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on Accounting and Auditing |
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Issue of 2019‒09‒02
four papers chosen by |
| By: | Beaver, William H; Cascino, Stefano; Correia, Maria; McNichols, Maureen F. |
| Abstract: | Using a large sample of business groups from more than one hundred countries around the world, we show that group information matters for parent and subsidiary default prediction. Group firms may support each other when in financial distress. Potential group support represents an off-balance sheet asset for the receiving firm and an off-balance sheet liability for the firm offering support. We find that subsidiary information improves parent default prediction over and above group-level consolidated information possibly because intra-group exposures are netted out upon consolidation. Moreover, we document that the improvements in parent default prediction are decreasing in the extent of parent-country financial reporting transparency which suggests that within-group information matters most when consolidated financial statements are expected to be of lower quality. We also show that parent and other group-firms’ default risk exhibits predictive power for subsidiary default. Lastly, we find that within-group information explains cross-sectional variation in CDS spreads. Taken together, our findings contribute to prior literature on default prediction and have direct relevance to investors, credit-rating agencies and accounting regulators. |
| Keywords: | Default prediction; Business groups; Consolidation; Financial reporting transparency; Credit spreads |
| JEL: | G12 G14 G15 G33 M41 |
| Date: | 2019–05–08 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:88139&r=all |
| By: | Atanasov, Atanas |
| Abstract: | Contemporary economic development leaves its distinctive trait and changes the way companies are perceived and valued in general. The purpose of this paper is to review the scope of the options for applying financial and nonfinancial reporting as well as to analyze and justify the need to introduce unified disclosure practices for non-financial information and how the management of the entity communicates this information with interested parties. We believe that the major part of the disclosures of non-financial information should be “structured” and appropriately linked to the entity's financial performance as part of a single integrated activity report. |
| Keywords: | non-financial reporting (NFR), financial reporting, integrated reporting (IR), accounting regulation |
| JEL: | M0 M41 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:95565&r=all |
| By: | Cheng, Gong; Lennkh, Rudolf Alvise |
| Abstract: | This paper documents the diverse financial structures – including capital structures and funding strategies – of Regional Financing Arrangements (RFAs) and offers an analysis of RFAs’ lending capacity from a statutory, accounting and credit rating perspective. Using credit rating agencies’ methodologies, the paper presents the dynamic relationship between RFAs’ financial structures, the support from their member states and their resulting creditworthiness. A stylized model is developed to demonstrate how the relative size of an institution’s paid-in compared with its callable capital, together with its member states’ support, could have an impact on the overall credit rating and lending capacity of an RFA. This paper contributes to the growing policy discussions on the heterogeneity of RFAs and their rising importance in the Global Financial Safety Net. |
| Keywords: | Regional Financing Arrangements, IMF, Credit rating, Capital, Lending Capacity, Global Financial Safety Net |
| JEL: | F33 F34 F53 F55 G24 |
| Date: | 2018–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:95754&r=all |
| By: | Thomä, Jörg; Zimmermann, Volker |
| Abstract: | In the present paper, various groups of innovating German SMEs are empirically identified according to their use (or non-use) of in-house R&D, their reliance on external sources of knowledge, and the degree of internal interactive learning that they employ.In order to account for non-R&D innovation activities, we apply the STI/DUI concept as a theoretical starting point. This distinguishes between (1) the science, technology, innovation (STI) mode with its strong emphasis on formal processes of in-house R&D and (2) the doing, using, interacting (DUI) mode with its focus on experience-based knowledge and interactive learning. On this basis, the empirical results indicate that three groups associated with different modes of learning and innovation exist within the German SME sector: the supplier-dependent DUI group, the customer-oriented DUI group and the STI/DUI group. The corresponding findings confirm that SMEs innovate differently depending on the specificities of their knowledge environments. In order to evaluate this in terms of innovation policy, we examine how these learning modes among innovating SMEs relate to overall company performance. Our main observation is that each learning mode is likely to positively affect performance, at least to some degree. There isno differ-ence in economic performance between the three learning modes as long as non-high-growth SMEs are considered. Hence, in large parts of the SME sector, it is economically rational to choose a non-R&D-oriented mode of learning and innovation. The paper con-cludes with some policy implications of these findings. |
| Keywords: | Modes of learning,R&D,Non-R&D innovation,Interactive learning,SMEs |
| JEL: | M21 O32 O38 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifhwps:172019&r=all |