Corporate Law: Law & Finance eJournal最新文献

{"title":"Changes in Managers’ Forecasting Behavior and the Market’s Assessment of Forecast Credibility during Periods of Financial Misreporting","authors":"Stephen P. Baginski, Sean McGuire, Nathan Y. Sharp, Brady J. Twedt","doi":"10.2139/ssrn.1919291","DOIUrl":"https://doi.org/10.2139/ssrn.1919291","url":null,"abstract":"The capital market benefits of high quality financial reporting create incentives for managers to signal the quality of their voluntary disclosure practices. Prior research focuses on the relations between observable measures of earnings quality and observable measures of voluntary disclosure quality. We examine the characteristics of management earnings forecasts during periods in which managers possess private (i.e., unobservable to the market) knowledge that they are engaging in financial misreporting (i.e., committing accounting fraud). Using a sample of Securities and Exchange Commission enforcement actions, we hypothesize and find that managers issue more bad news forecasts in periods of fraud relative to pre-fraud periods and control firms, consistent with the increased use of voluntary disclosure to manage expectations downward while violating constraints on earnings management. The fraud period forecasts are, when compared to fraudulent earnings observed by the market, less ex post biased and more accurate than pre-fraud period forecasts and thus give the appearance of higher quality voluntary disclosures. However, the fraud period forecasts are not less ex post biased or more accurate when accounting restatements later reveal true actual earnings. A consequence of the perceived increase in quality is greater bad news fraud-period forecast impact on prices relative to pre-fraud periods. Further, the enhanced price reactions do not deteriorate after the fraud is made public, suggesting that the public revelation does not taint investors’ assessment of the credibility of bad news management forecasts.","PeriodicalId":10698,"journal":{"name":"Corporate Law: Law & Finance eJournal","volume":"31 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2015-11-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"79533265","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Market Intermediation, Publicness, and Securities Class Actions","authors":"Hillary A. Sale, R. Thompson","doi":"10.2139/SSRN.2687216","DOIUrl":"https://doi.org/10.2139/SSRN.2687216","url":null,"abstract":"Securities class actions play a crucial, if contested, role in the policing of securities fraud and the protection of securities markets. The theoretical understanding of these private enforcement claims needs to evolve to encompass the broader set of goals that underlie the securities regulatory impulse and the publicness of those goals. Further, a clear grasp of the modern securities class action also requires an updated understanding of how the role of market intermediation in securities transactions has reshaped the realities of securities litigation in public companies and the evolution of the fraud cause of action in the context of open-market transactions. The Supreme Court’s embrace of market efficiency as a mechanism to establish reliance in its 1988 decision, Basic, Inc. v. Levinson, illustrates the necessary adaptation of common law fraud to the modern market setting, and Congressional enactment of the PSLRA in 1995 exemplifies the efforts to respond to the litigation risks inherent in that adaptation. Together, Basic and the PSLRA provide a frame for understanding both a series of recent Supreme Court decisions on securities class actions and a different understanding of the theory undergirding those class actions. To develop this understanding, we expand the conversation about the goals of securities regulation to include the set of goals that are rooted in publicness and focus on market protection, innovation, and growth, as well as stability and systemic considerations. We posit that this broader theoretical understanding explains why the Court rejected a challenge to the fraud on the market doctrine and, instead, permitted the continued use of market efficiency: the Court chose to preserve the deterrence and enforcement role of these cases in promoting market growth and innovation. We then apply this understanding of publicness and market intermediation to the interpretation of the Court’s limited, but ambiguous, use of “price impact” in securities fraud cases. Our analysis reveals that the practical balance established by Basic and the PSLRA has prevailed over pure doctrinal approaches to issues like reliance or other, more incomplete theoretical explanations focused solely on compensation, deterrence, and investor protection, but neglecting the role of publicness in the securities markets.","PeriodicalId":10698,"journal":{"name":"Corporate Law: Law & Finance eJournal","volume":"14 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2015-11-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82453154","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Strategic Trading and Delayed Disclosure by Informed Traders","authors":"E. Danesh","doi":"10.2139/ssrn.2694336","DOIUrl":"https://doi.org/10.2139/ssrn.2694336","url":null,"abstract":"The current SEC regulation section 13(f) allows financial institutions to delay the disclosure of their quarter-end stock holdings up to 45 days. Motivated by a recent regulatory debate about the appropriate length of delay for disclosures, I develop a model to examine a financial institution’s optimal response in different regulatory environments in terms of permitted delay. I show that an institution with access to better information about stocks optimally chooses to delay filing its disclosure for as long as permitted by the regulations. I demonstrate that this forbearance results in higher levels of profits for the financial institution relative to the case with immediate disclosure. Furthermore, delayed disclosure has nuanced implications on market quality: while longer delays by financial institutions with access to private information render the markets less liquid, they result in prices that are more reflective of the fundamentals.","PeriodicalId":10698,"journal":{"name":"Corporate Law: Law & Finance eJournal","volume":"37 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2015-09-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87321725","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Karl Polanyi and the Problem of Corporate Social Responsibility","authors":"L. Moncrieff","doi":"10.1111/j.1467-6478.2015.00718.x","DOIUrl":"https://doi.org/10.1111/j.1467-6478.2015.00718.x","url":null,"abstract":"This article considers Corporate Social Responsibility (CSR) as part of the projects in ‘new governance and decentred regulation’, which draw social forces towards the regulation of economic behaviour. It uses Karl Polanyi to open up pertinent interfaces between society and economy for observation, and Gunther Teubner to substantiate a ‘regulatory’ view of the company's social relationships. The article finds that CSR combines movements for the recognition of social relationships, on an unprecedented scale, with rigorous simultaneous movements for market building and social abstraction. Twenty‐first‐century market economy is defined by a capacity to contain ‘the social,’ which is thrown between the two movements, creating opportunities for companies to void the market's social limits. The article counterposes that the social that ‘returns’ after marketization needs to find its way past market‐building CSR, to constructively unshackle and redefine the framing of social conflicts that concern the corporation.","PeriodicalId":10698,"journal":{"name":"Corporate Law: Law & Finance eJournal","volume":"77 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2015-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87695368","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Sinking, Fast and Slow: Bifurcating Beta in Financial and Behavioral Space","authors":"J. Chen","doi":"10.2139/ssrn.2629541","DOIUrl":"https://doi.org/10.2139/ssrn.2629541","url":null,"abstract":"Modern portfolio theory accords symmetrical treatment to all deviations from expected return, positive or negative. This assumption is vulnerable on both descriptive and behavioral grounds. Many of the predictive flaws in contemporary finance stem from mathematically elegant but empirically flawed Gaussian models. In reality, returns are skewed. The presumption that returns and volatility are symmetrical also defies human behavior. Losing hurts worse than winning feels good; investors do not react equally to upside gain and downside loss. Moreover, correlation tightening during bear markets, not offset by changes in correlation during bull markets, suggest that standard diversification strategies may erode upside returns without providing adequate protection during times of stress.This article outlines mathematical tools for calculating volatility, variance, covariance, correlation, and beta, not merely across the entire spectrum of returns, but also on either side of mean returns. It pays special attention to beta. Beta is a composite measure that reflects changes in volatility and in correlation as returns move across either side of their expected value. Beta’s separate components address the distinct managerial concerns arising from loss aversion (or upside speculation) and from changes in correlation under different market conditions. Bifurcating beta in financial space describes both phenomena and anticipates the behavioral response to volatility and correlation in falling markets — problems appropriately described as sinking, fast and slow.","PeriodicalId":10698,"journal":{"name":"Corporate Law: Law & Finance eJournal","volume":"56 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2015-07-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85231226","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Carrot or Stick? The Shift from Voluntary to Mandatory Disclosure of Risk Factors","authors":"Karen K. Nelson, A. Pritchard","doi":"10.1111/jels.12115","DOIUrl":"https://doi.org/10.1111/jels.12115","url":null,"abstract":"This study investigates risk factor disclosures, examining both the voluntary, incentive-based disclosure regime provided by the safe harbor provision of the Private Securities Litigation Reform Act as well as the SEC’s subsequent mandate of these disclosures. Firms subject to greater litigation risk disclose more risk factors, update the language more from year-to-year, and use more readable language than firms with lower litigation risk. These differences in the quality of disclosure are pronounced in the voluntary disclosure regime, but converge following the SEC mandate, as low risk firms improved the quality of their risk factor disclosures. Consistent with these findings, the risk factor disclosures of high litigation risk firms are significantly more informative about systematic and idiosyncratic firm risk when disclosure is voluntary but not when disclosure is mandated. Overall, the results suggest that for some firms voluntary disclosure of risk factors is not a substitute for a regulatory mandate.","PeriodicalId":10698,"journal":{"name":"Corporate Law: Law & Finance eJournal","volume":"13 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2015-06-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84248371","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"The Spectral Stress VaR (SSVaR)","authors":"D. Guégan, Bertrand K. Hassani, Kehan Li","doi":"10.2139/ssrn.2622391","DOIUrl":"https://doi.org/10.2139/ssrn.2622391","url":null,"abstract":"One of the key lessons of the crisis which began in 2007 has been the need to strengthen the risk coverage of the capital framework. In response, the Basel Committee in July 2009 completed a number of critical reforms to the Basel II framework which will raise capital requirements for the trading book and complex securitisation exposures, a major source of losses for many international active banks. One of the reforms is to introduce a stressed value-at-risk (VaR) capital requirement based on a continuous 12-month period of significant financial stress (Basel III (2011)). However the Basel framework does not specify a model to calculate the stressed VaR and leaves it up to the banks to develop an appropriate internal model to capture material risks they face. Consequently we propose a forward stress risk measure ``spectral stress VaR\" (SSVaR) as an implementation model of stressed VaR, by exploiting the asymptotic normality property of the distribution of estimator of VaR_p. In particular to allow SSVaR incorporating the tail structure information we perform the spectral analysis to build it. Using a data set composed of operational risk factors we fit a panel of distributions to construct the SSVaR in order to stress it. Additionally we show how the SSVaR can be an indicator regarding the inner model robustness for the bank.","PeriodicalId":10698,"journal":{"name":"Corporate Law: Law & Finance eJournal","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2015-06-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80146411","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Catching Insider Trading","authors":"Margaret Ryznar, F. Sensenbrenner","doi":"10.2139/ssrn.3160473","DOIUrl":"https://doi.org/10.2139/ssrn.3160473","url":null,"abstract":"This Columbia Law School Blue Sky Blog post on insider trading analyzes shares from NASDAQ, AMEX, the New York Stock Exchange, and over the counter (OTC) markets, which allows for an examination of insider behavior within different market structures. We find that trades are different from surrounding trades in both trade to trade price impact and trade lot volume, information that should aid the government in identifying and prosecuting insider trading.","PeriodicalId":10698,"journal":{"name":"Corporate Law: Law & Finance eJournal","volume":"8 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2015-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88555057","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Algunos Swaps de Tipos de Interés (Some Interest Rate Swaps)","authors":"Pablo Fernandez","doi":"10.2139/SSRN.2191702","DOIUrl":"https://doi.org/10.2139/SSRN.2191702","url":null,"abstract":"Spanish Abstract: Esta nota contiene un caso real de una empresa que tenia un credito con tipo de interes variable y contrato un swap para pagar tipo de interes fijo y eliminar su riesgo de interes. La nota tambien contiene 30 comentarios sobre el swap y varias contestaciones a los mismos realizadas por lectores de versiones anteriores de este documento. English Abstract: This note has a real case of a company that had a variable-interest credit and subscribed a swap to pay fixed-interest and so, to eliminate its interest rate risk. The note also has 30 comments about the swap and answers to these comments made by readers of previous versions.","PeriodicalId":10698,"journal":{"name":"Corporate Law: Law & Finance eJournal","volume":"25 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2015-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88372539","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Amicus Brief of Scholars of Insurance Regulation in MetLife v. FSOC","authors":"Deepak Gupta, D. Schwarcz","doi":"10.2139/SSRN.2611853","DOIUrl":"https://doi.org/10.2139/SSRN.2611853","url":null,"abstract":"This Amicus Brief of Scholars of Insurance Regulation involves MetLife's challenge to the Financial Stability Oversight Council’s (\"FSOC\") determination that material financial distress at the company could pose a threat to U.S. financial stability. The brief focuses on one central element of MetLife’s challenge -- that FSOC failed to adequately consider the strength of the state insurance regulatory system in designating MetLife as a systemically significant nonbank financial company. The amicus brief argues that FSOC’s designation of MetLife fairly accounts for state insurance regulation’s focus on protecting policyholders rather than mitigating systemic risk. It argues that advancing these two regulatory goals often requires very different types of prudential safeguards and supervisory scrutiny. Many of the central features of U.S. state insurance regulation, the brief suggests, are inadequate in their capacity to prevent, anticipate, or respond to systemic risks. This problem is structural and cannot be remedied by state reforms, as states lack the inherent jurisdiction and ability to properly monitor and regulate systemic financial risk.","PeriodicalId":10698,"journal":{"name":"Corporate Law: Law & Finance eJournal","volume":"37 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2015-05-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73049460","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}