Accounting Information and Investment Risk Perception in Japan*

This paper investigates the issue of whether financial reports appear to convey information on risk on a consistent basis across international capital markets. Data collected from a sample of Japanese financial analysts are compared to previously reported data from U.S. analysts. The results indicate that traditional accounting measures of risk explain substantial variation in the average risk perceptions of financial analysts in both the U.S. and Japan; however, while accounting risk measures were found to explain significant variation in ex post beta for the U.S. sample, this was not found to be the case for the Japanese sample. The implications of these cross-national differences and similarities are discussed.     

金融系统职务犯罪预防探讨

目前,随着我国金融业的不断发展壮大,金融界的职务犯罪案件越来越频繁。本文深入剖析了当前金融系统职务犯罪的特点和主要成因,提出了预防金融系统职务犯罪的一些有针对性的对策措施。     

Crime Rates,Clearance Rates and Enforcement Effort: The Case of Houston,Texas*

Abstract . Two time series relationships with respect to police and criminal activities are analyzed. These relationships are: 1. That between police input and police output where the latter was measured by arrest and convictions rates and the former by expenditures and number of officers and, 2. The hypothetical one between the probability of arrest (the clearance ratio; i.e., the proportion of reported crimes for which arrests were made) and crime rates. Theoretically, an increase in expenditures for police effort would cause an increase in the clearance rate and a concomitant reduction in the crime rate. The results of this study showed little or no response in clearance and crime rates to small changes in police expenditures. However, there was evidence that large changes in police effort did produce some response in both clearance and crime rates. The implication of these findings was that the marginal product of police input was small.     

Crime and Racial Composition in Contiguous Communities as Negative Externalities: Prejudiced Household's Evaluation of Crime Rate and Segregation Nearby Reduces Housing Values and Tax Revenues

Abstract . How the level of amenities in surrounding communities affects the residential location decisions of households is considered. The amenities specifically taken into account are the crime and racial composition of the household's community and the contiguous communities. The theory of the household's valuation of neighborhood amenities through a housing value equation is expanded to include how the household's valuation of amenities is affected by the amenities in surrounding areas. An empirical model using data for 71 suburban communities in the Chicago Standard Metropolitan Statistical Area is specified to measure the simultaneous interaction between housing values, crime, and police effort. A revenue equation is included to determine how the household's valuation of crime and racial composition could affect the community's revenue-raising ability. The empirical results indicate that the crime and racial composition of surrounding communities as well as within the household's community have a statistically significant negative effect on housing values. While the magnitude of the effect is small, the empirical results suggest that households consider the crime rate and racial composition of surrounding communities as negative externalities.     

FINANCIAL CRIME IN AUSTRALIA

Financial crime is increasingly seen as a threat to the integrity of Australia's important financial sector. This paper examines the difficulties of evaluating the costs of financial crime and considers specific initiatives that have been undertaken in recent years to combat such activities.     

The Free Trade Philosophy of Sir George Paish

Sir George Paish (1867–1957) was a British economist whose unique position as a journalist, political advisor, and international traveler gave him access to significant world events and leaders. Paish wrote for and edited the financial magazine The Statist and earned recognition as an expert on British and American railways. He lectured and wrote on economics and international finance throughout his adult life and advised David Lloyd George on economic subjects between 1909–1915. Paish's written works provide insight to early 20^th-century economic affairs through the lens of his liberal, free trade philosophy. This article examines many of Paish's most relevant reflections on free trade, following the chronology of his life.     

Evaluating the statistical significance of de facto accounting harmonization: a study of European global players

Two different forces are involved in the international harmonization of accounting: institutional endeavours to harmonize accounting internationally by developing common accounting rules and reporting standards, and spontaneous efforts by ‘global players’ to adopt accounting methods that will improve communication with users in other countries. These two developments are proceeding side by side, generally reinforcing one another but occasionally moving independently. This paper is primarily concerned with the process of harmonization of financial accounting within the European Union. The hypothesis we want to test is that, in spite of the obstacles to the harmonization of regulations in the European Union, there has been greater conformity in recent years in the accounting practices of companies which operate on the international stage. If so, the implications for the harmonization strategies of the international bodies are important. In this study, we first carry out a critical analysis of previous research on accounting harmonization, summarizing the methods used in empirical studies of de facto harmonization and the results obtained. We note that the major deficiency in the index-based methods of measuring harmonization is that no test of significance has been included in prior research. In this paper, we propose a bootstrapping test of the C index as a way of measuring the significance of the change in its value. We consider a sample of eighty-five ‘global players’ from thirteen countries and we analyse their financial statements with regard to four accounting issues (deferred taxation, goodwill, leasing and foreign currency translation), providing estimates of the significance of de facto accounting harmonization for the periods from 1991–2 to 1996–7.     

The integration of international financial markets: an attempt to quantify contagion in an input–output-type analysis

ABSTRACT

The increasing integration of international financial markets means that credit defaults in one country have to be covered by creditors in other countries. If the principle of creditor liability were applied systematically, the financial losses incurred by the financial institution that provided the credit and is thus directly affected by the default would be ‘passed on’ through its domestic and foreign shareholders and debt holders, as well as their creditors, to the original savers. In this paper, this contagion effect will be estimated by taking international capital linkages into account. Analogously to an input–output analysis of inter-industry linkages, savings used for investments in one country are traced back to the countries from which the funds originated. This also reveals the important role of international financial centers, which essentially serve as distributors of investment risks, while the financial losses are ultimately borne by larger countries with higher levels of savings.     

Some Determinants of Property Crime: Economic Factors Influence Criminal Behavior But Cannot Completely Explain the Syndrome

Abstract . An empirical analysis of the property crimes, robbery, burglary and larceny, is presented for all 120 counties in Kentucky. While this analysis is based on an economic model of crime, certain sociological and legal variables are included as well in the system of equations. Overall, the empirical results support prior studies’findings with the exception that a quadratic relationship is found to exist between urbanization and each of the property crimes. Furthermore, neither the economic nor the non economic influences measured appear more important for affecting crime rates. Specifically, results indicate that the level of poverty, the degree of tourism, the presence of police, the unemployment rate and the apprehension rate all affect property crimes. In contrast, the length of sentence, the degree of industrialization, the level of public assistance payments and the proportion of youth in the county have no affect on property crime rates in these areas.     

The Difference Between Short and Long Run Effects of Police Outlays on Crime: Policing Deters Criminals Initially, But Later They May 'Learn by Doing'

Abstract . In the long run a positive relationship of police expenditurescrime is derived in models which explain criminal behavior In the short run, however, the statistical results point to the possible deterring effect of police expenditures. A theoretical model is constructed to explain the statistical difference of the short and long run effect of police outlays on crime. As police expenditures increase, crime level diminishes. As time elapses, criminals may adjust to the new level of police effort, improve their performance and at the same level of outlays, increase their criminal activities. This phenomenon could be termed “Criminals’Learning by Doing”. It could explain why, over the long run, the level of crime is positively associated with police expenditures. The empirical analysis examines pooled cross sectional time series of 47 states over the period 1970 to 1980—a total of 517 cases.     

The Performance Implications of Financial and Non‐Financial Rewards: An Asian Nordic Comparison

This study empirically investigated culture's consequences on employee perceptions of the performance implications of financial and non‐financial rewards. Using a sample (n = 568) drawn from the banking industry in Finland and Hong Kong, we found that although the effects and predictive capability of culture (i.e. masculinity–femininity, individualism–collectivism, uncertainty avoidance, and power distance) offered some important insights, a range of other contextual factors (i.e. organizational, institutional, economic) wielded influence over and shaped reward–performance values, preferences, and behaviours. The emergence of these new paradigms necessitates that the US centric economic and behavioural theories (e.g. exchange) that underpin reward–performance be revisited and extended if they are to be applicable in the international context. Understanding the influence of a range of contextual forces is therefore critical to multinational organizations attempting to implement effective reward strategies aimed at achieving a diverse set of performance priorities. In addition to these novel theoretical and practical contributions, this study also paves the way for future research in this promising area of management studies.     

Time and space in managerial work

Is top management work a stable or a changing phenomenon? Compared to a classic study about managerial work (Executive Behaviour, Strömbergs, Stockholm, 1951), this article examines evolving management practices in the internationalised economy. The results show that the participants in the new study exercised control in a more general and financially oriented way. At the same time, the important stakeholder relations have shifted from national actors such as government and trade associations towards financial and commercial actors in an international arena. But the perhaps most interesting development is the transforming nature of fragmentation in managerial work. In contrast to Carlson, who related fragmentation to time, this article highlights the emergence and consequences of fragmented space.     

Localized capabilities and the internationalization of manufacturing activities by SMEs

In this paper it is argued that the internationalization of production through foreign direct investment (FDI) by small and medium-sized enterprises (SMEs) is influenced by local level idiosyncracies. Although SMEs suffer from inherent constraints to international growth (due to the scarce availability of financial and managerial resources), the presence of qualified localized capabilities strengthen and complement their competitive/ownership advantages, thus favouring their internationalization. These capabilities are related to the advanced specialized services available to the firms, the existence of a ‘marshallian atmosphere’, and an environment conducive to innovation and learning. However, it is argued that negative externalities stemming from protectionism-oriented public intervention discourage the international growth of firms and negatively influence the propensity of SMEs to internationalize. Empirical support for these premises is provided by this study of the Italian case over the decade 1986–1995.     

Financial Distress Prediction in an International Context: A Review and Empirical Analysis of Altman's Z‐Score Model

This paper assesses the classification performance of the Z‐Score model in predicting bankruptcy and other types of firm distress, with the goal of examining the model's usefulness for all parties, especially banks that operate internationally and need to assess the failure risk of firms. We analyze the performance of the Z‐Score model for firms from 31 European and three non‐European countries using different modifications of the original model. This study is the first to offer such a comprehensive international analysis. Except for the United States and China, the firms in the sample are primarily private, and include non‐financial companies across all industrial sectors. We use the original Z′′‐Score model developed by Altman, Corporate Financial Distress: A Complete Guide to Predicting, Avoiding, and Dealing with Bankruptcy (1983) for private and public manufacturing and non‐manufacturing firms. While there is some evidence that Z‐Score models of bankruptcy prediction have been outperformed by competing market‐based or hazard models, in other studies, Z‐Score models perform very well. Without a comprehensive international comparison, however, the results of competing models are difficult to generalize. This study offers evidence that the general Z‐Score model works reasonably well for most countries (the prediction accuracy is approximately 0.75) and classification accuracy can be improved further (above 0.90) by using country‐specific estimation that incorporates additional variables.     

论网络犯罪及其防治对策

网络犯罪是现代社会的一种新型犯罪,它包括以网络为对象的犯罪和以网络为犯罪现场的犯罪。它具有技术含量高、危害程度重、涉及面广、隐蔽性强等特征。因此,打击该种犯罪,要完善法律法规,加强网络犯罪立法的国际协调与合作。     

South Korean Labor Market Discrimination Against Women—A Comment

It is pointed out that in concentrating on the discrimination and low labor participation rates of highly educated married women, the social opportunity costs related to family stability and youth crime rates are not considered.     

Searching for synchrony

Authorities working on economic-crime investigation in Finland are trying to change their form of collaboration from the sequential passing of documents towards parallel, interorganizational collaboration: the on-line investigation of an ongoing crime. The synchronization of events and the outputs of various participants proved to be difficult in this emerging process. This new model of crime investigation also requires a new kind of time management. This article explores how the change is being constructed in everyday practice by examining three economic-crime-investigation cases. It is claimed that individual efforts to manage time allocation suffice only in terms of co-ordination of events. It is suggested that a successful shift to parallel, interorganizational collaboration requires more than the common marking of calendars. The object of the work and the forms of interaction should be taken as subjects of reflective negotiation. New kinds of collective time-management tools are needed in this effort.     

The Impact of Financial Reporting Regulation on the Market Valuation of Reported Environmental Liabilities: Preliminary Evidence from US and Canadian Public Companies

This study investigates the economic consequences of four financial reporting regulations relating to environmental liability reporting in samples of 170 US and 156 Canadian public companies during the period 1984 to 1997. The study's purpose is to investigate the factors that make financial reporting regulation effective in enhancing the relevance and reliability of accounting information. Prior research provides the theory that financial reporting regulations impose costs on managers and create incentives for them to report accounting information that is relevant and unbiased. This study assesses these regulations' enforceability, which is viewed as arising from the regulator's power to enforce its regulations by sanctions or penalties. It tests whether the relation between market valuation and reported environmental liability accruals changes when the new regulations are enacted, and whether regulation with high enforceability has a more significant impact than regulation with low enforceability. This study uses a residual‐income valuation model to measure the valuation coefficient, or multiplier, on reported environmental liability accruals. Changes in this coefficient are used as indicators of changes in the market's assessment of the value relevance and bias of the reported accounting information. This study provides preliminary evidence indicating that financial reporting regulations issued by the securities market regulator and the accounting profession are associated with changes in the relation between market value and reported environmental liabilities in some cases, and suggests avenues for further international accounting research on the factors involved in financial reporting regulation's impact.     

THE RECENT REGULATORY RESPONSE TO CORPORATE ECONOMIC CRIME IN THE UNITED STATES: OBSERVATIONS AND COMMENTS

Corporate economic crime, including accounting and auditing fraud and inappropriate behaviour by directors on the boards of US corporations, has resulted in stockholder financial losses and the loss of confidence in investing in the US stock market. We observe the modern corporation with its absentee ownership and professional management team and discuss its inherent incentives to commit management crime. In spite of financial reporting, audits and the use of boards of directors to represent stockholders, management misbehaviour persists. We conclude that the failure of these potential remedies is due to a lack of independence from management in their execution. We comment on some of the provisions of the Sarbanes–Oxley Act, enacted in 2002, and their potential to mitigate some of these conflict of interest conditions.     

Portfolio choice,behavioral preferences and equity home bias

We provide a plausible explanation of aggregate portfolio behavior, in a framework where economic agents have behavioral (narrow framing) preferences. The representative agent derives utility not only from consumption (standard models) but also from risky financial wealth fluctuations. Moreover, the investor frames the stock market risk narrowly and has loss averse preferences. We numerically solve, for the foreign equity share, a simple model of international portfolio choice, providing a possible explanation for the equity home bias puzzle. Only economic agents able to process correctly information deriving from stock markets exploit the diversification opportunities provided by international financial markets.