Ring Fencing Volcker's Rule?

This chapter is aimed at highlighting why ring fencing not only presents a more feasible and cost effective option to other models, but also why its degree of flexibility provides the more appropriate balance in a financial environment whose trend is increasingly inclined towards conglomeration. Whilst the Liikanen Report highlights why there is need for re-structuring of banks into separate legal entities – as a means of achieving ring fencing activities, the mandatory separation of banks' proprietary trading and other risky activities, such as that opted for under the Liikanen Report could be distinguished from the position under Volcker's Rule in the sense that it does not impose such stringent requirements as those applicable under Volcker's Rule – whilst not being as flexible as ring fencing recommendations proposed in the Vickers Report.

“Volcker/Vickers Hybrid”?

Whilst some valid and justified arguments have been put forward in favor of ring fencing, that is, constructing a fire-wall between consumer and investment banks, and that such activities can be achieved without restructuring banks into separate legal entities, the Liikanen Report highlights why there is need for such re-structuring. As well as considering the merits of ring fencing and the establishment of separate legal activities and entities, this chapter aims to highlight why a suitable model aimed at mitigating risks of contagion can to a large extent, be justified on a cost-benefit analysis basis. Furthermore, the chapter ultimately concludes that even though a greater degree of separation of legal entities and activities persist with the model which is referred to as “total separation”, a certain degree of independence between bank activities would also be necessary under ring fencing if its purposes and objectives are to be fulfilled.

Estimating the Brand Image in the Process of Accounting Convergence

Globalization is an irreversible process accounting. The global economic crisis that cross, there is need for stronger global accounting standards, to ensure a common language for each type of transaction and for each business sector. The value of intangible assets has been the main focus in the debates between consumers' evaluations about brand name and business world for many decades. Today, this concept interferes with the international process of assessment, but also is influenced by the store name and the quality of merchandise it carries.

The Need for Global Adoption of International Financial Reporting Standards

Many questions have been raised as to whether financial accounting has become more conservative. The value relevance and qualitative characteristics of accounting information have become topics of particular relevance given the role they have assumed in influencing the value judgment of investors in deciding whether or not to invest in a certain market. Given the quality of accounting information – which has resulted in misleading and inaccurate information, it became evident, particularly following Enron's collapse, to adopt improved, enhanced, better quality standards: namely, International Financial Reporting Standards. This chapter considers the background culminating in the adoption of IFRS – as well as the need for the adoption of IFRS. It also highlights why the value relevance of accounting information is also of vital significance in certain emerging economies and why the successful implementation of IFRS in these jurisdictions may be crucial in restoring investor confidence – particularly in the aftermath of stock market crashes in these economies.

The Determinants of Stock Market Development in Emerging Economies

“The chief concerns of EMEs (emerging market economies) in relation to their financial systems remain developmental rather than regulatory: increasing financial savings to accelerate growth and development, and deepening their financial system to develop long term funding instruments for infrastructure financing, absorb large inflows of capital to counter the uphill backwash from EMEs to AMEs, reduce the cost of capital and reduce the leads and lags in monetary policy transmission. Advanced market economies (AMEs), on the other hand, need major regulatory changes that inoculate them more effectively against the new risks their financial systems face.” As well as investigating these observations, this chapter is aimed at investigating the validity of Efficient Markets Hypothesis and Efficient Capital Markets Hypothesis in emerging economies – as contrasted with advanced market economies. In so doing, it aims to contribute to the extant literature on stock market liquidity and liquidity in capital markets.

Revisiting the Value Relevance of Accounting Information in the Italian and UK Stock Markets

This chapter aims to investigate the results of the value relevance of accounting information with reference to the study: “The value relevance of accounting information in the Italian and UK stock markets”. Results revealed from this study are as follows: - First, evidence shows the greater value relevance of accounting information in Italy than in the UK, even if this result must be explained according to the sample's characteristics. Second, the study underlines that in Italy the most value relevant accounting data refer to earnings while in the UK the focus is mainly on cash flows. The chapter also seeks to contribute to the gap in the literature on the value relevance of accounting information in the UK and Italy. In so doing it investigates the relevance and reliability of results derived in this study, their applicability to current market developments – as well as recent fluctuations and volatility in the financial markets.

Value Relevance of Accounting Information in Capital Markets

“The sell-off in US Treasury bonds in 2013 had global repercussions, impacting broad ranges of asset classes in both advanced and emerging market economies. The sell-off in 1994 is distinguished from 2003 and 2013 episodes in that, in 1994, not only did long-term rates surge, short-term rates also picked up significantly. By contrast, in both 2003 and 2013, bond market stress was confined mostly to longer maturities, although drivers of the 2003 event were different from those in 2013.” As well as analyzing and investigating recent developments in vulnerabilities and volatility on the New York Stock Exchange, this chapter investigates the topic of the value relevance of accounting information in global capital markets as a means of contributing to the topic of value relevance – and particularly highlighting the impact of monetary policies and growth rates of certain economies at a global level. It also highlights why fundamentals presently underlying present stock market volatilities differ from those of previous crises.

Mitigating Information Asymmetries in Capital Markets

As well as highlighting the impact of the audit expectations gap (AEG) in assessing the extent to which accounting information can be relied upon based on given market values and its impact on assessing how a relationship or pattern could be established in certain jurisdictions, this chapter is aimed at contributing to the literature on how accounting information could be interpreted or conveyed in such a way as to serve as a useful and vital indicator which will enable investors to interpret financial information in such a way which mitigates information asymmetries between management and investors. It also elaborates on factors which could affect the quality of accounting information – by way of reference to contributing elements of the audit expectations gap. As a result, it recommends measures aimed at addressing issues being faced by jurisdictions which have implemented accounting and legislative reforms as a means of improving the quality of accounting information.

Information Uncertainty and Volatility in Financial Stock Markets

Rising oil prices, steel prices - as well as the stronger dollar certainly impacted the financial markets during the latter part of May 2016. So also, the expected announcement of higher interest rates in June 2016 by the Federal Reserve. As well as illustrating the impact of financial shocks for emerging economies, this chapter also illustrates the impact of financial shocks for smaller – as well as more advanced economies. Having highlighted through the entire volume, the macroeconomic consequences of the changes and fluctuations of commodity prices – as reflected through the recent global financial market volatilities. This chapter will also focus on the main channels through which commodities price fluctuations affect business cycles in EMEs.

Value Relevance of Accounting Information in the Emerging Chinese Stock Market (Re Visited)

Value relevance of accounting information is a very important issue – not just from the perspective of Foreign Direct Investment and the reliability and relevance of financial and accounting information for investors – whether institutional of individual, but also in matters of Corporate Social Responsibility and financial reporting. This being of crucial importance given the need to enhance the quality and presentation of financial information, the need for comparability and consistency as a means of enhancing the relevance and reliability of financial information. This issue of reconciliation of discrepancies hence constitutes a matter in need of urgent redress in capital markets.