Fraud detection is becoming increasingly important to managers of organizations, to internal and external auditors, and to regulators (Apostolou and Crumbley, 2005). Recent large frauds in many countries of the world and the Sarbanes-Oxley Act in the United States stress the importance of early detection of fraud. Financial statement frauds have weakened investor confidence in corporate financi...

This paper reveals and tests a new theoretical implication of the credit channel of monetary policy: as financial frictions (monitoring or auditing costs) increase, the reaction of stock prices to monetary policy shocks decreases. Correspondingly, towards the end of the Enron accounting scandal, the stock prices of firms sharing the same auditor as Enron responded by about 50 to 60 basis points...

In-group bias, a product of Social Identity Theory, may impair auditor independence by influencing auditor judgments in an analytical review task. Auditors rely on client representations to support their opinion of the financial statements; however, clients are sometimes former auditors of the external audit firm. This prior relationship could lead the auditor to exhibit unwarranted trust of cl...

A key criterion for applying hedge accounting under SFAS 133 is the demonstration of hedge effectiveness. Retrospective assessment of hedge effectiveness may reveal hedge ineffectiveness – the extent to which a gain (loss) on the hedging derivative is not offset by a corresponding loss (gain) on the hedged item. SFAS 133 requires that this accounting measure of hedge ineffectiveness be reported...

I plan to contribute the following to the Euroconference: 1. Present a framework of the factors that influence financial reporting practice and the quality of the financial reports in continental European countries. 2. Discuss potential differences in the proposed "financial reporting" framework between Anglo-Saxon and Continental European countries. This will be partly based on the Vander Bauw...

Following the bankruptcy of Lehman Brothers, interbank borrowing and lending dropped, whereas reserve holdings of depository institutions skyrocketed, as the Fed injected liquidity into the U.S. banking sector. This paper introduces bank liquidity risk and limited market participation into a real business cycle model with ex ante identical financial intermediaries and shows, in an analytically ...

In this paper we address the question of the size distribution of firms. To this aim, we use the Bloomberg database comprising multinational firms within the years 1995-2003, and analyze the data of the sales and the total assets of the separate financial statement of the Japanese and the US companies, and make a comparison of the size distributions between the Japanese companies and the US com...

We analyze the financial statements of 58,653 firm-years from 34 countries for the period 1985-1998 to construct a panel data set measuring three dimensions of reported accounting earnings for each country – earnings aggressiveness, loss avoidance, and earnings smoothing. We hypothesize that these three dimensions are associated with uninformative or opaque earnings, and so we combine these thr...

From the last decade of the twentieth century, professional football has become a transnational global business in which financial profits are as important as sports successes (1). Being a full occupational category, professional football relies on a diversity of stakeholders including among others players, clubs, (inter)national governing bodies, sponsors and sport ministries (1). Despite the ...

The monetary unit assumption of financial accounting assumes a stable currency i.e., constant purchasing power over time . Yet, even during periods of low inflation or deflation, nominal financial statements violate this assumption. I posit that, while the effects of inflation are not recognized in nominal statements, such effects may have economic consequences. I find that unrecognized inflati...