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on Accounting and Auditing |
| By: | Ghiselli Ricci, Roberto; Magni, Carlo Alberto |
| Abstract: | This paper presents an axiomatization of residual income, aka excess profit, and illustrates how it may univocally engenders fixed-income or variable-income assets. In the first part it is shown that, depending on the relations between excess profit and the investor's excess wealth, a well-specified theory of residual income is generated: one is the standard theory, which historically traces back to Hamilton (1777) and Marshall (1890) and is a deep-rooted notion in economic theory, finance, and accounting. Another one is the systemic value added or lost-capital paradigm: introduced in Magni (2000, 2003), the theory is enfolded in Keynes's (1936) notion of user cost and is naturally generated by an arbitrage-theory perspective. In the second part, the paper reverts the usual analysis: instead of computing residual incomes profits from a pattern of cash flows, residual incomes are fixed first to derive vectors of cash flows. It is shown that variable- or fixed-income assets may be constructed on the basis of either theory starting from pre-determined growth rates for excess profit. In particular, zero-coupon bonds and coupon bonds traded in a capital market are shown to be deducted as equilibrium vectors of residual-income-based assets. |
| Keywords: | Residual income; excess profit; capital; arbitrage; bond |
| JEL: | D53 G12 M41 G31 G00 M21 C60 |
| Date: | 2009–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:14438&r=acc |
| By: | Fabio Panetta (Bank of Italy); Paolo Angelini (Bank of Italy); Ugo Albertazzi (Bank of Italy); Francesco Columba (Bank of Italy); Wanda Cornacchia (Bank of Italy); Antonio Di Cesare (Bank of Italy); Andrea Pilati (Bank of Italy); Carmelo Salleo (Bank of Italy); Giovanni Santini (Bank of Italy) |
| Abstract: | This paper examines private equity and venture capital in Italy. The first part looks at the main features of the Italian market and its recent evolution; the second part considers the results of a survey of firms and intermediaries designed to gather information regarding contract features and the characteristics of investee firms and investing intermediaries. Finally, the paper discusses the main obstacles to the development of the sector using information from the survey of intermediaries. |
| Keywords: | pro-cyclicality, financial accelerator, capital requirements, leverage, accounting standards, incentives |
| JEL: | E5 G1 G2 G3 M4 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_44_09&r=acc |
| By: | Laura Márquez-Ramos (Department of Economics and Institute of International Economics, Universitat Jaume I, Castellón (Spain)) |
| Abstract: | This paper focuses on the importance of accounting harmonisation on foreign activities from a macroeconomic perspective. International Financing Reporting Standards (IFRS) adoption is considered to reduce information costs among countries and is, therefore, an important way to encourage international trade flows and investments. Moreover, heterogeneity in trade and FDI determinants among different European countries (well-established capitalist countries in the "West" and post-communist countries in the "East") is analysed since transition economies present a lower development of market institutions and, therefore, of financial systems. The effect of IFRS adoption is analysed from a gravity framework. The fixed-effects vector decomposition (FEVD) procedure, recently proposed by Plumper and Troeger (2007), is used to estimate panel data characterised by the presence of time invariant variables, or variables which vary rarely in time. The results provide evidence that benefits exist in terms of trade and FDI when IFRS are adopted. Furthermore, the positive effect of adopting uniform accounting standards on foreign activities in Europe is higher in transition economies. Finally, this effect also differs in countries because of behavioural factors such as unfamiliarity aversion.This paper was presented at the 18th International Conference of the International Trade and Finance Association, meeting at Universidade Nova de Lisboa, Lisbon, Portugal, May 23, 2008.Keywords: IFRS, international trade, FDI, transition countries, FEVD. JEL classification: F40 |
| Date: | 2008–08–13 |
| URL: | http://d.repec.org/n?u=RePEc:bep:itfapp:1124&r=acc |
| By: | Beatriz García Osma (Lancaster University); Encarna Guillamón Saorín (Universidad Carlos III de Madrid) |
| Abstract: | We study the association between corporate governance and impression management in annual results press releases (ARPRs). Press releases constitute a timely vehicle to communicate firm performance to third parties. However, oftentimes, managers provide self-serving disclosures that attempt to distort readers¿ perceptions of corporate achievements. Corporate governance mechanisms actively monitor managerial disclosures, improving firm transparency. Thus, we predict that strong governance (i) increases firm voluntary release of ARPRs, and (ii) reduces impression management in those ARPRs. Tests are based on a sample of Spanish firms. The results confirm that strong governance firms are more likely to release an ARPR. In particular, board independence and the existence of remuneration and audit committees significantly determine this type of voluntary disclosure. We also show that strong governance limits impression management practices, consistent with governance monitoring effectively reducing self-serving disclosures by management. Our evidence is consistent with impression management being associated to firm news, suggesting that these practices respond, at least partly, to informative motivations. En este trabajo investigamos la asociación entre el gobierno corporativo y la manipulación de la presentación de la información en las notas de prensa. Las notas de prensa son uno de los medios que usan las empresas para comunicarse con terceras partes. A veces, las empresas revelan información con la intención de mostrar una imagen sesgada de la empresa. El gobierno corporativo es uno de los mecanismos que controlan la manipulación en la revelación de información y mejora la transparencia. Nuestras expectativas son que empresas con mejor gobierno corporativo (i) incrementen la revelación voluntaria y (2) muestren menos manipulación de la presentación de información en sus notas de prensa. Hemos analizado empresas Españolas cotizando en la Bolsa de Madrid. En particular, hemos encontrado que la independencia de los directivos y la existencia de comités de remuneración y de auditoria determinan el tipo de revelación de información voluntaria. Estos resultados confirman el papel de control que ejerce el gobierno corporativo para reducir efectivamente la presentación engañosa de la información. Nuestros resultados también muestran que la manipulación esta relacionada con las noticias de las empresas, lo que sugiere que estas practicas responden, al menos en parte, a razones informativas. |
| Keywords: | Gobierno corporativo, manipulación de la presentación, revelación voluntaria Corporate governance, impression management, voluntary disclosure |
| JEL: | G10 G38 M41 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:ivi:wpasec:2009-02&r=acc |
| By: | Cécile Carpentier; Douglas Cumming; Jean-Marc Suret |
| Abstract: | We analyze the economic consequences of disclosure and regulation within a context of significant information asymmetry and lenient regulation. In Canada, firms can enter the stock market at a pre-revenue stage, using full disclosure (initial public offerings, IPOs) or the minimal disclosure allowed by reverse mergers (RMs). Our sample is a set of 1,455 IPOs and RMs between 1993 and 2003. Controlling for several dimensions, including self-selection, we find that the level of disclosure and regulation significantly influence the value and long-run performance of newly listed firms. Overall, our results suggest that disclosure has a significant economic impact. These results are consistent with theories suggesting that a commitment by a firm to increase its disclosure level lowers the information asymmetry component of the cost of capital. The results are also consistent with the hypothesis that increased disclosure reduces the heterogeneity of expectations and mispricing. <P>Nous analysons les conséquences économiques des règles de divulgation et d’inscription en Bourse dans un contexte où l’asymétrie informationnelle est grande et la réglementation des valeurs mobilières peu contraignante. L’échantillon porte sur 1 455 émissions initiales et prises de contrôle inversées, effectuées entre 1993 et 2003. Au Canada, les entreprises peuvent accéder au marché boursier avant même de percevoir des revenus, en effectuant soit un appel public à l’épargne qui implique une divulgation complète, soit une prise de contrôle inversée comportant une divulgation minimale. En contrôlant pour diverses dimensions, incluant l’auto-sélection du mode d’entrée, nous montrons que le niveau de divulgation et de réglementation auquel se soumet l’émetteur influence de façon significative la valeur et la performance à long terme des entreprises nouvellement inscrites en Bourse. Nos résultats indiquent que la divulgation a un effet économique important, et sont en accord avec les propositions qui lient l’augmentation de la divulgation à la réduction de l’asymétrie et du coût du capital. Ils sont également cohérents avec l’hypothèse qui veut que l’augmentation de l’information réduit l’hétérogénéité des anticipations et les erreurs d’évaluation. |
| Keywords: | Disclosure, Securities Regulation, Initial Public Offerings, Reverse Mergers, Listing Standards , Divulgation, réglementation des valeurs mobilières, prise de contrôle inversée, norme minimales d’inscription en Bourse |
| JEL: | G24 G32 G14 G1 |
| Date: | 2009–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2009s-06&r=acc |
| By: | Avner Offer (All Souls College, Oxford University) |
| Abstract: | The Meade and Stone approach to national accounting (first published for the UK in 1941) eventually provided the template for the United Nations System of National Accounts. Feinstein’s historical national accounts for the UK developed out of this project and built on its earlier contributions. He was the foremost constructor of historical accounts in the UK, and shared with other national accounting pioneers a pragmatic approach and a bias against neo-classical general equilibrium. He made important contributions to growth accounting and the measurement of standards of living, and also left his mark as a teacher and as an academic leader. His commitment to racial equality in South Africa preceded his academic career, and continued after his formal retirement. |
| Date: | 2008–06–02 |
| URL: | http://d.repec.org/n?u=RePEc:nuf:esohwp:_070&r=acc |
| By: | Escaith, Hubert |
| Abstract: | Vertical integration of production processes at international level and the resulting fragmentation of the value chains increasingly question the relevance of traditional trade indicators. Intermediate productions are increasingly offshored within these global value chains, giving place to what is known as "trade in tasks". The paper presents some experiences of alternative measures of international trade in terms of the value added generated by this process. The strength with which the concept of value added has imposed itself as the yardstick for the measurement of international trade has very fruitful analytical implications in the context of national accounts. A second part shows how the international statistical system has responded to the obvious risk of obsolescence by launching a series of joint initiatives in order to adapt all the instruments of the statistician’s “tool-box”: classifications, balance of payments and national accounts manuals. Conclusions highlight the remaining challenges, as well as the divergences that persist among the groups of experts in relation to the proposed reforms and their normative and practical impacts. |
| Keywords: | vertical integration; trade in tasks; national accounts |
| JEL: | O24 E01 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:14454&r=acc |