Earnings management and audit adjustments: An empirical study of IBEX 35 constituents

Doubts about the reliability of a company's qualitative financial disclosure increase market participant expectations from the auditor's report. The auditing process is supposed to serve as a monitoring device that reduces management incentives to manipulate reported earnings. Empirical research confirms that it could be an efficient device under some circumstancesand recognizes that our estimates of the informativeness of audit reports are unavoidably biased (e.g., because of a client's anticipation of the auditing process). This empirical study supports the significant role of auditors in the financial market, in particular in the prevention of earnings management practice. We focus on earnings misstatements, which auditors correct with anadjustment, using a sample of past and current constituents of the benchmark market index in Spain, IBEX 35, and manually collected audit adjustments reported over the 1997-2004 period (42 companies, 336 annual reports, 75 earnings misstatements). Our findings confirm that companies more often overstate than understate their earnings. An investor may foresee earningsmisreporting, as manipulators have a similar profile (e.g., more leveraged and with lower sales). However, he may receive valuable information from the audit adjustment on the size of earnings misstatement, which can be significantly large (i.e., material in almost all cases). We suggest that the magnitude of an audit adjustment depends, other things constant, on annual revenues and free cash levels. We also examine how the audit adjustment relates to the observed market price, trading volume and stock returns. Our findings are that earnings manipulators have a lower price and larger trading volume compared to their rivals. Their returns are positively associated with the magnitude of earnings misreporting, which is not consistent with the possible pricing of audit information.

Anticipatory and compensatory postural adjustments in sitting in children with cerebral palsy

The aim of this study was to examine postural control in children with cerebral palsy performing a bilateral shoulder flexion to grasp a ball from a sitting posture. The participants were 12 typically developing children (control) without cerebral palsy and 12 children with cerebral palsy (CP). We analyzed the effect of ball mass (1 kg and 0.18 kg), postural adjustment (anticipatory, APA, and compensatory, CPA), and groups (control and CP) on the electrical activity of shoulder and trunk muscles with surface electromyography (EMG). Greater mean iEMG was seen in CPA, with heavy ball, and for posterior trunk muscles (p < .05). The children with CP presented the highest EMG and level of co-activation (p < .05). Linear regression indicated a positive relationship between EMG and aging for the control group, whereas that relationship was negative for participants with CP. We suggest that the main postural control strategy in children is based on corrections after the beginning of the movement. The linear relationship between EMG and aging suggests that postural control development is affected by central nervous disease which may lead to an increase in muscle co-activation. (C) 2011 Elsevier B.V. All rights reserved.

Cardiac and peripheral adjustments induced by early exercise training intervention were associated with autonomic improvement in infarcted rats: role in functional capacity and mortality

Aims To test the effects of early exercise training (ET) on left ventricular (LV) and autonomic functions, haemodynamics, tissues blood flows (BFs), maximal oxygen consumption (VO(2) max), and mortality after myocardial infarction (MI) in rats. Methods and results Male Wistar rats were divided into: control (C), sedentary-infarcted (SI), and trained-infarcted (TI). One week after MI, TI group underwent an ET protocol (90 days, 50-70% VO2 max). Left ventricular function was evaluated noninvasively and invasively. Baroreflex sensitivity, heart rate variability, and pulse interval were measured. Cardiac output (CO) and regional BFs were determined using coloured microspheres. Infarcted area was reduced in TI (19 +/- 6%) compared with SI (34 +/- 5%) after ET. Exercise training improved the LV and autonomic functions, the CO and regional BF changes induced by MI, as well as increased SERCA2 expression and mRNA vascular endothelial growth factor levels. These changes brought about by ET resulted in mortality rate reduction in the TI (13%) group compared with the SI (54%) group. Conclusion Early aerobic ET reduced cardiac and peripheral dysfunctions and preserved cardiovascular autonomic control after MI in trained rats. Consequently, these ET-induced changes resulted in improved functional capacity and survival after MI.

Effects of the preventive and corrective adjustments in economical designs for online process control for attributes with misclassification errors

The procedure for online process control by attributes consists of inspecting a single item at every m produced items. It is decided on the basis of the inspection result whether the process is in-control (the conforming fraction is stable) or out-of-control (the conforming fraction is decreased, for example). Most articles about online process control have cited the stoppage of the production process for an adjustment when the inspected item is non-conforming (then the production is restarted in-control, here denominated as corrective adjustment). Moreover, the articles related to this subject do not present semi-economical designs (which may yield high quantities of non-conforming items), as they do not include a policy of preventive adjustments (in such case no item is inspected), which can be more economical, mainly if the inspected item can be misclassified. In this article, the possibility of preventive or corrective adjustments in the process is decided at every m produced item. If a preventive adjustment is decided upon, then no item is inspected. On the contrary, the m-th item is inspected; if it conforms, the production goes on, otherwise, an adjustment takes place and the process restarts in-control. This approach is economically feasible for some practical situations and the parameters of the proposed procedure are determined minimizing an average cost function subject to some statistical restrictions (for example, to assure a minimal levelfixed in advanceof conforming items in the production process). Numerical examples illustrate the proposal.

Contraction of the human diaphragm during rapid postural adjustments

1. The response of the diaphragm to the postural perturbation produced by rapid flexion of the shoulder to a visual stimulus was evaluated in standing subjects. Gastric, oesophageal and transdiaphragmatic pressures were measured together with intramuscular and oesophageal recordings of electromyographic activity (EMG) in the diaphragm. To assess the mechanics of contraction of the diaphragm, dynamic changes in the length of the diaphragm were measured with ultrasonography. 2. With rapid flexion of the shoulder in response to a visual stimulus, EMG-activity in the costal and crural diaphragm occurred about 20 ms prior to the onset of deltoid EMG. This anticipatory contraction occurred irrespective of the phase of respiration in which arm movement began. The onset of diaphragm EMG-coincided with that of transversus abdominis. 3. Gastric and transdiaphragmatic pressures increased in association with the rapid arm flexion by 13.8 +/- 1.9 (mean +/- S.E.M.) and 13.5 +/- 1.8 cmH(2)O, respectively. The increases occurred 49 +/- 4 ms after the onset of diaphragm EMG, but preceded the onset of movement of the limb by 63 +/- 7 ms. 4. Ultrasonographic measurements revealed that the costal diaphragm shortened and then lengthened progressively during the increase in transdiaphragmatic pressure. 5. This study provides definitive evidence that the human diaphragm is involved in the control of postural stability during sudden voluntary movement of the limbs.

Lessons from a comprehensive clinical audit of users of psychiatric services who committed suicide

Objective: Characteristics of patients who committed suicide were examined to provide a picture of the treatment they received before death and to determine whether and how the suicides could have been pre vented by the service system. Methods: The unnatural-deaths register was matched to the psychiatric case register in the state of Victoria in Australia to identify suicides by people with a history of public-sector psychiatric service use who committed suicide between July 1, 1989, and June 30, 1994. Data on patient and treatment characteristics were examined by three experienced clinicians, who made judgments about whether the suicide could have been prevented had the service system responded differently. Quantitative and qualitative data were descriptively analyzed. Results: A total of 629 psychiatric patients who had committed suicide were identified. Seventy-two percent of the patients were male, 62 percent were under 40 years old, and 51 percent were unmarried. They had a range of disorders, with the most common being schizophrenia or schizoaffective disorder (36 percent). Sixty-seven percent had previously attempted suicide. A total of 311 patients (49 percent) received care within four weeks of death. Twenty percent of the suicides were considered preventable. Key factors associated with preventability were poor staff-patient relationships, incomplete assessments, poor assessment and treatment of depression and psychological problems, and poor continuity of care. Conclusions: Opportunities exist for the psychiatric service system to alter practices at several levels and thereby reduce patient suicides.

Developing a reliable audit instrument to measure the physical environment for physical activity

Background: The physical environment plays an important role in influencing participation in physical activity, although which factors of the physical environment have the greatest effect on patterns of activity remain to be determined. We describe the development of a comprehensive instrument to measure the physical environmental factors that may influence walking and cycling in local neighborhoods and report on its reliability. Methods: Following consultation with experts from a variety of fields and a literature search, we developed a Systematic Pedestrian and Cycling Environmental Scan (SPACES) instrument and used it to collect data over a total of 1987 kilometers of roads in metropolitan Perth, Western Australia. The audit instrument is available from the first author on request. Additional environmental information was collected using desktop methods and geographic information systems (GIS) technology. We assessed inter- and intra-rater reliability of the instrument among the 16 observers who collected the data. Results: The observers reported that the audit instrument was easy to use. Both inter- and intra-rater reliability of the environmental scan instrument were generally high. Conclusions: Our instrument provides a reliable, practical, and easy to-use method for collecting detailed street-level data on physical environmental factors that are potential influences on walking in local neighborhoods.

Electronic medical records may be inadequate for improving population health status through general practice: cervical smears as a case study

Objective: To determine whether routine electronic records are an accurate source of population health data in general practice through reviewing cervical smears rates in four South Australian practices. Methods: The cervical screening rate in a purposive sample of four general practices (three rural and one urban) was obtained using an audit of medical records and a telephone follow-up. Results: The cervical screening rate using only immediately available electronic medical records indicated an overall low rate for the participating practices (44.9%). However, telephone follow-up and adjustments to the denominator indicated the real rate to be 85.7%. The offer of appointments during the telephone follow-up further improved this rate for eligible women (93.8%). Conclusions and implications: Electronic medical records may be inadequate in preventive screening in general practice, without ensuring their accuracy. Updating records by telephone or personal follow-up produces a much more accurate denominator.

Hemolymph ionic regulation and adjustments in gill (Na(+), K(+))-ATPase activity during salinity acclimation in the swimming crab Callinectes ornatus (Decapoda, Brachyura)

We evaluate hemolymph osmotic and ionic regulatory abilities and characterize a posterior gill microsomal (Na(+), K(+))-ATPase from the marine swimming crab, Callinectes ornatus, acclimated to 21 parts per thousand or 33 parts per thousand salinity. C ornatus is isosmotic after acclimation to 21 parts per thousand but is hyposmotic at 33 parts per thousand salinity; hemolymph ions do not recover initial levels on acclimation to 21 parts per thousand salinity but are anisoionic compared to ambient concentrations, revealing modest regulatory ability. NH(4)(+) modulates enzyme affinity for K(+), which increases 187-fold in crabs acclimated to 33%. salinity. The (Na(+), K(+))-ATPase redistributes into membrane fractions of different densities, suggesting that altered membrane composition results from salinity acclimation. ATP was hydrolyzed at maximum rates of 182.6 +/- 7.1 nmol Pi min(-1) mg(-1) (21 parts per thousand) and 76.2 +/- 3.5 nmol Pi min(-1) mg(-1) (33 parts per thousand), with little change in K(M) values (approximate to 50 mu mol L(-1)). K(+) together with NH(4)(+) synergistically stimulated activity to maximum rates of approximate to 240 nmol Pi min(-1) mg(-1). K, values for ouabain inhibition (approximate to 110 mu mol L(-1)) decreased to 44.9 +/- 1.0 mu mol L(-1) (21 parts per thousand) and 28.8 +/- 1.3 mu mol L(-1) (33 parts per thousand) in the presence of both K(+) and NH(4)(+). Assays employing various inhibitors suggest the presence of mitochondrial F(0)F(1)- and K(+)- and V-ATPase activities in the gill microsomes. (C) 2009 Elsevier Inc. All rights reserved.

Chronic absence of baroreceptor inputs prevents training-induced cardiovascular adjustments in normotensive and spontaneously hypertensive rats

We investigate whether arterial baroreceptors mediate the training-induced blood pressure fall and resting bradycardia in hypertensive (SHR) and normotensive rats (WKY). Male SHR and WKY rats, submitted to sino-aortic denervation (SAD) or sham surgery (SHAM group), were allocated to training (T; 55% of maximal exercise capacity) or sedentary (S) protocols for 3 months. Rats were instrumented with arterial and venous catheters for haemodynamic measurements at rest (power spectral analysis) and baroreceptor testing. Kidney and skeletal muscles were processed for morphometric analysis of arterioles. Elevated mean arterial pressure (MAP) and heart rate (HR) in SHAM SHRS were accompanied by increased sympathetic variability and arteriolar wall/lumen ratio [+3.4-fold on low-frequency (LF) power and +70%, respectively, versus WKYS, P < 0.05]. Training caused significant HR (similar to 9% in WKY and SHR) and MAP reductions (-8% in the SHR), simultaneously with improvement of baroreceptor reflex control of HR (SHR and WKY), LF reduction (with a positive correlation between LF power and MAP levels in the SHR) and normalization of wall/lumen ratio of the skeletal muscle arterioles (SHR only). In contrast, SAD increased pressure variability in both strains of rats, causing reductions in MAP (-13%) and arteriolar wall/lumen ratio (-35%) only in the SHRS. Training effects were completely blocked by SAD in both strains; in addition, after SAD the resting MAP and HR and the wall/lumen ratio of skeletal muscle arterioles were higher in SHRT versus SHRS and similar to those of SHAM SHRS. The lack of training-induced effects in the chronic absence of baroreceptor inputs strongly suggests that baroreceptor signalling plays a decisive role in driving beneficial training-induced cardiovascular adjustments.

National audit of anaesthesia for major abdominal surgery

A postal survey was conducted of all hospitals in Australia known to have a department of anaesthesia and an intensive care or high dependency unit. Each hospital was asked to report the anaesthetic and postoperative analgesic techniques used for the last ten cases of four common major surgical procedures-aorto-femoral bypass, repair of an abdominal aortic aneurysm, hemicolectomy and anterior resection of the rectum. Half of 76 hospitals sent a survey form completed and returned it. Responding hospitals were larger on average, than non-responding ones, but otherwise typical of them in terms of university affiliation and metropolitan versus rural location. For each of the procedures studied the proportion of cases in which epidural block was used intra- or postoperatively varied from 0% to 100%. Depending on the procedure, between 65% and 85% of hospitals used epidural block sometimes, with between 10% and 90% of patients in these hospitals being managed with this technique. There is wide variation in the use of epidural block, intra- and postoperatively, in Australia, variation that is unlikely to be explained by systematic differences between institutions in the patients seen or their suitability for one or other technique. This pattern of practice mirrors the lack of agreement about the proper place for epidural techniques evident in the recent literature. There is a widespread belief among clinicians that this is a question of great importance. Accordingly, we believe that anaesthetists and surgeons share an ethical responsibility to enter suitable patients in an appropriately designed randomized controlled trial in order to resolve this question.

The Fast Alcohol Screening Test (FAST) is as Good as the AUDIT to Screen Alcohol Use Disorders

This study was aimed at assessing the psychometric qualities of the fast alcohol screening test (FAST), and at comparing these qualities to those of the alcohol use disorders identification test (AUDIT) in three samples of Brazilian adults: (i) subjects attended at an emergency department (530); (ii) patients from a psychosocial care center (40); and (iii) university students (429). The structured clinical interview for diagnosis (SCID)-IV was used as gold standard. The FAST demonstrated high test-retest and interrater reliability coefficients, as well as high predictive and concurrent validity values. The results attest the validity and reliability of the Brazilian version of the FAST for the screening of indicators of alcohol abuse and dependence.