Related party transactions, corporate governance and accounting quality in Greece

Related Party Transactions (RPTs) have been considered recently in research as a phenomenon which is associated with several financial scandals, shareholder’s wealth expropriation and is used for earnings management (EM) purposes by the reporting entity. This study aimed to: (i) assess the extent of EM and RPTs i Greece; (ii) investigate the association between RPTs and EM; (iii) investigate the association between corporate governance and EM; (iv) investigate the association between corporate governance and RPTs; and (v) investigate the impact of RPTs on Accounting Quality. Greece was selected for this study as it provides a special context due to poor investor protection, high levels of EM and unhealthy financial reporting environment where wealth extraction and EM are more likely. This study examines the relationship between earnings management and RPTs for the firms listed on the Athens Stock Exchange (ASE). Moreover, it examines the association between earnings management and corporate governance activities. The results show a negative and significant relationship between EM and RPTs. This finding does not support the conclusion that RPTs are necessarily conducted to mask fraud or the extraction of firm resources. The results show that firms audited by one of the Big 4 audit firms are associated with less EM. Additionally, the study investigates the relationship between RPTs and accounting quality. The findings show that that there is no significant difference in accounting quality between RPTs firms and non-RPTs firms. This study contributes to the EM, accounting quality and corporate governance literatures. This research suggests recommendations for researchers, data providers and policy makers on ways to reduce the problems associated with RPTs.

Emissziós jogok közgazdasági relevanciája és számviteli leképezése (Economic relevancy and accounting mapping of emission rights)

A cikk bemutatja, hogy az emissziós jogok mérleg- és beszámoló-képességi kritériumai milyen leképezést tesznek lehetővé a jelenleg érvényes Nemzetközi Pénzügyi Beszámolási Standardokban (IFRS, International Financial Reporting Standards). A vizsgálat fókuszában az üzemeltető áll, aki az Európai Unió kibocsátás-kereskedelmi rendszerének hatálya alá tartozik, azaz ipari tevékenysége folytán szén-dioxiddal szennyezi a Föld légterét. Az üzemeltető mint az emissziós jog tulajdonosa jelenik meg. A cikk megvizsgálja mindazokat a folyamatokat, melynek eredményeképpen birtokolhatja ezeket az egységeket, valamint azt, hogy az IFRS-ek milyen lehetőséget nyújtanak a különböző forrásból származó jogosultságok értékelésére. / === / The author presents that accounting and report ability criteria of the emission rights what mapping allows in the current International Financial Standards. The study focuses on the operator, who is the subject of the European Union Emissions Trading Scheme, whose industrial activities pollute with carbon dioxide to the earth’s atmosphere. The operator, as the owner of emission rights is displayed. This article examines those processes, which resulted in these units may be owned, and that what possibility is provided by IFRSs to evaluate rights from different sources.

Hiring Schedule: Deans Office, Finance and Administration, Teaching Faculty Y1 and Y2, Clinical Sciences

A hiring schedule for the Dean's Office based on a three year plan.

Islamic Infrastructure Finance and Sustainable Development Goals

This was a very interesting discussion with the pioneers of Islamic finance regarding infrastructure finance and the sustainable development goals.

Essays in International Finance and Macroeconomics

Thesis (Ph.D.)--University of Washington, 2016-08

Interbank market integration under asymmetric information

We argue that the main barrier to an integrated international interbankmarket is the existence of asymmetric information between differentcountries, which may prevail in spite of monetary integration or successfulcurrency pegging. In order to address this issue, we study the scope forinternational interbank market integration with unsecured lending whencross-country information is noisy. We find not only that an equilibriumwith integrated markets need not always exist, but also that when it does,the integrated equilibrium may coexist with one of interbank marketsegmentation. Therefore, market deregulation, per se, does not guaranteethe emergence of an integrated interbank market. The effect of a repo marketwhich, a priori, was supposed to improve efficiency happens to be morecomplex: it reduces interest rate spreads and improves upon the segmentationequilibrium, but\ it may destroy the unsecured integrated equilibrium, sincethe repo market will attract the best borrowers. The introduction of othertransnational institutional arrangements, such as multinational banking,correspondent banking and the existence of "too-big-to-fail" banks mayreduce cross country interest spreads and provide more insurance againstcountry wide liquidity shocks. Still, multinational banking, as theintroduction of repos, may threaten the integrated interbank marketequilibrium.

Advertising bans

I show that an advertising ban is more likely to increase -- ratherthan decrease -- total consumption when advertising does not bring abouta large expansion of market demand at given prices and when it increasesproduct differentiation (thus allowing firms to command higher prices). Inthis case, the main impact of a ban on advertising is to reduce equilibriumprices and thus increase demand. I argue that this is more likely tohappen in mature industries where consumer goods are ex--ante (i.e.without advertising) similar and advertising is of the `persuasive' type.The ban is the more likely to increase profits of the firms the weakerthe ability of advertising to expand total demand and the less advertisingserves to induce product differentiation.

The credit ratings game

The spectacular failure of top-rated structured finance products has broughtrenewed attention to the conflicts of interest of Credit Rating Agencies (CRAs). We modelboth the CRA conflict of understating credit risk to attract more business, and the issuerconflict of purchasing only the most favorable ratings (issuer shopping), and examine theeffectiveness of a number of proposed regulatory solutions of CRAs. We find that CRAs aremore prone to inflate ratings when there is a larger fraction of naive investors in the marketwho take ratings at face value, or when CRA expected reputation costs are lower. To theextent that in booms the fraction of naive investors is higher, and the reputation risk forCRAs of getting caught understating credit risk is lower, our model predicts that CRAs aremore likely to understate credit risk in booms than in recessions. We also show that, due toissuer shopping, competition among CRAs in a duopoly is less efficient (conditional on thesame equilibrium CRA rating policy) than having a monopoly CRA, in terms of both totalex-ante surplus and investor surplus. Allowing tranching decreases total surplus further.We argue that regulatory intervention requiring upfront payments for rating services (beforeCRAs propose a rating to the issuer) combined with mandatory disclosure of any ratingproduced by CRAs can substantially mitigate the con.icts of interest of both CRAs andissuers.

An overall perspective on banking regulation

We survey the theory of banking regulation from the general perspectiveof regulatory theory. Starting by considering the different justificationsof financial intermediation, we proceed to identify the market failuresthat make banking regulation necessary. We then succinctly compare how theanalysis of regulation compares in the domains of banking and industrialorganization. Finally we analyse why a safety net for banks could be partof banking regulation and how it can be structured in an efficient way.

Taming SIFIs

We model a Systemically Important Financial Institution (SIFI) that is too big(or too interconnected) to fail. Without credible regulation and strong supervision,the shareholders of this institution might deliberately let its managers take excessiverisk. We propose a solution to this problem, showing how insurance againstsystemic shocks can be provided without generating moral hazard. The solutioninvolves levying a systemic tax needed to cover the costs of future crises and moreimportantly establishing a Systemic Risk Authority endowed with special resolutionpowers, including the control of bankers' compensation packages during crisisperiods.

Credit lines: The other side of corporate liquidity

In this paper we offer the first large sample evidence on the availability and usage ofcredit lines in U.S. public corporations and use it to re-examine the existing findings oncorporate liquidity. We show that the availability of credit lines is widespread and thataverage undrawn credit is of the same order of magnitude as cash holdings. We test thetrade-off theory of liquidity according to which firms target an optimum level of liquidity,computed as the sum of cash and undrawn credit lines. We provide support for the existenceof a liquidity target, but also show that the reasons why firms hold cash and credit linesare very different. While the precautionary motive explains well cash holdings, the optimumlevel of credit lines appears to be driven by the restrictions imposed by the credit line itself,in terms of stated purpose and covenants. In support to these findings, credit line drawdownsare associated with capital expenditures, acquisitions, and working capital.

Managerial incentives for mergers

We study managerial incentives in a model where managers take notonly product market but also takeover decisions. We show that the optimalcontract includes an incentive to increase the firm's sales, under bothquantity and price competition. This result is in contrast to the previousliterature and hinges on the fact that with a more aggressive manager rivalfirms earn lower profits and are willing to sell out at a lower price. \\However, as a side--effect of such a contract, the manager might take overmore rivals than would be profitable.