The impact of monetary and fiscal policies on the French financial system

This paper presents a model of the French financial system and analyses the influence of policy instruments on one price (the interest rate) and two quantities (the stocks of bank credit and money). The development of hypotheses as to the behavior of the banking system and the public leads to a theoretical construct of the monetary system. After a comparative static analysis, the model is tested and the influence of policy instruments on the above mentioned three variables is empirically ascertained. Among other things, it is shown that the required reserve system is not optimally established and that some institutional reforms would improve the authorities' control over monetary processes.     

The impact of SFAS No. 123(R) on financial statement conservatism

SFAS No. 123(R) requires firms to recognize the fair value of stock options as compensation expense over the vesting period of the options. Thus, SFAS No. 123(R) leads to an overall increase in financial statement conservatism. However, it is not known whether SFAS No. 123(R) increases conditional and/or unconditional conservatism. Because the different forms of conservatism have different implications for the quality of earnings, I investigate which types of conservatism are impacted by SFAS No. 123(R) to gain insight into the ramifications of the Standard. I find that SFAS No. 123(R) leads to an increase in both unconditional and conditional conservatism. I additionally find that the Standard causes an increased negative relation between contemporaneous economic gains and income. These findings hold outside of the sample period and under a non-priced based model of conservatism.     

Enhancement of value investing strategies based on financial statement variables: the German evidence

This paper examines the added-value of combining traditional valuation ratios with each other as well as with some financial statement variables in the German stock markets during the 2000–2015 period. The results show that combination pays off and, moreover, that the benefits of combination are greater in Germany than in most other developed stock markets. Particularly, we find strong evidence of the added-value of using Piotroski’s F-score as a supplementary selection criterion for value stocks as well as for low-accrual stocks. Our results show further that the F-score also boosts the efficacy of other valuation ratios besides the book-to-price ratio. In addition, the inclusion of F-score besides a relative value measure tends to increase the average market equity of portfolio firms. The decomposition of the full-sample-period performance into separate bull- and bear-period performance shows clearly that the better performance of F-score-boosted portfolios is mostly attributable to their outperformance during bearish periods, even though on average, they also generate higher bull-period returns than the comparable value portfolios formed without F-score. The use of F-score as a supplementary criterion also increases the proportion of stocks that earn above-market-average returns during the subsequent holding period. For the first time in the financial literature, we also document a strong relationship between high F-score stocks and momentum stocks.     

The spillover effect of fraudulent financial reporting on peer firms' investments

We investigate how high-profile accounting frauds affect peer firms' investment. We document that peers react to the fraudulent reports by increasing investment during fraud periods. We show that this finding is not driven by frauds that have a higher ex ante likelihood of detection or by an association between fraud and investment booms. In addition, we find that peers’ investments increase in fraudulent earnings overstatements, and in industries with higher investor sentiment, lower cost of capital and higher private benefits of control. We also find evidence consistent with equity analysts potentially facilitating the spillover effect.     

The heterogeneous impact of macroeconomic information on firms' earnings forecasts

This paper re-examines the role of macroeconomic information in forecasting firm earnings. We adopt a Fama–MacBeth regression model with the important extension of including information from over 140 macroeconomic variables that enter into the model in a reduced dimension form as a consequence of common factor analysis. The resulting factor-augmented model is then used to evaluate the importance of macroeconomic information on earnings forecasts for U.S. firms from 1962 to 2009. The same model is also examined for each individual time window and industry subsample. The results reveal a clear and heterogeneous impact of macroeconomic information on firm-specific earnings forecasts, and that these effects differ markedly during certain periods and across industries. In addition, when compared to analyst forecasts, we show that our model is generally more accurate over longer forecast horizons. The results of the identified heterogeneous impacts are used to define the conditions under which macroeconomic information becomes important for the firm.     

Functional fixation: Experimental evidence on the presentation of financial information through different digital formats

This study examines whether, in the presentation of financial information, digital formats address the concern over users’ functional fixation. The accounting literature indicates that the presentation of financial information either within the financial statements or in the notes to the financial statements often creates functional fixation where users of financial statements fail to adjust for differences in accounting policy. This leads users to judge what would otherwise be identical financial situations as being different due to the different accounting policies and methods adopted. It has been suggested that the use of digital formats in presenting financial reports may overcome functional fixation. Using an experimental design involving accountants in public practice, the results indicate that the use of digital formats to present financial reports does not fully overcome the issue of functional fixation in the processing of financial information. Although the participants were able to identify and extract relevant information, irrespective of whether or not the information was presented within the financial statements or in the notes to the accounts, the evidence indicates that functional fixation remained when the participants made final decisions based on available information. This suggests that functional fixation may not be caused by access to or extraction of information but by the level of perceived significance based on where the information is reported in the financial statements. In general, the results indicate that current technology may not be able to fully reduce functional fixation in the evaluation of financial information prepared in accordance with different accounting policies and methods.     

Crisis transmission: Some evidence from the Asian financial crisis

We used a crisis measure of financial market as defined by Sexena (1998) to study the nature of crisis transmission and the channels through which the 1997 crisis was transmitted among Asian financial markets. Estimated with a vector autoregression (VAR) and an OLS model on Asian financial markets from January 1990 to December 1998, we found that:

1.

During the crisis period, crisis transmission was more significant than during other noncrisis periods;

2.

Comparing the crisis transmission within the industrialized countries (Taiwan, Korea, and Japan), within the emerging countries (Thailand, Malaysia, The Philippines, and Indonesia), and between the industrialized and emerging groups, it is shown that

2.1.

The crisis transmission among the three industrialized countries was not significant.

2.2.

The crises originated from Thailand and Malaysia were transmitted to other emerging countries.

2.3.

The crisis transmission between industrialized and emerging countries was not found to be significant. There was evidence showing that Singapore served as an intermediary transmitting crisis between industrialized and emerging countries during this particular crisis.

3.

The transmission through the wake-up call effect was found to be more significant than other transmission channels. Trade relationship and cash-in effects only existed in Korea, Thailand, and Malaysia.

     

The impact of macroeconomic uncertainty on non-financial firms' demand for liquidity

This paper empirically investigates whether changes in macroeconomic volatility affect the efficient allocation of non-financial firms' liquid assets. We argue that higher uncertainty will hamper managers' ability to accurately predict firm-specific information and induce them to implement similar cash management policies. Contrarily, when the macroeconomic environment becomes more tranquil, each manager will have the latitude to behave more idiosyncratically as she can adjust liquid assets based on the specific requirements of the firm, bringing about a more efficient allocation of liquid assets. Our empirical analysis provides support for these predictions.     

The information content of financial analysts' forecasts of earnings: Some evidence on semi-strong inefficiency

The paper assesses the information content of revisions in financial analysts' forecasts of earnings by analyzing the relation between the direction of these revisions and stock price behavior. Abnormal returns during the months surrounding the revisions in analysts' forecasts are computed and evaluated. The results strongly indicate that information on revisions in forecasts of earnings per share is valuable to investors. It is also suggested that market reaction to the disclosure of analysts' forecasts is relatively slow and gives rise to potential abnormal returns to investors who act upon this type of publicly available information.     

Analysts' forecasts of Japanese firms' earnings: additional evidence

This article examines analysts' forecasts of Japanese firms' earnings during Japan's economic burst period in the 1990s. Using the evidence of analyst earnings forecasts in the United States as a benchmark, the article documents the following three findings. First, whereas the forecast accuracy of U.S. analysts following U.S. firms improves over time, the forecast accuracy of U.S. and Japanese analysts following Japanese firms does not. Second, whereas decreases in forecast errors of U.S. analysts following U.S. firms are best explained by decreases in forecast bias of the analysts, increases in forecast errors of U.S. and Japanese analysts following Japanese firms are best explained by increases in the frequency of losses experienced by Japanese firms. Third, Japanese analysts forecast earnings less accurately than do U.S. analysts. These findings reflect the difficulty of producing accurate earnings forecasts during economic downturns. They also suggest that Japanese analysts are more bound than their U.S. counterparts by cultural ties that impede forecast accuracy.     

The effect of principles-based standards on financial statement comparability: The case of SFAS-142

This study examines the effects of a prominent principles-based standard (SFAS-142, Goodwill and Other Intangible Assets) on financial statement comparability. Using non-goodwill-intensive firms as our control group, we implement a difference-in-differences research design to examine how SFAS-142 affects comparability among goodwill-intensive firms (i.e. a treatment group), and comparability between goodwill-intensive firms and non-goodwill-intensive firms (i.e. another treatment group). We find that SFAS-142 decreases comparability among goodwill-intensive firms, as well as comparability between goodwill-intensive and non-goodwill-intensive firms. We also find that these reductions in comparability are less severe when the verifiability of net assets is higher. Overall, the results suggest that principles-based standards may reduce comparability, particularly when the accounting items entail high uncertainty and verifiability is low.     

The impact of financial regulation on the stickiness of credit card lending rate: evidence from the USA

Review of Quantitative Finance and Accounting - We examine the effect of the U.S. Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 on the credit card lending rate...     

The impact of Say-on-Pay votes on firms' strategic policies: Insights from the Anglo-Saxon economy

This study examines evidences of executive reactions to say-on-pay (SOP) votes in terms of strategic policies which could affect firms' long-run growth and eventual survival. We employed an unbalanced panel data from 1932 firms taken from four countries in the Anglo-Saxon economy, covering time periods when different forms of SOP were implemented in these countries. Using Limited Information Maximum Likelihood (LIML) estimator to gauge the simultaneous determination of SOP votes and firm strategic policies, we find that, in line with shareholders preferences, US firms had increased capital expenditure ratio; Australian and US firms had reduced reliance on debt financing; US managers had shifted focus on current rather than long-term profit, but evidences emerged from other countries are unclear. Corroborations also suggest that excess liquidity was shunned by Canadian shareholders, but the reactions of their company executives were overly disproportionate. UK firm policies did not appear to have been affected by SOP, and vice versa. Overall, the varying effects of SOP votes on firms' strategic policies might be ascribed to either the adoption of a specific SOP practice or the effectiveness of the board.     

财务报表审计风险及其规避

一、审计风险的影响 随着涉诉案件的一再发生,审计风险对注册会计师行业的影响越来越受到重视.这种影响有不利的方面,也有有利的方面.     

The statement of changes in financial position: An alternative teaching approach

The Statement of Changes in Financial Position (SCFP) is an important financial statement for external users. From a teaching point of view, however, the development of the SCFP has not been understood clearly by many accounting students.In order to properly understand the SCFP using either the working capital basis or cash basis, students need a framework for analyzing the impact of various transactions on the Statement. This article provides the accounting instructor with an alternate method for teaching the relationship between any transaction and the SCFP.     

The IASB standard-setting process: Participation and perceptions of financial statement users

The interests of users of financial statements are, in theory, paramount to accounting standard-setters. However, there is a dearth of research into users' participation in, and influence on, the process of setting accounting standards. The enhanced status now accorded to the International Accounting Standards Board (IASB) offers the opportunity to examine these issues in a new regulatory context. This study reports the results of a questionnaire survey of the perceptions of, and participation in, the IASB process of a sample of UK investment management firms. The findings suggest that these firms' participation is not as low as is often inferred from the public record of comment letters. In particular, a considerable number of firms participate through representative report user organisations such as the Investment Management Association. Other findings suggest that the major factor inhibiting investment firms from participating is the cost of lobbying, not complacency that the IASB is ‘on their side’ and will naturally safeguard their interests. Moreover, the respondents consider the accounting profession and the European and US accounting standard-setters to be the dominant interest groups in the IASB standard-setting process.     

Consistency of firms' past financial performance measures and future returns

In this study, I show that growth consistency in firms' past financial performance measures is useful in predicting future stock returns. Firms consistently ranking in the lowest 30 percent of past financial growth measures have greater rates of returns relative to their inconsistent low-growth firm counterparts. The return differential between these two groups increases uniformly with the length of estimation intervals of past performance data. Firms consistently ranking in the top 30 percent of growth rates earn slightly lower returns than inconsistent high-growth firms. These findings indicate that investors overreact to consistency in financial metrics, but this overreaction is more pronounced and persistent for consistent low-growth firms than that for consistent high-performing firms. Regression analyses reveal that consistency of firms' past financial performance predicts subsequent price movement. This association between past growth consistency and future returns is stronger for consistent low-growth firms relative to consistent high-growth firms.     

US political corruption: Identifying the channels of bribes for firms' financial policies

This paper presents first-time evidence on ‘channel-based’ firm corruption in the US, spanning the period 2000–2010. By employing conviction, type of bribery, ethnicity firm-level data, and two alternative panel econometric approaches for robustness, the empirical analysis documents first, that the cash payment channel dominates bribery activities in relevance to the firms' financial policies, while ethnicity groups do matter in exemplifying the role of those channels, with the Anglo-Saxon group dominating such activities. The results could be of substantial importance for regulators in developing venues to capture corruption activities.     

The relation between earnings management and financial statement fraud

This paper provides new evidence on the characteristics of firms that commit financial statement fraud. We examine how previous earnings management impacts the likelihood that a firm will commit financial statement fraud and in doing so develop three new fraud predictors. Using a sample of 54 fraud and 54 non-fraud firms, we find that fraud firms are more likely to have managed earnings in prior years and that earnings management in prior years is associated with a higher likelihood that firms that meet or beat analyst forecasts or that inflate revenue are committing fraud. We further find that fraud firms are more likely to meet or beat analyst forecasts and inflate revenue than non-fraud firms are even when there is no evidence of prior earnings management. This paper contributes to the fraud detection literature and the earnings management literature, and can help practitioners and regulators develop better fraud detection models.