Prediction Ability of Cash Flows,Net Income （NI）, and Auditors

The accounting information should help investors and creditors evaluate the amounts, timing, and uncertainty of firms＇ future cash receipts and disbursements. The Financial Accounting Standards Board （FASB） contends that accrual-based historical earnings are superior to cash flows in predicting future cash flows. But, Bowen, Burgstahler, and Daley （1986） showed that traditional measures of cash flows （net income （NI） plus depreciation and working capital from operations） appear to be better predictors of future cash flows than accrual accounting earnings. Since then, many researchers have articulated the importance of accounting data, especially cash flows and NI, in the predictive and forecasting processes. In this study, we empirically re-examined the ability of cash flows from operating activities （CFO） and accrual-based NI in predicting firms＇ bankruptcy. In the past, the results of this type of research were mixed. Differently from previous research, we focus on the timing of predictive ability, i.e., which indicator, cash flows or NI, is faster in predicting a firm＇s bankruptcy. We also investigate the timing of auditors＇ issuance of a going-concern opinion. The preliminary results show that the accrual-based NI is more accurate and faster than either CFO or audit opinion in predicting firms＇ failures. On average, NI signals a firm＇s bankruptcy 2.41 years before the bankruptcy filing, while CFO signals 1.48 years before filing. Auditors issued a going-concern opinion, another signal for firms＇ failure, to only 16 out of 41 bankrupt firms one year before bankruptcy, and no auditor issued the going-concern opinion two years before bankruptcy.     

Value-relevance of accounting numbers for valuation

Recent empirical work suggested that the ability of accounting numbers to explain the relationship between accounting numbers and stock prices has deteriorated over the past four decades. The findings of this study suggest that the accounting earnings and book value are capturing most of the information that is relevant to assess the values of firms. At the same time, it also suggests that earnings and book value as well as non-accounting beta are more valued during the financial crisis as compared to after the financial crisis. Overall, the accounting estimate of the value of the firm is not deviating from the markets＇ estimate, which suggests that accounting numbers play an important role in the valuation of firms in Malaysia.     

Prediction difficulty, financial strength and debt maturity

In order to have the optimal capital structure, the company with higher volatility of return adjusts the capital structure more frequently and has shorter debt maturity. Investors also have shorter investment cycle on these companies. Investment cycle is also affected by information asymmetry. The less asymmetric the information is, the more information investors get and the longer the investment cycle is. The adjustment frequency is also restricted by financial strength. This paper measures the debt maturity structure of the firm as the weighted average of debt maturity, and it is more precise than the ratio of long term debt to total debt. In empirical tests on debt maturity, the results show that financial strength, volatility of return and asymmetric information all have negative impacts on debt maturity.     

The degree of IPO underpricing in China

This paper studies the IPO underpricing in the emerging stock market of China. The empirical results reveal that in China, the degree of IPO underpricing measured by first-day return is more than 100%, which is a prevailing phenomenon for almost all IPO firms, regardless of the IPO time and the industry of the firm The degree of IPO underpricing in China is larger than the IPO initial returns documented in almost all the other countries. This considerable underpricing in China can hardly be explained by the information asymmetry theory and agency theory.     

Does ownership structure matter when CPA deciding types of audit opinions

Ownership structure is one of the most important and basic corporate governance characteristics. Thus, does the ownership structure of a firm have an effect on the type of audit opinion it receives from CPA？ This paper uses a sample including 1246 non-financial listed companies from China A-share market in 2003. Empirical results show： for listed firms, external auditor＇s propensity to qualify is lower with lower proportion of public shares, or with higher concentration of shares at a marginal significant level. However, the proportions of state-owned shares and institutional shares have no significant effects on audit opinions. A possible explanation is that the ownership structure influences risk awareness and negotiation power of audit firms, influences negotiation power of clients, and then ultimately influences auditors＇ reporting decision and audit opinions. The potential policy implication is： a more dispersed ownership structure and/or a higher proportion of public shares are preferable for higher audit reporting conservatism and audit quality in China.     

The Analysis of the Governance Effect of Chinese Public Corporation Based on Capital Structure

Under the existed system, the capital structure is the basis of the corporate governance, the structure of the corporate governance is the reflection of the capital structure. The choice of the capital structure decides the level of the corporate governance to a great degree. This paper discusses the governance effect of Chinese public corporation in the view of capital structure. At last, the author suggests that the government should change the state of state-owned stock which takes a great proportion, make the state-owned stocks and corporation stocks enter and circulate in the market, develop investment banks, promote the stockholder＇s rights to circulate and recombine, enhance the supervision and the management of the stock markets, perfect the mechanism of the market＇s operation, set up the mechanism of the way to protect to pay back the debt, perfect the system of bankruptcy and develop the way of bond-financing, offset the drawbacks of the indirect-financing among banks and so on. All of the advice was given to perfect the public company＇s capital structure and improve the efficiency of the corporate governance.     

Effects of Mandatory Audit Firm Rotation Upon Quality of Audit： The Perception of Audit Firms Evidence From Bahrain

The objectives of this study are： （1） to explore current audit appointment practices by audit firms in Bahrain; （2） to look into the opinions of audit firms in Bahrain on potential effects provided by implementing mandatory audit firm rotation （audit quality）; and （3） to investigate audit firms＇ views in implementing mandatory audit firm rotation in Bahrain. To achieve these objectives, a questionnaire was developed and distributed to respondents that consist of all auditors working in audit firms in Bahrain. The findings indicated that there is a significant relationship between mandatory audit firm rotation and quality of audit. The study also indicated that longer partner tenure makes the auditor＇s performance lack the quality in the auditing process. The average mean for all questions of the hypothesis together is 2.73 with average standard deviation of 0.94 which is less than half of the mean. This means that there is no dispersion among respondents about the questions of the hypothesis. Also, the analysis shows that the t-value is 29.922, which is greater than the table critical value of t （1.66）, and the p-value obtained is 0.000 which is less than the value of significance at p 〈 0.05. These results confirm statistically that there is a significant relationship, so the null hypothesis is rejected and the alternative hypothesis is accepted.     

Corporate Governance,Enterprise Risk Management,and Inter-temporal Risk Transfer

This work is an initial attempt to describe the interconnections among corporate governance,enterprise risk management,and the phenomena of inter-firm risk transfer that occurs in combination with firms’income smoothing.Corporate governance is conceived as a set of rules according to which a firm is managed and governed by its top managers.Extant literature on corporate governance has pointed out the benefits of the adoption,at a firm level,of a comprehensive enterprise risk management process.We note that,although such an adoption favors the smoothing of a firm’s income,in smoothing the income a firm,it also gives rise to an inter-temporal transfer of risk from the firm itself to its stakeholders,specifically to suppliers and employees.Such transfer of risk depends on the strength of a firm contractual power and on the structural relationships established by a firm with its stakeholders.We therefore argue that larger-sized organizations affiliated with a business group are likely to smooth income to a greater extent than smaller-sized organizations unaffiliated with a business group.The paper also offers some discussions of the findings and points out some important issues to be addressed in future studies.     

Which Central and Eastern European country has the greatest potential for housing market recovery？

This paper is concentrated on analyzing the CEE （Central and Eastern European） countries housing and lending market development in 2002-2009. These countries experienced real estate boom and bust phases during that time and the aim of this paper is to understand which of these countries have the greatest potential for housing market recovery. The study has conducted comparable analysis of these countries and their real estate and lending market. The data was collected from central banks, national statistic offices and real estate companies. The results suggest that countries with higher housing debt had stronger real estate booms and the current bust-cycle has caused much steeper decline in prices. This paper attempts to look at the CEE housing markets from the developer＇s or investor＇s point of view and may be useful for banks and other financial institutions which are related to housing market and lending.     

Working capital management and corporate performance： Case of Malaysia

Working capital always being disregard in financial decision making since it involve investment and financing in short term period. However, it is an important component in firm financial management decision. An optimal working capital management is expected to contribute positively to the creation of firm value. To reach optimal working capital management firm manager should control the trade off between profitability and liquidity accurately. The intention of this study is to examine the relationship between working capital management and firm profitability. Cash conversion cycle is used as measure of working capital management. This study is used panel data of 1628 firm-year for the period of 1996-2006 that consist of six different economic sectors which are listed in Bursa Malaysia. The coefficient results of Pooled OLS regression analysis provide a strong negative significant relationship between cash conversion cycle and firm profitability. This reveals that reducing cash conversion period results to profitability increase. Thus, in purpose to create shareholder value, firm manager should concern on shorten of cash conversion cycle till optimal level is achieved.     

Corporate governance mechanisms and firm valuation in Malaysian listed firms： A panel data analysis

Corporate governance mechanisms emerge to tackle agency problems in ensuring that shareholders＇ funds are not expropriated or wasted on unprofitable activities. The issue arises as to whether these improvements have been effective in reducing agency costs, and therefore enhancing firm value. The objectives of this paper is to examine the effects of governance mechanisms of dividend, types of ownership structure, and board governance on firm value. This paper utilises a panel data analysis of 403 firms listed on the Bursa Malaysia over a four-year period from years 2002 to 2005. A hierarchical regression analysis is used to test the hypotheses and the data is analysed using the generalized least square （GLS） estimation technique. Overall, the results highlight the importance of moderating role played by board governance variables with types of ownership structure to influence firm value. However, the benefits of better corporate governance through enhanced board governance are not the same across all firms since their incentives vary with respect to dividend and different types of ownership structure mechanisms.     

The effect of earnings forecast precision on firm value and insider trading under voluntary disclosure in Taiwan

Taiwan changed its earnings forecast policy from mandatory to voluntary disclosure in 2005. In this study, the inferences of voluntary earnings forecast are examined based on forecasts issued by listed firms. This study suspects that insiders have a temptation to strategically manipulate financial forecast information to influence markets and thus receive extra rents. Under the new earnings forecast disclosure policy, the number of disclosing firm decreases but the precision of earnings forecast increases. The empirical result from dynamic panel data evidences the forecast error of voluntary disclosure may negatively impact firm values. Furthermore, there is a positive relationship between insiders＇ trading profit and manipulation of earnings forecasts. As volatility in insider manipulation increases, it is difficult for the investors to predict the real intention of insiders, and insiders may achieve greater benefits from trading. This study also observes that many listed companies hold investor conferences to provide earnings guidance in Taiwan. The reason may be that investor conference is more flexible and has less forecast error cost than the formal financial forecast. This study provides important insights into earnings forecast policy in emerging markets. The competent authority should improve corporate governance and develop monitoring functions to abate forecast manipulation.     

The Market Reaction to the Pronouncements Related to International Accounting Standards （IAS） 19R

This paper examines whether and how investors reacted to the pronouncements related to International Accounting Standards （IAS） 19R. Using a sample of 401 European firms reporting pension and retirement expense during the period of 2006-2011, this paper finds negative abnormal returns around the pension project initiation by the International Accounting Standards Board （IASB）. More importantly, the abnormal returns are more negative for firms with higher financial leverage and lower ratios of net periodic pension cost to net income, but less negative for firms in countries with weak creditor rights （CR） and infrequent use of the corridor approach under IAS 19. Additionally, the effects of financial leverage and the ratio of net periodic pension cost to net income on the abnormal returns are more pronounced for smaller firms. Overall, the results are consistent with the view that recognition of previously disclosed off-balance-sheet pension liabilities as required by IAS 19R increases debt contracting costs, and highlight the importance of considering firm size and CR in international tests of debt contracting theory.     

Dividend policy determinants of Indian FMCG sector： A factorial analysis

Profitability has always been considered as a primary indicator of dividend payout by a company. There are factors other than profitability namely cash flows, debt equity ratio, retained earnings, sales growth, share prices of a company, capital expenditure and beta etc. that also affect dividend decisions of an organization. Existing literature suggests that dividend payout is positively related to profits, cash flows while CAPEX （capital expenditure） retained earnings, sales growth, share prices, beta, interest paid and debt equity ratio have inverse relationship. A set of 21 key variables have been identified that affect the dividend payout of a firm. Researchers in the past have used several proxies to represent these determinants. Authors have tried to find out which proxy variable is most relevant in the present scenario. The paper attempts to give a focused overview of the important dividend theories and empirically analyze the determinants of dividend behavior of Indian FMCG （Fast moving consumer goods） sector. The relationship between key variables has been explored with the aid of statistical techniques of factor analysis. Thus, the main theme of this study is to examine the various factors that influence the dividend policy decisions of FMCG firms in India.     

Corporate Sustainability and Ethical Codes Effectiveness

In the last years, the issues regarding both sustainable development and business global responsibility have qualified the corporate governance effectiveness. Many international institutions have intervened and the companies, at least formally, have increased their attention to the interaction between stakeholder relationship management and economic, social, and environmental responsibility. The numerous and frequent scandals underline the discrepancy between the firms＇ formal statements and the substantial behaviors. Most of the companies, in the industrialized country, publish well-structured code of ethics and conduct, explicating the strategic values assigned to the global responsibility. The research considers the capability of the code of conduct to influence effectively the behaviors, in relation with the needs of transparency, sharing, coherent individual behavior, and control. In relation to the importance conferred to the sustainable development by the European Union （EU）, the analysis examines listed companies with the greatest market capitalization operating in the Great Britain, Germany, and Italy, in order to verify the firms＇ behavioral uniformity and the effectiveness of sustainability policies. The analysis shows that the codes of ethics seem to remain only formal declarations. Conscious and rational governance not only transfers values and principles of sustainability to the firm＇s behaviors and its result system, but also goes beyond a mere diffusion and formalization of codes of ethics and conducts. To achieve that, it is necessary to develop productive behaviors focused on the risk control and on managing behaviors of all the organization＇s members, in particular in reference to the stakeholder relationship management. The codes of ethics, in fact, seem to assume a poor relevance for the corporate sustainability promotion if a correct formal structure does not occur integrated with strategies and processes which assure a constant workability. It requests especially： the ethic cu     

Bankruptcy Prediction for Chinese Firms： Comparing Data Mining Tools With Logit Analysis

China＇s capital market is different from that of the US in economic, political, and socio-cultural ways. China＇s dynamic and fast growing economy for the past decade entails some structural changes and weaknesses and as a consequence, there are some business failures. We propose bankruptcy prediction models using Chinese firm data via several data mining tools and traditional logit analysis. We used Chinese firm data one year prior to bankruptcy and our results suggest that the financial variables developed by Altman （1968） and Ohlson （1980） perform reasonably well in determining business failures of Chinese firms, but the overall prediction rate is low compared with those of the US or other countries＇ studies. The reasons for this low prediction rate may be structural weaknesses resulting from China＇s fast growth and immature capital market.     

Are Islamic incomes relevance to commercial banks in Malaysia？

A significant price-to-earnings relation is evident in many research findings, which includes study on Malaysia Stock Markets, that the strength, consistency and magnitude of the relation are not as large as those reported in institutionally more developed markets. However, the price adjustment is stronger if price reaction is measured over a long periods, which is consistent to speculative trading. Firm-specific variables such as revenue, firm size and debt-equity have no incremental information content beyond earnings implies that the market monitoring process in an emerging market focuses on earnings only during financial announcement. Therefore, this paper revisited the study on the relevant of accounting banks in Malaysia using the earnings response coefficients, earnings by looking at Islamic Income for commercial which are the earnings-to-share return coefficients that are estimated for sub earnings components by including Islamic banking incomes in the analysis. This paper discovered that though there is a positive effect, the earnings from Islamic banking operation are small. Thus, the total earnings as well as the sub-categories of earnings of banks appear to enter the pricing considerations of investors.     

The Audit Opinion of Earnings Management in Listed Companies of China

The paper testes the relationship between audit opinions and financial sensitive zones and accounts on the basis of the data of A-share companies in China. The author finds that when ROE of listed companies is in the small-profit zone or in the large-loss zone, the probabilities that they get modified audit opinions increase. But the right-offering zone, accrual accounts and accounts below the line have no significant effects on the modified audit opinions. Besides, the author also finds that the ratio of accounts receivable to asset, debt ratio, previous year＇s audit opinion and change of CPA firms have significant positive effects on the modified audit opinions, while the ratio of major business revenue and size of companies have no notable effects. Some other factors such as cash ratio, age of the listing and CPA firm ranking have no consistent and continuous effects.