Meeting-or-Beating, Earnings Management, and Investor Sensitivity after the Scandals

2014 ◽  
Vol 28 (4) ◽  
pp. 847-867 ◽  
Author(s):  
Sanghyuk Byun ◽  
Kristin Roland-Luttecke
Keyword(s):  
Earnings Management ◽  
Capital Market ◽  
Market Reaction ◽  
Data Availability ◽  
Market Regulation ◽  
Future Performance ◽  
Accounting Scandals ◽  
Potential Market ◽  
Earnings Surprises ◽  
Capital Market Regulation

SYNOPSIS We contribute to the literature investigating the market reaction to firms' small positive earnings surprises following the large accounting scandals in the early 2000s. While prior studies provide evidence that the market no longer rewards firms for meeting-or-beating (MBE) in the post-scandal period, their efforts to address the rationality of the market response invite additional analysis. We demonstrate that the change in the market reaction to MBE is consistent with temporary over-skepticism. Specifically, we show that the market does not differentiate between MBE achieved operationally versus through earnings management, despite previously documented differences in future performance. We explore the relation between MBE, earnings management, and future performance in the post-scandal period and find evidence of mispricing consistent with the market underreacting to small positive earnings surprises earned by firms that do not appear to have manipulated earnings to MBE. Our study provides evidence of a potential market anomaly, which should be of interest to financial managers, researchers, and investors, and speaks to capital market regulation. Data Availability: Data are available from sources identified in the paper.

Detection and analysis of occurrences of spoofing in the Brazilian capital market

2020 ◽  
Vol 28 (3) ◽  
pp. 369-408 ◽  
Author(s):  
Luisa Mendonça ◽  
Alan De Genaro
Keyword(s):  
Capital Market ◽  
Order Book ◽  
Market Manipulation ◽  
Market Regulation ◽  
Data Set ◽  
Content Type ◽  
Potential Market ◽  
Capital Market Regulation ◽  
In The Beginning ◽  
The Impact

Purpose The purpose of this paper is to analyze a data set from a brokerage firm to find possible spoofing cases in ten stocks from the Ibovespa index. The studies proposed concerned the parameters used in the search for the practice, the frequency of occurrences during the negotiation period, the impact on the price caused by the size of the spoofing order and the correlation between the stock's liquidity and the number of occurrences. Design/methodology/approach By using intraday orders flows, the authors are able to reassemble the order book and perform an analysis of potential market manipulation. Findings The authors found six possible cases, all of them happened in the beginning or end of the negotiation period, confirming that there is a window of opportunity for the practice when there is greater uncertainty related to the stock's price. Moreover, they found that in the less liquid stocks, it was necessary to place greater spoofing orders aiming to narrow the wider spread. Practical implications A methodology for spoofing detection that can be replicated by brokerage firms and other researchers was developed. Social implications The study contributes to the literature of capital market regulation by suggesting best practices for regulators and self-regulatory entities to avoid a predatory market practice. Originality/value The authors present an algorithm and parameters for detecting spoofing; other papers are not practical orientated.

scholarly journals A critical review of corporate governance reforms in Malaysia

2017 ◽  
Vol 6 (1) ◽  
pp. 38-44 ◽  
Author(s):  
Ahmad Al-Hiyari
Keyword(s):  
Corporate Governance ◽  
Financial Statements ◽  
Business Environment ◽  
Market Regulation ◽  
Policy Makers ◽  
Corporate Managers ◽  
Accounting Scandals ◽  
Governance Practices ◽  
Capital Market Regulation ◽  
Local Business Environment

Following the East-Asian financial crisis in 1997 and the corporate accounting scandals, the shareholder’s confidence in the audited financial statements was adversely affected and regulators started to think seriously reforming the existing corporate governance practices. As a result, numerous initiatives were implemented to accelerate improvement of corporate governance practices. One of these initiatives was the Malaysian Code on Corporate Governance (MCCG). The code was derived from the approach applied by the British Hampel Committee, which attempt to mitigate the agency problem between corporate managers and outside owners. This study suggests that the British approach is unsuitable to Malaysian business environment. Particularly, the MCCG that had been lunched since 2011 ignore the uniqueness of Malaysia’s capital market, regulation environment and ownership structure. Therefore, the study recommends that policy makers and other regulators should consider the local business environment when establishing future code on corporate governance.

scholarly journals Genesis And Development Of Capital Market In CIS Countries: Cases From Russia, Kazakhstan, And Uzbekistan

2021 ◽  
Vol 58 (1) ◽  
pp. 129-139
Author(s):  
Otabek Narziev
Keyword(s):  
Capital Market ◽  
Legal Framework ◽  
Market Regulation ◽  
Main Research ◽  
Market Formation ◽  
History Of ◽  
Research Questions ◽  
Capital Market Regulation ◽  
Cis Countries ◽  
In Cis

This paper provides the necessary information and analysis for understanding and considering the main research questions and discussions of the research. Notably, this section outlines the background to capital market formation and development in CIS countries through a brief history of the CIS; considers the necessity of capital market and its regulation in CIS countries; reviews the institutional and legal framework of capital market regulation, and analyzes certain problems of capital market development.

scholarly journals LANDASAN FILOSOFIS PENGATURAN PASAR MODAL DI INDONESIA: HARAPAN DAN KENYATAAN

2015 ◽  
Vol 9 (2) ◽  
pp. 181
Author(s):  
Marihot Janpieter Hutajulu
Keyword(s):  
Welfare State ◽  
Economic System ◽  
Capital Markets ◽  
Capital Market ◽  
Market Development ◽  
Market Regulation ◽  
The Republic ◽  
Capital Market Regulation ◽  
Met Expectations ◽  
The Capital Market

<p><strong>Abstrak</strong><strong></strong></p><p> </p><p>Keberadaan pasar modal di Indonesia dibutuhkan mengingat peranannya yang penting untuk menyokong kondisi perekonomian negara. Namun pasar modal sebagai lembaga yang berasal dari sistem ekonomi liberal-kapitalistik tidak serta merta dapat dengan mudah diadopsi dan diatur tanpa disesuaikan dengan filosofi bangsa Indonesia. Melalui tulisan ini, Penulis hendak menganalisis kesesuaian tujuan pengaturan dan pengembangan pasar modal di Indonesia dengan konsep Negara Kesejahteraan Indonesia pasca Amandemen Undang-Undang Dasar Negara Republik Indonesia Tahun 1945. Analisis tulisan ini menyimpulkan bahwa tujuan pengembangan pasar modal Indonesia adalah mewujudkan masyarakat yang adil dan makmur, namun tujuan pengaturan pasar modal itu sendiri belum sesuai dengan konsep negara kesejahteraan Indonesia serta belum memenuhi harapan konstitusional bangsa ini.</p><p><strong> </strong></p><p><em><strong>Abs</strong><strong>tract</strong></em><strong></strong></p><p>In Indonesia the existence of capital market is needed considering the important role to support the country's economy. But the capital market as an institution derived from the liberal-capitalistic economic system can not necessarily be adopted and arranged without adjustment to the philosophy of the Indonesian nation. Through this article, the author analyzes the suitability of regulation and development of capital markets in Indonesia with the concept of Indonesian welfare state after the amendment to the Constitution of the Republic of Indonesia of 1945. The analysis of this paper draws a conclusion that the purpose of the Indonesian capital market development is to realize a just and prosperous society, but the goal of the capital market regulation itself is not in accordance with the concept of Indonesia as well as the concept of welfare state and thus has not met expectations of the nation's constitutional expectations.</p><p> </p>

scholarly journals The Institutional and Legal Framework of Emerging Capital Markets: The Experience of CIS Countries

2021 ◽  
Vol 58 (1) ◽  
pp. 157-177
Author(s):  
Said Gulyamov, Otabek Narziev
Keyword(s):  
Capital Market ◽  
Financial Services ◽  
Legal Framework ◽  
Market Regulation ◽  
Services Sector ◽  
Market Formation ◽  
History Of ◽  
Capital Market Regulation ◽  
Cis Countries ◽  
In Cis

The present study focuses on the development of one of the key institutions of the market economy – namely, the securities market in terms of its role in promoting competitive conditions in the financial services sector. Due to a variety of objective and subjective factors, banks have become the most dominant institutions in all CIS countries in terms of, both, accumulating and redistributing financial resources. Particularly, the research outlines the background to capital market formation and development in CIS countries through a brief history of the CIS; considers the necessity of capital market and its regulation in CIS countries; reviews the institutional and legal framework of capital market regulation, and analyzes certain problems of capital market development.

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