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Accounting


The Feltex Debacle: New Zealand's Enron? - by Sue Newberry
http://www.scoop.co.nz/stories/BU0712/S00076/the-feltex-debacle-new-zealands-enron.htm
Sue Newberry is Associate Professor of Accounting at the University of Sydney, and a member of the New Zealand Institute of Chartered Accountants.

The collapse into receivership of Feltex Carpets Ltd continues to produce waves of concern [in New Zealand]. Shareholders have commenced a class action against its directors; there have been Securities Commission investigations. This December 2007 article gathers evidence that the Securities Commission has not adequately scrutinised the behaviour of Feltex or its auditors; that Feltex was misleading in reporting its financial situation to its current and prospective shareholders at crucial times; and questions the quality of the work of its auditor, Ernst and Young.

Administrator perspectives on Hastie Group
Australian Institute of Company Directors: The Boardroom Report
This 6 February 2013 article from the Australian Institute of Company Directors: "The Boardroom Report" discusses some observations of Hastie Group administrators PPB Advisory. The article suggests that although Hastie Group undertook multiple acquisitons, financial reporting systems where never properly integrated and the Board of Directors did not demand sufficiently detailed information about the underlying performance of the business. If this had ocurred, the eventual demise of the company might have been averted.

Earnings Guidance and Market Uncertainty
Earnings Guidance and Market Uncertainty
In this article Rogers, Skinner, and Van Buskirk the authors study the effect of disclosure on uncertainty by examining how management earnings forecasts affect stock market volatility. Using implied volatilities derived from exchange-traded options prices, we find that management earnings forecasts tend to increase short-term volatility but have little effect on long-term volatility. We also find that when managers issue forecasts that convey bad news relative to analysts’ expectations, both short-term and long-term return volatility increase, and that these results are more pronounced when firms do not issue forecasts on a regular basis. Our results suggest that in most instances disclosure has little affect on long term measures of investor uncertainty but that it can sometimes increase uncertainty when managers announce negative news.

The misguided practice of earnings guidance
The misguided practice of earnings guidance
In this 2006 "McKinsey on Finance" study by Hsieh, Koller, and Rajan the authors argue that companies provide earnings guidance with a variety of expectations—and most of them don’t hold up.

The Accountant Who Changed The World
http://www.npr.org/blogs/money/2012/10/04/162296423/the-accountant-who-changed-the-world
This npr "planet money" feature by David Kestenbaum illuminates the fascinating historyof double entry book-keeping by discussing Jane Gleeson-White's new book "Double Entry: How the Merchants of Venice Created Modern Finance". In the program she explains how significant this new accounting was.

U7 Unemployment Rises Again
http://www.pbs.org/newshour/businessdesk/2012/07/u7-unemployment-rises-again.html
This PBS Newshour article highlights that even widely accepted measures for economic activity can be misleading and sometimes it is necessary to dig a bit deeper to get a clearer picture of what the numbers really mean.

Called to Account
http://downloads.bbc.co.uk/podcasts/radio/worldbiz/worldbiz_20120602-0030a.mp3
A BBC program from 2 June 2012 out of the Peter Day's World of Business series: The global Big Four accountancy groups are under sharp scrutiny from the authorities in Britain, Europe and the USA. Peter Day finds out why they are getting such close official attention … and why it matters to the rest of us. Producer: Caroline Bayley Editor: Stephen Chilcott.

Inside The Detection of Earnings Manipulation
http://myweb.ncku.edu.tw/~r16001205/w7.1_ProbM_Model.FAJ.1999.pdf
In this research paper by Messod D. Beneish from June 1999 the author profiles a sample of earnings manipulators, identifies their distinguishing characteristics, and estiamtes a model for detecting manipulation. His results suggest a systematic relation between the probability of manipulation and financial statement variables.

Inside Background Briefing - Auditing the Auditors
http://www.abc.net.au/rn/backgroundbriefing/stories/2011/3291026.htm
In this Backgroud Briefing program from 14th August 2011, ABC Radio National reporter Stan Correy looks at the profession of Auditing, and asks the question of who auditors are ultimately answerable to.

Inside The Mind Of A Financial Criminal
http://www.npr.org/blogs/money/2011/07/05/137632410/the-tuesday-podcast-inside-the-mind-of-a-financial-criminal
The NPR Planet Money Podcast from 5 July 2011 is about "Crazy Eddie", which in the 1980's was a listed NY based electronics retailer. The CFO of Crazy Eddie was Sam Antar and here he explains how he laundered money, avoided taxes and cheated his shareholders.

Financial Reporting Quality and Investment Efficiency of Private Firms in Emerging Markets
http://www.rotman.utoronto.ca/accounting/ole-kristian%20hope.pdf
In this 2010 research paper by Feng Chen et al., factors influencing financial reporting quality and investment efficiency are examined, with findings that may have broader application beyond emerging markets. Many companies today have operations in emerging markets and deal with private firms in these markets. This article provides some useful insights.

Predicting Material Accounting Misstatements
http://faculty.washington.edu/geweili/papers/care_1041.pdf
In this 2007 research paper, Patricia M. Dechow et al., examine in detail what factors might point to accounting misstatements and is a useful reference for investors sensitised to accounting alchemy.

Review of the Taxation Treatment of Off-Market Share Buybacks
http://www.taxboard.gov.au/content/
A comprehensive review of issues involved in off-market share buybacks.

Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers
This 2000 article by Stanford Graduate School of Business accounting professor Joseph D. Piotroski is essential reading for those interested in active investment management theory.