Financial accounting scandals and the reform of corporate governance in the United States and in Italy

2017 ◽  
Vol 17 (1) ◽  
pp. 77-88 ◽  
Author(s):  
Daniel P. Sorensen ◽  
Scott E. Miller
Keyword(s):  
United States ◽  
Corporate Governance ◽  
Financial Reporting ◽  
The United States ◽  
Class Action ◽  
Financial Accounting ◽  
Private Enforcement ◽  
Content Type ◽  
Accounting Scandals ◽  
The Usa

Purpose In the 1990s and beginning of the next decade, a series of financial accounting scandals occurred in the United States (USA or US) and in several other countries of the world. The USA and Italy (among others) responded with legislation to reform financial reporting and corporate governance in these jurisdictions. This paper aims to compare the regulatory response of Italy to that of the USA. Design/methodology/approach This paper includes a review of relevant literature and evaluation of the actions of the regulatory authorities. Findings In the case of the financial reporting crises, the rapid response put the USA into the role of the “first mover” with the European Union (EU) reacting to US initiatives and eventually converging to a large degree with the provisions of the US legislation. Italy has adopted many of the same regulatory reforms as the USA and has added some reforms that are directed to the specific needs to Italy. Research limitations/implications In conjunction with legislative initiatives like Sarbanes-Oxley, private enforcement mechanisms, such as shareholder class action suits in the USA, play an important role in discouraging and punishing financial accounting fraud. Practical implications In the absence of significant reforms of the Italian private enforcement system, corporate governance abuses and the potential for accounting scandals may still be persistent. As a whole, cooperative efforts continue between the USA and the EU. Such efforts are needed more and more, as companies become increasingly globalized. Originality/value This paper provides comparison and evaluation of corporate governance reform efforts in the USA and Italy.

The role of agency costs in the voluntary adoption of XBRL-based financial reporting

2020 ◽  
Vol 16 (5) ◽  
pp. 599-622
Author(s):  
Mehdi Khedmati ◽  
Farshid Navissi ◽  
Mohammed Aminu Sualihu ◽  
Zakiya Tofik-Abu
Keyword(s):  
United States ◽  
Financial Reporting ◽  
Agency Costs ◽  
The United States ◽  
Matched Pair ◽  
Alternative Measure ◽  
Content Type ◽  
Using Data ◽  
Voluntary Adoption

PurposeThe purpose of this paper is to examine whether and how firm's agency costs played a role in the voluntary adoption of the eXtensible Business Reporting Language (XBRL) under the SEC's voluntary filing program (VFP) that encouraged the voluntary adoption of the XBRL.Design/methodology/approachThis study employs a logistics regression and a sample of 140 firms that voluntarily participated in the VFP during its entire existence in the United States, and 140 matched-pair counterparts that did not voluntarily adopt the XBRL to investigate the role of agency costs in the voluntary adoption of XBRL-based financial reporting.FindingsWe find evidence consistent with the conjecture that a firm's low magnitude of agency costs plays a significant motivating role in the voluntary adoption of XBRL-based financial reporting. Our results continue to hold after using an alternative measure of agency costs and conducting two-stage least squares regressions. Supplementing these results, the study also shows that the level of agency costs of voluntary XBRL adopters remains statistically unchanged after the adoption while the level of agency costs associated with the firms that did not participate in SEC's VFP significantly decline after the adoption during the XBRL mandate.Practical implicationsThe findings of this study suggest that based on a firm's level of agency costs, regulators and policymakers, especially those in countries that are yet to mandate XBRL reporting, can, in advance, identify firms that are more likely to comply with their new financial reporting initiatives.Originality/valueThis paper provides first evidence on the role of agency costs in the voluntary adoption of XBRL using data from the United States.

scholarly journals The Management Of Research And Development And The Relevance Of Financial Accounting

2011 ◽  
Vol 18 (1) ◽  
Author(s):  
Paul E. Nix ◽  
Roberto De Magalhaes ◽  
William Wilcox
Keyword(s):  
United States ◽  
Research And Development ◽  
Financial Reporting ◽  
The United States ◽  
International Markets ◽  
Financial Accounting ◽  
Public Corporations ◽  
Private Research ◽  
Industrial Research Institute

<p class="MsoNormal" style="text-align: justify; margin: 0in 0.5in 0pt;"><span style="font-family: Batang; font-size: x-small;">This study investigates alternatives to current financial accounting treatment of research and development expenditures in United States public corporations.<span style="mso-spacerun: yes;">&nbsp; </span>A questionnaire survey was sent to members of the Financial Directors Network of the Industrial Research Institute of America, representing over forty percent of private research and development in the United States.<span style="mso-spacerun: yes;">&nbsp;&nbsp; </span>Background research and the survey indicate that if the financial reporting of research and development is modified, research and development will increase and a shift from short?term to long?term projects will occur; and finally United States public corporations will more effectively compete in the international markets.</span></p>

Corporate governance failures and the road to crime

2015 ◽  
Vol 23 (1) ◽  
pp. 216-230 ◽  
Author(s):  
Peter Yeoh
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Secondary Data ◽  
Savings And Loans ◽  
Content Type ◽  
Study Approach ◽  
Financial Crimes ◽  
Governance Practices ◽  
The Usa ◽  
The Uk

Purpose – The purpose of this paper is to provide enhanced insights on corporate governance failures which contributed to various financial crimes in major banking institutions and whether those involved have been held sufficiently accountable in the USA and the UK. Design/methodology/approach – This interdisciplinary doctrinal research relies on primary and secondary data and is complemented by the case study approach. Findings – Case insights demonstrate that a few major banks and isolated numbers of bankers at the lower echelons were held accountable in the USA but to a lesser degree in the UK. This contrasts sharply with the earlier Enron-type corporate financial reporting scandals or the much earlier Savings and Loans Crisis; but recent criminal charge practices against mega banks suggest a policy shift. Research limitations/implications – The paper findings suggest the need for further research in this under-researched area, while the banking communities in the USA and the UK may be prompted to review their corporate governance practices. Originality/value – This interdisciplinary research uses corporate law and criminological research to provide enhanced insights on financial crimes perpetuated in major banks in the USA and the UK.

scholarly journals O IMPACTO DA PROTEÇÃO AOS ACIONISTAS MINORITÁRIOS: O CASO PETROBRÁS

2019 ◽  
Vol 3 (56) ◽  
pp. 270
Author(s):  
Guilherme Amorim Campos SILVA
Keyword(s):  
United States ◽  
Corporate Governance ◽  
Risk Reduction ◽  
Legal Protection ◽  
The United States ◽  
Minority Shareholder ◽  
Reduction Factor ◽  
Class Action ◽  
Minority Shareholders

RESUMOA governança corporativa pode ser considerada como fator de redução de risco aos investidores, no entanto, a proteção legal direcionada aos investidores minoritários não se configura de igual maneira no Brasil e nos Estados Unidos, o que acaba por refletir nas ações propostas nesses dois países com o objetivo de ressarcimento a esses investidores frente aos escândalos de corrupção envolvendo a Petrobrás.PALAVRAS-CHAVE: Class Action; Governança Corporativa; Investidores Minoritários; Petrobrás.ABSTRACTCorporate governance can be considered as a risk reduction factor for investors, however, legal protection directed at minority shareholder is not the same in Brazil and the United States, which is reflected in the actions proposed in these two countries with the objective of reimbursing these investors against the corruption scandals involving Petrobras.KEYWORDS: Class Action; Corporate Governance; Minority Shareholders; Petrobras

scholarly journals Is the use of financial accounting fit for purpose? An exploration of the theoretical foundations, framework and practicalities

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Thereza Raquel Sales de Aguiar
Keyword(s):  
Corporate Governance ◽  
Secondary Data ◽  
Theoretical Background ◽  
Financial Accounting ◽  
Business And Society ◽  
Content Type ◽  
Inappropriate Use ◽  
Accounting Scandals ◽  
The Impact ◽  
Theoretical Foundations

Purpose The purpose of this paper is to explore issues related to the use of financial accounting and reporting by discussing three interrelated areas: the theoretical foundations, the framework and practicalities. The paper also discusses participatory and pluralistic approaches to accounting and corporate governance as alternatives to address some of these issues. Design/methodology/approach This is a narrative research based on deductive thematic analysis of secondary data. This study provides a general overview of the existing literature of the limits of the use of financial accounting and its impact on business and society. Findings In terms of the theoretical foundations, this paper contrasts financial accounting explained by agency theory and a dialogic accounting approach. The findings of this study emphasise the need to establish an accounting framework for the interests of the many (not the few) in conjunction and simultaneously with a participatory and pluralistic approach to corporate governance. Finally, this paper explores accounting for carbon emissions and recent financial accounting scandals to analyse the impact of the inappropriate use of financial accounting and reporting in business and society. Originality/value This paper provides an overview of the limits of the use of financial accounting by exploring its theoretical background, framework and practicalities. The paper also discusses the need for new accounting and corporate governance frameworks that allow a pluralistic and participatory approach to the decision-making of companies.

The potential benefits of employee equity funds in the United States

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Lenore Palladino
Keyword(s):  
United States ◽  
Corporate Governance ◽  
Wealth Inequality ◽  
Original Data ◽  
The United States ◽  
Shareholder Wealth ◽  
Employee Voice ◽  
Content Type ◽  
Equity Funds ◽  
Employee Equity

PurposeThe mainstream framework for corporate governance is that all corporate activity should be directed towards shareholder wealth maximization. This article posits that public policy should move away from shareholder primacy and instead recognize employees as key contributors to corporate value-creation. One way to implement this approach is to require the creation of Employee Equity Funds (EEFs) at large corporations, which would pay employees dividends alongside external shareholders and establish a collective employee voice in corporate governance. EEFs may reduce economic inequality while improving firm performance and macroeconomic stability. This article provides an original estimate of average employee dividends, illustrating the potential of employee equity funds.Design/methodology/approachAnalysis of employee dividends for Employee Equity Funds at large U.S. corporations, using publicly available corporate finance data.FindingsBased on historic dividend payments and employee counts in public 10-K filings, I find that, if EEFs held 20% of outstanding equity, the average employee dividend across this sample would be $2,622 per year, while the median is $1,760. This indicates that employee dividends can be a small but meaningful form of redressing wealth inequality for the low-wage workforce, though it should emphatically not be seen as a replacement for fair wages.Originality/valueOriginal data analysis of a proposed policy reform to increase the benefits of employee equity in the United States.

Design, qualification and Shariah governance of stock screening methodologies in selected Gulf Cooperation Council (GCC) countries in comparison with the United States

2018 ◽  
Vol 10 (2) ◽  
pp. 189-209
Author(s):  
Umayal Kasi ◽  
Junaina Muhammad
Keyword(s):  
United States ◽  
The United States ◽  
Gulf Cooperation Council ◽  
Content Type ◽  
Secondary Sources ◽  
Muslim Countries ◽  
Gcc Countries ◽  
Design Qualification ◽  
The Usa ◽  
Shariah Governance

Purpose This paper aims to compare and analyse the aspects of Shariah screening methodologies within the selected Gulf Cooperation Council (GCC) countries as well as comparing the methodologies with the USA, and to examine how Shariah screening methodologies affect financing and investing activities of a firm. Design/methodology/approach Shariah screening methodologies within the selected GCC countries and between the GCC countries and the USA are compared on the basis of the data collected from secondary sources. Findings Design, qualification and Shariah governance set the Shariah screening methodologies within the GCC countries apart. Feasibility, duration, economic viability and funds required differentiate these Shariah screening methodologies between the GCC countries and the USA. Shariah screening methodologies implied in the USA is more stringent than in the GCC countries. Research limitations/implications The suggestions in this study include using a longer research timeline, examining many more number of countries’ Shariah screening methodologies and exploring other types of Shariah screening methodologies. Practical implications The possibility of generalising the implementation of strict and uniform Shariah screening methodologies across all the country-specific Shariah indices amongst Muslim nations, globally, is likely to benefit all the Muslim countries, by strengthening the understanding, interaction and economic co-operation amongst these countries. Social implications People’s needs can be tended to if Maqasid Al-Shariah (objectives of Shariah) is achieved through flexibility, dynamism and creativity within the social policy. Originality/value Aspects of Shariah screening methodologies are compared and contrasted within the selected GCC countries as well as between the GCC countries and the United States and the role of Shariah screening methodologies is examined in order to determine the extent of what is Shariah-Compliant and what is Non-Shariah Compliant for a firm.

scholarly journals The Prospects Of Replacing GAAP With IFRS In The United States

2012 ◽  
Vol 12 (1) ◽  
pp. 25
Author(s):  
RamMohan R. Yallapragada ◽  
C. William Roe ◽  
Alfred G. Toma
Keyword(s):  
United States ◽  
Financial Reporting ◽  
Accounting Standards ◽  
The United States ◽  
Capital Allocation ◽  
Financial Accounting ◽  
Future Perspective ◽  
International Accounting ◽  
International Accounting Standards ◽  
The Us

Historically, each country developed its own Generally Accepted Accounting Principles (GAAP) for financial accounting and reporting and there was no uniformity among the GAAPs of different countries. Comparison of financial statements issued by business firms from different countries has become difficult leading toward suboptimal capital allocation across countries in the world. Gradually, there emerged a global demand for convergence of GAAP of different countries into a single set uniform accounting standards applicable to all countries. As a result, the International Accounting Standards Committee (IASC) was established in 1973. The IASC formed International Accounting Standards Board (IASB) in 2001 which began issuing International Financial Accounting Standards (IFRS). At this point about 100 countries have adopted IFRS for their financial reporting purposes. In 2010, the US Securities Exchange Commission (SEC) stated that it would be able to make a decision on the adoption of the IFRS in the United States within that year and would allow a five-year period for complete transition, if it is decided to incorporate the IFRS into the U S reporting standards. An intense debate ensued for and against incorporation of IFRS into the US GAAP. Four alternative processes are suggested for the transition - outright adoption, convergence, endorsement, and co-endorsement. This paper presents details of each of these suggested alternatives and future perspective of the adoption of IFRS into the U S accounting and reporting system.

Research of ethics, values and cross-cultural differences on China, Mexico or the United States

2014 ◽  
Vol 9 (2) ◽  
pp. 133-154 ◽  
Author(s):  
Jonny Villatoro ◽  
John Chang ◽  
Samuel Lane
Keyword(s):  
United States ◽  
Cultural Differences ◽  
International Business ◽  
The United States ◽  
Global Market ◽  
Cross Cultural ◽  
Cultural Environment ◽  
Content Type ◽  
Cross Cultural Differences ◽  
The Usa

Purpose – The purpose of this paper is to study ethics, values and cross-cultural differences in China, Mexico or the United States. Three distinct and unique nations, the USA, Mexico and China, have different political structures, historical backgrounds and economical systems. While each of these nations can be considered an integral part to the world economy, each nation has their own distinct ethics, values and culture which serve as the backbone of the particular region. To be successful in international business, knowledgeable as an expatriate and culturally or ethically aware of key nations in the global market, individuals need to have researched information pertaining to the ethics, cultures and values of the USA, Mexico or China to blend in and succeed with the foreign cultural environment. Design/methodology/approach – This research paper will focus extensively on the impact values, ethics and cultural differences (based majorly and solely on the Rokeach Values Survey, Forsyth Studies and Hofsteade’s Model) have on the societies of the USA, Mexico or China. A review of the empirical studies will demonstrate the importance values, ethics and culture have on individual life or business environment for the USA, Mexico or China. Findings – Culture can be a factor which heavily influences a region or nation’s ethics and values. Research limitations/implications – When discussing culture, there are many factors such as values, religion, societal norms, customs, beliefs or deeply rooted faiths which can impact a nation’s overall collective culture. As a result, cross-cultural differences among a variety of nations, countries, regions or sub-regions may vary when compared with one another. Through more empirical investigation, research or study of a nation’s cultural values may there be a more profound, detailed and legitimate basis for assessing a nation’s ethical constructs. Practical implications – Understanding the differences of ethics, values and culture of the USA, China or Mexico can impact an individual’s experience if serving as an expatriate at the particular location. Each nation has its own distinct and unique social, business and cultural environment. To successfully accomplish international business or to operate a multinational corporation in a global market, individuals need to have a prior understanding of varying cultures, ethical standards or values in a particular region. Originality/value – This research paper will present and deliver pertinent information to individuals interested in serving as an expatriate in the USA, China or Mexico. Individuals can also read this paper to understand, comprehend or consume more general knowledge of the ethics, values and culture of the researched locations.

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