Fair values and audit fees: Evidence from asset revaluations in Australia

This paper examines the association between the level of audit fees paid and asset revaluations, one use of fair value accounting. This Australian study also investigates attributes of asset revaluations and the association with the level of audit fees paid. We find that firms choosing the revaluation model incur higher audit fees than those that chose the cost model; asset revaluations made by directors lead to the firm incurring higher audit fees than for those made by external independent appraisers; and revaluation of investment properties leads to lower audit fees. The findings suggest that asset revaluations can result in higher agency costs and audit fees vary with the reliability of the revaluations and the class of assets being revalued.

The determinants of fair value measurements of banks: International evidence

The purpose of this study is to investigate the accounting choice decisions of banks to employ Level 3 inputs in estimating the value of their financial assets and liabilities. Using a sample of 146 bank-year observations from 18 countries over 2009-2012, this study finds banks’ incentives to use Level 3 valuation inputs are associated with both firm-level and country-level determinants. At the firm-level, leverage, profitability (in term of net income), Tier 1 capital ratio, size and audit committee independence are associated with the percentage of Level 3 valuation inputs. At the country-level, economy development, legal region, legal enforcement and investor rights are also associated with the Level 3 classification choice. Lastly, ‘secrecy’, the proxy for culture dimensions and values, is found to be positively associated with the use of Level 3 valuation inputs. Altogether, these findings suggest that banks use the discretion available under Level 3 inputs opportunistically to avoid violating debt covenants limits, to increase earnings and manage their capital ratios. Results of this study also highlight that corporate governance quality at the firm-level (e.g. audit committee independence) and institutional features can constrain banks’ opportunistic behaviors in using the discretion available under Level 3 inputs. The results of this study have important implications for standard setters and contribute to the debate on the use of fair value accounting in an international context.

The determinants of fair value measurements of banks: International evidence

The purpose of this study is to investigate the accounting choice decisions of banks to employ Level 3 inputs in estimating the value of their financial assets and liabilities. Using a sample of 146 bank-year observations from 18 countries over 2009-2012, this study finds banks’ incentives to use Level 3 valuation inputs are associated with both firm-level and country-level determinants. At the firm-level, leverage, profitability (in term of net income), Tier 1 capital ratio, size and audit committee independence are associated with the percentage of Level 3 valuation inputs. At the country-level, economy development, legal region, legal enforcement and investor rights are also associated with the Level 3 classification choice. Lastly, ‘secrecy’, the proxy for culture dimensions and values, is found to be positively associated with the use of Level 3 valuation inputs. Altogether, these findings suggest that banks use the discretion available under Level 3 inputs opportunistically to avoid violating debt covenants limits, to increase earnings and manage their capital ratios. Results of this study also highlight that corporate governance quality at the firm-level (e.g. audit committee independence) and institutional features can constrain banks’ opportunistic behaviors in using the discretion available under Level 3 inputs. The results of this study have important implications for standard setters and contribute to the debate on the use of fair value accounting in an international context.

The usefulness of fair values in improving the predictive ability of earnings: Evidence from international banks

One of the objectives of general-purpose financial reporting is to provide information about the financial position, financial performance and cash flows of an entity that is useful to a wide range of users in making economic decisions. The current focus on potentially increased relevance of fair value accounting weighed against issues of reliability has failed to consider the potential impact on the predictive ability of accounting. Based on a sample of international (non-U.S.) banks from 24 countries during 2009-2012, we test the usefulness of fair values in improving the predictive ability of earnings. First, we find that the increasing use of fair values on balance-sheet financial instruments enhances the ability of current earnings to predict future earnings and cash flows. Second, we provide evidence that the fair value hierarchy classification choices affect the ability of earnings to predict future cash flows and future earnings. More precisely, we find that the non-discretionary fair value component (Level 1 assets) improves the predictability of current earnings whereas the discretionary fair value components (Level 2 and Level 3 assets) weaken the predictive power of earnings. Third, we find a consistent and strong association between factors reflecting country-wide institutional structures and predictive power of fair values based on discretionary measurement inputs (Level 2 and Level 3 assets and liabilities). Our study is timely and relevant. The findings have important implications for standard setters and contribute to the debate on the use of fair value accounting.

Revisiting Coptotermes (Isoptera: Rhinotermitidae): a global taxonomic road map for species validity and distribution of an economically important subterranean termite genus

Coptotermes Wasmann (Isoptera: Rhinotermitidae) is one of the most economically important subterranean termite genera and some species are successful invaders. However, despite its important pest status, the taxonomic validity of many named Coptotermes species remains unclear. In this study, we reviewed all named species within the genus and investigated evidence supporting the validity of each named species. Species were systematically scrutinized according to the region of their original description: Southeast Asia, India, China, Africa, the Neotropics, and Australia. We estimate that of the currently 69 named species described by accepted nomenclatural rules, only 21 taxa have solid evidence for validity, 44 names have uncertain status, and the remaining species names should be synonymized or were made unavailable. Species with high degrees of invasiveness may be known under additional junior synonyms due to independent parochial descriptions. Molecular data for a vast majority of species are scarce and significant effort is needed to complete the taxonomic and phylogenetic revision of the genus. Because of the wide distribution of Coptotermes, we advocate for an integrative taxonomic effort to establish the distribution of each putative species, provide specimens and corresponding molecular data, check original descriptions and type specimens (if available), and provide evidence for a more robust phylogenetic position of each species. This study embodies both consensus and contention of those studying Coptotermes and thus pinpoints the current uncertainty of many species. This project is intended to be a roadmap for identifying those Coptotermes species names that need to be more thoroughly investigated, as an incentive to complete a necessary revision process.

Salt in the desert: A comparison of clinical versus serum-calculated osmolality determination of dehydration

Background: Clinicians frequently use their own judgement to assess patient’s hydration status although there is limited evidence for the diagnostic utility of any individual clinical symptom. Hence, the aim of this study was to compare the diagnostic accuracy of clinically assessed dehydration in older hospital patients (using multiple symptoms), versus dehydration measured using serum-calculated osmolality (CO) as the reference standard. Method: Participants were 44 hospital patients aged ≥ 60 years. Dehydration was assessed clinically and pathologically (CO) within 24 hours of admission and at study exit. Indicators of diagnostic accuracy were calculated. Results: Clinicians identified 27% of patients as dehydrated at admission, and 19% at exit, compared to 19% and 16% using CO. Agreement between the measures was fair at admission and poor at exit. Clinical assessment showed poor sensitivity for predicting dehydration with reasonable specificity. Conclusions: Compared to the use of CO, clinical assessment of dehydration in older patients was poor. Given that failure to identify dehydration in this population may have serious consequences, we recommend that clinicians do not rely upon their own assessments without also using the reference standard.

Charge distribution, dipole moments and infrared spectra of some thiol and thio acids

The dipole moments of thioglycollic (2.28 D), β-mereaptopropionic (2.25 D), thiomalic (2.47 D), malic (3.12 D), and dithiodiacetic (3.17 D) acids have been measured in dioxan at 35° C. Using the scheme of Smith, Ree, Magee and Eyring, the formal charge distribution in and hence the electric moments of these acids have been evaluated, compared with the theoretical moments, and discussed in terms of their various possible structures. Infrared spectra of these acids (liquid and nujol mull) indicate association through hydrogen bonding. These bonds are broken in solution. © 1969.

Charge distribution, dipole moments and infrared spectra of some thiol and thio acids

The dipole moments of thioglycollic (2.28 D), β-mereaptopropionic (2.25 D), thiomalic (2.47 D), malic (3.12 D), and dithiodiacetic (3.17 D) acids have been measured in dioxan at 35° C. Using the scheme of Smith, Ree, Magee and Eyring, the formal charge distribution in and hence the electric moments of these acids have been evaluated, compared with the theoretical moments, and discussed in terms of their various possible structures. Infrared spectra of these acids (liquid and nujol mull) indicate association through hydrogen bonding. These bonds are broken in solution.

Heat transfer in plane Couette flow of a rarefied gas using Bhatnagar-Gross-Krook model

Using the linearized BGK model and the method of moments of half-range distribution functions the temperature jumps at two plates are determined, and it is found that the results are in fair agreement with those of Gross and Ziering, and Ziering.

Electron temperature distribution across a shock wave in a partially ionized gas

The electron temperature structure in a weakly ionized plasma is studied allowing the degree of ionization to vary across the shock wave. The values of the electron temperature and the downstream equilibrium temperature obtained with variable ionization are less than those for frozen ionization. The electron temperature rises sharply behind the shock for variable ionization while a gradual increase is predicted by frozen ionization.

Charge distribution in and dipole moments of some aliphatic alcohols

Using the treatment of Smith, et al.,1 charge distributions in several aliphatic alcohols and consequently their dipole moments have been evaluated. The dipole moments of trichloroethanol (2.04 D) and 1,3-dichloropropan-2-ol (2.11 D) have been measured in benzene solution at 35°. The results of evaluation and measurements are interpreted in terms of the occurrence of intramolecular interaction between the hydroxyl hydrogen and an acceptor atom X (halogen or oxygen) at the β-carbon atom.

Charge distribution in and electric moments of some aliphatic acids

Using the treatment of Smith et al., charge distribution in and consequently the dipole moments of several aliphatic acids have been evaluated. The electric moments of chloro (2·86 D), bromo (2·90 D), iodo (2·06 D) and trichloro (3·00 D) acetic acids have been measured in dioxan solution at 35°. The experimental values are compared with those calculated theoretically and discussed in terms of the various possible structures.

Charge distribution, dipole moment and molecular structure of silyl compounds

The formal charge distribution and hence the electric moments of a number of halosilanes and their methyl derivatives have been calculated by the method of Image and Image . The difference between the observed and the calculated values in simple halosilanes is attributed to a change in the hybridization of the terminal halogen atom and in methyl halosilanes to the enhanced electron release of the methyl group towards silicon compared with carbon.

Measurement of the kT Distribution of Particles in Jets Produced in pp̅ Collisions at √s=1.96 TeV

We present a measurement of the transverse momentum with respect to the jet axis (kt) of particles in jets produced in pp̅ collisions at √s=1.96  TeV. Results are obtained for charged particles in a cone of 0.5 radians around the jet axis in events with dijet invariant masses between 66 and 737  GeV/c2. The experimental data are compared to theoretical predictions obtained for fragmentation partons within the framework of resummed perturbative QCD using the modified leading log and next-to-modified leading log approximations. The comparison shows that trends in data are successfully described by the theoretical predictions, indicating that the perturbative QCD stage of jet fragmentation is dominant in shaping basic jet characteristics.