Research on Financial Contract Structure

Financial decision-making is the central link of enterprise financial management. The prevalent theory of financial decision-making is ＂capital structure＂. This paper makes a new explanation of ＂capital structure＂, which is ＂financial contract structure＂ based on interacts among stakeholders. It developed the intension and extension of＂capital structure＂.     

1995 Financial and Taxation System Reform

ＩＰｅｒｆｅｃｔｉｎｇｔｈｅｆｉｎａｎｃｉａｌｓｙｓｔｅｍｆｅａｔｕｒｉｎｇｔｈｅｓｈａｒｉｎｇｏｆｔａｘｒｅｖｅｎｕｅｓｂｅｔｗｅｅｎｔｈｅｃｅｎｔｒａｌａｎｄｌｏｃａｌａｕｔｈｏｒｉｔｉｅｓｉｎｔｈｅｆｉｎａｎｃｉａｌｓｙｓｔｅｍ,ａｎｄｅｎｓｕｒｉｎｇｔｈｅｓｔｅａｄｙｏｐｅｒａｔｉｏｎｏｆｔｈｅｎｅｗｓｙｓｔｅｍ　　Ｏｎｔｈｅｂａｓｉｓｏｆｔｈｅｂａｓｉｃｆｒａｍｅｗｏｒｋｏｆｔｈｅｆｉｎａｎｃｉａｌｓｙｓｔｅｍｆｅａｔｕｒｉｎｇｔｈｅｓｈａｒｉｎｇｏｆｔａｘｒｅｖｅｎｕｅｓｂｅｔｗｅｅ…     

Summary of 1995 Financial System Reform

Ｉｎ1995,Ｃｈｉｎａｓｆｉｎａｎｃｉａｌｓｙｓｔｅｍｒｅｆｏｒｍｇｒａｄｕａｌｌｙｅｎｔｅｒｅｄｔｈｅｓｔａｇｅｏｆｓｔｅａｄｙｄｅｖｅｌｏｐｍｅｎｔ1Ｆｉｎａｎｃｉａｌｍａｃｒｏｃｏｎｔｒｏｌｃａｐａｂｉｌｉｔｙｏｂｖｉｏｕｓｌｙｓｔｒｅｎｇｔｈｅｎｅｄ.Ａｌｏｎｇｗｉｔｈｔｈｅｓｕｃｃｅｓｓｉｖｅｐｒｏｍｕｌｇａｔｉｏｎｏｆｓｅｖｅｒａｌｌａｗｓ,ｉｎｃｌｕｄｉｎｇｔｈｅＬａｗｏｎｔｈｅＰｅｏｐｌｅｓＢａｎｋｏｆＣｈｉｎａ,ｔｈｅＣｏｍｍｅｒｃｉａｌＢａｎｋＬａｗ,ｔｈｅＬａｗｏｆＮｅｇｏｔｉａｂ…     

Fraudulent Financial Reporting： Theory and Evidence

This paper develops a hypothesis of the four factors from the cause of fraudulent financial reporting in terms of thoughts, culture, motive, opportunity and economic trade-off. Then tests whether independent directors monitor and improve the quality of financial report on the basis of 1 170 firms in China by means of OLS regression. The evidence is consistent with the hypothesis.     

Impact of International Financial Reporting Standards （IFRS） Adoption on Key Financial Ratios＂ The Case of the Czech Republic

This contribution analyzes the impact of new International Financial Reporting Standards （IFRS） reporting rules on financial ratios prepared in the Czech companies. Using a sample of 16 Czech firms, we attempt to measure the scope and size of the differences in the selected set of financial ratios as calculated with data reported according to the traditional Czech accounting standards （CAS） and under the IFRS provisions. Our study discovers that there are important differences resulting from the two reporting formats. Our research comes to a conclusion that translation of Czech statements to IFRS may cause changes in the values of financial indicators without relationship to the real change in the firms＇ value, performance, and stability. Even though the findings were not statistically significant, the indicative results of our measurements disclosed an important fact that the transition to IFRS could cause deterioration of key indicators and thereby could impact on the overall rating of companies. One needs to be cautious with generalization due to the small sample size.     

Bank Relationships and Private Firms’ Financial Reporting Quality

Private firms with relatively high (proprietary) costs of disclosure may benefit from a close relationship with a bank. Relationship lending is based on intertemporal contracting that assumes that the bank is able to acquire private information about the firm and, moreover, to keep this information private. For both reasons, we expect and find that private firms with fewer bank relationships exhibit lower levels of financial reporting quality. Controlling for many other factors, firms with a single bank relationship disclose their financial reports about 14 days later. The size of such firms’ financial reports is also smaller, containing approximately 8% fewer words than the median report. Firms with a single bank relationship also exhibit more earnings management, exceeding the median value of the three-year sum of absolute discretionary accruals by about 20%. The results are robust to different econometric specifications, including endogeneity concerns. They indicate that private firms choose to be opaque in the presence of fewer lending relationships.     

Grey Relational Evaluation of Financial Situation of Listed Company

The financial comprehensive evaluation of listed company is a grey problem. In this paper, a grey relational analysis method is used to evaluate the financial situation of listed companies. A grey relational evaluation model is set up and studied practically, and then a conclusion about the order of the comprehensive financial situation of these six listed companies is drawn. This analysis method is flexible and can avoid the disadvantages of evaluating financial situation from only one aspect in the past.     

Value-Added Tax （VAT） on Selected Financial Transactions

This paper deals with the approach to imposing value-added tax （VAT） on financial transactions. The VAT is a highly harmonized consumption tax within the European Union （EU）. VAT operational rules have been set down by the relevant directive of the Council of the EU. Under the directive, it is possible to select either exemption or taxation of financial transactions. Only the first option is permitted in the Czech Republic. Pros and cons of both models are described, in particular, the problems with determining the difference between financial transactions and other similar performance that must always be subject to tax. Potential lower VAT revenue or tax base assessment, as appropriate, seems to be crucial in the case of the taxation of financial transactions.     

Financial shared services in multinational corporations： Based on Motorola

The competition of Multinational Corporation is getting more and more intense with the economy globalization, requiring companies to standardize operations to stay competitive. Shared Services is an effective way of keeping costs down and improving efficiency by moving certain functions to one central location. Financial Shared Services is one of the typical representatives. In this essay, the advantages and disadvantages of Financial Shared Services will be discussed on the case of Motorola and explored with some possible solutions.     

The Formation and Development of Modern Firm Financial Governance Theory

This paper points out the drawbacks of traditional financial governance. After introducing Chinese and western economists＇ researches on firm financial governance theory, we put forward modern finn financial governance system, which is based on the core of finance-rights allocation. In our opinion, the theory of finance-rights is the important cornerstone of the theory of financial finance-rights theory. Financial governance structure system is the basic framework of the research of financial governance.     

Financial reporting of cash flow： Arbitrary items and management preferences

The international financial reporting standard for cash flow statement （IAS 7） provides options for the classification of certain cash flow items （arbitrary items）. Therefore, business firms may classify the arbitrary items using the option that would maximize their own interest. This reduces the comparability of financial statements amongst business firms. This study aims to investigate the factors explaining management preferences in the selection of financial reporting practices on the arbitrary cash flow items. It concludes that managers tend to magnify the CFO reported in order to maximize the shareholders＇ wealth, which in turn would maximize their compensation. Managers of business firms with a relatively smaller size of CFO tend to classify interest paid and dividends paid as non-CFO in order to magnify their CFO. They also tend to classify interest received as CFO in order to inflate their relatively smaller size of CFO up to expectation. Similarly, managers of business firms with a relative larger size of dividends paid would classify the dividends paid outside CFO.     

Some Aspects to Improve the Financial Accounting Report under Cyber-economy Background

Cyber-economy is the product of intemet commercialization since mid-1980s. Nowadays, cyber-economy is impacting every aspect of the social life under the background of economic globalization, with modem e-information as its base and the e-commerce as its guideline. Financial circumstance has also changed greatly as being affected by the whole economic condition. Accounting is a very important management activity. We need to study and research on how to face the changing condition and play its function constantly. This paper analyzes and discusses the financial accounting report under the cyber-economy from six aspects in order to promote accounting development.     

International Financial Reporting Standards and Private Firms’ Access to Bank Loans

Prior research has focused on publicly listed firms when examining the economic consequences of adopting International Financial Reporting Standards (IFRS). This study extends the literature by examining the ability of private firms to attract bank loans through the use of IFRS. Based on firm-level data from 25 countries, we show that private firms that voluntarily use IFRS are associated with a higher propensity to attract debt from foreign banks. We find no such association when examining their relationships with domestic banks. Supplementary analyses show that the results are mainly driven by private firms operating in countries with strong regulatory enforcement. The findings suggest that, conditional on adequate enforcement, the use of IFRS provides useful information for foreign non-relationship banks.     

Financial statements in less developed countries： What do preparers demand？

This study reports on an empirical investigation of the characteristics, attitudes, and beliefs of preparers of external financial reports in a less developed country. The basic research instrument consisted of a questionnaire in two parts： the first addressing attitudes of professional accountants toward annual financial reports generally; the second, more specifically measuring the importance of the information items to preparers. Our results suggest that the independent auditor is the most influential group in decision-making processes. As in many developed countries, the auditor＇s report and the regulatory framework are considered to have a major influence on financial reporting practices. Preparers believe that a lack of knowledge of external users＇ needs and lack of reporting standards and accepted accounting principles are the main concerns with corporate financial reports in Iran. The results showed that the balance sheet, auditors＇ report, and income statement in that order are the three most important parts of the annual reports.     

Positive Research on the Financial Statement Fraud Factors of Listed Companies in China

This paper studied the ＂pressure＂ and ＂opportunity＂ factors that caused financial statement fraud on the basis of the data of 41 A-share listed companies （1999-2004） in China which had been forfeited by China Securities Regulatory Commission （SRC） because of accounting irregularities. The author found that avoiding ＂ST＂ and ＂PT＂ was the primary pressure, and the opportunities mainly came from the higher top 10 shareholders＇ ownership concentration, the lower proportion of independent directors, the fewer number of directorate meetings and shares owned by the directorate members, board chairman and CEO held by one person and the ineffective supervisor boards. We also found that the companies involved financial statement fraud had the lower first majority shareholder＇s share proportion and they changed CPA firm more frequently.