{"title":"Credit rating agencies’ assessments of related party transactions","authors":"Sonakshi Agrawal , Hariom Manchiraju , Sumeet Rajput","doi":"10.1016/j.accoth.2024.100005","DOIUrl":"10.1016/j.accoth.2024.100005","url":null,"abstract":"<div><div>This study examines the impact of Related Party Transactions (RPTs) on credit risk assessments by credit rating agencies (CRAs). Using a comprehensive dataset and a fixed effects regression model, we find that CRAs differentiate between financing and operating RPTs, generally assigning lower credit ratings to firms with financing RPTs while awarding higher ratings to those with operating RPTs. Further analysis reveals that CRAs distinguish between equity and debt-related financing RPTs, with firms engaging in debt-related RPTs receiving lower ratings, likely due to the potential risk that these transactions create by facilitating cash tunneling and strategic defaults. Conversely, equity-related RPTs do not significantly impact ratings. Additionally, CRAs assess RPTs within group-affiliated firms and material RPTs of firm with superior governance structures favorably. CRAs favorably view material RPTs by group firms in financial distress suggesting these RPTs reduce default risk. Overall, this study demonstrates that CRAs integrate RPT information into credit risk assessments and thus contributes to the understanding of CRA rating processes and the role of RPTs in credit risk assessments.</div></div>","PeriodicalId":100010,"journal":{"name":"Accounting Theory and Practice","volume":"2 ","pages":"Article 100005"},"PeriodicalIF":0.0,"publicationDate":"2025-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143147218","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Reflections on my service as the Chief Economist of the US securities and exchange commission and implications for India","authors":"S.P. Kothari","doi":"10.1016/j.accoth.2024.100002","DOIUrl":"10.1016/j.accoth.2024.100002","url":null,"abstract":"<div><div>This manuscript offers an insider's perspective on the role of the Chief Economist and the Division of Economic and Risk Analysis (DERA) at the US Securities and Exchange Commission (SEC) during the author's tenure from March 2019 to January 2021. It begins with a brief history of the SEC, highlighting its mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. The manuscript elaborates on the SEC's organizational structure, detailing the functions of its rulemaking divisions, enforcement division, and compliance division, with a special focus on DERA.</div></div>","PeriodicalId":100010,"journal":{"name":"Accounting Theory and Practice","volume":"1 ","pages":"Article 100002"},"PeriodicalIF":0.0,"publicationDate":"2024-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151454","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Rethinking innovation policy in India: Amplifying spillovers through contracting-out","authors":"R.A. Mashelkar , Ajay Shah , Susan Thomas","doi":"10.1016/j.accoth.2024.100004","DOIUrl":"10.1016/j.accoth.2024.100004","url":null,"abstract":"<div><div>At independence, India committed itself fully to foster, promote and sustain the creation of science and scientific research in all aspects. In this paper, we present first principles reasoning on the case for state action, and the optimal mechanisms for using taxpayer resources, to fulfil this commitment. We argue in favour of a reorientation of public spending on innovation: away from building vertical government organizations, and in favour of a <em>contracting-out</em> strategy. Such a strategy would induce knowledge and capabilities in the society, and through this, induce greater gains for the people of India. We present a preliminary sketch of the path to implementation.</div></div>","PeriodicalId":100010,"journal":{"name":"Accounting Theory and Practice","volume":"1 ","pages":"Article 100004"},"PeriodicalIF":0.0,"publicationDate":"2024-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143151455","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Principles of corporate governance and practices in India-an Appraisal","authors":"U.K. Sinha","doi":"10.1016/j.accoth.2024.100001","DOIUrl":"10.1016/j.accoth.2024.100001","url":null,"abstract":"","PeriodicalId":100010,"journal":{"name":"Accounting Theory and Practice","volume":"1 ","pages":"Article 100001"},"PeriodicalIF":0.0,"publicationDate":"2024-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142540340","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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