Transaction Structure Research Articles

An interlocutory analysis as a methodological approach in studying cognitivo-linguistic mediations: Interest, difficulties, and limits

According to a Vygotskian approach, apprenticeship and cognitive development are linked with the internalization of significant function of language signs, namely with the ability to use words as conceptual tools. Such an internalization is not possible without social mediation and meaning negotiation, within (or consecutively to) an interactive situation. Because within this socio-cognitive process (both inter-individual and intra-individual), linguistic signs play a principal role, a logical analysis of the interlocution seems to be a powerful way to study interlocutive processes: It permits us to understand how semiotic mediations can produce, via exchanged speech acts, new knowledge and new social and cognitive tools. However, we will evoke some theoretical and methodological problems encountered in interaction analysis with young children: the validity (i) of transcription of the reality (coding is transforming, more or less); (ii) of interdiscusive corpus analysed (How can we transcribe punctuation of discourses as well as affects and its perlocutory aims? Are chosen sequences relevant to be analysed?); and (iii) of the researcher's inferences regarding the effective mechanisms; the importance of nonverbal signs within a conversation; and the difficulty (i) of abstracting structures of transactions and (ii) of measuring both the impact of subject's previous social and cognitive experience and representations concerning the partner.

Transaction Structuring and Canadian Convertible Debt

We examine whether Canadian firms issuing convertible debt over the period 1996–2003 structured issuances to minimize reported leverage. Over this sample period, some firms using payment-in-kind (PIK) provisions providing them with the option to make interest and/or principal payments in company shares were able to record significant amounts of the issuance as equity. In a sample of 195 convertible debt offerings, we find significant variation in accounting treatment, ranging from firms recording the entire issuance as debt to some recording the entire issuance as equity. We find evidence consistent with the contention that reporting benefits are an important reason why high-leverage corporations with material convertible debt transactions used PIK provisions. In contrast, our evidence suggests that the future financial flexibility ensuing from the use of PIK provisions was an important determinant of income trusts’ use of this feature. We acknowledge, however, that during our sample period PIK provisions simultaneously provide both financial flexibility and reporting benefits to any issuer, whether corporation or trust. Finally, we document a negative share price reaction on the part of convertible debt issuers employing PIK provisions at the time when the likelihood of the introduction of more restrictive accounting rules increased. This negative reaction is driven by the corporations in our sample, with the income trusts largely unaffected. Our findings are relevant to standard setters as they debate alternative models for distinguishing between equity and liabilities.

Tuulikki Pietilä. Gossip, Markets and Gender: How Dialogue Constructs Moral Value in Post-Socialist Kilimanjaro. Women in Africa and the Diaspora series. Madison: University of Wisconsin Press, 2007. xi + 241 pp. Maps. Photographs. Illustrations. Notes. Glossary. Bibliography. Index. $45.00. Cloth.

Tuulikki Pietila. Gossip, Markets and Gender: How Dialogue Constructs Moral Value in Post-Socialist Kilimanjaro. Women in Africa and the Diaspora series. Madison: University of Wisconsin Press, 2007. xi + 241 pp. Maps. Photographs. Illustrations. Notes. Glossary. Bibliography. Index. $45.00. Cloth. The seemingly ubiquitous is the setting of Pietila's study of everyday talk and negotiated morality in contemporary Tanzania. It is told in ethnographic detail against the backdrop of the creative and sometimes contradictory social relations of businesspersons and traders in the Kilimanjaro region (both women and men) . Pietila is interested in everyday conversation, stories, even gossip and rumor, which reveal not simply a changing economic reality but a public conversation. Public dialogue is concerned with the morality of markets, women, and businessmen. She subtly shifts our focus of analysis from the actual economic changes that liberalization and globalization have brought to the ways that people debate, challenge, and construct individual and collective morality in response to these changes. Pietila brings comprehensive order to the Himo in Kilimanjaro without sacrificing complexity, in describing both the organization of the and the structure of negotiation and economic transactions. She provides scrupulous accounting of the possible meanings of each of the various steps of a seemingly simple transaction such as the bargaining between a trader and a customer. Her goal is to use everyday conversation as a tool for blurring the lines between the and the moral economy. While the literature on economic relations in so-called noncapitalist societies tends to see these two economies as distinct, Pietila's interest is in how traders in Kilimanjaro draw on concepts and language from kinship and domestic spheres to bring the moral economy into the marketplace. In this case, Chagga experiences are informed not only by the but also by the history of Tanzanian socialism; everyday conversation and gossip reveal uneasiness with the perceived corruption and individualized wealth accumulation under postsocialist regimes. At the same time, conversations in the market, especially among and about women traders, are part of the renegotiation of gender roles in contemporary Tanzania as well as ways to build, shape, and contest reputations. Pietila's particular interest is in the morality of women and men, and what everyday stories and discourse reveal about gender relations, and (to a lesser extent) age, class, and other important social hierarchies. She argues that women traders use idioms of motherhood, kinship, and patronage to bring stable sociality and reciprocity to the market (48). In this way, women traders use what appears to be casual talk, such as gossip and joking, to construct and preserve the reputations of entrepreneurs in the context of rapid economic change. …

The need for transparency in financial reporting

PurposeThe paper's aim is to research and discuss the issue of the lack of transparency in financial reporting and how companies take advantage of accounting rules in ways that inhibit transparency.Design/methodology/approachA literature review was carried out to see what had been written and discussed. Various legal cases were studied as well as Securities and Exchange Commission (SEC) and Financial Accounting Standards Board (FASB) studies of the impact of off‐balance‐sheet arrangements allowed by the FASB and SEC.FindingsThere are many ways that companies accomplish off‐balance‐sheet financing by taking advantage of rules‐based accounting. If there is not a rule to prevent an entity from handling a particular transaction a certain way, then it is difficult for the auditor to stop it from happening.Research limitations/implicationsThe paper is of descriptive nature. There are many policy implications from the results of the paper for all regulatory agencies. The economic substance of transactions needs to be communicated.Practical implicationsFinancial managers and financial consultants need to refocus the structuring of financial transactions so that they comply with generally accepted accounting principles and that the economic substance of financial transactions is communicated. More accountability and ethical awareness needs to be instilled in the individuals who deceitfully structure financial transactions. Regulatory bodies need to ensure more transparency by closing loopholes and better enforcement of accounting standards. Boards of directors, especially the audit committees, need to be sure that a company is communicating the true economic reality of the financial transactions and financial position of the business entity. Off‐balance‐sheet financing is one of the most significant ways, among others, that the user of financial statements can be misled. It is time for regulatory bodies to eliminate overly rules‐based standards, clearly state the economic objective of each standard, and require firms to disclose the economic motivations for the accounting practices they adopt.Originality/valueThe value of the paper is that it studies the problems of the lack of transparency in financial reporting. It then suggests that if what is currently being done, (i.e. rules‐based accounting), is not working, then a new approach, principles‐based accounting needs to be implemented by the regulatory agencies. This paper provides an overview of the lack of financial statement transparency.

Assessing the Credit Risk of CDOs Backed by Structured Finance Securities

The collateralized debt obligation (CDO) market grew strongly in the last several years thanks to a strong U.S. housing market, a low interest rate environment, abundant global excess liquidity, and a healthy U.S. economy. The growth slowed significantly in 2007 amidst an unprecedented housing market turnaround and the sudden performance deterioration of recent-vintage subprime residential mortgage-backed securities (RMBS). CDOs9 large exposure to these subprime RMBS brought them under intense scrutiny. The illiquidity, novelty, and complexity of CDOs made them easy targets of criticism. This paper describes the evolution of CDOs backed by structured finance securities (SF CDOs) and the analytical approaches used by Moody9s to rate SF CDOs. We show that SF CDOs have experienced substantial changes in the last eight years in terms of asset distribution and transaction structure. We find that this sector has been dominated by Aaa-rated securities (about 85% by dollar volume of issuance), which had not experienced any defaults and losses as of the end of 2006. Although recently issued SF CDOs are expected to perform poorly, not all SF CDOs are backed by subprime RMBS and CDO performance is expected to vary significantly across transactions. This paper also describes Moody9s methods for the modeling of four basic components—default probability, recovery rate, asset correlation, and prepayment rate—and the differences and similarities across different rating models for transactions with and without complex waterfalls. Additionally, we analyze the rationale of a number of structural features such as par haircuts on assets with low credit ratings and assets purchased at deep discounts in SF CDOs as well as additional stresses that are designed to protect SF CDO investors. Finally, we note that the changing distribution of CDO assets and the different credit cycles to which these assets have been subjected make it difficult to interpret the average statistics computed for the overall CDO sector during a short data sample period that covers only a part of the credit cycle for each asset type. <b>TOPICS:</b>CLOs, CDOs, and other structured credit, project finance, legal and regulatory issues for structured finance

L'industrie de l'informatique à Toulouse : Développement, Structure, Enjeux

Cet article traite du développement de l’industrie de l’informatique dans la métropole toulousaine. Les activités informatiques se sont surtout constituées en interrelation avec l’industrie aéronautique et spatiale locale. La géographie économique de l’industrie toulousaine de l’informatique souligne le rôle central joué par le marché métropolitain du travail et la structure locale des transactions interentreprises. L’industrie aéronautique et spatiale opère une externalisation de plus en plus marquée des fonctions informatiques, ce qui conduit à une densification dans l’agglomération toulousaine de producteurs et de prestataires informatiques. Les dispositifs locaux de régulation de cette industrie révèlent la propension à une démarche partenariale entre les institutions privées et publiques en charge du soutien à l’industrie et des corrections portées aux insuffisances du marché.

Assessing the Credit Risk of CDOs Backed by Structured Finance Securities: Rating Analysts' Challenges and Solutions

The CDO market grew strongly in the last several years thanks to a strong U.S. housing market, a low interest rate environment, abundant global excess liquidity, and a healthy U.S. economy. The growth slowed significantly in 2007 amidst an unprecedented housing market turnaround and the sudden performance deterioration of recent-vintage subprime residential mortgages-backed securities (RMBS). CDOs' large exposure to these subprime RMBS brought them under intense scrutiny. The illiquidity, novelty, and complexity of CDOs made them easy targets of criticism. This paper describes the evolution of CDOs backed by structured finance securities (SF CDOs) and the analytical approaches used by Moody's to rate SF CDOs. We show that SF CDOs have experienced substantial changes in the last eight years in terms of asset distribution and transaction structure. We find that this sector has been dominated by AAA-rated securities (about 85% by dollar volume of issuance), which did not experience any defaults and losses as of the end of 2006. Although recently issued SF CDOs are expected to perform poorly, not all SF CDOs are backed by subprime RMBS and CDO performance is expected to vary significantly across transactions. This paper also describes Moody's methods for the modeling of four basic components - default probability, recovery rate, asset correlation, and prepayment rate - and the differences and similarities across different rating models for transactions with and without complex waterfalls. Additionally, we analyze the rationale of a number of structural features such as par haircuts on lowly rated assets and assets purchased at deep discount in SF CDOs and additional stresses that are designed to protect SF CDO investors. Finally, we note that the changing distribution of CDO assets and the different credit cycles to which these assets have been subjected make it difficult to interpret the average statistics computed for the overall CDO sector during a short data sample period that covers only a part of the credit cycle for each asset type.

Structure, function and evaluation of SME service transactions: a multimethod approach

Given the low rate of e-business technology adoption by Australian Small and Medium Enterprises (SMEs), a customer's experience of a business is still largely based on face-to-face transactions. The conduct of these transactions will be critical to the continued well-being of an SME. This paper describes a methodological pilot study that utilises a novel multimethod approach consisting of systemic functional linguistics, qualitative analysis, and Q methodology for the detailed structural, functional and evaluative analysis of service encounters. The purpose of this paper is to describe and exemplify these techniques and to show how complementary they are in practice. We use loan and return transactions from a library to illustrate the fine-grained nature of this approach for analysing workpractices in the form of face-to-face service transactions.

A Transaction Structure Approach to Assessing the Dynamics and Impacts of ‘Business-to-Business’ Electronic Commerce

This paper proposes some ways forward in stimulating and structuring interdisciplinary research on business-to-business electronic commerce. A ‘commerce-centered’ perspective is proposed that is grounded in concepts of commerce as a complex socio-economic institution. On this basis, a conceptual framework is developed for assessing the dynamics and impacts of electronic commerce in the value chains of products and services. The approach focuses on examining technical change in transaction structures, and how this relates to the evolution of electronically-mediated business relationships in the rapidly developing Internet environment. The approach is oriented towards critical research questions concerning the effects of electronic commerce on the ways various market participants exercise and/or respond to control over the organization and operation of value chains, and the implications for business, the public interest and policy. The practical research possibilities of the transaction structure approach are then discussed as oriented toward a comparative analytical framework.

Psychotherapy for Borderline Personality: Focusing on Object Relations

Psychotherapy for Borderline Personality: Focusing on Object Relations

CARBON DIOXIDE EMISSIONS REDUCTIONS IN NEW ZEALAND: A MINIMUM DISRUPTION APPROACH*

Reductions in carbon dioxide emissions can come from (among other things) changes to the structure of final demands, changes in the use of fossil fuels by industry, and changes to the structure of inter-industry transactions. This paper examines the nature of the least disruptive changes, that is, the minimum changes to these three components which are consistent with specified overall reductions in carbon dioxide emissions in New Zealand. In examining the minimum changes needed, constraints are imposed on the corresponding changes in GDP growth and aggregate employment.

Legal Risks of Servicer Bankruptcy or Insolvency in Securitization Transactions

The purpose of this article is to discuss some of the important legal risks under United States law relating to a bankruptcy or insolvency of the servicer of the assets in a securitization transaction. These risks include the inability to enforce the transaction documents against the servicer or to require the servicer to turn over property in its possession, the inability to terminate the servicing agreement or the servicer, the ability of the servicer to stop servicing the assets or to assign the servicing agreement in violation of the terms of the servicing agreement, the possibility that commingled collections in the possession of the servicer at the time of the bankruptcy or insolvency proceeding belong to the servicer, the possibility that commingled collections previously paid to investors will have to be returned as preferential transfers, the possibility that regulators will require changes to the servicing agreement, and the risk that the servicer will use the threat of one of these outcomes to negotiate changes in the servicing agreement. The occurrence of any these outcomes could result in losses to the investors. The risks that these outcomes will occur can be reduced by designing a transaction structure that will allow for the effective replacement of the servicer with a successor servicer before the servicer goes into bankruptcy or insolvency.

Case Study on Korean Cross-Border RMBS

Korea First Bank (KFB) closed its _550,000,000 cross-border residential mortgage-backed securities RMBS securitization in December 2004. This transaction was the third cross-border RMBS securitization closed by KFB in 2004 and was, at the time of closing, both the largest ever in terms of deal size and also the longest ever in terms of maturity for a cross-border RMBS securitization originating in Korea. Its success is a sign that international investors are increasingly comfortable both with Korea as an ABS jurisdiction and with Korean RMBS as an asset class. This article provides an overview of the transaction structure and discusses some of the issues encountered in structuring this transaction.

Security Issuance and Investor Information

Although the commoditisation of illiquid asset exposures through securitisation facilitates the disciplining effect of capital markets on the risk management, private information about securitised debt as well as complex transaction structures could possibly impair the fair market valuation. In a simple issue design model without intermediaries we maximise issuer proceeds over a positive measure of issue quality, where a direct revelation mechanism (DRM) by profitable informed investors engages endogenous price discovery through auction-style allocation preference as a continuous function of perceived issue quality. We derive an optimal allocation schedule for maximum issuer payoffs under different pricing regimes if asymmetric information requires underpricing. In particular, we study how the incidence of uninformed investors at varying levels of valuation uncertainty and their function of clearing the market effects profitable informed investment. We find that the issuer optimises own payoffs at each valuation irrespective of the applicable pricing mechanism by awarding informed investors the lowest possible allocation (and attendant underpricing) that still guarantees profitable informed investment. Under uniform pricing the composition of the investor pool ensures that informed investors appropriate higher profit than uninformed types. Any reservation utility by issuers lowers the probability of information disclosure by informed investors and the scope of issuers to curtail profitable informed investment.

New Institutional Econometrics: The Case of Contracting and Organizations Research

New Institutional Economics is characterized by its real-word orientation and empirical focus. Nowhere is this broader scope more evident than in microeconomic theories of firms and markets. NIE has led researchers not only to crack open the black box of production known as the firm, but also the market itself, examining the structures of individual transactions and their implications for firm and market performance. The result is a burgeoning field of research on the causes and consequences of different modes for governing the allocation and coordination of resources in an economy. The broad array of questions addressed and data employed require NIE researchers to be flexible in their choice of econometric methods. The purpose of this paper is to provide an overview of econometric techniques appropriate to NIE research and some of the empirical and theoretical challenges facing scholars in this field.

Local Government Autonomy in Nigeria: A Historical Perspective

KEYWORDS Local; government; autonomy; historical; reforms ABSTRACT Local governments are not sovereign unlike independent nation-states. It is a subordinate government, which derives its existence and power from law enacted by a superior government. The nature and structure of transactions or interactions between the three tiers of government determine the degree of autonomy. Local government in Nigeria is rooted on historical antecedents of reforms. This paper examines the contradictions in local government system and suggests that the sustainability of local government autonomy should anchor on improved revenue base adherence to constitutional provisions, political stability accountability and transparency in governance

Rules-Based Standards and the Lack of Principles in Accounting

INTRODUCTION In September 2002, the Financial Accounting Standards Board (FASB) of the United States published a discussion paper seeking views on whether U.S. standard setting should move from a “rules-based” approach toward a “principles-based” approach as sometimes associated with the International Accounting Standards Board (IASB). That paper was partly in response to the SarbanesOxley Act, which was itself a response to such accounting scandals as Enron and WorldCom. Schipper (2003) points out that the U.S. rules are often based on principles. That is, the standard setters use principles in order to produce the rules for the preparers of financial statements. Nelson (2003, 91) agrees, and suggests that a particular standard should rather be seen as more or less rulesbased. He suggests that rules can increase the accuracy with which standard setters communicate their requirements and can reduce the sort of imprecision that leads to aggressive reporting choices by management. However, he notes that rules can also lead to excessive complexity and to the structuring of transactions. One of the reasons why standards on several topics need to contain rules is that the standards are inconsistent with the conceptual frameworks of the standard setters. For several topics, the use of the appropriate principle could lead to clearer communication and to more precision without the need for the current rules. That is, before asking how rules-based a particular standard should be, we should ask whether the standard is based on the most appropriate principle. I identify six topics on which the accounting standards have detailed technical rules. In each case, I suggest that part of the need for rules is caused by a lack of principle or by the use of an inappropriate principle (i.e., one that does not fit with higher-level principles). The lack of clear and appropriate principles can also lead to optional accounting methods in standards because no one policy is obviously the correct one; this leads to lack of comparability. I do not suggest that the use of appropriate principles would lead inexorably to standards with no optional methods but that, on some topics, optional methods could be eliminated. The six topics are examined one by one. In each case, I attempt to locate the principles being used, to assess the appropriateness of the principles, and then to identify any arbitrary rules or optional methods that result from the absence of appropriate principles. I start with the IASB’s standards (hereafter, IFRSs), with frequent comparison with U.S. GAAP. One reason for examining

Earnings Management through Transaction Structuring: Contingent Convertible Debt and Diluted Earnings per Share

ABSTRACTIn this article we examine whether firms structure their convertible bond transactions to manage diluted earnings per share (EPS). We find that the likelihood of firms issuing contingent convertible bonds (COCOs), which are often excluded from diluted EPS calculations under Statement of Financial Accounting Standard (SFAS) 128, is significantly associated with the reduction that would occur in diluted EPS if the bonds were traditionally structured. We also document that firms' use of EPS‐based compensation contracts significantly affects the likelihood of COCO issuance and find weak evidence that reputation costs, measured using earnings restatement data, play a role in the structuring decision. These results are robust to controlling for alternative motivations for issuing COCOs, including tax and dilution arguments. In addition, an examination of announcement returns reveals that investors view the net benefits and costs of COCOs as offsetting one another. Our results contribute to the literature on earnings management, diluted EPS, financial reporting costs, and financial innovation.

Discussion of Earnings Management through Transaction Structuring: Contingent Convertible Debt and Diluted Earnings per Share

Neutrality means that either in formulating or implementing standards, the primary concern should be the relevance and reliability of the information that results, not the effect that the new rule may have on a particular interest.... To be neutral, accounting information must report economic activity as faithfully as possible, without coloring the image it communicates for the purpose of influencing behavior in some particular direction. [emphasis in the original] (FASB [1980, para. 98-100])

Business-to-business electronic marketplaces: evolving business models and competitive landscape

Business models, as the core architecture of value creation, provide an analytical framework for a systematic classification of business-to-business electronic marketplaces (EMs). That framework comprises transaction content, structure and governance. By their transaction content, EMs can be classified as horizontal, vertical and super-vertical; by their transaction structure as buyer- centric, seller-centric and third-party; by their transaction content and structure combined as MRO hubs, catalog hubs, yield managers and exchanges, and the former two further as lead generators, dealers and brokers; or by their transaction governance as independent, industry sponsored and private. The EM competitive landscape is evolving as some earlier business models prove non-viable and new models emerge. That evolving landscape is explained in part by the intermediation-disintermediation-reintermediation (IDR) process, EMs' quest for market leadership and their search for sustainable revenue streams.