scholarly journals The relationship between financial crisis and earnings management: Some evidence from the Italian context

2019 ◽  
Vol 17 (1) ◽  
pp. 325-335 ◽  
Author(s):  
Francesco Grimaldi
Keyword(s):  
At Risk ◽  
Financial Crisis ◽  
Earnings Management ◽  
Financial Crises ◽  
Macroeconomic Factors ◽  
Crisis Period ◽  
Macroeconomic Conditions ◽  
Investigation Period ◽  
Italian Context ◽  
The Relationship

The aim of this research is to investigate the relationship between the financial crisis and earnings management. Despite the wealth of research examining earnings management, we still have much to learn about the effects of macroeconomic factors on accounting discretional decisions; the recent financial crises may be one of such factors. Particularly, this study aims at investigating whether, in the Italian context, the precarious macroeconomic conditions and the consequent difficulties suffered by listed companies have constituted an incentive to implement earnings management or not. The research is based on a sample of 89 non-financial listed Italian companies and an investigation period (2005-2016) split out into three different sub-periods: a pre-crisis period (2005-2008), a crisis period (2009-2012) and a post-crisis period (2013-2016). The research is conducted using the Beneish Model, due to its capability to identify, although on the basis of likelihood, companies that potentially adopt earnings management. The results of this study suggest an overall low presence of companies at risk of manipulation throughout the period under investigation; however, the most consistent number of such companies is recorded during the pre-crisis period.

scholarly journals Value relevance of accounting data and financial crisis in Europe: an empirical analysis

2012 ◽  
Vol 2 (2) ◽  
pp. 201 ◽  
Author(s):  
Alain Devalle
Keyword(s):  
Financial Crisis ◽  
Positive Impact ◽  
Value Relevance ◽  
Net Income ◽  
Accounting Data ◽  
Book Value ◽  
Crisis Period ◽  
Comprehensive Income ◽  
The Impact ◽  
The Relationship

This paper aims at verifying the relationship between book value and  market value for a four years period (2006-2009) in Europe, under IFRS. In particular, I used value relevance approach to measure whether net income or comprehensive income are more useful to understand the relationship between market data and financial data. Moreover, the paper analyzes the impact of financial crisis on the value relevance of accounting data. The examination period runs from a pre-crisis period (2006-2007) to an in-crisis period (2008-2009). Results shows that comprehensive income is more value relevant than net income. Furthermore, the financial crisis has a positive impact on value relevance.  

The effects of global financial crisis on the relationship between CEO compensation and earnings management

2020 ◽  
Vol 28 (2) ◽  
pp. 389-408 ◽  
Author(s):  
Oheneba Assenso-Okofo ◽  
Muhammad Jahangir Ali ◽  
Kamran Ahmed
Keyword(s):  
Financial Crisis ◽  
Earnings Management ◽  
Chief Executive Officers ◽  
Ceo Compensation ◽  
Global Financial Crisis ◽  
Chief Executive ◽  
Content Type ◽  
Multivariate Tests ◽  
Executive Officers ◽  
The Relationship

Purpose This paper aims to examine the effects of global financial crisis (GFC) on chief executive officers’ (CEO) compensation and earnings management relationship. Specifically, the authors examine whether the recent financial crisis had moderated the relationship between CEO bonus and discretionary accruals. Design/methodology/approach The authors use panel data for 1,800 firm-year observations (over a period of six years from 2005 to 2010) and use univariate and multivariate tests to test their hypothesis. The authors divide the period into pre-crisis, during-crisis and post-crisis periods to examine how the different financial crisis periods affect the relationship between CEO compensation and earnings management. Various alternative tests including endogeneity test suggest that the results are robust. Findings The authors’ multivariate results indicate that the relationship between CEO’ compensation and earnings management changes because of the GFC. Practical implications The findings, therefore, justify more monitoring and scrutiny to limit the existence of opportunistic managerial behaviour and for the appropriate designing of CEO compensation packages during abnormal economic circumstances. Originality/value So far as the authors’ knowledge goes, this is the first study which examines the relationship between CEO compensation and earnings management during GFC.

scholarly journals Nexus between Volatility of Stocks and Macroeconomic Factors during Global Financial Crisis: Evidence from Conventional & Islamic Stocks

2020 ◽  
Vol 6 (2) ◽  
pp. 465-473
Author(s):  
Majid Imdad Khan ◽  
Waheed Akhter ◽  
Muhammad Usman Bhutta
Keyword(s):  
Interest Rate ◽  
Financial Crisis ◽  
Industrial Production ◽  
Stock Markets ◽  
Global Financial Crisis ◽  
Stock Exchange ◽  
Oil Prices ◽  
Macroeconomic Factors ◽  
Monthly Data ◽  
The Relationship

Purpose: The study explores the relationship between the volatility of stock return of markets (Islamic & conventional) and macroeconomic factors by using GARCH in Mean (1,1) model during global financial crisis. Design/Methodology/Approach: monthly data for the period from 04 Jan, 2005 to 31st Dec, 2015. The Islamic stock markets (Dow Jones Islamic Market Malaysia (DJIM), Dow Jones Islamic Market Indonesia (DJII) & Dow Jones world Islamic Index (DJWI)-Benchmark), Conventional stock markets (Shanghai Stock Exchange (SSE),Bombay Stock Exchange (BSE) & Pakistan Stock Exchange (PSE) and Macroeconomic factors (Inflation, Interest Rate, Oil prices and Industrial Production) are taken into consideration. Findings: The results explored that inflation rate influenced the returns of conventional stock markets than Islamic stock markets. Moreover, the volatility components for macroeconomic factors i.e. inflation, interest rate and oil prices are more volatile but larger to industrial production during global financial crisis. Implications/Originality/Value: However, the frequency of market volatility for Islamic stock market is lower than conventional stock markets that mean that the investment in Islamic stock markets seems to be safe flight than conventional stock markets during global financial crisis.

BIBLIOMETRIC ANALYSIS OF FINANCIAL CRISIS RESEARCH

2020 ◽  
pp. 1-28
Author(s):  
CHIEN-LUNG HSU ◽  
CHUN-HAO CHIANG
Keyword(s):  
Financial Crisis ◽  
Financial Crises ◽  
Financial Risk ◽  
Global Financial Crisis ◽  
Market Risk ◽  
Prudential Supervision ◽  
Occurrence Data ◽  
Lehman Brothers ◽  
The Global Financial Crisis ◽  
The Relationship

The global financial crisis that followed Lehman Brothers’ declaration of bankruptcy in September 2008 critically highlighted the significance of research on systemic risk and macro-prudential supervision. Accordingly, this paper mainly analyzed the relationship between financial crises and the article output in financial crisis research through the application of bibliometrics. The occurrence of a financial crisis leads to changes in the output of articles on crisis and risks. Hence, we focused on bibliographic coupling (e.g., co-authorship, co-occurrence), data classification by risk type in this study (e.g., market risk, credit risk) and citation analysis (e.g., top 1% cited paper). Meanwhile, the analysis indicated the most relevant disciplines in financial crisis research. For example, the number of top 1% cited articles and citations, MARKET RISK documents and citations published the most papers. In other words, the market risk is valued in the financial risk literature.

The Social Impact of the Financial Crises in the Recent Past and Evidence Thereof — With Special Reference to India

2017 ◽  
Vol 6 (2) ◽  
pp. 1-12
Author(s):  
Asim Kumar Karmakar ◽  
Sebak Kumar Jana
Keyword(s):  
Financial Crisis ◽  
Financial Crises ◽  
Social Impact ◽  
Global Financial Crisis ◽  
Labour Force ◽  
Social Indicators ◽  
Well Being ◽  
Significant Loss ◽  
Special Focus ◽  
Crisis Period

Financial crises have significant short-term and long-term social costs. As a result, economic and social indicators have dwindled significantly since 2007. The soar in the unemployment rate has been most marked in so called advanced economies, reaching alarming levels in the tangential Europe with more than half of the young labour force unemployed in Greece and Spain. What is more, the crises, one global and another Euro zone financial crisis, have inexplicably hurt the poor. The progress in poverty alleviation has been not smooth across regions, and the pace has slowed since 2007 across the board. The crisis has also created challenges to the achievement of other development targets, including reduction of the occurrence of malnutrition and mortality rates, and civilizing gender equality in education and access to hygienic water and sanitation. This also suggests a significant loss or a reversal of the progress in development. In the above background, this paper presents evidence on the extent to which the global financial crisis and other crises since 2007 has been associated with deteriorating economic and social well-being indicators with a special focus on India. The results clearly indicate that poverty levels have been falling before the pre-crisis period but the post-crisis period witnessed a jump in the poverty rates across India.

Strategic and Innovative Actions of the Government During the Financial Crisis

2019 ◽  
pp. 352-370 ◽  
Author(s):  
Seçil Şenel
Keyword(s):  
Financial Crisis ◽  
Economic Crisis ◽  
Financial Crises ◽  
Social Problems ◽  
Government Intervention ◽  
Crisis Period ◽  
Mortgage Crisis ◽  
Economic Depression ◽  
The Government

Financial crises cause significant economic and social problems for the countries. Many companies stop their operations and a lot of people lose their jobs. Especially after the globalization, there is an increase in the number of financial crises. Because of this aspect, governments try to implement necessary actions to prevent the crisis. In this scope, government intervention to the market during the crisis period is a much-debated concept. The aim of this chapter is to identify the success of government intervention in the market in crisis period. For this purpose, three different financial crises are analyzed, which are 1929 Economic Depression, 2001 Turkish Economic Crisis, and 2008 Global Mortgage Crisis. As a result, it is identified that when government intervene into the market in crisis period, the countries can much easily overcome the crisis. Therefore, it is recommended that strategic and innovative actions should be taken by the government in case of economic crisis, such as increasing liquidity level and implementing new regulations.

scholarly journals Accruals quality and the cost of debt: the European evidence

2019 ◽  
Vol 27 (2) ◽  
pp. 333-351 ◽  
Author(s):  
Yasser Eliwa ◽  
Andros Gregoriou ◽  
Audrey Paterson
Keyword(s):  
Financial Crisis ◽  
Cost Of Debt ◽  
Content Type ◽  
Crisis Period ◽  
Listed Firms ◽  
National Characteristics ◽  
Accruals Quality ◽  
The Cost ◽  
The Impact ◽  
The Relationship

Purpose This paper aims to investigate the empirical relationship between the cost of debt (CoD) and accruals quality (AQ) of European listed firms during the period of 2005 to 2014. Also, it aims to test the impact of the interrelationship between the financial crisis (2008-2009) and AQ on CoD. Finally, we decompose AQ into two components; the innate (InnateAQ) and discretionary components (DiscAQ); and test their relationships with CoD. Design/methodology/approach To empirically examine the relationship between AQ and CoD, a sample including 15 member states of the EU is constructed. AQ proxy is based on the McNichols (2002) modification of Dechow and Dichev (2002) model. A univariate analysis and a multivariate analysis are conducted to examine the relationship between AQ and CoD after controlling for firm characteristics and institutional variables. Findings We find a significant negative association between AQ and CoD in a vast proportion of the 15 countries under review. Also, the results indicate that during the crisis period, creditors pay relatively more attention to the quality of accounting information than during the pre-crisis period when they determine CoD of firms. Moreover, we report a link between the magnitude of this relationship and national characteristics and provide evidence of the significant effects of national characteristics and market forces on CoD. Finally, we find that InnateAQ drives the relationship with CoD. Practical implications This paper provides up-to-date evidence on the economic consequences of AQ and IFRS in the capital market. The results should, therefore, be of interest to managers, creditors, regulators and standard-setters. Originality/value To the best of the authors’ knowledge, this is the first paper to investigate the effects of AQ on CoD for European listed firms. Also, it examines the impact of financial crisis on the association between AQ and CoD.

Long-Term Scarring from the Financial Crisis

2009 ◽  
Vol 210 ◽  
pp. 36-38 ◽  
Author(s):  
Ray Barrell
Keyword(s):  
Financial Crisis ◽  
Financial Crises ◽  
Asset Prices ◽  
Banking Sector ◽  
Oecd Countries ◽  
Risk Premia ◽  
Crisis Period ◽  
Permanent Effect ◽  
Output Costs

It is useful to look at the distinction between transitory and permanent effects of a crisis. Financial crises normally bring on a recession, and the output costs can be large, as Hoggarth and Saporta (2001) discuss. In the majority of cases since 1970 in the OECD countries output returns to its trend level and there is no permanent effect. However, there may have been a permanent scar on the level of output in Japan after its crisis in the early 1990s, making the crisis and subsequent recession much more costly. This may reflect the nature and length of the crisis, as the banking sector was left to flounder for some years before its rescue toward the end of the crisis period. This appears to have left a permanent scar because risk premia were subsequently higher, and real asset prices have not fully recovered.

The systemic causes of financial crises in the long nineteenth century

2017 ◽  
Vol 20 (2) ◽  
pp. 208-238 ◽  
Author(s):  
Heather Ba
Keyword(s):  
Nineteenth Century ◽  
Financial Crisis ◽  
Financial Crises ◽  
International System ◽  
Spillover Effects ◽  
International Economy ◽  
Macroeconomic Conditions ◽  
Systemic Theory ◽  
The Stability ◽  
The Impact

AbstractIn a globalized and hegemonically organized international economy, the economic fundamentals and policy choices of the hegemon often have spillover effects for peripheral economies. This is a well-recognized dynamic of the contemporary political economy, but it was true during the first age of globalization as well. Motivated by literature examining the impact of the U.S. macroeconomic conditions on other economies throughout the international system, this article advances a systemic theory of financial crisis and applies it to the long nineteenth century, when British hegemony reigned. My main motivation is the earliest example of a systemic theory of financial crisis, Charles Kindleberger's Hegemonic Stability Theory. However, while Charles Kindleberger focused on the stability brought about by a hegemonically structured international economy, I emphasize the dynamics of volatility present in this type of system. I argue that a hierarchical distribution of economic activity in the international system means that the financial cycle of the most central country influences the financial conditions in peripheral countries that lead to financial crisis. Evidence from financial crises which occurred in the long nineteenth century supports this theory.

scholarly journals Post Financial Crisis and Macroeconomic Fundamentals on Household Debt in Advanced Economies

2017 ◽  
Vol 2 (3) ◽  
pp. 36-41
Author(s):  
Siti Aminah Mainal ◽  
Catherine S F Ho ◽  
Jamaliah Mohd Yusof
Keyword(s):  
Financial Crisis ◽  
Global Financial Crisis ◽  
Panel Data Analysis ◽  
Control Variable ◽  
Housing Price ◽  
Household Debt ◽  
Macroeconomic Factors ◽  
Crisis Period ◽  
Advanced Economies ◽  
Macroeconomic Fundamentals

Objective - The unwarranted household debt initiated the global financial crisis which led to severe worldwide financial instability. Deleveraging process which has been taking place since the crisis has been slow and there is no quick fix to the debt issue. The lack of study on the effect of financial crisis on household debt justifies the objective to investigate macroeconomic fundamentals and financial crisis on household debt. Methodology/Technique - This study applies panel data analysis in ten advanced economies from 2001 to 2013. The random effect (RE) generalized least square estimator is used in the regression to examine macroeconomic factors and post financial crisis period as control variable on household debt. Findings - Findings confirm that post financial crisis period has significant negative effect on household debt which affirmed the deleveraging process in most advanced economies. Economic growth and household disposable income too have negative relation with household debt. Nonetheless, macroeconomic factors such as inflation, housing price and household consumption encourage household debt in advanced economies. Novelty - This study suggests that empirical evidence support that household avert from borrowing post financial crisis. Intensification of housing price and other consumption expenditure, if left unrestrained, may elicit another debt crisis. These are challenges faced by policy makers to curb household debt which entail risks for households, the financial system and the wider economy. Type of Paper: Empirical Keywords: Household Debt; Post Financial Crisis; Macroeconomic Factors. JEL Classification: G01, G02.

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