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We find evidence of widespread stale pricing in bond mutual funds and the resulting risks of dilution and fragility. A principal driver of this phenomenon is the high illiquidity of funds’ holdings, which makes accurate pricing difficult and provides funds with greater discretion over valuation. Consequently, net asset values (NAVs) are extremely stale and fund returns are predictable over several days and weeks, particularly during market crises. Opportunistic traders withdraw capital from overvalued funds, exacerbating the risk of fund runs, while buy-and-hold investors face annual dilution of around $1.2 billion. Our results highlight adverse consequences of insufficient fair valuation practices that remain pervasive even after corrective regulations that followed the 2003 market-timing scandal.

We apply advances in analysis of mixed frequency and sparse data methods to estimate ``unsmoothed'' private equity (PE) Net Asset Values (NAVs) at the weekly frequency for individual funds. Using simulations and a large sample of buyout and venture funds, we show that our method yields superior estimates of NAVs relative to a simple approach based on comparable public asset and as-reported NAVs. The market beta of an average buyout [venture] fund, around 1.05 [1.20], is notably lower than previous studies suggest. The overall risk of a median buyout [venture] fund is 34% [40%] per year if measured in terms of the standard deviation of total returns, an increase of 10 [13] percentage points relative to the series based on as-reported NAVs. However, we find significant variation in systematic and idiosyncratic risk within and across vintages, and the risk-return profile based on the samples from the 1990s is not representative of currently operating funds. Our method easily accommodates additional data, such as individual holdings details, and related M&A activity. As an example application, we show how the cross-section of appraisal biases and nowcast errors evolved around the 2008 Financial crisis.

The study analyzes the effect of economic variables on the financial performance of listed firms manufacturing consumer goods in Nigeria. The researchers adopted the Ex-post facto research design and Ordinary Least Square multiple regression analysis for estimation of the equations. The population comprises 20 listed consumer goods manufacturing companies, and total sample of 13 firms, the data covered 17 years' financial reports. The sample was determined using the elimination method and purposive sampling techniques. We found strong correlation between CPI, interest, exchange rates and net asset per share. CPI has significant effect on NAPS and there is short run relationship based on the coefficients ARDL, exchange and interest rates showed no significant effect on NAPS. The economic implication of the result based on the CPI is that consumers are paying more due to the rise in the level of inflation, firms adjust their profit margin to cushion the effect, and 1% rise in interest and exchange rates result to decline in NAPS. The researchers recommended that government should provide enabling environment for business to thrive by providing moderate interest rate to manufacturing firms, and encourage the demand for made-in-Nigeria to strengthen the value of the Naira to compete well with foreign currencies in the international market.

Firms face a greater risk of lawsuits for overstated rather than understated earnings or net assets, suggesting conservatism can reduce firms' expected legal costs. Because managers with legal expertise are more likely than other managers to recognize the legal benefits of conservatism, this study examines whether legal expertise among members of senior management promotes greater conservatism. Consistent with this prediction, we find that firms with a general counsel (GC) in senior management (our proxy for legal expertise) report more conservatively. We also find that GC firms recalibrate their conservatism levels in response to changes in the legal environment—their conservatism choices are more responsive to litigation against peer firms and to two judicial rulings that affected the litigation risk for firms located in the Ninth Circuit. Overall, our findings suggest that populating senior management with legal experts affects the extent to which a firm's level of conservatism incorporates legal risks. Data Availability: Data are available from public sources identified in the text. JEL Classifications: K40; M41.

The move of the Financial Accounting Standards Board to expand the use of fair value instruments results in an increase in unverifiable assets and liabilities, which do not have actively traded market prices. Prior research suggests that managers may use discretion in estimating fair values of such assets and liabilities for their self-serving interests, leading to more agency conflicts. We examine the association between a firm’s corporate social responsibility (CSR) performance and the unverifiable net assets ratio, used to capture the level of unverifiable assets and liabilities. We find a significant negative relation between CSR and the unverifiable net assets ratio, suggesting that socially responsible firms use a low level of unverifiable assets and liabilities.

The current trend in the management of large companies is implementation of the gender diversity measures. The existence of women at the top management became one of the growing issues recently, especially in corporate governance. The prevailing opinion is still that men are better and more deserving to hold the power of leaders in the company. But authors believe that this statement needs to be verified. The purpose of this study is to assess the impact of female CEO and CFO on cash holdings of Indonesian food and beverages companies. The data used in this study are the data from annual report of food and beverage companies listed on the Indonesia Stock Exchange for the 2016-2020 period. The company's cash holdings in this study are assessed on the basis of two indicators: a) the ratio of the cash and cash equivalents to the company's total assets; b) the ratio of the cash and cash equivalents to the company's net assets. The sample of the study is presented by 25 companies with 125 observations. For data analysis authors use the panel data regression analysis and the fixed-effect model. Microsoft Excel 2013, Stata/MP 16.0 and Reviews 10 software were used for data processing. The analysis results show that the female CEOs have a significant positive effect on the company's cash holdings, while female CFOs have no significant positive effect on the company's cash holdings. These results have the practical significance because they will help the business owner to make the right decision when he selects candidates for the position of CEO/CFO.

Çalışmanın amacı, Çanakkale İli, Kumkale Ovasında buğday yetiştiren tarım işletmelerinin Çiftlik Muhasebe Veri Ağı (ÇMVA) sistemine göre ekonomik büyüklüklerini ve standart sonuçlarını tespit etmektir. Bu sebeple, buğday üretiminin yoğun olarak yapıldığı Kumkale Ovası‘nda basit tesadüfi örnekleme yöntemine göre yapılan örneklemede 59 işletmeye anket yapılarak verilerin elde edilmesi sağlanmıştır. İşletmelerin ekonomik büyüklüklere göre sınıflandırılması 5 gruba göre yapılmıştır. Tarımsal işletmelerin %32,20‘si I. ekonomik büyüklük işletme grubunda, %15,25‘i II. ekonomik büyüklük işletme grubunda, %18,64‘ü III. ekonomik büyüklük işletme grubunda, %16,95‘i IV. ekonomik büyüklük işletme grubunda ve %16,96‘sı V. ekonomik büyüklük işletme grubunda bulunduğu tespit edilmiştir. Araştırma kapsamında bulunan işletmelerden elde edilen sonuçlara göre, ekonomik büyüklükleri 2,14 ve 98,86 ESU değeri arasında değişmektedir. İşletmeler ortalaması 24,03 ESU‘dur. Tarımsal işletmelerin ekonomik büyüklük gruplarına göre toplam gelir 32.669,96 TL ile 1.008.939,30 TL, brüt işletme karı 7.953,32 TL ile 754.769,83 TL, işletme net katma değeri 4.184,66 TL ile 736.240,61 TL, net işletme aile geliri -13.049,82TL ile 631.720,36 TL arasında değişmektedir. I. ve II. ekonomik büyüklük grubundaki işletmelerde net işletme aile değeri negatif olarak bulunmuştur. Analiz edilen işletmelerde ekonomik büyüklük gruplarına göre karlılığın arttığı tespit edilmiştir.

A partir del 2019 se ha implementado en muchas empresas la NIIF 16 Arrendamientos, y con ello se ha dado lugar al reconocimiento de un activo derecho de uso y una correspondiente depreciación en el Estado de Situación Financiera del arrendatario. Una de las preguntas que se aborda en el presente trabajo es si este activo debería de incorporarse como base imponible del Impuesto Temporal a los Activos Netos (ITAN). De acuerdo con la normativa del ITAN, se debe tomar como base el valor histórico de los activos netos consignados en el Balance General (hoy Estado de Situación Financiera). Sin embargo, queda la duda de si la base debe tomar en cuenta un “Activo Contable” o un “Activo Tributario”, sin considerar las deducciones que regula la propia norma. Nos referimos a un “Activo neto contable”, cuando se debe partir de los activos definidos como tal en el Marco Conceptual y las NIIFs, por ejemplo, la aplicación de la NIIF 16. En el caso de los arrendamientos operativos, antes se reconocía directamente en los resultados y no se contabilizaba un activo ni sus efectos por estos conceptos. Por ello, será importante que el legislador establezca reglas claras para la aplicación de los tributos. En el caso del ITAN se podría dar a partir de la línea del Tribunal Constitucional y el impuesto patrimonial; y en el del Impuesto a la Renta Empresarial, cuando se encuentran involucrados conceptos contables. No obstante, la faltade claridad en las normas origina contingencias a los contribuyentes y procesos innecesarios.

The fundamental purpose of the study is to examine the impact of corporate social responsibility (CSR) on the financial performance (FP) of Private Commercial Banks (PCBs) in Bangladesh. The study uses a simple random sampling technique. Ten (10) PCBs are selected as samples for the study from the Dhaka Stock Exchange (DSE) listed companies. Statistical analysis tools such as regression, analysis of variance (ANOVA), and correlation are applied to collected data to examine CSR's impact on selected banks' financial performance. In the study, net profit after tax (NPAT), earnings per share (EPS), net asset value per share (NAVPS), return on assets (ROA), return on equity (ROE), and market value per share (MVPS) are considered as dependent variables and the independent variable, corporate social responsibility (CSR). The findings reveal that the EPS, NAVPS and MVPS of the selected banks are significantly influenced by CSR 56.4, 62.0, and 59.8 percent, respectively. In contrast, CSR has an insignificant relationship with NPAT, ROA, and ROE. The study also indicates a high degree positive and statistically significant correlation between CSR and financial performance (EPS, NAVPS, and MVPS). CSR influences financial performance essentially, so considering social benefits, the banks should perform CSR activities emphasizing educational, environmental, and health issues.

PurposeThis study aims to examine whether socially responsible firms have well-funded employee pension programs and whether corporate social responsibility (CSR) performance is associated with management discretionary choice of pension accounting assumptions.Design/methodology/approachThe current study examines the impact of CSR performance on two measures of pension funding and two pension accounting assumptions using regression analysis. This study uses a panel data of 13,099 firms-years across 1,428 US firms from 1992 to 2015.FindingsFirms with higher CSR scores report higher pension net assets and are less likely to have underfunded pension than their counterparts. These firms also adopt more responsible (conservative) pension accounting assumptions (i.e. lower discount rate and a higher rate of compensation increase) to estimate pension benefit obligations. Results are stronger for firms that operate in the materials and industrial sectors and for the post-2000 period when underfunded pension has become more prevalent. Firms with higher CSR scores are also less likely to have a pension freeze.Originality/valueThis study examines the signaling role of CSR by using the signaling theory to explain how senders view the signaling process as a channel to build their reputation and the correspondent inference theory to explain how receivers process and assess the signal. It provides evidence that the signal provided by CSR score is reliable in assessing firms’ commitment to non-investing stakeholders, such as employees, providing valuable information for potential employees making career decisions and for managers considering employee pension as part of corporate strategies to attract high quality workforce. This study provides inputs for public accountants providing assurance services that CSR performance has a significant impact on management reporting choices. This study also provides evidence that CSR could be considered a private provision of public goods that internalize the negative externality of the prevalent underfunded pension phenomenon.

We find that Treasury floating rate notes (FRNs) trade at a significant premium relative to the prices of Treasury bills and notes. This premium is directly related to the near-constant nature of FRN prices and is correlated with measures reflecting investor demand for safe assets. Money market funds are often the primary investors in FRNs, and the FRN premium is related to flows into funds with fixed net asset values, but not to flows into funds with variable net asset values. These results provide strong evidence that the FRN premium represents a convenience yield for the mark-to-market stability feature of FRNs.

Previous work shows large differences in fees for S&P 500 index funds and other funds and suggests that investors suffer wealth losses investing in high-fee funds when similar low-fee funds are available. In contrast, the neoclassical model of mutual funds (Berk and van Binsbergen, 2015, J. Financ. Econ., 118, 1–20) argues that percentage fees are irrelevant, as fund size will adjust in equilibrium such that net alphas are equal to zero. We show that fees matter from an investor perspective. We document (i) a strong negative association between net-of-fee fund performance and fees in a sample of all US and international equity funds, (ii) economically large, robust, persistent, and pervasive fee dispersion in the mutual fund industry, and (iii) important economic effects for investors. During the sample period, the mutual fund industry has generated a total value lost (i.e., a negative net value added) of 125 billion USD, coming predominantly from high-fee funds.

Statement of Financial Accounting Standards nos. 141 and 142 eliminated the pooling method of accounting for acquisitions and altered the accounting for intangible assets, respectively. The Financial Accounting Standards Board (FASB) asserts that as a result of these changes financial statement users (i.e., market participants) will be “better able to understand the investments” made and have an improved “ability to assess the future profitability and cash flows” derived from these assets. In this paper, we address whether the FASB accomplished its goals with these new standards. We utilize an OLS regression to assess investors’ ability to forecast a firms’ future performance and to determine whether the information related to these accounting changes are impounded into market prices. The overall evidence partially supports FASB’s assertion of providing better information. While there is a significant improvement in market participants’ ability to assess the future economic benefits associated with goodwill, there does not appear to be any improvement in the market’s ability to understand the future implications of other intangible assets or net assets in general.

The objective of the research to analyze taxpayers who have received tax amnesty and accounting treatment of the tax amnesty assets and liabilities in the financial statements. Tax amnesty assets and liabilities are presented separately from the other assets and liabilities in the financial statements. The PSAK 70 is also applicable by non-publicily accountable entities that choose to adopt the SAK ETAP (Standar entity without accountability public). The implementation of PSAK 70 by PT. Z related to the recognition, measurement, presentation, and disclosures in accordance with SAK (financial accounting standar). The difference of tax amnesty assets and liabilities is PT. Z recognizes in addition to the retained earnings in the balance sheet. As we know PSAK 70 paragraph 12 which reads concerning net assets that should have from tax amnesty must be recognized in equity as additional paid in capital. That is what makes the difference between accounting and tax presentation Keywords : tax amnesty, tax amnesty assets and liabilities, retained earning, additional paid in capital

This study investigates China's convergence towards International Financial Reporting Standards (IFRS) using generally accepted accounting principles (GAAP) differences data disclosed in AH-share companies? annual reports from 2006 to 2017. We firstly find that 92% of AH-share companies disclosed GAAP differences in 2006, immediately prior to implementation of converged Chinese accounting standards (CAS). This ratio decreased to 88% in 2007, 58% in 2010, and 38% in 2011, respectively. After 2011, less than one third of AH companies disclosed GAAP differences. Secondly, an increasing number of AH companies (35%) have published CAS-based financial statements in Hong Kong from 2014. Thirdly, except for the first few years after 2007, the disclosed GAAP differences have dropped to a very low level; since 2010 the net profit and net assets GAAP differences ratios have been below 0.5%. Fourthly, reduction of the disclosed GAAP differences appears to be the result of efforts by Chinese standard setters and regulators, work related to the International Accounting Standards Board, or changes in China's special socio-economic environment. Distinct from word-by-word comparison between CAS and IFRS, this research shows that China has achieved its original goal, namely an enterprise applying CAS should produce financial statements that are the same as those of an enterprise that applies IFRS. Our findings provide insights regarding China's institutional evolution in terms of the country's IFRS convergence effort, which are useful for further empirical study.

This article investigates the accounting standards changes related to business acquisitions and the impact of those changes on the reported goodwill in the past 50 years. We observe that the amount of goodwill on companies’ balance sheets steadily increased before 2001 but has risen to new levels with the adoption of SFAS 141. Goodwill is now equal to about 30 percent of companies’ net assets compared to only about 7 percent in the 1980s. We examine whether the increased levels of goodwill could have resulted from changes in accounting standards. Specifically, we investigate the impacts of accounting regulations on goodwill reporting under three different regimes: APB 16 and 17, SFAS 141 and 142, and SFAS 141(R). We find that the increase in the reported value of goodwill is not a result of an increase in public companies’ acquisitions, as those have actually decreased over time. Further, the increase overlaps with the changes to the accounting for goodwill and the switch from goodwill amortization to impairment. Our findings are timely and important because the Financial Accounting Standards Board (FASB) has a concurrent project revisiting Identifiable Intangible Assets and Subsequent Accounting for Goodwill (FASB 2020). Our evidence urges caution in the reintroduction of goodwill amortization proposed by FASB, as the level of goodwill has increased dramatically despite FASB’s intentions to improve the quality of goodwill accounting and curtail management’s goodwill manipulation.

In recent years, managerial ownership has begun to be used as an incentive mechanism in China. Managerial ownership is one of the ways to realize the mixed ownership reform of state owned enterprises. Taking the mixed ownership reform of Chinese state-owned enterprises as the research object, this paper analyzes the impact of management ownership on the performance of mixed ownership enterprises. The conclusions are as follows: management ownership and corporate performance have a positive correlation in state-owned listed companies. The financial performance of the company increases with the proportion of management shareholding, ownership concentration and equity balance. There is a significant negative correlation between the proportion of independent directors and the rate of return on net assets, which shows that the independent directors of state-owned enterprises in China have not played their due role in the governance of state-owned enterprises.

Purpose This paper aims to investigate the pricing efficiency of Saudi Sharia-compliant (i.e. Islamic) exchange-traded funds (ETFs). Design/methodology/approach The paper adheres to a positivist research philosophy with a deductive research approach where data is collected, analyzed and interpreted to examine a hypothesis. Ordinary least squares (OLS) regressions are applied to investigate pricing efficiency and persistence. Findings The results show that Saudi ETFs do not currently offer proper diversification for investors, possibly due to their low trading volumes and the delays of market prices in reflecting net asset value (NAV). On average, ETFs trade at a premium to their NAVs. Moreover, the authors find that the deviations of ETF prices from their NAVs (i.e. premiums or discounts) do not disappear in one day. The results reveal a significant positive relationship between the trading volume of Saudi ETFs and volatility, a significant positive correlation between ETF returns and contemporaneous deviations and a significant negative relationship between returns and lagged deviations. These findings can be interpreted as evidence against the market efficiency of Saudi ETFs. Practical implications Individual and institutional investors can use Saudi ETFs, especially as their efficiency improves with increased trading volume (liquidity). Saudi regulators must increase their efforts to educate market participants and expand the availability of information to enhance transparency and awareness of the benefits of investing in ETFs, which will positively affect liquidity and pricing efficiency in the future. Originality/value This paper is the first to perform empirical tests on Saudi ETFs. Saudi Arabia deserves further attention because it is the most significant stock market in the Gulf Cooperation Council and only recently allowed foreigners to participate.

The adoption of the International Accounting Standard 40 (IAS 40) in 2005 by public companies in the European Union required firms to disclose the fair value of their investment properties. We study whether this increase in the transparency in financial reporting reduces information asymmetry and leads to higher pricing efficiency and improved liquidity. We investigate this question in the context of the real estate industry, which due to its unique structure stands to be affected the most by the adoption of the fair value method. We observe that post regulation the coefficients of variation of trading volume and daily turnover decreased significantly, while turnover ratio increased significantly. In addition, these effects are stronger for larger firms. We further note that although post-IAS 40 asymmetric information decreases and liquidity increases, the disclosure of fair value does not lead to lower NAV deviation. Furthermore, our results suggest that fair value disclosure exacerbates NAV deviation and illiquidity during the crisis period.

Islamic real estate investment trusts (iREITs) is a fund or a trust that owns and manages income producing commercial real-estate which complied with Shariah. The aim of the paper is to study the recent performance of four iREITs in Malaysia, namely Al-'Aqar Healthcare REIT, Axis REIT, Al-Salam REIT and KLCC REIT, from 2012 until 2016. Trend analysis is adopted to analyse the performance focusing on dividend distribution per unit (DPU) and net asset value (NAV). Based on the findings, both DPU and NAV performance show a good track record and this is evident in the case of Al-A«Aqar Healthcare REIT, KLCC REIT and Al-Salam REIT. Generally, it can be concluded that iREITs provide an attractive investment tool as it generates steady income in the form of dividend to the shareholders, while at the same time backed by quality underlying assets.

This paper uses proprietary data from a leading intermediary to explain the magnitude and determinants of transaction costs in the secondary market for private equity stakes. Most transactions occur at a discount to net asset value. Buyers average an annualized public market equivalent of 1.023 compared with 0.976 for sellers, implying that buyers outperform sellers by a market-adjusted 5 percentage points annually. Both the cross-sectional pattern of transaction costs and the identity of sellers and buyers suggest that the market is one in which relatively flexible buyers earn returns by supplying liquidity to investors wishing to exit.

The article explores the process of development the evaluation of market value of the enterprise in the system of accounting and analytical support. The purpose of our research is to determine the methodology for evaluation the enterprise value that provides a reliable and reasonable calculation of indicators enterprise value based on the data of the accounting system. A hypothesis was formulated, which later on received a confirmation. A comparative analysis of the characteristic features the application of different evaluation approaches of the enterprise (income, cost, market) was carried out. The authors determined that the formation of the market value of the enterprise should be carried out in the system of accounting and analytical support of the enterprise and determined by the indicator of net assets, which should be adjusted to the predicted level of profitability taking into account alternative risk-free investments and the risks level of the enterprise. The proposed concept for determining the market value of the enterprise provides a reliable and reasoned calculation of value indicators based on the data of the accounting system for both profitable and unprofitable enterprises.

This study provides mutual fund shareholders with a normative listing of transparent and traditionally opaque fees and expenses designed for most all funds. The most likely next step, if any, would be for a few “stewardship funds” to adopt the normative listing of transparent and traditionally opaque fees and expenses and attach to each its percentage cost to total net assets, if any. This analysis is needed, for one reason, because a large percentage of individual investors, especially those with low financial literacy, are unaware of the existence of traditionally opaque fund fees and expenses, no less their percentage costs.

The study expects to further exploring the role of asset structure in enterprise profitability, and analyze the relationship between them in detail. Taking the express industry as the research object, from strategic management accounting, the study uses edge computing and related analysis tools and compares the financial and non-financial indicators of existing express enterprises. The study also discusses the differences between asset structure allocation and sustainable profitability, and constructs the corresponding analysis framework. The results reveal that SF’s total assets are obviously large and the profit margin increases. While the total assets of other express enterprises are small, and the express revenue drops sharply. Heavy assets can improve the enterprises’ profitability to a certain extent. SF has a good asset management ability. With the support of the capital market, SF’s net asset growth ability has been greatly improved. The edge computing method used has higher local data processing ability, and the analysis framework has higher performance than the big data processing method. The study can provide some research ideas and practical value for the asset structure analysis and profitability evaluation of express enterprises.

PurposeThe purpose of this paper is to portray the valuation of financial investments as mental time travel.Design/methodology/approachIn a series of thought investments, $1 invested in an investment fund is mentally projected forward in time and then discounted back to the present – with no objective time passing. The thought investments feature symmetric valuation (in which discount rates exactly match projection rates) and asymmetric valuation (in which discount rates and projection rates happen to differ). They show how asymmetric valuation can result in differences between the current personal value and market value of an investment and, by way of real-world illustration, between a closed-end investment fund's net asset value and its market value. The authors explore possible reasons for asymmetric valuation.FindingsThought investments illustrating mental time travel can be used to help understand both financial investment valuation generally and, more specifically, established explanations of the closed-end investment fund puzzle. The authors show how different expectations, different perceptions of time and risk and different risk and time preferences might help determine value.Originality/valueThere are vast literatures on prospection, discounting and future-orientated or intertemporal decision-making. The authors’ innovation is to illustrate how these mental activities might combine to facilitate financial investment valuation. In particular, the authors show that a low personal discount rate could be a consequence of a shortened perception of future time and vice versa.

This research aims to analyze and adapt the financial reporting of non-profit entities based on Interpretation of Financial Accounting Standards 35 (ISAK 35): concerning the Presentation of Financial Statements for Non-Profit Oriented Entities. Namely the interpretation of the Statement of Financial Accounting Standards 1 (PSAK 1): concerning the Presentation of Financial Statements. For other accounting provisions for non-profit entities, it refers to the Financial Accounting Standards for Entities without Public Accountability (SAK ETAP) and Sharia Accounting Standards (SAS). Qualitative research was conducted with a case study at the University of Ibrahimy Sukorejo Situbondo. The results of this study, it is necessary to change the accrual basis recording method with the double entry system, preparation of adjusting journals to then compilation of financial position reports, comprehensive income reports, changes in net assets reports, cash flow reports and notes on financial reports based on ISAK 35. Adaptation of university financial reports Ibrahimy based on ISAK 35 is carried out by adjusting the required account posts by Ibrahimy University with the accounts stated in the Interpretation of Financial Accounting Standards 35 (ISAK 35)

Purpose: Justify the need to improve the current accounting system in the Russian Federation by reorienting it to the needs of the digital economy.

This report looks at how exploration and evaluation (E&E) costs of new mineral or oil and gas reserves are reported in the financial statements of listed extractive companies. This is against a background of a general concern that intangibles are inadequately recognised and reported in accounts contributing to the increasing gap between net asset values and the market value of companies.

NHS Foundation Trusts overeaching groups of hospitals as a part of UK public sector organisations changed to IFRS since their 2009/10 financial statements. The intended purpose was “to bring benefits in consistency and comparability between financial reports in the global economy and to follow private sector best practice”. This comparative analysis deals with the effect of IFRS adoption among University and Teaching Hospitals NHS Foundation Trusts sector on Public Dividend Capital dividends payable through items entering net assets. Implications of the original purpose of the new accounting regime to bring comparability and transparency to NHS organisations and its side effects on Public Dividend Capital dividend payable are discussed. The question is whether this IFRS adoption could have resulted in a significant change of financial resources repaid to the Department of Health.

The article is devoted to the improvement of methodical approaches to the use of accounting engineering in the practical activities of Ukrainian enterprises. The background and causes of appearance of accounting engineering were disclosed. An example of the use of mechanisms and tools of accounting engineering in the process of forming accounting and analytical information for managing business processes of an enterprise was given. In particular, a Report on the implementation of budgets for the business processes, Register of financial and economic operations on hedging of risks by instruments of accounting engineering, Monitoring "Derivative Balance Sheet" were compiled. An assessment of the costs of the business processes of the basic and advanced versions of the apple juice production at a pilot plant was carry out. It was determined that the key information elements of accounting engineering are: 1) definition, identification and classification of business management processes as "centers of accounting for financial situations"; 2) work plan of aggregated mega-accounts, aggregated double-entry; 3) accounting engineering tools; 4) accounting registers; 5) the result of the accounting is the definition in the reports of indicators of net assets and net liabilities. The mechanism of accounting engineering covers four groups of operations: 1) operations to adjust the historical value of assets to market (fair) value; 2) hedging operations (protection) against the risks of adjusted balance; 3) operations with existing risks; 4) operations with possible expected, hypothetical realization and repayment of long-term and short-term liabilities - to determine the value of net assets and net liabilities as indicators of the risk-taking financial activity of the enterprise. As the results of the study shows, thanks to use of engineering tools, accounting from the fixer of economic and financial operations becomes a mechanism for managing the enterprise.

We find that shares of real estate limited partnerships sell at substantial discounts to net asset values (NAV) and these discounts are influenced by factors associated with agency costs and unrealized gains. Our study builds on previous work by Barber (1996) by examining a much longer time period (1994-2013), including additional control variables, and utilizing Tobit estimation instead of OLS, which we find superior. We find much larger effects of unrealized capital gains than Barber (1996). Factors that reduce fund managers’ freedom to take actions that might reduce shareholder returns such as leverage and high dividend payments reduce discounts.

Using a G-5 country sample (France, Germany, Japan, the UK, and the US) from 1980 to 2007, I find new evidence of the asymmetry in firms’ mechanisms of cash holdings adjustments. They undertake different approaches to move toward their target cash holdings levels conditional on whether they have below- or above-target cash holdings. Specifically, firms with above-target cash holdings adjust mainly via changes in cash flows from financing and investing. They generally reduce their levels of equity proceeds, net debt issues and fixed asset disposal but increase their levels of equity repurchases, dividend payout, net assets from acquisitions, portfolio and short-term investments, and capital expenditures. However, firms with below-target cash holdings adjust mainly via changes in operating cash flows, i.e., they increase their levels of funds from operations but reduce their levels of working capital. The mechanisms undertaken by firms with above-target cash holdings allow them to adjust toward their target cash holdings relatively faster than those with below-target cash holdings, as they possibly incur lower costs than the mechanisms experienced by firms with below-target cash holdings. The results highlight the importance of understanding the asymmetry in firms’ mechanisms of cash holdings adjustments when analyzing how they adjust toward their target cash holdings levels.

PurposeConsidering that the Johannesburg Stock Exchange (JSE) has enacted in its Listings Requirements, compliance of listed firms to International Financial Reporting Standards (IFRS) and King Code of Good Corporate Governance, this study aims to investigate the impact of internal corporate governance attributes on the value relevance of accounting information in South Africa.Design/methodology/approachThe fixed effect generalised least squares regression is used for the period from 2002 to 2014. Proxies for internal corporate governance are the size of the board, leadership structure, board activity, staggered board, boardroom independence, presence of key committees and board gender diversity. Value relevance is measured using the adjustedR2derived from a regression of stock price on earnings and equity book values by following Ohlson’s accounting-based valuation framework.FindingsThe findings suggest that the net asset value per share is value-relevant in South African listed firms and also when the boardroom is largely independent. The value of earnings per share (EPS) is more robust when corporate governance structures, such as separating the roles of chief executive officer and chairperson, proportion of board-independent board members and presence of board committees, are in place. This suggests that EPS favours agency and resource dependence theories.Practical implicationsThe value relevance of accounting information in the South African financial market underscores the importance of requisite rules and supervision regarding financial reporting to allow asset owners and managers in the allocation of capital decisions. This study supports the view that corporate governance plays a key role in ensuring, amongst others, credible financial reporting. The outcome of this study could inform the JSE to enforce, even stricter, compliance with IFRS and corporate governance to improve the value relevance of financial information.Social implicationsSignificant corporate governance reforms around the world suggest that regulators and policy makers consider corporate governance as a pertinent tonic in ensuring, amongst others, credible financial reporting. The implications of the study might assure users of financial information of how compliance to corporate governance practices may influence the value of the firm. This paper provides empirical evidence in the South African context that EPS, unlike net asset value per share, is driven by corporate governance structures.Originality/valueThe period of this study is unique, because it covers a relatively stable economic period before the financial crisis, a challenging and unstable period of time when the financial crisis materialised, and the aftermath of the financial crisis. In addition, the examination period of the study also covers the two corporate governance reforms in South Africa, King II in 2002 and King III in 2009, as well as the new Companies Act No. 71 of 2008. These exogenous factors may influence the results.

This article examines the rationale behind IPO underpricing using a sample of REIT IPOs in Asia. Although the IPOs registered an average initial return of 3.08%, the issuers were able to sell the IPO shares above their fundamental values by timing the listings in periods when existing REIT stocks are traded at a premium to their net asset values (NAV). An IPO could therefore be underpriced and yet produce a net gain for the issuer. The issuers’ net gain from IPO is, however, negatively related to long‐run performance of REIT IPOs.

This study attempts to examine the financial literacy level of SME’s owner in East Java based on demographic aspect. The sample was taken from 65 SME’s in East Java which produce prominent local product. The data were collected by using survey method and deep interview. They were analyzed using descriptive explorative and also cross tabulation for examining SME’s financial literacy based on demographic attribute. Research found that that the financial literacy score of SME’s owner in East Java is good enough, where they have average score 55.8 with the same score of median and mode 66.7. Majority weakness of SME’s owner is the literacy on SME understanding of net asset and insurance premium. Otherwise, whole SME’s owner is fully understood that financial knowledge is so useful for the SME. Other finding shows that there is a relationship between financial literacy’s level and SME’s owner on demographic aspect such as gender, education, the business time established. It can be concluded that demographic aspects determine the financial literacy level of SME’s owner

This case presents graduate and advanced-level accounting students with the task of analyzing U.S. GAAP warrant accounting concepts in the context of Bohn Industries, a company that after a decade as a public company was in financial distress. Faced with shrinking demand and poor economic conditions in the housing construction business, Bohn was forced to access the private equity market to raise much-needed capital to continue its operations. The consequences of the investor protection clauses inherent in the loan agreements provide a useful lens to explore the implications and eventual takeover of Bohn for $240 plus the original borrowing, a bargain for a company with $60,000,000 in net assets. Besides encouraging students to research the technical aspects of U.S. GAAP relative to the accounting treatment of the loan, the case study provides insights into how accounting decisions are integral to the broader business environment. Specifically, the case highlights the conflation of economic consequences and aspects of contract law within specific provisions of the loan agreement in relation to anti-dilution stock provisions and preferential conversion clauses. Students will learn that accountants should act as business advisors, which requires the integration of knowledge from a range of disciplines. Students learn about due diligence relative to understanding the risks involved in certain contract clauses.

© 2017 Elsevier B.V. General partners (GPs) in private equity (PE) report the performance of an existing fund while raising capital for a follow-on fund. Interim performance has large effects on fundraising outcomes. The impact is greatest when backed by exits and for low reputation GPs. Faced with these incentives, GPs time their fundraising to coincide with periods of peak performance through two strategies: (1) exit and fundraise and (2) net asset value (NAV) management. Consistent with the former, performance peaks are greatest for funds with high realization rates. Consistent with the latter, low reputation GPs with low realization rates experience performance peaks and erosions in performance after fundraising.

Standard setters advocate a balance sheet approach to financial reporting, which views assets and liabilities as primary, and income as just the change in net assets. This paper argues that income is conceptually and practically better described as “adjusted net cash flows,” where the adjustments are the accounting accruals. One proof of that is seen in the existence of whole accounting systems like tax accounting and NIPA accounting, which emphasize the determination of income but have no balance sheets. Another comes from the observation that income drives changes in net assets, and not the other way around. The paper also argues that an income-based approach to financial reporting is better suited to reflect the success of advancing cash to earn more cash, which defines what for-profit entities do. There are two main features of the income-based approach. One is attention on the cash flows as the natural foundation for financial reporting because they are precisely determined, and provide a clear link to firm valuation. The other is attention on the accounting accruals, which serve to adjust the raw cash flows to better show the current success of investing cash to ultimately earn more cash. Specifically, it argues for revenue recognition which is close to current practice, and for expense recognition which is aligned with the matching principle.

We examine the activity and performance of a large panel of individual investors (approximately 70,000 investors and their daily returns over the 2000 to 2010 period) in Sweden's Premium Pension System. We document strong inertia in individuals' choices and changes of mutual funds. We find that active investors outperform passive investors, and that there is a causal effect of fund changes on performance. The outperformance is primarily the result of dynamic fund selection. Activity is beneficial for the individual investor, whereas extreme flows out of mutual funds (which we attribute to financial advisors) affect funds' net asset value negatively for all investors.

Governments’ net assets balances are viewed as a measure of fiscal health and have been linked to municipal credit ratings. This study explores the extent to which ambient socioeconomic factors are captured in aggregated restricted and unrestricted net assets balances (termed “liquid net assets”) to understand why such balances are relevant to credit analysts and others. We model liquid net assets balances using observable nonaccounting factors (e.g., unemployment rates) to learn whether they reflect such influences. We use panel data for fiscal years 2007-2011 so our results comprehend effects of recent economic fluctuations. We find that liquid net assets balances impound a rich array of influences, bearing a positive association with the mayor-council form of government, community wealth, the incidence of property crimes, and increases in governments’ business-type net assets. Liquid net assets balances bear a negative association with liabilities for postemployment benefits, unemployment, and violent crime. The results indicate that net assets balances capture noteworthy debt burden, administrative, and socioeconomic influences and, as such, have meaning beyond their basic accounting interpretation. This article is protected by copyright. All rights reserved.

In February 2010, Kraft Foods, a US publicly listed company, announced it had acquired control of Cadbury, a leading confectionery company listed on the London Stock Exchange. The merger between the two companies created the second largest confectionery, food, and beverage company in the world. The purpose of this case is to introduce the reader to the basic elements of consolidation using the purchase method. Using financial information from both companies, we measure the deal consideration, the fair value of net assets acquired and goodwill; then, we produce a pro-forma consolidated balance sheet. We also discuss the differences between the full fair value and partial methods for goodwill and non-controlling interests and the effects of fair value adjustments on subsequent consolidated income.

The standard System of National Accounts (SNA) omits the costs of the environmental inputs from nature and the environmental fixed asset degradation from the national/sub-national natural working landscapes. The United Nations Statistic Division (UNSD) is currently drafting the standardization of the Experimental Ecosystem Accounting (EEA), as part of the System of Environmental-Economic Accounting (SEEA). The EEA- aims to mitigate some of the limitations of the SNA by extending the concept of economic activity and explicitly incorporating ecosystem services and environmental assets provided by nature in the estimates of net value added, adjusted according to the costs of the environmental inputs consumed and the environmental fixed asset degradations of ecosystem. However, the NVAad proposed in the ongoing draft of the EEA is inconsistent in that it omits the manufactured costs of the public economic activities of the new government institutional sub-sector of the ecosystem trustee. In addition, the ongoing methodological guidelines of the EEA do not propose to estimate the environmental income. This implies that there is not a single indicator that integrates the ecosystem services obtained and the evolution of the environmental assets in the natural working landscapes in which the private and public activities are valued. The objective of this research is to discuss conceptually and compare the measurements of ecosystem services and environmental incomes in the extended Agroforestry Accounting System (AAS), and in refined versions of the official SNA and the ongoing EEA methodologies, through a case study of privately-owned holm oak dehesas working landscapes in Andalusia-Spain. This comparison shows that the refined SNA and the refined EEA in their current state of development do not allow the complete visualization of the environmental income contribution to the total income of the natural working landscapes. We also discuss the advances provided by the AAS extended accounting methodology that would be relevant for the EEA next improvements., The authors thank the Agency for Water and Environment of the Regional Government of Andalusia for the financial and field work support for the REnta y CApital de los Montes de ANdalucía (RECAMAN) project (Contract NET 165602), the Valoraciones de servicios y activos de AMenidades privadas de fincas SILvopastorales (VAMSIL) project of CSIC (ref.: 201810E036) and the Mapping and Assessment for Integrated ecosystem Accounting (MAIA) project of EU call H2020-SC5-2018-1 (Grant Agreement Nr. 817527).

This chapter discusses additional issues related to the application of the purchase (acquisition) method of accounting. To determine the fair value of net assets acquired, the acquirer must identify, measure, and recognize provisions that exist at the time of acquisition. We discuss the effect of these provisions on the consolidation process and on subsequent income. We also discuss acquisitions in which the acquirer achieves control in multiple steps. For example, an acquirer may first acquire 25% of the voting shares of a target company in the first step, and only later achieve control by acquiring an additional 40% of the voting shares. In addition, we present the accounting process in cases of complete and partial disposal of subsidiaries. In particular, we focus on when disposal of subsidiaries results in the recognition of gains/losses in the income statement and when disposals are recorded as transactions among equity holders. Finally, we explain and demonstrate the preparation of the consolidated cash flow statement in the presence of acquisitions.

GASB Statement No. 53, Accounting and Financial Reporting for Derivative Instruments, (GASB 53) significantly altered U.S. governmental sector accounting of derivative instruments by mandating the recognition of hitherto off-balance sheet derivative instruments in the government-wide statement of net assets and requiring that ineffective hedges be clearly identified. These requirements have an unfavorable financial statement impact for municipalities with net negative fair value derivative positions and municipalities holding ineffective hedges. Using a hand-collected, comprehensive dataset of municipal derivatives, we examine whether the level of U.S. municipal derivative holdings changed following the adoption of GASB 53. Consistent with GASB 53 affecting municipal officials’ derivative decisions, we find a significant post-GASB 53 reduction in derivative holdings for municipalities with net negative fair value derivative positions and ineffective hedges. Our findings suggest that governmental accounting regulations could affect real decisions of municipal officials and therefore could potentially have public policy implications beyond the provision of information to stakeholders.

New economy companies often use convertible and redeemable preferred shares with equity and debt characteristics as financing tools to reduce risk during their early stages of growth. According to relevant accounting standards, such preferred shares should be classified as financial liabilities and measured at fair value, with changes in fair value recognized in profit or loss. This can lead to confusing financial information: the better a company’s development prospects, the higher its redemption or conversion price and loss, which can result in a large negative net asset value. A successful initial public offering, however, could offset large losses and negative net asset value. Following the development of accounting standards, this article thoroughly analyzes various proposals to modify relevant accounting standards and eliminate confusing information. This article also proposes possible problems and solutions as a reference for accounting standard setters and the various stakeholders in new economy companies.