BEHIND THE Donation

Zhao Benshan,regarded as the King of Xiaopin in China,carried out his skit,The Donation,during the CCTV Spring Festival Gala on February 13,Chinese Spring Festival Eve for the Year of the Tiger.The skit was mainly about Zhao's donation of 30,000 Yuan(by a mistake,as he initially wanted to donate 3,000 Yuan) to a local village student whose single mother can't afford his university tuition.This play brought hot discussion afterwards, mainly focusing on the story,which was not as funny as the huge audience...     

The Relationship between Changes in Fixed Plant Investment and the Likelihood of Emergence from Corporate Financial Distress

Companies experiencing financial distress can attempt to mitigate financial distress through changing the investment in the fixed asset base. Management may choose to expand the asset base in hopes of increasing sales. Alternatively, management may choose to contract the asset base in order to eliminate and/or reduce investment in unprofitable or risky ventures, improve liquidity, reduce earnings volatility, and reduce the need for operating capital.In this study, we examined how observed changes in the investment base affect the likelihood of emergence from a financially distressed condition. We find that, when management chooses to contract the investment in property, plant, and equipment, the likelihood of emergence from financial distress is significantly improved. On the other hand, when management chooses to expand property, plant, and equipment in the face of distress, the distress is only intensified. Our explanation is that companies that choose to contract their fixed asset base in times of trouble are taking steps that will most likely improve their financial condition—they are less likely to need working capital, and can better tolerate increased levels of long-term debt. Conversely, increasing the fixed asset base amplifies the need for working capital, and borrowing money to facilitate the expansion simply increases the necessary uses of that working capital because the debt must be serviced. As a result, companies descend even deeper into financial distress and decrease the likelihood that they will emerge therefrom.     

采用ToF-SIMS分析喷墨油墨各组分在纸基中的分布

摘译 数字印刷得以持续发展的一个原因是其具有较高的印刷质量，这里所说印刷质量主要是指成品的光学指标，它主要受油墨与纸基相互作用的影响，包括油墨在纸基表面的扩散（XY方向）和向纸基内部的渗透（Z方向），两者相互作用的平衡点是能获得最佳印品质量的关键。消费者主要通过着色剂（染料或颜料）的分布，从视觉上评判印品质量，但油墨的其他组分（连结料／溶剂、助溶剂、表面活性剂等）对影像的形成和纸基对油墨的吸收有重要影响。     

Tests of financial models in the presence of overlapping observations

A general approach to testing serial dependence restrictionsimplied from financial models is developed. In particular, wediscuss joint serial dependence restrictions imposed by randomwalk, market microstructure, and rational expectations modelsrecently examined in the literature. This approach incorporatesmore information from the data by explicitly modeling dependenciesinduced by the use of overlapping observations. Because theestimation problem is sufficiently simple in this framework,the test statistics have simple representations in terms ofonly a few unknown parameters. As a result, relatively goodsize properties are attained in small samples. In addition,the benefit to overlapping observations and the advantage ofexamining multiperiod time series are explicitly quantified.     

The Influence of Long-Term Performance Plans on Earnings Management and Firm Performance

Boards of directors often implement long-term performance plans (LTPP) to focus management's attention on enhancing long-term shareholder value instead of concentrating their efforts on short-term earnings. This study provides estimation results suggesting that firms that compensate managers with LTPP are associated with lower levels of managed earnings than firms that have only short-term bonus plans. In addition, we find evidence that suggests that firms with long-term performance plans have significantly higher annual returns than firms that have only short-term bonus plans. We also find that firms with long-term performance plans are typically larger firms with smaller managerial ownership and larger institutional ownership than firms without long-term performance plans.     

Reliability of Asset Revaluations: The Impact of Appraiser Independence

In this paper we examine whether there are differences in the reliability of asset revaluations made by boards of directors versus independent (external) appraisers. We use a sample of recognized Australian asset revaluations. As a first step we examine the determinants of the choice between director-based revaluations and those undertaken by independent appraisers. We find that independent appraisers are more likely to be used for revaluations of land and buildings and directors are more likely for investments, plant and equipment and identifiable intangibles. We interpret this as evidence of firms harnessing directors' knowledge of asset specificities. We also find that firms with less independent boards are more likely to use independent appraisers. We interpret this as evidence of substitutability between governance mechanisms.As for differences in reliability, we find that revaluations of plant and equipment that are made by independent appraisers are more reliable than those by directors. However, we are unable to detect a difference for other classes of non-current assets. We define reliability in terms of ex-post adjustments of recognized value increases. Reliability is determined by an examination of the extent to which upward revaluations are subsequently reversed.     

The Value Relevance of Multiple Occurrences of Nonrecurring Items

Discontinued operations, special items, or extraordinary items typically are nonrecurring items in firms' income statements. As such, prior research has theorized that these items are of minimal relevance to market valuation of the firm, since they are transitory in nature. Moreover, anecdotal evidence in the financial press is supportive of this notion. We examine firms that report either single or multiple occurrences of such items over a rolling six-year period between 1977 and 1996 and find in both cases that such items are value-relevant. When multiple occurrences are not partitioned by type (discontinued operations, special items, or extraordinary items), the more recent such event in the series has a negative effect upon market value of equity, whether it has had a positive or negative effect upon net income.This is consistent with at least two possible explanations, multiple occurrences of such items indicate firms in financial difficulty, or multiple occurrences indicate firms whose managers have engaged in repeated attempts at earnings management, and that the most recent attempt is being devalued by the market. We find patterns of discretionary accruals consistent with managers engaging in upward earnings management prior to multiple write-downs using special items. We also find that firms with multiple write-downs are more likely to go into liquidation or bankruptcy within the next five years. We find that single occurrences also are value-relevant and are positively correlated with market values. Tests on the sample when partitioned by type lead to similar results, though signs of the effects upon net income change in some instances.