrigo S. Verdi
language : en
Publisher:
Release Date : 2006
Financial Reporting Quality And Investment Efficiency written by Rodrigo S. Verdi and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with categories.
This paper studies the relation between financial reporting quality and investment efficiency on a sample of 38,062 firm-year observations between 1980 and 2003. Financial reporting quality has been posited to improve investment efficiency, but to date there has been little empirical evidence to support this claim. Consistent with this claim, I find that proxies for financial reporting quality are negatively associated with both firm underinvestment and overinvestment. The relation between financial reporting quality and underinvestment (overinvestment) is mainly driven by the innate (innate and discretionary) component of reporting quality. Further, financial reporting quality is more strongly associated with overinvestment for firms with large cash balances and dispersed ownership, which suggests that financial reporting quality mitigates information asymmetries arising from agency conflicts. However, I find mixed evidence for the hypothesis that financial reporting quality is more strongly associated with underinvestment for firms facing financing constraints. Finally, the relation between financial reporting quality and investment efficiency is stronger for firms with low quality information environments. Overall, this paper has implications for research examining the determinants of investment efficiency and the economic consequences of enhanced financial reporting.
Financing Patterns Around The World
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Author : Thorsten Beck
language : en
Publisher: World Bank Publications
Release Date : 2002
Financing Patterns Around The World written by Thorsten Beck and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2002 with Business enterprises categories.
Using a firm-level survey database covering 48 countries, Beck, Demirgüç-Kunt, and Maksimovic investigate whether differences in financial and legal development affect the way firms finance their investments. The results indicate that external financing of investments is not a function of institutions, although the form of external finance is. The authors identify two explanations for this. First, legal and financial institutions affect different types of external finance in offsetting ways. Second, firm size is an important determinant of whether firms can have access to different types of external finance. Larger firms with financing needs are more likely to use external finance compared with small firms. The results also indicate that these firms are more likely to use external finance in more developed financial systems, particularly debt and equity finance. The authors also find evidence consistent with the pecking order theory in financially developed countries, particularly for large firms. This paper--a product of Finance, Development Research Group--is part of a larger effort in the group to understand firms' access to financial services.
Beyond Internal Control Over Financial Reporting
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Author : Daoguang Yang
language : en
Publisher: Taylor & Francis
Release Date : 2024-02-06
Beyond Internal Control Over Financial Reporting written by Daoguang Yang and has been published by Taylor & Francis this book supported file pdf, txt, epub, kindle and other format this book has been release on 2024-02-06 with Business & Economics categories.
By examining two different modes of internal control and the fundamentals of risk management, this book analyses the role of internal control in financing, investment, profit distribution, and corporate strategies through China's experience. In doing so, it confirms the effectiveness and superiority of internal control over operation and management. The book compares the various internal control methods used in China and the USA, namely, operation and management-oriented versus financial reporting-oriented approaches. It also discusses the differences in corporate risk attitudes and behaviours under the two approaches. The author then proposes the hyper-correction hypothesis and the trimming hypothesis. Empirical findings regarding corporate cash policy, mergers and acquisitions, tax avoidance, and diversification strategy reveal that internal control in China does not result in undue risk aversion but instead manages enterprise risk within a reasonable capacity. These results support the trimming hypothesis and demonstrate that internal control is a useful risk management tool. The title will appeal to students, academics, and accounting professionals interested in internal control (risk management), accounting, auditing and corporate finance, regulation and governance.
1998 Statement Of Financial Accounting Concepts
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Author : Financial Accounting Standards Board (FASB)
language : en
Publisher: Wiley
Release Date : 1998-09-07
1998 Statement Of Financial Accounting Concepts written by Financial Accounting Standards Board (FASB) and has been published by Wiley this book supported file pdf, txt, epub, kindle and other format this book has been release on 1998-09-07 with Business & Economics categories.
The FASB Statements of Financial Accounting Concepts contains the full text of five of the six Statements of Financial Accounting Concepts issued to date. The existing concepts are intended to serve the public interest by setting the objectives, qualitative characteristics, and other concepts that guide selection of economic events to be recognized and measured for financial reporting. Unlike a Statement of Financial Accounting Standards, a Statement of Financial Accounting Concepts does not establish generally accepted Accounting Principles.
Managerial Ability Investment Efficiency And Stock Price Crash Risk
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Author : Ahsan Habib
language : en
Publisher:
Release Date : 2017
Managerial Ability Investment Efficiency And Stock Price Crash Risk written by Ahsan Habib and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with categories.
This paper examines empirically the effect of managerial ability on firm-level investment efficiency, and the joint effect of managerial ability and financial reporting quality on stock price crash risk conditional on level of investment. Using a managerial ability measure developed by Demerjian et al. (2012), the paper documents consistent evidence that the more able managers over-invest compared to their not-so-able counterparts, even after controlling for the effects of financial reporting quality and other firm specific determinants of investment efficiency. This evidence is robust to alternative proxies for investment efficiency and financial reporting quality. The empirical evidence also suggests that crash risk increases for firms with talented managers, primarily because of an adverse effect of managerial talent on financial reporting quality (both accruals and real earnings management) and this effect is more pronounced for firms that over-invest. Overall, the study contributes to a better understanding of the influence of managerial ability on investment decisions and financial reporting quality in the context of diverging opinions regarding manager-specific effects on organizational outcomes.
Financial Gatekeepers
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Author : Yasuyuki Fuchita
language : en
Publisher: Brookings Institution Press
Release Date : 2007-02-01
Financial Gatekeepers written by Yasuyuki Fuchita and has been published by Brookings Institution Press this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007-02-01 with Business & Economics categories.
Developed country capital markets have devised a set of institutions and actors to help provide investors with timely and accurate information they need to make informed investment decisions. These actors have become known as "financial gatekeepers" and include auditors, financial analysts, and credit rating agencies. Corporate financial reporting scandals in the United States and elsewhere in recent years, however, have called into question the sufficiency of the legal framework governing these gatekeepers. Policymakers have since responded by imposing a series of new obligations, restrictions, and punishments—all with the purpose of strengthening investor confidence in these important actors. F inancial Gatekeepers provides an in-depth look at these new frameworks, especially in the United States and Japan. How have they worked? Are further refinements appropriate? These are among the questions addressed in this timely and important volume. Contributors include Leslie Boni (University of New Mexico), Barry Bosworth (Brookings Institution), Tomoo Inoue (Seikei University), Zoe-Vonna Palmrose (University of Southern California), Frank Partnoy (University of San Diego School of Law), George Perry (Brookings Institution), Justin Pettit (UBS), Paul Stevens (Investment Company Institute), Peter Wallison (American Enterprise Institute)
Financial Reporting Quality And Corporate Bond Markets
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Author : Mingzhi Liu
language : en
Publisher:
Release Date : 2011
Financial Reporting Quality And Corporate Bond Markets written by Mingzhi Liu and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with categories.
Recent research proposes that financial reporting is actually shaped by debt markets instead of by equity markets. As noted by Baker, Greenwood and Wurgler (2003), "Relative to the literature on equity financing patterns, and relative to the actual importance of debt finance in the U.S. economy, the literature on debt financing patterns is surprisingly underdeveloped". Hence, the interface between financial reporting and debt financing has recently emerged as a fruitful idea for research. In fact, because of their asymmetric payoff function and fixed claims on corporate assets, creditors have stronger incentives than equity investors to demand high quality financial reporting. In this dissertation, I build up alternative arguments for conservatism that can be applied to the public bond market and cannot be generalized to the private debt market or the equity market. For instance, Merton's (1974) theoretical bond pricing model indicates that equity holders and bondholders value a firm's operating volatility in different ways. Thus, bond and equity investors could have different expectations and needs regarding what they consider to be useful financial reporting. In that regard, recent evidence on the interface between financial reporting quality and debt markets largely focuses on private bank loan contracting. However, in terms of providing capital to corporations, public debt markets are as large as private debt markets, with substantial differences in terms of monitoring efficiency, private information availability, seniority in liquidation, and re-contracting flexibility. Hence, public bondholders can value financial reporting quality in a way that differs from private debt holders' perspective. Using accounting conservatism and internal control effectiveness as proxies for financial reporting quality, I investigate two sets of research questions that relate to the effects of financial reporting quality on corporate bond financing. I consider both conditional and unconditional conservatism. Conditional conservatism depends upon future economic circumstances and reflects the writing down of book values under sufficiently adverse circumstances while not allowing their writing up under favorable circumstances (e.g., lower of cost or market for inventories). Unconditional conservatism reflects the consistent application of Generally Accepted Accounting Principles (GAAP) that reduces earnings independent of future economic events, resulting in the book value of net assets being understated due to predetermined aspects of the accounting process (e.g., immediate expensing of R & D expenditures according to U.S. GAAP). First, I investigate the main effect of accounting conservatism and the moderating effect of internal control effectiveness on the yield spread of new corporate bond issues. Second, I assess the main effect of accounting conservatism and internal control effectiveness on the underpricing of newly issued corporate bonds. Both yield spreads and underpricing reflect different market realities. While the yield spread of new corporate bond issues is determined through negotiations among bond issuers, investment bankers and large institutional investors the underpricing of newly issued corporate bonds reflects the responses of all bond investors based on their assessment of the available information. My main empirical findings are: (1) conditional conservative reporting relates to higher yield spreads in new corporate bond issues; (2) unconditional conservative reporting relates to lower yield spreads in new corporate bond issues; (3) ineffective internal controls enhance the effect of conditional conservative reporting to raise the yield spread; (4) both conditional and unconditional conservative reporting relate to the underpricing of newly issued corporate bonds. However, internal control effectiveness does not seem to matter in the underpricing. This dissertation mainly contributes to the existing literature in two ways. First, this study extends the conservatism literature by linking conservative reporting to corporate bond financing patterns. With theoretical arguments and empirical evidence that are inconsistent with the debt contracting efficiency view of conservatism, my study casts some doubt as to how generalizable is the traditional debt contracting efficiency argument regarding the interface between conservatism and the cost of debt. Second, research on Sarbanes-Oxley Act's internal control provisions needs to go beyond the equity holders' and private debt holders' perspectives, and consider other financial stakeholders who contract on the basis of financial statements. This dissertation fills the void in the internal control literature by providing initial empirical evidence as to how internal control effectiveness affects corporate bond financing.
Auditing
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Author : W. Robert Knechel
language : en
Publisher: Taylor & Francis
Release Date : 2016-10-04
Auditing written by W. Robert Knechel and has been published by Taylor & Francis this book supported file pdf, txt, epub, kindle and other format this book has been release on 2016-10-04 with Business & Economics categories.
Focusing on auditing as a judgment process, this unique textbook helps readers strike the balance between understanding auditing theory and how an audit plays out in reality. The only textbook to provide complete coverage of both the International Auditing and Assurance Standards Board and the Public Company Accounting Oversight Board, Auditing reflects the contemporary evolution of the audit process. New additions to the book include expert updates on key topics, such as the audit of accounting estimates, group audit, and the Integrated Audit. Supplemented by extra on-line resources, students using this established text will be well-equipped to be effective auditors and to understand the role of auditing in the business world.
The World Price Of Earnings Opacity
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Author : Uptal Bhattacharya
language : en
Publisher:
Release Date : 2002
The World Price Of Earnings Opacity written by Uptal Bhattacharya and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2002 with categories.