scholarly journals Applicability of Z-score Models on the Agricultural Companies in the Republic of Srpska (Bosnia and Herzegovina)

2018 ◽  
Vol 18 (4) ◽  
pp. 227
Author(s):  
Tamara Stojanović ◽  
Ljiljana Drinić
Keyword(s):  
Safe Zone ◽  
Z Score ◽  
Financial Variables ◽  
Financial Difficulties ◽  
Ex Post ◽  
Ex Ante ◽  
The Republic ◽  
Near Future ◽  
Ex Post Analysis

The aim of our research was to test the predictability of Altman’s Z-score models in the case of agricultural companies in the Republic of Srpska. Due to the fact that according to these models the companies from the critical zone are supposed to go bankrupt in the near future, while the companies from the safe zone are not supposed to go bankrupt, these two groups of companies have been subject to ex-ante analysis during the period of five years (2011-2015) in order to estimate the predicting efficiency of Z-score models. The authors have also performed the ex-post analysis to see how the bankrupt companies had been classified according to these models in the years preceding their bankruptcy. The results of these analyses show that Z-score models are not reliable in predicting bankruptcy, nor for the creditworthiness analysis, but can be useful in identifying agricultural companies with long-term financial difficulties especially if other, non-financial variables are included.

scholarly journals How should we regulate artificial intelligence?

2018 ◽  
Vol 376 (2128) ◽  
pp. 20170360 ◽  
Author(s):  
Chris Reed
Keyword(s):  
Artificial Intelligence ◽  
Neural Networks ◽  
Decision Making ◽  
Current System ◽  
General System ◽  
Fundamental Rights ◽  
Ex Post ◽  
Ex Ante ◽  
Human Decision

Using artificial intelligence (AI) technology to replace human decision-making will inevitably create new risks whose consequences are unforeseeable. This naturally leads to calls for regulation, but I argue that it is too early to attempt a general system of AI regulation. Instead, we should work incrementally within the existing legal and regulatory schemes which allocate responsibility, and therefore liability, to persons. Where AI clearly creates risks which current law and regulation cannot deal with adequately, then new regulation will be needed. But in most cases, the current system can work effectively if the producers of AI technology can provide sufficient transparency in explaining how AI decisions are made. Transparency ex post can often be achieved through retrospective analysis of the technology's operations, and will be sufficient if the main goal is to compensate victims of incorrect decisions. Ex ante transparency is more challenging, and can limit the use of some AI technologies such as neural networks. It should only be demanded by regulation where the AI presents risks to fundamental rights, or where society needs reassuring that the technology can safely be used. Masterly inactivity in regulation is likely to achieve a better long-term solution than a rush to regulate in ignorance. This article is part of a discussion meeting issue ‘The growing ubiquity of algorithms in society: implications, impacts and innovations'.

The Valuation Consequence of Accounting Changes: A Multi-Year Examination

1993 ◽  
Vol 8 (4) ◽  
pp. 475-494 ◽  
Author(s):  
Bala G. Dharan ◽  
Baruch Lev
Keyword(s):  
Stock Returns ◽  
Positive Impact ◽  
Abnormal Returns ◽  
Cross Sectional ◽  
Earnings Response Coefficients ◽  
Financial Variables ◽  
Ex Post ◽  
Earnings Response ◽  
Accounting Changes

We examine the valuation impact of changes in the accounting procedures and estimates underlying reported financial data in the year of the change as well as in the postchange years. Since most accounting changes have undisclosed effect on financial variables in subsequent years in addition to the earnings impact disclosed in the year of the change, an accounting change might be motivated by its long-term valuation effect, even if investors are cognizant of the initial earnings impact and fully account for it in the year of the change. This conjecture is empirically examined for the first time in this study. Our tests are based on a cross-sectional examination of the valuation impact of the earnings effect of accounting changes in the year of the change and a longitudinal examination of the behavior of returns in the postchange years. We also provide descriptive evidence indicating that earnings management is a managerial motive for changing accounting techniques. Cross-sectionally, for income-increasing accounting changes, our results show that investors' valuations seem to reflect a concern for the reduced quality of earnings, as reflected by smaller earnings response coefficients and R2s. However, the decline is not attributable specifically to the earnings effect of the accounting change. Similarly, the earnings effect of income-decreasing changes does not have valuation impact in the year of the accounting change. Although investors appear to largely ignore the accounting changes in the year they are made, our longitudinal test does show that firms undertaking accounting changes experience different long-term returns relative to other firms in the postchange period. However, income-increasing accounting changes are associated with negative valuation changes in the postchange period, rather than the positive impact expected from the conjecture stated above. Over the five years following the year of the accounting change, abnormal returns of income-decreasing firms exceed those of income-increasing firms substantially, with the latter firms experiencing large negative returns over the period. We demonstrate a trading rule that, ex post, exploits the information contained in the accounting changes to yield large abnormal stock returns. The results suggest that income-increasing accounting changes are perhaps the first visible sign indicating other hidden, fundamental problems that get revealed in subsequent years.

The New Old Efficiency Theories of Causation and Liability

2014 ◽  
Vol 7 (1-2) ◽  
Author(s):  
Richard W. Wright
Keyword(s):  
Social Welfare ◽  
Fundamental Problem ◽  
Tort Law ◽  
Tort Liability ◽  
Liability Rule ◽  
Actual Causation ◽  
Ex Post ◽  
Ex Ante ◽  
The One ◽  
Ex Post Analysis

AbstractFor the last 40 years, efficiency theorists have attempted to demonstrate that tort liability in general and negligence liability in particular can best/only be explained by the hypothesis that judges are trying to maximize aggregate social welfare. Thirty years ago I published a pair of articles criticizing these attempts, noting especially the efficiency theorists’ inability to explain and justify the factual causation requirement in tort law. Nevertheless, the efficiency theorists have continued to make the same arguments. In this paper, I canvass the old arguments and their current restatements, including the attempts by some of the leading theorists to equate ex post analysis of actual causation with ex ante analysis of negligent conduct and attempts by others to explain the actual negligence liability rules. None of the rules proposed by the efficiency theorists is consistent with the practice of the courts, and none of them would promote efficient deterrence. Worse yet, the least descriptively plausible negligence liability rule proposed by the efficiency theorists is the one likely to be the least inefficient in actual practice, while the one assumed by most efficiency theorists will be the most inefficient. The fundamental problem with the efficiency theories is that they assume that the focus of law should be and is on the maximization of aggregate social welfare, rather than justice – the promotion of everyone’s equal external freedom in their interactions with others.

scholarly journals Ready When the Big One Comes? Natural Disasters and Mass Support for Preparedness Investment

2021 ◽  
Author(s):  
Michael M. Bechtel ◽  
Massimo Mannino
Keyword(s):  
Adverse Event ◽  
Natural Disasters ◽  
Disaster Preparedness ◽  
Personal Experience ◽  
Personal Exposure ◽  
Policy Options ◽  
Ex Post ◽  
Ex Ante ◽  
Disaster Exposure

AbstractSocieties can address collective threats such as natural disasters or pandemics by investing in preparedness (ex ante) or by offering compensation after an adverse event has occurred (ex post). What explains which of these options voters prefer? We study how personal exposure and policy knowledge affect mass support for long-term disaster preparedness, a type of long-term investment meant to cope with an increasingly destructive and frequent class of events. We first assess whether support for preparedness reflects personal affectedness and find that neither subjective nor geo-coded measures of disaster exposure predict policy preferences. Second, we explore whether this finding can be explained by misperceptions about the features of the available policy options. We find that revealing the damage reductions associated with preparedness systematically reduces opposition to long-term investment. These results suggest that opposition to preparing for collective threats may depend more on informational deficiencies than on personal experience with realized risks.

scholarly journals PREDICTING BANKRUPTCY OF SELECTED MANUFACTURING COMPANIES LISTED IN COLOMBO STOCK EXCHANGE: APPLYING ALTMAN’S Z-SCORE

2017 ◽  
Vol 5 (2) ◽  
pp. 313-321 ◽  
Author(s):  
Anandasayanan S ◽  
Subramaniam V.A
Keyword(s):  
Legal Status ◽  
Stock Exchange ◽  
Early Stage ◽  
Safe Zone ◽  
Manufacturing Firms ◽  
Manufacturing Companies ◽  
Z Score ◽  
Outstanding Debt ◽  
Score Model ◽  
Near Future

Bankruptcy is the legal status for an individual or company incapable to pay off outstanding debt. Predication of Bankruptcy is critical task. Early stage of identification of likelihood of solvency may avoid evils in the near future & may shelter the firm from Bankruptcy situation. Bankruptcy of organizations can be predicated by using Altman’s Z-Score Model. This study tries to apply the model to understand the likelihood of Bankruptcy of selected listed manufacturing firms for past 5 years from 2010 to 2014 which are listed in Colombo Stock Exchange. The study reveals that four companies completely belong to Safe Zone for the entire period of study. Three firms are in Distress Zone which clearly indicates that these firms may go Bankrupt in near future.

scholarly journals The Necessity Of Piercing Corporate Veil Doctrine In Uzbek Corporate Law

2020 ◽  
Vol 02 (12) ◽  
pp. 83-90
Author(s):  
Utkirbek Kholmirzaev ◽  
Keyword(s):  
Common Law ◽  
Corporate Law ◽  
Legal Entity ◽  
Legal Traditions ◽  
Ex Post ◽  
Ex Ante ◽  
The Republic ◽  
Corporate Liabilities ◽  
Liability Risks

This article discusses the distribution of liability risks of shareholderss and other controlling persons on corporate liabilities. Given the analysis of ex post and ex ante model of control over distribution of risks of civil turnover participants in common law and continental legal traditions. Also, considered problems of shareholders' liability on obligations of corporations in the Republic of Uzbekistan. A shareholder shall be held liable on a subsidiary basis for the obligations of the legal entity in case of insolvency, as a result of the member's wrongful acts. However, some mechanisms of such liability do not allow to resolve the issue fairly.

scholarly journals The historically realised equity risk premium as a guide to future expectations in an emerging market: The case of South Africa

2008 ◽  
Vol 2 (1) ◽  
pp. 89-104
Author(s):  
Jesse De Beer
Keyword(s):  
Risk Premium ◽  
Emerging Market ◽  
Equity Risk Premium ◽  
Future Expectations ◽  
Investment Performance ◽  
Equity Risk ◽  
Ex Post ◽  
Long Run ◽  
Ex Ante

The concept of an equity risk premium (ERP) is fundamental to modern financial theory and central to every decision at the heart of corporate finance. Efforts to quantify ERP are well rewarded by insights into the stability and dynamics of long-term investment performance. Such efforts require the quantification of both historically realised (ex post) and expected future (ex ante) premiums. Finding an appropriate proxy for the expected (ex ante) ERP remains a challenging aspect. One widely used application is the use of long-term averages of observed market premiums as a proxy for expected returns. The aim of this paper is to analyse the appropriateness of the historical methodology of estimating expected ERP in the South African context. The analysis in this paper suggests that analysing past historical figures remains useful in the SA context. This is supported by the results of the statistical analysis, showing stationarity of the ERP time-series, meaning that the true mean does not change over time. This implies that the historical average mean may be used as a proxy for the long-run expected ERP. However, the well-documented problems relating to large standard errors (predictability problem) and relevance due to changing circumstances are also evident in the SA data. Thus, investors would be well advised to analyse the past and apply informed judgments as to future differences, if any, when attempting to arrive at fair forecasts.

Can IMF program design resurrect investor sentiment? An empirical investigation

2019 ◽  
Vol 22 (2) ◽  
pp. 339-382 ◽  
Author(s):  
Krishna Chaitanya Vadlamannati
Keyword(s):  
Empirical Investigation ◽  
Investor Sentiment ◽  
Performance Criteria ◽  
Estimation Methods ◽  
Political Costs ◽  
Ex Post ◽  
Ex Ante ◽  
Imf Programs ◽  
And Performance

AbstractDoes international investor sentiment improve when a crises-ridden country participates in an International Monetary Fund (IMF) program? I argue that merely participating in an IMF program may not revive the sentiments of investors. Rather, investor sentiment would improve when governments enhance the credibility of their commitment to reforms by accepting severe conditions imposed by the IMF, which incur ex ante and ex post political costs. Using panel data on 166 countries during the 1992–2013 period (twenty-two years), I find that countries participating in IMF programs, with conditions attached, specifically prior actions and performance criteria conditions, after controlling for endogeneity concerns using exogeneous instruments, are associated with an increase in long-term investor sentiment. These results are robust to using alternative data, variables and estimation methods. My findings are in stark contrast to those who argue that IMF conditional programs are akin to swallowing a bitter pill. In fact, my results demonstrate that the so-called bitter pill may act as a palliative.

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