Effects Of Regulatory Changes Research Articles

Using AI in the informal currency market: evidence from Cuba

ABSTRACT This article explains the various steps of a novel methodology designed to analyse the informal currency market and calculate a parallel exchange rate (ER). We utilize artificial intelligence algorithms for Natural Language Processing to extract data from social network groups and classified websites. The methodology has been implemented since 2021 amidst Cuba’s complex financial and political landscape. Given that the official exchange rate remains fixed and overvalued, the calculated ER has become vital for assessing the real-time effects of regulatory changes, economic shocks, and policies. We conduct a statistical and econometric analysis using vector autoregressive models and spillover indexes to validate the economic and financial consistency of the informal market’s time series.

Effectiveness of regulatory changes in administrative law during the war

Introduction. In the conditions of war, administrative law faces new challenges that require prompt and adequate regulatory changes. Traditional approaches to administrative regulation may not be effective enough, putting stability, security and law and order at risk. Adaptation of normative acts, procedures and mechanisms of administrative law to the conditions of war is an urgent need. The purpose of the paper is to determine the effectiveness of regulatory changes in administrative law during wartime, to analyze the impact of these changes on the functioning of state bodies and the protection of citizens’ rights, as well as to develop practical recommendations for improving the regulatory framework in wartime conditions. The results. The paper provides an overview of the main normative acts adopted in Ukraine during the war, such as the laws "On the National Security of Ukraine" and "On the Defense of Ukraine", as well as presidential decrees and resolutions of the Cabinet of Ministers. Their influence on administrative practice, in particular on mobilization measures, coordination between state bodies and protection of information resources, is considered. The analysis of international experience showed that other countries also implemented similar regulatory changes to improve the effectiveness of public administration in wartime conditions. The main problems and challenges faced by state bodies and citizens in the conditions of martial law have been identified. Based on the research of Ukrainian and international scientists, specific mechanisms and approaches for adapting administrative law to the conditions of war are proposed. Conclusion. The conclusions of the paper emphasize the need for a quick and flexible response of the regulatory framework to the challenges of war. It is recommended to create legislative and organizational mechanisms that will ensure the effective work of state bodies and the protection of citizens’ rights. The paper proposes concrete measures to increase the transparency and accountability of state bodies, which are critically important in wartime conditions. Prospects for further developments include research into the long-term consequences of the implemented changes and their impact on the stability of public administration in the post-war period.

The Role of Regulatory Frameworks in Shaping the Firm Value of Cross-Listed Companies: A Comparative Analysis

This study examines the impact of regulatory frameworks on the firm value of cross-listed companies in Hong Kong and Mainland China, employing Institutional and Agency theories as analytical lenses. The research primarily utilizes quantitative methodologies, analysing secondary data sourced from financial databases and regulatory bodies. Key findings indicate that stringent regulatory compliance in Hong Kong correlates with higher firm values compared to Mainland China. Effective enforcement of regulations in Hong Kong also reduces information asymmetry, thereby increasing firm value. Conversely, regulatory discrepancies between the two regions increase perceived investment risks, negatively impacting firm value. These results underscore the importance of robust, consistent regulatory practices in enhancing corporate legitimacy and investor confidence. The study acknowledges limitations related to the reliance on secondary data and the dynamic nature of regulatory frameworks, which may affect the timeliness and applicability of the findings across different regions. Future research directions include conducting longitudinal studies to assess the temporal effects of regulatory changes, incorporating qualitative analyses to deepen understanding of corporate responses to regulatory environments, and expanding the geographical scope to include comparisons with other global markets. This research contributes to the existing literature by highlighting how regulatory alignment and enforcement influence the economic valuation of cross-listed firms, providing valuable insights for regulators and corporate managers aiming to optimize firm value in complex regulatory landscapes.

Redistributive Regulations and Deadweight Loss

AbstractRedistribution generates equity benefits and deadweight loss. A canonical result in economic theory holds that policymakers generally cannot escape the problem of deadweight loss by redistributing through non-tax rules. Nonetheless, the Office of Management and Budget (OMB) released a revised framework for regulatory analysis in November 2023 that encouraged federal agencies to consider distributional benefits – but not the deadweight loss of redistribution – when choosing which non-tax rules to promulgate. By omitting deadweight loss from distributional analysis, OMB’s framework will lead to inaccurate estimates of the welfare effects of regulatory changes and will leave agencies vulnerable to legal attack on the ground that they have ignored an important aspect of regulatory redistribution in their decision-making. This article illustrates how agencies can incorporate deadweight loss into distributional analysis and thereby place their redistributive rules on firmer economic and legal footing. It shows how the “elasticity of taxable income” approach – widely used by tax economists – can be modified to the regulatory context so that agencies can estimate the deadweight loss of redistributive regulations while incurring relatively modest additional analytical burdens. Explicitly incorporating deadweight loss into distributional analysis will provide the public with a more accurate view of the welfare consequences of regulatory actions and will make regulations more robust to legal challenges.

The Influence of Environmental Change on Pharmaceutical Companies -- Analysis of Opportunities for Pharmaceutical Companies, Take Roche Inc., Pfizer, and Merck. as an example

The impact of natural environment change on biological pharmaceutical companies has become a growing concern in recent years. In response, re-searchers have employed various models to analyze the relationship between natural environment changes and the financial performance of these companies. This paper will use the Capital Asset Pricing Model (CAPM) and Fama-French Three-Factor Model (FF3F) to estimate the impact of natural environment changes on biological pharmaceutical companies. Using secondary data from past studies, this paper conducts a literature review to analyze the impact of natural environmental changes on these companies, particularly in terms of their risk and return tradeoffs. Results from previous research indicate that both CAPM and FF3F models can be used to measure the risk and return trade-offs in the context of natural environmental changes. The CAPM model has been used to identify factors such as natural disasters and climate change that influence the risk of these companies, while the FF3F model has been used to measure the effect of regulatory changes on their stock prices. Overall, this paper brings together previous insights and findings, aiming to provide a deeper understanding of the impact of natural environment change on biological pharmaceutical companies. It concludes that further research is needed to investigate other factors that can influence the performance of these companies in the face of natural environmental changes.

Assessment and Control of Investment Risk in Real Estate Projects

The fast rise of China's real estate business has efficiently propelled the country's economy, and it is also profoundly entwined with the daily lives of the Chinese populace. There are more investment risks associated with real estate projects due to the size of the investment funds, the length of time required to accomplish the task, the effect of regulatory changes, the market climate, and other variables. If these risks are not appropriately managed, they will lower the investment's return. Real estate project investments should be more cautious and scientific, fully assess investment risks, and target the appropriate control measures to reduce the impact of risk factors and ensure the smooth implementation of investment activities. This is particularly crucial in light of the new normal, which involves increased uncertainty.

IMPACT OF COVID-19 ON THE CAPITAL MANAGEMENT (IMPLEMENTATION AND COMPLIANCE OF THE BASEL-3 FRAMEWORK) OF THE BANKS IN BANGLADESH

The global economic condition has faced tremendous pressure due to the arrival of Covid-19. Covid-19 has affected the business and financial system severely and put extra pressure on banks in earnings, expenses, and operating efficiencies. Capital management has been a challenge for the banks in Bangladesh due to higher NPLs ratio, poor governance, and weakness in the quality of assets. The Covid situation has deepened manifold due to regulatory changes, fall in earnings, and asset quality with extra facilities being offered to the borrowers during the crisis period. This paper investigates the impact/s of Covid-19 on capital requirements, capital adequacy ratio, and capital management of banks in Bangladesh. The paper analyzes the effects of Covid-19 on key risk factors of the banking sector i.e. capital requirements and financial stability. The study is based on time series data comprising 62 banks operating in Bangladesh and a total of bank-year observations over the period 2012 to 2021. The empirical output of the paper unveils the degree of changes in capital adequacy of banks in the post-Covid situation. The paper also illustrates the impact of Covid-19 on CAR due to changes in performance indicators represented by different financial ratios- ROA, NIM & ROE which have been affected negatively in the post-Covid situation due to the effects of regulatory changes during the Pandemic. Although Classification status was not changed due to regulatory relaxation, the expenses on provisions and others increased substantially and resulting in a fall in profits and affecting the CAR negatively. The findings also show that there exists interconnectivity between the performance indicators and capital management.

Evaluating Regulatory Reform: Banks' Cost of Capital and Lending

AbstractWe examine the effects of regulatory changes on banks' cost of capital and lending. Since the passage of the Dodd–Frank Act, the value‐weighted CAPM cost of capital for banks has averaged 10.5% and declined by more than 4% on a within‐firm basis relative to financial crisis highs. This decrease was much greater for the largest banks subject to new regulation than for other banks and firms. Over a longer 20‐year horizon, we find that changes in the systematic risk of bank equity have real economic consequences: increases in banks' cost of capital are associated with tightening in credit supply and loan rates.

Indirect Effects of Regulatory Changes: Evidence From the Acceleration of the 10-K Filing Deadline

This study responds to a recent call for research on the indirect effects of regulatory changes and examines the audit office effects of changes in client time pressure, using the first acceleration of the 10-K filing deadline as the primary research setting. The extant literature provides evidence that increased client time pressure adversely affects the timing and quality of individual engagements. We argue that because audit offices possess finite resources and production capacity, client-level pressure can have office-level effects. We document within-office differences related to changes in audit timeliness. In the same audit office, clients with no pressure (with pressure) experience an increase (a decrease) in audit report lag post-acceleration. This evidence suggests that auditors alter the timing of concurrent engagements in response to client pressure, and clients of the same office are affected differently by changes in time pressure. We also document across-office differences in audit/filing timeliness and audit quality. Clients of audit offices with more time pressure across the entire client portfolio have a greater increase in audit delay, are more likely to file late, and experience lower audit quality. Taken as a whole, our results are consistent with client pressure producing office effects as a result of the auditors’ response to increased resource constraints. These results should be informative to regulators and practitioners, because they suggest there are indirect costs associated with regulation and such effects are not limited to directly affected clients. Further, the results indicate that auditors do not always respond to changes in resource requirements in a manner that prevents undue strain.

The effect of regulatory changes on relationship between earnings management and financial reporting timeliness: The case of COVID-19 pandemic

The purpose of this paper was to examine the effect of regulatory changes regarding financial reporting deadlines introduced because of COVID-19 pandemic on relationship between earnings management and financial reporting timeliness Using sample of companies listed on stock exchange in Republic of Croatia for the period from 2015 to 2019, pooled OLS regression model was estimated with panel data Financial reporting timeliness was measured with financial reporting delay, while level of earnings management was proxied by discretionary accruals Empirical results supported the hypothesis that the aforementioned changes of regulatory framework during the extraordinary pandemic circumstances had a statistically significant positive effect on relationship between earnings management and financial reporting delay, indicating that financial reporting delays after regulatory changes during pandemic could be attributed to earnings management activities Furthermore, after separating income-increasing and income-decreasing accruals, moderating effect of regulatory changes was significant and negative only in case of income decreasing accruals, suggesting that companies were adjusting their financial information in accordance with pessimistic economic forecasts to mitigate probable profitability deterioration in future periods © 2020, University of Rijeka All rights reserved

The financial impact of the implementation of Solvency II on the Mexican insurance sector

This paper examines the effects of the regulatory changes implemented in the Mexican insurance sector in adjustment to the international regulations of Solvency II imposed by the International Association of Insurance Supervisors. The effect of regulatory changes on the risk and performance levels of foreign entities was analysed and compared with their domestic counterparts. Using a difference-in-difference estimator, significant evidence that foreign insurance companies enhanced their default risk after complying with the law was found. The findings showed that the stability levels of domestic entities were negatively affected. No effect on the performance level for both types of entities was found. This study provides evidence that foreign entities were already prepared for the change in regulation, as opposed to domestic ones, due to their association with their foreign holdings.

Regulating Opioid Supply Through Insurance Coverage.

Responding to an opioid crisis in Canada, policy makers have implemented supply-side interventions seldom used in the US, regulating insurance reimbursement to discourage the prescribing of specified opioids. Using national databases of all opioids dispensed through provincial pharmaceutical programs and of opioid hospitalizations from January 2006 through March 2017, we found that requiring physicians to obtain prior authorization for patients to receive reimbursement for OxyContin prescriptions substantially reduced OxyContin fills, particularly among opioid-naive patients; it also reduced overall opioid prescriptions, suggesting limited substitution. "Grandfathering" OxyNeo (an abuse-resistant OxyContin variant), allowing previous OxyContin patients to obtain OxyNeo, increased OxyNeo fills but had no detectable effect on total opioid prescriptions, which points to substantial opioid substitution among chronic users of prescription opioids. We found no effects of regulatory changes on opioid-related hospitalizations. These results suggest that restrictions on pharmaceutical formularies can reduce fills of targeted opioids with the additional benefit of altering treatment of opioid-naive and other patients differently. Canadian policy makers may wish to extend such regulations to more provincial formularies and private insurers, and policy makers in the US and elsewhere could fruitfully follow suit.

Regulatory changes and audit fees: the moderating effect of overlapping directorship and financial reporting quality

PurposeThis study examines the contemporaneous changes in the reporting regime in Nigeria by investigating the effect of regulatory changes on audit fees as well as the moderating effect of overlapping directorship and financial reporting quality.Design/methodology/approachThis study utilises a longitudinal sample of 409 firm-year observations, from 2008 to 2013, of nonfinancial companies listed on the Nigerian stock exchange. The study uses the general method of moments (GMM) to control for endogeneity concerns.FindingsThe results reveal that, without the moderating effect of overlapping directorship and financial reporting quality, the relationship between regulatory changes and audit fees is positive but weak, which suggests that regulatory changes drive cost. Similarly, the interaction of overlapping directorship did not reverse the positive relationship, which suggests the perceived risk associated with overlapping directorship. However, the improvement in financial reporting quality reverses the relationship, as evidenced by the negative and significant coefficient on the interacted terms.Practical implicationsThis study provides useful insights about committee membership overlap to regulatory authorities concerning the weakness of the monitoring ability of such committees.Originality/valueThe results of this study contribute to the growing literature on regulatory reform, audit fees and corporate governance. Specifically, the study provides empirical evidence on the effect of committee overlap on audit fees, which, to the best of the researchers' knowledge, has received no empirical attention in the Nigerian context.

Corporate Social Responsibility Reporting Practices in Banking Companies in Bangladesh: A Review

This paper reviewed the work of Ullah and Rahman on Corporate Social Responsibility (CSR) reporting practices. This has been an issue of concern both in terms of content and impacts on the bottom lines of businesses as well as compliance with regulations regarding CSR and extent of compliance. The review assesses how well the objectives of the authors were achieved and the applicability of its findings. Results showed that although content analysis was appropriately adopted for the study, the outcomes may be a result of tax inducement implemented. In addition, linguistic approach was also used in the study. 97 relevant factors extracted from literature on CSR reporting were categorized into seven but the basis was not disclosed. This impairs reliance on the results of the analysis. In determining the effect of regulatory changes on the volume of CSR information disclosed, descriptive analysis was used and it is inadequate for generalizations drawn. It would have been more conclusive if it had been compared with data from other climes. In assessing the relationship of Bank characteristics to CSR reporting, the definition of what constitutes independent and dependent variables. This study has pointed attention to the roles of policy response in CSR expenditure.

Effects of regulatory changes in microcredit on the financial and social performance of Brazilian credit unions

ABSTRACT This study investigates whether the performance of credit unions that offer microcredit in Brazil was affected by the advent of Crescer - the National Microcredit Program. This research fills a gap in the literature because few papers investigate credit unions that work with microcredit and also the effects of governmental interventions related to microcredit operations. Studies of this type may help evaluate the impact of governmental interventions on the performance of the institutions that are directly or indirectly affected. Our results add to the debate about microcredit and about the inclusion of credit unions in this market. In particular, our evidence may influence the design of public policies and the strategies of microfinance institutions, which typically combine economic and social objectives. Based on the literature, we calculate fifteen indicators for each credit union, related to their financial and social performance. The inferences are based on the implementation of the difference in differences estimator using the advent of Crescer, in 2011, as the exogenous event of interest and including in the control group the credit unions that did not provide microcredit loans throughout the sample period. This research presents evidence that the volume of clients and microcredit operations performed by Brazilian credit unions was positively affected by regulatory changes that took place in 2011, consistently with the objectives of the governmental intervention. The evidence also suggests that the governmental intervention did not harm the financial sustainability of the credit unions. The main changes are: a substantial reduction of interest rates and transaction costs, the implementation of subsidies to participants in the program, and a push for public banks to enhance their supply of productive and oriented microcredit.

Regulatory changes and reporting quality: the moderating role of firm characteristics

The objective of this study is to investigate the effect of regulatory changes on financial reporting quality and audit fees and to further test whether this effect was moderated by firm characteristics (i.e. abnormal audit fees, political connections and overlapping directorship) in Nigeria. This study utilized the data of 90 companies listed on the Nigerian stock exchange over the period 2008–2013. Using Generalized Method of Moments (GMM) technique that takes into account the endogeneity nature of financial reporting quality and audit fees model, the results indicated that financial reporting quality improved in the regulatory changes period. However, abnormal audit fees, political connection and overlapping directorship deteriorated the effect. Accordingly, future regulatory reforms must be cognizant of these factors. Even though there are abundant empirical studies on financial regulatory changes and their effects on financial reporting quality, this study provides additional insights into the regulatory change literature by investigating how firm characteristics (abnormal audit fees, political connection and overlapping directorship) moderate the effect of regulatory changes particularly in Nigeria, one of the less developed and underresearched capital markets in the world. Further, the findings of this study are robust with respect to the issues of unobserved heterogeneity and endogeneity, which previous studies had failed to consider.

Asymmetric sensitivity of executive bonus compensation to earnings and the effect of regulatory changes

In this paper we examine the sensitivity of CEO bonus to earnings in the cases of good news and bad news, and compare these relationships in the periods before and after SOX. We find an asymmetric sensitivity of bonus to earnings. We also find that the asymmetric sensitivity of bonus to earnings exists before SOX but disappears post SOX. Regulatory changes brought forth by SOX, including personal certifications of financial reporting by CEOs and CFOs, the claw back provision, annual evaluation of internal controls and disclosure of any material weakness, and increased level of conservatism in firms and their auditors after SOX, offer an alternative mechanism to monitor executives, potentially reducing the ex post settling up problem. The findings show that regulatory changes affect compensation contracts and have implications for regulators, managers, politicians, investors, and academics in their assessment of the equitable relationship between executive efforts and executive bonus compensation.

Rehabilitation of existing building stock: A system dynamics model to support policy development

The development of policies to support an agenda of urban rehabilitation as a part of a city's approach to engender sustainability is a difficult process owing to the need to consider a large number of stakeholder needs and demands. For example, Hong Kong has accumulated a considerable amount of building stock due to its rapid economic development over the last 50 years. However, despite Hong Kong's economic growth, it has overlooked the need to rehabilitate its existing building stock (i.e. to restore the condition, operation and capacity of buildings). As such, a significant proportion of Hong Kong's ageing building stock is in need of rehabilitation. Further, the absence of a systemic maintenance policy, has stymied the Hong Kong's government's ability to ensure that its private building stock are resilient and adaptable for the future. Responding to the resulting need to develop urban rehabilitation policies for Hong Kong, this paper develops a system dynamics (SD) model to: (1) understand the future trend of the aged private buildings, particularly their sizes and age distribution; and (2) examine the complex relationships between allocated resources such as building professionals, number of aged private buildings and the strength of rehabilitation policies. The SD model developed can be used as a planning tool to simulate the effects of regulatory changes on aged private building stock management in consideration of available resources. The model development relies on a real-life database that can be applied to any city that faces the need to rehabilitate its ageing building stock as a part of an urban rehabilitation strategy.

INVESTOR RESPONSE TO FOOD NUTRITION LABELING REGULATION IN CHINA

INVESTOR RESPONSE TO FOOD NUTRITION LABELING REGULATION IN CHINA

Regulatory Changes and the Cost of Capital for Banks

We examine the effects of regulatory changes on banks’ cost of capital and lending. Since the passage of the Dodd-Frank Act, the value-weighted CAPM cost of capital for banks has averaged 10.5 percent and declined by more than 4 percent on a within-firm basis relative to financial crisis highs. This decrease was much greater for the largest banks subject to new regulation than for other banks and firms. Over a longer twenty-year horizon, we find that changes in the systematic risk of bank equity have real economic consequences: increases in banks’ cost of capital are associated with tightening in credit supply and loan rates.