IFRS adoption in the United States: An analysis of the role of the SEC’s Chairs

In this paper, we study the role of the SEC’s Chairs in the possible adoption of IFRS in the United States between 2005 and 2017. We mobilize the theoretical framework of institutional entrepreneurship to analyze the multidimensional institutional process which involves the streams of problem recognition, policy development and politics. Our qualitative empirical study finds that the SEC Chairs attempted to couple the three streams to different extents to achieve policy breakthroughs on IFRS adoption. We show how the coupling endeavors of Chair Cox opened a temporal window of opportunity for IFRS adoption, while Chairs Schapiro and White were unsuccessful in coupling the streams due to limited recognition of IFRS adoption as a central problem for the SEC, the inability to develop a practicable policy solution and unfavorable conditions in the policy stream. Our paper offers insights into the reasons for the SEC’s substantial efforts to introduce IFRS to U.S. capital markets and why these efforts never resulted in a formal decision on adopting IFRS for U.S. issuers. Our findings contribute to literatures on IFRS adoption, the temporal dimension of institutional entrepreneurship and the U.S. debate on IFRS.     

Investor valuations of Japan’s adoption of a territorial tax regime: quantifying the direct and competitive effects of international tax reform

This paper examines the impact of Japan’s 2009 adoption of a territorial tax regime using event study methods which leverage individual firm characteristics to identify underlying drivers of market reactions. Differences in Japanese firms’ foreign and domestic effective tax rates yield an aggregate capitalization effect of \(\yen \)4.3 trillion, while firms with less prior foreign exposure and fewer opportunities for tax avoidance experienced relatively larger abnormal returns. We attribute these results to tax savings on existing undistributed foreign earnings, enhanced opportunities for international expansion, and cultural biases against tax planning. Spillovers to the US (through tax or firm competition) appear insignificant.     

Bangladesh’s trade partners and the J-curve: an asymmetry analysis

Separating currency appreciations from depreciations and using non-linear models in recent literature have improved discovering significant link between the trade balance and the exchange rate. We add to this growing literature by considering the experience of Bangladesh with 11 trading partners. When a linear model was used, support for the J-curve effect was present only with one small partner. However, when a non-linear model was used, support increased to three countries including the largest partner, the United States, which accounts for more than 12% of Bangladesh’s trade. Furthermore, the non-linear models supported short-run asymmetry adjustment as well as short-run asymmetry effects of exchange rate changes in most cases. However, long-run asymmetric effects were limited to a few.     

Issuers’ incentives and tests of Baron’s model of IPO underpricing

This paper reexamines the validity of Baron’s (J Financ 37:955–976, 1982) model of IPO underpricing, in which IPO underpricing is caused by asymmetric information between issuers and investment bankers. Muscarella and Vetsuypens (J Financ Econ 24:125–135, 1989) find that lead-manager IPOs are significantly more underpriced than non-self-marketed IPOs and conclude that their empirical results do not support Baron’s model. We compare self-marketed underwriters’ IPOs with non-self-marketed underwriters’ IPOs and with IPOs they lead. Our empirical results show that it is premature to reject Baron’s model of IPO underpricing when we take issuer incentives into account.     

It’s been a pleasure doing business with you: a strategic analysis and critique of university change management

Universities have been undergoing major changes in scope of activities, structures, processes and relationships since late in the 20th century. This paper critically examines some of the dimensions of these changes, reflecting on the spectrum of environmental forces and internal resource pressures that have begun to transform many aspects of university governance core activities, stakeholder relationships and academic work. This Habermasian informed analysis and critique of major changes in university operations, reveals an array of globalised environmental disturbances that have directly impacted on university design archetypes including governance, accountability, decision-making and communication. The consequent impacts on the financial, educational and research subsystems are found to be extensive and have penetrated the interpretive schemes that constitute the university lifeworld. Commercial values are found to be usurping the previously dominant knowledge focussed values in universities. A re-engagement in discourse and bottom-up strategic management and processually based change orientation are offered as potential foundations for developing a bridge between the new managerialism and academics’ re-empowerment.     

On the Effect of Bank of Japan’s Outright Purchase on the JGB Yield Curve

This paper examines an impact of Bank of Japan (BOJ)’s outright purchase on the Japanese government bond (JGB) yield curve. Particularly, we develop a simple state space model, which incorporates new factors regarding the BOJ’s announcement for its outright purchase and the current market outstanding with standard level and spread factors. Based on the model with a filtering method, we also implement an empirical analysis with time series of the BOJ’s announcement records during 2014/10/22–2017/8/3 in the quantitative–qualitative easing period to estimate the sensitivities of interest rates against the changes in the market expectation for the net supply with each sector of JGB. We expect the current work provides a basis for considering quantitative effects on the term structure by BOJ’s policy changes such as termination or significant reduction of the BOJ’s outright purchase. For instance, our scenario analysis shows substantial increase in the 30 year yield with widening of 20–30 year spread.     

On the ‘Review of Structure and Effectiveness of the IFRS Foundation’: the EAA’s Financial Reporting Standards Committee’s View

In July 2015 the International Financial Reporting Standards (IFRS) Foundation launched its third five year review of its structure and effectiveness of the organisation. In a public call, the Trustees solicited stakeholders’ input on the relevance of IFRS Standards with respect to broadening the IFRS scope and to the impact of new technology, on the consistent application of IFRS and on the governance and funding of the International Accounting Standards Board and the IFRS Foundation. The European Accounting Association (EAA)’s Financial Reporting Standards Committee responded to this request for views by submitting a comment letter based on research-informed opinions. This article provides an overview of this Review of Structure and Effectiveness of the IFRS Foundation and the EAA’s opinions in response to this Review.     

Consequences of adopting an expanded auditor’s report in the United Kingdom

The United Kingdom has recently required an expanded auditor’s report for large public companies. We investigate whether this requirement is associated with an increase in the decision usefulness of the auditor’s report and whether it has indirect consequences on audit fees and quality. Our analyses cover four years surrounding the changes, including companies that transitioned to the new regime and companies that continued issuing the previous report’s format. We do not find evidence that the regulatory change significantly affected investors’ reaction to the release of auditors’ reports, audit fees, or audit quality. Furthermore, we do not find that variation in the expanded reports’ content has affected these outcomes. Although companies with long reports pay comparatively higher fees, the mere increase in disclosure does not affect audit fees or quality. Collectively, our evidence is consistent with the expanded auditor’s report providing little incremental information to investors.     

On the validity of the augmented Fama and French’s (1993) model: evidence from the Hong Kong stock market

This paper investigates the performance of four-factor asset pricing model using Hong Kong stock returns. Our four-factor model is constructed by adding a momentum factor into the Fama and French’s (J Finance Econ 33(1):3–56, 1993) three-factor model. We find that the four-factor model may explain return variation using Hong Kong data. Our results show evidence that all the four factors are significant in the model and intercepts are not significant. In addition, the reasonably high values of adjusted R ² and the insignificance of an additional explanatory variable of residual standard deviation provide supportive evidence to the model. The robustness of the model is also checked for two effects: up- and down-market conditions and seasonal behavior.     

Beck’s creative challenge to class analysis: from the rejection of class to the discovery of risk-class

Abstract

Beck’s rejection of the relevance of class in Risk Society has had an immense impact on both the fields of class analysis and the sociology of risk. In outlining a novel theory of the systemic importance of risks as side-effects and in making bold claims about how the production and distribution of risks are undermining class inequalities, Beck posed a highly influential challenge to both risk and class studies. Beck’s impact on class analysis however has not been mainly due to widespread acceptance of his original claims about risk and class; rather, it has been research building upon Beck’s work so as to critically depart from his conclusions through which Beck has made his contributions to the study of class. In seeking to identify the impact of Beck’s work on the study of risk and class, this paper, firstly, outlines Beck’s challenge to class analysis. It then proceeds to identify three key areas of research whose development was motivated by their critical engagement with Beck’s work: the literature on risk and the continuity of class; the critical theory of the individualization of class inequality; and the political economy of risk-class. This paper then concludes by critically evaluating Beck’s more recent, partial acknowledgement of risk inequalities by arguing that there are significant limitations in his account of class, but that his work continues to offer a valuable opportunity to inspire future work on class and inequality.     

The ‘competition–stability/fragility’ nexus: A comparative analysis of Islamic and conventional banks

The ‘competition–stability/fragility’ nexus is one of the more debated issues in the banking literature. However, while there is ample evidence concerning the relationship between competition and stability/fragility in different countries and regions, no prior study investigates this in the context of Islamic and conventional banks. We do this using data on both types of banks drawn from 16 developing economies over the period 2000–12. We measure the lack of competition using the Lerner index, and stability using both accounting-based measures, comprising the Z-score and the nonperforming loan ratio, and market-based measures, including Merton's distance to default. We employ panel vector autoregression and two-stage quantile regression to estimate the relationship. Our results lend support to the competition–fragility hypothesis in both Islamic and conventional banks. We also find the magnitude of the market power effect on stability is greater for conventional banks than Islamic banks. Lastly, banks in the median quantile of stability have a greater ability to reduce credit risk through gaining market power than banks in the lower and upper quantiles.     

Large shareholders’ power and the quality of corporate governance: An analysis of Brazilian firms

This paper analyzes the incentives of large shareholders to implement the corporate governance system that favors their interests within a framework of highly concentrated ownership and poor legal protection for investors. A metric for corporate governance based on the fulfillment of non-mandatory rules of good corporate governance is used. System GMM (Generalized Method of Moments) estimates for a balanced panel data of Brazilian firms reveal that the ownership concentration is detrimental to corporate governance quality and the quality of board composition. In accordance with the expropriation effect on principal-principal agency conflicts, by weakening the corporate governance system and board composition, large controlling shareholders may use private benefits of control. As proposed by the substitution effect, in a complementary way, controlling shareholders may renounce strong boards and directly perform management monitoring, mitigating agency conflicts with managers. Finally, the ability of large shareholders other than the main blockholder is not enough to contest his/her power to shape the corporate governance system. The work provides evidence of the prominence of the principal–principal agency problem in an emerging market, by analyzing the effect of ownership concentration over the quality of the corporate governance system, and also that other large non-controlling shareholders are not able to contest the power of the main blockholder.     

Under threat. Lay thinking about terrorism and the three‐dimensional model of personal involvement: a social psychological analysis

Global ‘standards’ in social security are set by the UN Specialist Agency, the International Labour Organization (ILO). The ILO ‘Standards’ prioritize one model of social security system in particular; namely, contributions‐financed social insurance. Specifically, social insurance systems are designed to mitigate the negative impacts of formal labour market risks. Accordingly, social security systems typically fail to address adequately many informal labour market and nonlabour market risks. The inherently limited focus of social protection provided by many social security systems is recognized to be of major concern for least developed countries (LDCs) in particular for whom western‐centric definitions of life‐cycle risk remain largely inappropriate for the majority. This realization has led the World Bank to experiment with a reconceptualized definition of social protection; Social Risk Management (SRM). Seeking to encourage wider debate across the multidisciplinary field of risk management research, this article outlines critically the tenets underpinning SRM and highlights the policy limitations of this innovative World Bank venture in two key respects. First, by outlining the likely policy implications of World Bank approaches to social protection for global social security standards and practice. Second, by questioning the short‐term contribution that SRM can make to poverty reduction, not least amongst the elderly poor.     

A multivariate analysis of the determinants of Moody’s bank financial strength ratings

In 1995 Moody’s Investors Services inaugurated a new rating service, bank financial strength ratings (BFSRs), that assesses the safety and soundness of banks in over 50 countries. Our study sets out to do some preliminary investigations of this new type of credit rating. We develop logistic regression models to help explain or predict BFSRs. Using bank-specific accounting and financial data we are able to correctly classify or predict BFSRs. These fundamental variables cover the dimensions of risk, loan provision ratios, and profitability. Of the three, loan provisions is the most important factor, followed by risk, and then profitability. Country risk ratings do not appear to be significant explanators of BFSRs. We also find that traditional debt ratings accurately classify BFSRs and this raises the question of whether BFSRs add incremental information. The paper also highlights future directions for our research. One such area is to examine how well BFSRs predict banking crises such as the credit problems currently affecting Asia and Latin America.     

On the relationship between the number of a broker’s real estate listings and transaction outcomes

This paper documents that sellers who employ brokerage offices that list a large number of properties (“active brokerages”) obtain higher selling prices, smaller negotiated discounts from the corresponding list prices, and shorter times on the market for their listed properties. Sellers who employ active brokerages list their properties at prices that are closer to our hedonic model’s predicted prices. Interestingly, properties that are listed at discounts relative to their predicted prices are snapped up more quickly only if they are associated with brokerages that list a relatively small number of properties. In addition, properties listed by active brokerages are less likely to be listed “as is” and are more likely to have their defects repaired prior to being listed. Moreover, because the efficacy of brokerage services varies across brokerage offices, the results also suggest that the use of an indicator variable for the use of brokerage services is not sufficient to capture the complete impact of the use of a real estate broker on transaction outcomes. In addition, the Appendix discusses the concern for potential endogeneities between the number of brokerage listings and transaction outcomes. It documents that the Durban–Wu–Hausman test indicates that exogeneity cannot be rejected.     

Housing Starts in Canada, Japan, and the United States: Do Forecasters Herd?

Recent price trends in housing markets may reflect herding of market participants. A natural question is whether such herding, to the extent that it occurred, reflects herding in forecasts of professional forecasters. Using survey data for Canada, Japan, and the United States, we did not find evidence of forecaster herding. On the contrary, forecasters anti-herd and, thereby, tend to intentionally scatter their forecasts around the consensus forecast. The extent of anti-herding seems to vary over time. For Canada and the United States, we found that more pronounced anti-herding leads to lower forecast accuracy.     

Can both Bitcoin and gold serve as safe-haven assets? — A comparative analysis based on the NARDL model

This paper uses the nonlinear autoregressive distributed lag (NARDL) model to analyze the different performances of Bitcoin and gold under the impacts of three different uncertainties, namely global economic policy uncertainty (GEPU), US stock market volatility index (VIX) and the CBOE crude oil ETF volatility index (OVX). The results indicate that faced with shocks of different uncertainties, Bitcoin is unable to serve as a safe-haven, while gold can hedge against uncertainties to varying degrees. Moreover, the three types of uncertainties have asymmetric impacts on the prices of Bitcoin and gold respectively. The decrease of uncertainties has a greater impact on Bitcoin price than the increase, while the increase of uncertainties has a greater impact on gold price than the decrease. It suggests that investors are cautious and optimistic about Bitcoin, and gold remains unanimously recognized as the traditional safe-haven.     

Banks’ external financing costs and the bank lending channel: Results from a SVAR analysis

We analyze the dynamic response of banks’ financing costs to structural, macroeconomic shocks, which we identify by imposing combinations of zero and sign restrictions on impulse responses. For the estimation we combine US bank balance sheet data from the Call reports with macroeconomic aggregates over the period from 1984Q1 to 2007Q3. We find that banks’ financing costs mainly respond to monetary policy and aggregate demand shocks. Furthermore, funding costs of undercapitalized and illiquid banks increase more strongly after a contractionary monetary policy shock as compared to better capitalized and more liquid banks. These results provide support for the view that banks’ financing costs represent an important element of the bank lending channel.     

Political competitiveness and the private–public structure of public expenditure: a model and empirics for the Indian States

Studies of government size usually try to identify the factors that explain what parts of economic activity are brought within the public sector and what parts are left strictly in private hands. Modern governments are now so large that the question of what determines the private/public composition, or privateness, of public expenditure is of comparable importance for understanding the role of government in society. In this paper, we use a model of the composition of public budgets to uncover the importance of electoral competitiveness and other factors in the evolution of the privateness of public expenditure across the Indian states. These states vary widely in their socioeconomic characteristics while sharing a common political heritage based on parliamentary government. New measures of public expenditure on private targetable goods and of electoral competitiveness at the Indian state level accompany the paper along with a primer on Indian public finance accounting practices in an Online Appendix. The empirical analysis shows that the degree of privateness in India’s more developed states falls substantially with greater political competition and with rising incomes, while in the less developed states it responds more weakly to these key factors and in some cases even inversely.

     

A Time Series Analysis of Economical Phenomena in Japan’s Lost Decade (1): Determinacy Property of the Velocity of Money and Equilibrium Solution

The extended velocities of money given by the ratio of NGDP and M₂+CD in Japan’s lost decade are analyzed through the non-linear time series analysis based upon the theory of KM₂O-Langevin equations. The time series of logarithmic returns of some extended velocities of money are judged to have a determinacy property in a specified time domain whose final time coincides with the time 1999q1 when the Bank of Japan took the zero interest rate policy. This implies that there exists a stochastic process with the time series stated above its realization and it satisfies certain functional relation. This gives a meaning from a viewpoint of time series analysis that the velocity of money can be regarded as an equilibrium solution of the demand and the supply between the goods market and the money market.