An investigation into the potential adoption of international financial reporting standards in the United States: implications and implementation

International Financial Reporting Standards (IFRS) have been adopted by most of the G20 countries. Given the broad worldwide acceptance of IFRS and significance of attaining comparability to facilitate free flow of capital, the US standard setter, the Financial Accounting Standards Board (FASB) made a commitment to jointly work with the International Accounting Standards Board (IASB) to explore the possibilities of convergence of US Generally Accepted Accounting Principles (GAAP) with IFRS. In 2007, the US Securities and Exchange Commission (SEC) eliminated the requirement that foreign companies listed on the US stock exchanges reconcile their IFRS-based financial statements with the US GAAP. In the same year the US SEC issued a concept release to the public requesting comments on a proposal to allow US issuers to prepare financial statements in accordance with IFRS. Following these initiatives by the FASB and SEC, the aim of the present study is to investigate the implications of a potential full adoption of IFRS by the US. The present study details the challenges and benefits of adoption and outlines the steps required for a successful outcome of this process.

The influence of remuneration structures on financial reporting quality: evidence from Australia

This cross-sectional study investigates the influence of a company's remuneration structure on managers' opportunistic behaviour. The findings support the proposed hypothesis that a higher level of compliance with Remuneration Principle 8-ASX Corporate Governance Council) is associated with a lower level of earnings management. The findings support the efficient functioning of the ASX proposed remuneration structure. This cross-sectional study investigates the influence of remuneration structures on financial reporting quality, based on a sample of companies listed on the Australian Securities Exchange (ASX). Compliance with Remuneration Principle eight issued by ASX (providing recommendations on formation, operation and disclosure of remuneration committees) is expected to improve financial reporting quality represented by a decreased level of earnings management. This study expands the corporate governance literature by examining an under-researched mechanism to address the agency problem. Earnings management, as a consequence of the agency problem, is measured using the level of absolute discretionary accruals. In this study, we use the modified Jones model to measure the level of discretionary accruals and the existence of reduced earnings management. The study is conducted using a random sample of 214 firm-year observations selected from the ASX listed companies. Our findings show a higher level of compliance with the principle on remuneration is associated with lower levels of earnings management. The findings support the efficient functioning of the ASX-proposed remuneration structure in reducing earnings manipulations.

How accurately can convertibles be classified as debt or equity for tax purposes? Evidence from Australia

The New Business Tax System (Debt and Equity) Act established a set ofcriteria by which convertible securities could be classified as “debt-like” or “equity-like” for tax purposes. Using data on 256 convertible issues made in Australia between 2001 and 2012, we show that there is a strong relation between, on the one hand, a convertible’s ex ante classification determined at issuance using the tax criteria and, on the other hand, its ex post classification based on the conversion premium at maturity. We conclude that the criteria have been an efficient means of classifying convertibles. We also find an industry effect where debt-like convertibles are more likely to be associated with the resources, metals and mining firms, whilst equity-like are mainly issued by the finance sector. This finding is consistent with the solution to a finance-sequencing problem in the former case, and the impact of capital adequacy regulation in the latter.

The SEC's retail investor 2.0: interactive data and the rise of calculative accountability

The Securities and Exchange Commission (SEC) in the United States mandated a new digital reporting system for US companies in late 2008. The new generation of information provision has been dubbed by Chairman Cox, ‘interactive data’ (SEC, 2006a). Despite the promise of its name, we find that in the development of the project retail investors are invoked as calculative actors rather than engaged in dialogue. Similarly, the potential for the underlying technology to be applied in ways to encourage new forms of accountability appears to be forfeited in the interests of enrolling company filers.We theorise the activities of the SEC and in particular its chairman at the time, Christopher Cox, over a three year period, both prior to and following the ‘credit crisis’. We argue that individuals and institutions play a central role in advancing the socio-technical project that is constituted by interactive data. We adopt insights from ANT (Callon, 1986, Latour, 1987 and Latour, 2005b) and governmentality (Miller, 2008 and Miller and Rose, 2008) to show how regulators and the proponents of the technology have acted as spokespersons for the interactive data technology and the retail investor. We examine the way in which calculative accountability has been privileged in the SEC's construction of the retail investor as concerned with atomised, quantitative data (Kamuf, 2007, Roberts, 2009 and Tsoukas, 1997). We find that the possibilities for the democratising effects of digital information on the Internet has not been realised in the interactive data project and that it contains risks for the very investors the SEC claims to seek to protect.

Investor legal protection and earnings management : a study of Chinese H-shares and Hong Kong shares

Under the unique "one country, two systems" arrangement, the more stringent investor protection rules in Hong Kong are not enforceable in firms that are incorporated in China but listed on the Hong Kong stock exchange (H-shares). As such, H-shares and other local Hong Kong firms are subject to different investor protection regimes in the same stock market. We find that H-shares are associated with higher earnings management than local Hong Kong firms after controlling for disparity in economic development, types of controlling shareholders and other factors. More importantly, this relationship is weaker after China implemented the Securities Law in 1999. The results are robust after considering the dual-listing status of H-shares and board characteristics. These results provide direct evidence showing the effect of investor legal protection on financial reporting quality.

Ética, Direito, Economia e Mercados de Valores Mobiliários (MVM)

Resumo: 1 - Ética, Direito, Economia e «mercados de valores mobiliários»: realidades concretas de um só mundo no qual interagem, de modo constante e complexo, uma série de factores económicos, sociais, políticos, culturais e mentais que não se podem separar de modo artificial; 1.1 – Intróito e primeiro andamento; 1.2 – Introdução e desenvolvimento; 1.3 – A chamada «protecção penal de valores» e/ou o «moralismo»; 2 – Ética nos mercados de valores mobiliários e capitalismo; 2.1 – Possíveis perigos do problema da ética económico-financeira; 2.2 – Os fundos éticos nos mercados de valores mobiliários; 2.3 – Códigos de conduta interna e/ou deontológica, transparência e/ou o papel dos investidores como instrumentos éticos nos mercados de valores mobiliários; 2.4 – Ética e mercados de valores mobiliários: mais alguns possíveis desenvolvimentos pré-conclusivos; 3 – Ética e mercados de valores mobiliários: o microcrédito como desenvolvimento conclusivo; 3.1 – Ética, Paz Social, Corrupção; 3.2 – Direito penal, ética e «Educação e/ou Formação no Ensino Superior»: conclusões § Abstract: § 1 - Ethics, Law, Economy and “securities��� (markets): concrete realities of one only world in which they interact, in constant and complex way, a series of economic, social factors, politicians, cultural and mental who if cannot separate in artificial way; 1.1 – “First introduction” and first course; 1.2 - Introduction and development; 1.3 - The call “criminal protection of values” and/or the “morality”; 2 - Ethics in the “securities��� (markets) and capitalism; 2.1 - Possible “risks” of the problem of the ethics economic-financier; 2.2 - The ethical “stock fund” in the “securities��� (markets); 2.3 - Codes of internal and/or deontological behavior, transparency and/or the paper of the investors as ethical instruments in the “securities��� (markets); 2.4 - Ethics and “securities��� (markets): plus some possible p.-conclusive developments; 3 - Ethics and “securities��� (markets): the microcredit as conclusive development; 3.1 - Ethics, Social Peace, Corruption; 3.2 - Criminal law, ethical and “Education and/or Formation in ‘University’ School”: conclusions

Hybridity in contemporary commercial organizations: implications for employee trust

This study advances the concept of organizational hybridity (OH). By doing so, it takes into account the individual level of analysis often neglected in organizational theory. More specifically, it aims to understand the implications of organizational hybridity for employees’ trust in contemporary commercial organizations. Informed and guided by current literature, this study argues that the current literature on organizational hybridity fails to adequately address the consequences of hybridity for employees' behaviour. The empirical study was conducted in 2014 using data collected via semi-structured interviews and document analysis. The study was based on a comparison of two case studies in Nigeria: Alter Securities Limited and Barak Petroleum Limited. A total of forty (40) interviews were conducted; twenty (20) from each organization. The data were analysed using thematic analysis. The main findings are that organizational hybridity in this study produced tensions that resulted in negative behavioural responses and employees’ distrust in the commercial hybrid organizations. However, employees’ identification with non-market orientated institutional logics such as family, philanthropic and religious logics is seen to facilitate their commitment, honesty, and trust in the organizations. Nevertheless, caution is required here as religious logics may also lead to an acceptance of unethical behaviour by employees. Overall, this study contributes to the literature on organizational hybridity by extending on Battilana and Lee’s (2014) framework, which highlights governance, leadership, organizational culture and intra-organizational relationships as core organizational attributes in the context of which issues may arise in commercial hybrid organizations. Furthermore, it addresses a gap in Besharov and Smith’s (2014) hybrid typology framework by providing an alternative line of argument focused on understanding how tensions manifest within commercial hybrid organizations. The key recommendations of this research underscore the need for commercial hybrid organizations to invest in mechanisms for improving employees’ trust so as to reap the benefits associated with trust. This could be achieved by involving employees in the decision-making process and clearly communicating the organizations’ values, so as to minimise the misinterpretation of the embodied institutional logics by employees.

Synthetic portfolio for event studies: Estimating the effects of volatility call auctions

We propose a method denoted as synthetic portfolio for event studies in market microstructure that is particularly interesting to use with high frequency data and thinly traded markets. The method is based on Synthetic Control Method and provides a robust data driven method to build a counterfactual for evaluating the effects of the volatility call auctions. We find that SMC could be used if the loss function is defined as the difference between the returns of the asset and the returns of a synthetic portfolio. We apply SCM to test the performance of the volatility call auction as a circuit breaker in the context of an event study. We find that for Colombian Stock Market securities, the asynchronicity of intraday data reduces the analysis to a selected group of stocks, however it is possible to build a tracking portfolio. The realized volatility increases after the auction, indicating that the mechanism is not enhancing the price discovery process.

O papel da custódia de títulos financeiros nos mercados financeiros internacionais: mercados auto compensados e não compensados

Este relatório de estágio tem como objetivo descrever e contextualizar aspetos práticos relativos ao funcionamento dos mercados financeiros que não são habitualmente abordados nos manuais sobre este tipo de mercados. O relatório tem por base o estágio profissional realizado no BNP Paribas Securities Services, que proporcionou contacto direto com várias práticas, principalmente no domínio da prestação de serviços de custódia de títulos financeiros. A custódia é um serviço de post-trading, com grande relevância para a gestão e manutenção dos títulos financeiros e abrange todos os procedimentos que decorrem da negociação, de entre os quais se destacam aqueles que dizem respeito à distribuição de rendimentos; The AUD’s (assets under custody) role in the international financial markets: auto compensated markets and non compensated markets Abstract: This report aims to describe and contextualize practical aspects related to the functioning of financial markets that are not usually addressed in handbooks on such markets. The report is based on a professional internship at BNP Paribas Securities Services, which provided direct contact with various practices, particularly in the provision of financial securities custody services. The custody is a post-trading service, with great relevance for the management and maintenance of financial securities and covers all the procedures resulting from the negotiations, of which are especially relevant those relating to the distribution of income earnings.