FINANCIAL STYLE AND CORPORATE CONTROL

who will control the process of realizing values inherent in a particular business? If the answer is to be “Management,” then a more assertive financial style and an accelerated financial restructuring timetable may be required to accompany any necessary business restructuring activities. In the new financial environment, failure to take the initiative to implement prudent, well-reasoned financial restructuring may allow outside interests to re-define the game. Management would thus lose control of the value creation process.     

健全的金融体系：金融监管和公司治理

健全的金融体系是每个成功的经济体制的核心,它配置资本并且转移风险。银行业从计划经济体制向市场经济体制转型中面临着重要的挑战,政府为此出台了一系列举措。健全的金融体系的建立主要包括两个方面,一方面是对金融机构的监管法规,另一方面是金融机构对其行为的自我管理,即公     

THE CHAIRMAN'S STATEMENT AND CORPORATE FINANCIAL PERFORMANCE

Agency theory and signalling theory both suggest that firms are motivated to disclose excellence of financial performance in an unambiguous manner. We might expect, therefore, that good financial performance is associated with a clear and readable Chairman's narrative and poor performance with an obscure or misleading message. Extant work linking corporate performance with clarity of executive narrative fails to distinguish sample cases by industry or financial status. This paper seeks to overcome the consequences of such deficiencies explicitly, by conducting a systematic analysis of the relationship between narrative complexity and alternative measures of financial performance, for a matched sample of failed/non-failed companies across common industries. This study employs separate measures of the readability and the understandability of the chairman's narrative and finds them to be significantly related to overall financial performance and individual measures of performance, most notably liquidity. Poor readability is strongly associated with poor financial performance and ease of readability with relative financial success. The implication is that firms actively signal good news while obscuring, perhaps deliberately, messages which convey bad news.     

ASSET PRICING AND FINANCIAL REPORTING WITH CHANGING PRICES

This study empirically investigates the recent SFAS No. 33 requirements to determine if the inflation disclosures, or information similar to it, are impounded in security returns. An attempt is also made to determine which of the two diverse disclosures best represent the information impomded by the market. The investigation utilizes a methodological framework arising out of currently accepted asset pricing theory. The results suggest that the current cost data parallels the information impounded in security returns and that it provides risk information not included in the commonly employed systematic risk factor, beta.     

THE IMPACT OF ASSET SECURITIZATION: A PERSPECTIVE FOR INVESTORS

A securitization transaction creates a new set of analytical challenges for both investors in the asset backed securities (ABS) and for holders of the debt and equity of the sponsor. This article argues that investors can gain insights into the risk and expected rewards of both ABS and the sponsoring corporation's securities by focusing on the excess cash flow (or residual interest) that is expected to be generated by the ABS trust. The value of this residual interest is recognized as a one-time gain by the sponsoring lender in the period the ABS transaction is closed. Because the assumptions used to calculate this gain should represent management's best estimates as to the performance of the loan pool, comprehensive analysis of the gain-on-sale calculation can provide both corporate and ABS investors with significant insight into the level of risk in the securities they own. It also offers a tool for determining whether the expected returns justify the risks.     

WHO GAINS FROM CORPORATE ASSET SALES?

This study documents that sell-offs, on average, are firm value enhancing, as both stockholders and bondholders gain from such transactions. Further, it reveals that sell-offs can be wealth redistributing, value destroying, or value enhancing depending on the way the sale proceeds are distributed and the motive underlying the sell-off. The wealth effects on stockholders and bondholders are not always symmetrical. Our results suggest that benefits from the sale of assets that do not strategically fit the firm's core business accrue primarily to stockholders, while benefits from distress-related sell-offs accrue to bondholders. Sell-offs to thwart takeovers destroy firm value. We document that a significant proportion of sell-offs results in wealth transfers between securityholders. Restrictive dividend covenants play an important role in protecting bondholders from wealth expropriation. Our analysis suggests that the relative size of the asset sale, the uses of the sale proceeds, and the degree of protection afforded bondholders via a dividend restriction may be relevant in explaining the direction of wealth transfer.     

ASSET REVALUATION AND CURRENT COST ACCOUNTING: UK CORPORATE DISCLOSURE DECISIONS IN 1983

Accountants have long disputed whether financial statements should report current values and the effects of price changes. Indeed, the two kinds of adjustment are often confused. This study examines the asset revaluation and Current Cost Accounting (CCA) disclosure decisions of UK firms in 1983, using a costly contracting framework. We find the two decisions appear to have been taken for very different reasons and to be largely unrelated, even though the resultant measures overlapped to a non-trivial degree. The two common factors were that revaluers and CCA disclosers both tended to be large and to have revalued in the previous two years. Indebtedness was positively related to revaluation and negatively to CCA disclosure. Current Cost Accounting disclosure was also positively correlated with profitability and fixed asset intensity, whereas revaluation was not.