Accounting Irregularities Research Articles

Chief Executive Officer Equity Incentives and Accounting Irregularities

ABSTRACTThis study examines whether Chief Executive Officer (CEO) equity‐based holdings and compensation provide incentives to manipulate accounting reports. While several prior studies have examined this important question, the empirical evidence is mixed and the existence of a link between CEO equity incentives and accounting irregularities remains an open question. Because inferences from prior studies may be confounded by assumptions inherent in research design choices, we use propensity‐score matching and assess hidden (omitted variable) bias within a broader sample. In contrast to most prior research, we do not find evidence of a positive association between CEO equity incentives and accounting irregularities after matching CEOs on the observable characteristics of their contracting environments. Instead, we find some evidence that accounting irregularities occur less frequently at firms where CEOs have relatively higher levels of equity incentives.

Discussion of Chief Executive Officer Equity Incentives and Accounting Irregularities

Journal of Accounting ResearchVolume 48, Issue 2 p. 273-287 Discussion of Chief Executive Officer Equity Incentives and Accounting Irregularities JOHN E. CORE, JOHN E. CORE The Wharton School, University of Pennsylvania.Search for more papers by this author JOHN E. CORE, JOHN E. CORE The Wharton School, University of Pennsylvania.Search for more papers by this author First published: 16 March 2010 https://doi.org/10.1111/j.1475-679X.2010.00367.xCitations: 25 This discussion has benefited from, and reflects the comments of, participants at the 2009 Journal of Accounting Research conference. I gratefully acknowledge helpful comments from Wayne Guay and Greg Miller, and the financial support of the Wharton School. Any errors are the sole responsibility of the author. Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Citing Literature Volume48, Issue2May 2010Pages 273-287 RelatedInformation

Accounting Irregularities and Executive Turnover in Founder-Managed Firms

ABSTRACT: This study tests the hypothesis that founder CEOs are less likely to be fired than non-founder CEOs when accounting irregularities are disclosed. We also examine whether CFOs are more likely to shoulder the blame when the CEO is a founder. Using a sample of 96 newly public firms with accounting irregularities, and a control sample of similar newly public firms, we document that the probability of CEO (CFO) turnover in the wake of an accounting irregularity is lower (higher) when the firm's CEO is also a founder. The difference in CEO turnover rates is dramatic, with nonfounder CEOs turning over at a rate of 49 percent, as compared to only 29 percent for founder CEOs. Our overall findings are consistent with the notion that the board's response to irregularities differs when the CEO is a founder.

Short Seller Trading in Companies with a Severe Accounting Irregularity

We find that shorts establish significant positions more than a year before the average restatement announcement, those positions increase as the announcement month approaches, and the largest positions are held in companies that will announce an accounting irregularity that attracts class action litigation. Shorts are thereby well positioned to profit from the lengthy string of negative returns that precede the announcement of a severe accounting irregularity. Afterward, we find average short interest is sticky, and shorts retain positions in firms that experience a further price decline. In the six months after an announcement, positions in heavily shorted restating firms (i.e., short interest exceeding 2.5 percent before the announcement) earn an additional 24 percent (31 percent with class action litigation). We conclude that shorts have the skill to play an important private-sector role in identifying and disciplining companies with accounting irregularities.

Preventing and Detecting Accounting Irregularities: The Role of Corporate Governance

This study examines the extent to which corporate governance acts as an efficient means of protecting investors against accounting irregularities, thus contributing to the literatures on governance, on fraudulent financial statements and on the public enforcement of securities laws by market authorities. It does so by empirically testing the prediction that the seriousness or level of non compliance of irregularities detected by market authorities is negatively associated with the quality of governance. For that purpose, a sample of 107 firms identified as reporting issuers in default by the Canadian Securities Administrators and the Ontario Securities Commission is matched with 107 other control firms based on industry, size, stock exchange membership and date of default.

A novel approach for calculating starch crystallinity and its correlation with double helix content: A combined XRD and NMR study

A peak fitting procedure has been implemented for calculating crystallinity in granular starches. This methodology, widely used for synthetic polymers, is proposed to better reflect the crystalline content of starches than the method normally used, in which it is assumed that relatively perfect crystalline domains are interspersed with amorphous regions. The new approach takes into account irregularities in crystals that are expected to exist in semicrystalline materials. Therefore, instead of assuming that the amorphous background extends up to the base of diffraction peaks, the whole X-ray diffraction (XRD) profile is fitted to an amorphous halo and several discrete crystalline diffraction peaks. The crystallinity values obtained from the XRD patterns of a wide range of native starches using this fitting technique are very similar to the double helix contents as measured by (13)C solid state NMR, suggesting that double helices in granular starches are present within irregular crystals. This contrasts with previous descriptions of crystalline and noncrystalline double helices that were based on the analysis of XRD profiles as perfect crystals interspersed in a noncrystalline background. Furthermore, with this fitting methodology it is possible to calculate the contribution from the different crystal polymorphs of starch to the total crystallinity.

Tenures for Department Chairs: How Short Is Too Short?

F i h c i p he average tenure for chairs of departments of internal edicine at US medical schools has decreased from .272 years in the 1970s to 3.997 years in the 2000s 2000 to 2006). During the past 4 decades, the average ength of an interim (or acting) chair’s tenure increased rom 1.353 years to 2.355 years. These trends indicate hat the leadership of departments of internal medicine s becoming increasingly destabilized. Becoming chair of a department of internal medicine t a US medical school has shifted from the capstone of successful career to a stop on the way to other posiions, such as dean of a medical school. The chairs of esterday are now running centers and institutes, servng as vice deans for research, or leaving academic edicine to pursue other professional opportunities. cademic medicine has become more corporate: deartment chairs run “business units” rather than build cademic programs in education, research, and patient are; mentor students, residents, fellows, and faculty; or each, conduct research, or care for patients. This shift raises fundamental questions about the kills, knowledge, and attitudes necessary for chairing epartments of internal medicine in the future as well as oncerns about the amount of money medical schools pend to replace chairs. These costs include retaining earch firms, involving faculty and staff in the search, nd providing packages to entice the most appealing andidates.

Accounting Irregularities and Executive Turnover in Founder-Managed Firms

This study tests the hypothesis that founder CEOs are less likely to be fired than non-founder CEOs when accounting irregularities are disclosed. We also examine whether CFOs are more likely to shoulder the blame when the CEO is a founder. Using a sample of ninety newly public firms with accounting irregularities, and a control sample of similar newly public firms, we document that the probability of CEO (CFO) turnover in the wake of an accounting irregularity is lower (higher) when the firm's CEO is also a founder. The difference in CEO turnover rates is dramatic, with non-founder CEOs turning over at a rate of 51% compared to only 26% for founder CEOs. Our overall findings are consistent with the notion that founder CEOs are entrenched.

Local kinematics of the Galaxy

We found the parameters of the velocity ellipsoid in the solar neighbourhood, the Galactocentric solar velocity, and the circular velocity at the solar radius. In order to take into account biasing and irregularities of the velocity field, we extrapolated to zero heliocentric distance. For the Galactocentric solar velocity, we also extrapolated to zero angular momentum. As for the circular velocity, extrapolation to zero eccentricity was used.

TROUBLED RHODIA TAKES MORE HITS

FRANCE'S STOCK MARKET regulatory authority, AMF (Autorite des Marches Financiers), has accused Rhodia of improper financial disclosures dating back to 2000. Separately, a criminal probe has been launched into possible accounting irregularities and insider trading dating back to 1999. Both developments follow forecasts by Rhodia that it will be profitable in 2006 for the first time in five years. The allegations against France's largest specialty chemical firm cover a period of turmoil during which Rhodia amassed debt from high-priced acquisitions. The CEO at the time, Jean-Pierre Tirouflet, was ousted in October 2003. His successor, Jean-Pierre Clamadieu, has cut 1,600 jobs and sold off several businesses. AMF alleges improprieties in Rhodia's valuation of ChiRex, which it acquired in 2000; its valuation of deferred tax assets; and its disclosures on debt, liquidity and coverage for environmental risks. The criminal investigation, conducted by the Paris public prosecutor's office, stems from lawsuits file...

Can Short Sellers Anticipate Accounting Restatements?

An announcement by corporate managers that they will restate a past financial statement due to an irregularity provides the laboratory market for our tests of short seller expertise. For 565 firms announcing a restatement during the period 1995 - 2002, we find the level of short interest in the announcement month is substantially higher for restating firms than for control firms. A statistically significant difference begins 19 months before the announcement date, increases significantly in the six months preceding the restatement announcement, and peaks in the announcement month. In the twelve months after the announcement, the average level of short interest remains steady for the restating firms - as if short sellers are waiting to be sure all bad news has been released before unwinding their positions. Consistent with a contagion effect, the level of short interest for the control firms begins to increase after a restatement is announced by its industry- and size-matched counterpart. Using three proxies for accounting irregularities, we find that the significant difference in short interest between restatement and control firms is driven entirely by those firms restating because of severe accounting irregularities. Our results indicate a high level of short seller expertise in identifying accounting irregularities.

Transitional and quasi‐objects in organization studies

It is proposed to examine how these two different models of human relations – that of Winnicott and Serres – illuminate features of contemporary organizational life. With these models, one can view recent scandals in the USA, specifically the implosion of the energy firm, Enron. Previous accounts of Enron emphasize the manipulations of income and accounting irregularities; however, it is suggested that the accounting manipulations illuminate features of human relations within and outside the economic firm. As a case study, Enron provides a good example of how the object theories of Winnicott and Serres illuminate aspects of behavior in our contemporary organizations and address problems of postmodernity. Andrew Fastow, former CFO of Enron, is the postmodern subject with pathological splitting behavior. Enron is the playground where Fastow played with quasi‐objects among other postmodern subjects. Enron is also the site where the circulation of quasi‐objects in the form of SPEs suddenly ceased.

El efecto a corto plazo en el precio de una acción de capital de una compañia tenedora de bancos en Puerto Rico cuando la campaña anuncia una recompra de acciones

Sinopsis de las siguientes tesis: Detectar irregularidades de contabilidad: Un estudio de transacciones específicas indicativas de prácticas inapropiadas, El puerto de las Américas: La puerta al futuro de Puerto Rico,El efecto a corto plazo en el precio de una acción de capital de una compañía tenedora de bancos en Puerto Rico cuando la compañía anuncia una recompra de acciones, El trabajo a distancia y los beneficios económicos para las empresas, Los costos de transacción en el mercado secundario de capital de Puerto Rico.

Detectar irregularidades de contabilidad: Un estudio de transacciones específicas indicativas de prácticas inapropiadas

Sinopsis de las siguientes tesis: Detectar irregularidades de contabilidad: Un estudio de transacciones específicas indicativas de prácticas inapropiadas, El puerto de las Américas: La puerta al futuro de Puerto Rico,El efecto a corto plazo en el precio de una acción de capital de una compañía tenedora de bancos en Puerto Rico cuando la compañía anuncia una recompra de acciones, El trabajo a distancia y los beneficios económicos para las empresas, Los costos de transacción en el mercado secundario de capital de Puerto Rico.

The stresses of retail internationalization: lessons from Royal Ahold's experience in Latin America

Written prior to the financial crisis of the world's third largest retailer following its announcement of accounting irregularities on 24 February 2003, this paper uses a case study of Ahold's struggles to manage significant investment in the unpredictable business environments of Latin America to focus attention on the stresses internationalization poses for the retail firm. It offers a picture of retail multinationals facing distinctive organizational challenges as they seek to transpose internal and inter-firm practices to markedly different institutional environments, and of a highly contested retail internationalization process - not least by the suppliers of finance. It concludes by drawing out five lessons for retail internationalization theory from Ahold's experiences. A postscript then summarizes the events following Ahold's revelation of significant accounting irregularities through to the announcement of its decision on 3 April 2003 to withdraw from South America. That postscript assesses what further insights the corporate scandal has revealed about Ahold's management of its significant investment in the region.

Traffic flows modelling and the evaluation of energy-ecological parameters. Part I.

The purpose of the investigation is the development of methods of estimation of energy consumption and intensity of accompanying pollutant emissions caused by a traffic flow taking into account irregularity of movement. The stochastic modelling of mixed traffic flows on multilane road is elaborated in the paper. The paper is the first part of this work. Here, we formulate the terms of a saturated traffic flow, of stable and unstable regime of flows. Determinate and stochastic components of traffic variance are introduced and modelled. The stochastic modelling results of traffic flows made and stochastic fluctuation are investigated.

Physicochemical Behavior of Impurity Atoms Formed by Nuclear Transmutation in the Course of Post-Radiation Annealing of Irradiated Cadmium Metal

The mechanism of impurity atom transfer during annealing of irradiated cadmium targets was studied. Structural transformations of the irradiated metal are accompanied by accelerated migration of Sn and In. It was found that the migration rate of impurity atoms depends on the nuclear history (radiation dose, type and energy of the bombarding particles), and the transfer rate decreases during post-radiation annealing of the metal. To explain the abnormal behavior of impurities, the transfer mechanism was proposed, which takes into account irregularity of the metal crystal structure after irradiation and structural transformations, and also possible stabilization forms of transmutation nuclides in the irradiated cadmium (at the substitution and intercalation positions and at the crystallite grain boundary).

Sound scattering by several zooplankton groups. II. Scattering models.

Mathematical scattering models are derived and compared with data from zooplankton from several gross anatomical groups--fluidlike, elastic shelled, and gas bearing. The models are based upon the acoustically inferred boundary conditions determined from laboratory backscattering data presented in part I of this series [Stanton et al., J. Acoust. Soc. Am. 103, 225-235 (1998)]. The models use a combination of ray theory, modal-series solution, and distorted wave Born approximation (DWBA). The formulations, which are inherently approximate, are designed to include only the dominant scattering mechanisms as determined from the experiments. The models for the fluidlike animals (euphausiids in this case) ranged from the simplest case involving two rays, which could qualitatively describe the structure of target strength versus frequency for single pings, to the most complex case involving a rough inhomogeneous asymmetrically tapered bent cylinder using the DWBA-based formulation which could predict echo levels over all angles of incidence (including the difficult region of end-on incidence). The model for the elastic shelled body (gastropods in this case) involved development of an analytical model which takes into account irregularities and discontinuities of the shell. The model for gas-bearing animals (siphonophores) is a hybrid model which is composed of the summation of the exact solution to the gas sphere and the approximate DWBA-based formulation for arbitrarily shaped fluidlike bodies. There is also a simplified ray-based model for the siphonophore. The models are applied to data involving single pings, ping-to-ping variability, and echoes averaged over many pings. There is reasonable qualitative agreement between the predictions and single ping data, and reasonable quantitative agreement between the predictions and variability and averages of echo data.

Effect of dimensionality of heterogeneity corrections on the implementation of a three-dimensional electron pencil-beam algorithm

Electron beam dose distributions were calculated on a three-dimensional grid using three pencil-beam algorithms, each taking into account irregularities in field shape. The algorithms differ in that patient anatomy in either one, two, or three dimensions is used in the calculation of dose to a point. Algorithms were optimized for speed by such techniques as precalculation and storage of several quantities, reordering of pencil-beam and grid-point loops, selection of cutoff values for some calculated quantities, and invoking error function symmetries. Execution times for optimized versions of each of the algorithms as implemented on a three-dimensional treatment planning system were comparable for both the one- and two-dimensional heterogeneity corrections, in spite of the fact that the two-dimensional heterogeneity correction requires an additional calculational loop over fan lines.

Seismic Ray Tomography Using the Method of Damped Least Squares

The well known problem with seismic tomography is that limitations of source receiver geometry mean that seismic ray coverage is incomplete. This is one cause of artifacts that disturb reconstructed velocity distribution images. In this paper, we attempt to reduce the occurrence of artifacts by means of the damped least squares method.In general, tomographic velocity models are obtained by dividing the area of exploration into a number of rectangular cells, and assigning slowness values to each cell. The reconstruction procedure generally used is the iterative method, in which ray tracing and modification of the model are carried out alternately.The damped least squares method is one way to obtain stable least squares solutions. It is an attempt by the authors to take into account irregularity of ray coverage by determining damping parameters for each cell from the number and directionality of rays passing through each cell.Numerical experiments showed that if appropriate damping parameters are selected, the damped least squares method can reduce the occurrence of artifacts. The method was also applied with good results to field measurements, taken at a dam site in an area of granite.