The International Journal of Accounting
We test for differences in financial reporting quality between companies that are required to file
periodically with the SEC and those that are exempted from filing reports with the SEC under
Rule 12g3-2(b). We examine three earnings quality measures: conservatism, abnormal accruals,
and the predictability of earnings. Our results, for all three measures, show improved financial
reporting quality for companies that file with the SEC than for those that are exempt from filing
requirements; this difference in financial reporting quality can lead investors to question why the
SEC allows the exemption (and is currently discussing expanding the exemption) when one of
the primary goals of the SEC is the protection of US investors.
New Perspectives Quarterly
Three years into the protracted Eurocrisis “all choices are ugly,” as former British prime minister Tony Blair comments. Indeed, the high cost of bad options is prompting some to question whether Europe is worth saving the euro.
Along with Tony Blair, the former Italian prime minister Romano Prodi as well as two of the best financial minds around—Nouriel Roubini and Mohamed el-Erian—warn of the dire consequences of a euro breakup. One of France's most prominent philosophers, André Glucksmann, wonders whether the idea of a united Europe—a reaction to the horrors of World War II—can hold everyone together in the future when peace is the norm.
While China remains the worlds factory, some companies are starting to realize that the extraordinary margins they once enjoyed are steadily being eroded. Why? The rising costs of raw materials and labor only partially explain why a growing number of companies are opting to bring back part or all of the production that they had previously outsourced to China. More likely, the disjointed and inefficient supply chain between China and Europe is the bigger culprit. A study undertaken by the Port of Barcelona Chair of Logistics at the China Europe International Business School (CEIBS) in Shanghai analyzed the roles and relationships between all of the key agents and actors in this strategically important supply chain. This article highlights which aspects could be improved, and the authors recommend ways to enhance efficiency, in order for business people doing trade with China to reap the rewards without the headaches.
The perspectives of the expert contributors reflect the strong growth of research on the topic, as accounting is increasingly recognised as an important factor in development. The book draws commentary and analyses together to inform future research, practice and policy and raises awareness of the actual and potential role of accounting in formulating and executing development policy.
In this study, we analyze two new potential determinants for mitigating fraud committed by firms: institutional investors and political connection. The role of institutional investors in the effective monitoring of firm management has also been well established and we in turn observe that firms with a large proportion of institutional investors have lower incidences of corporate fraud. The importance of political connection for enterprise in both developed and emerging markets such as the United States and China has also been established by prior studies. We find in this paper that it is possible to identify another positive effect on enterprise in that political connection could reduce incidences of corporate fraud, thus providing value to firms. We further find that political connection plays more pronounced role in reducing the incidence of regulatory enforcement against non-state owned enterprises in weaker legal environments, while institutional ownership plays a more important role in reducing the incidence of regulatory enforcement against state owned enterprises in weaker legal environments.
This paper studies how culture affects economic behavior. We explore the reactions of investors, governments and entrepreneurs to the publication of the Hurun Rich List to study the impact of egalitarianism within Chinese Confucian culture. We find that when the Rich List is announced, investors react negatively to the companies controlled by the listed entrepreneurs and their market values drop significantly in the following three years and the government is reluctant to assist listed entrepreneurs and their companies, and even monitors them more closely. Furthermore, listed entrepreneurs are far more likely to be investigated, arrested and charged than other entrepreneurs. In addition, they tend to conceal profits through negative earnings management to avoid public attention. Finally, we observe that the foregoing negative reactions are more pronounced for firms involved in rent-seeking industries and with lower charitable donations.