THE IMPACT OF THE 2008 GLOBAL FINANCIAL CRISIS ON THE STRUCTURE OF THE TRANSMISSION OF PRICE INNOVATIONS ACROSS FINANCIAL MARKETS: THE CASE OF SOUTHWEST ASIAN EQUITY MARKETS

This study examines the reaction of Southeast Asian equity markets to the transmission of price innovations from major equity markets during the pre and post periods of the 2008 global financial crisis. In particular, we examine the reaction of returns indices in Malaysia, the Philippines, South Korea, Taiwan, and Thailand as endogenous variables, and compare them to the returns indices of the U.S., the Eurozone, Japan, and China as exogenous variables. The results of VAR models indicate the combined and individual impact of the price innovations from the major equity markets on the volatility of returns of selected countries is relatively trivial during either the pre- or post-financial crisis periods. However, the individual impact of the U.S. innovations is generally higher during the post-financial crisis. The ARCH and GARCH models indicate the stock markets of Southeast Asian countries are more responsive to their own price innovations during both the pre- and the post-crisis periods, although some response to U.S. and Eurozone shocks is also observed.JEL Codes - G01, G1

Real and Accrual‐Based Earnings Management in the Pre‐ and Post‐IFRS Periods: Evidence from China

The purpose of this study is to investigate the prevalence of both accrual‐ and activities‐based earnings management for Chinese A‐share firms surrounding the adoption of substantially IFRS‐convergent accounting standards. Since 2007, all listed A‐share firms in China have been required to comply with a new set of accounting standards that have substantially conformed to IFRS. The new reform also produced a set of new auditing standards and internal control reporting requirements. Based on a sample of 4,050 firm‐year observations from 2002 to 2011, we find that Chinese firms in the post‐IFRS period (2007–2011) are less likely to engage in accrual‐based earnings management. The magnitude of discretionary accruals also declines after IFRS adoption. In response, we see firms turning to real activities manipulation as a substitute for upward earnings management. The reduction in accrual‐based earnings management could stem from higher quality accounting standards associated with IFRS adoption and/or concurrent changes in the governance regimes introduced with the IFRS mandate. A further analysis, however, indicates that the benefits of IFRS adoption in curbing upward accrual‐based earnings manipulation are not evenly distributed across firms. Specifically, the benefit diminishes for firms that are controlled by Chinese central or local governments, are located in less developed regions, and that have weak financial performance and therefore subject to delisting status. We also find that the benefit is less pronounced for manufacturing firms than for their non‐manufacturing counterparts.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/113776/1/jifm12030.pd

Cassava genome from a wild ancestor to cultivated varieties

Cassava is a major tropical food crop in the Euphorbiaceae family that has high carbohydrate production potential and adaptability to diverse environments. Here we present the draft genome sequences of a wild ancestor and a domesticated variety of cassava and comparative analyses with a partial inbred line. We identify 1,584 and 1,678 gene models specific to the wild and domesticated varieties, respectively, and discover high heterozygosity and millions of single-nucleotide variations. Our analyses reveal that genes involved in photosynthesis, starch accumulation and abiotic stresses have been positively selected, whereas those involved in cell wall biosynthesis and secondary metabolism, including cyanogenic glucoside formation, have been negatively selected in the cultivated varieties, reflecting the result of natural selection and domestication. Differences in microRNA genes and retrotransposon regulation could partly explain an increased carbon flux towards starch accumulation and reduced cyanogenic glucoside accumulation in domesticated cassava. These results may contribute to genetic improvement of cassava through better understanding of its biology

The Impact of the 2008 Global Financial Crisis on the Structure of the Transmission of Price Innovations Across Financial Markets: The Case of Southwest Asian Equity Markets

This study examines the reaction of Southeast Asian equity markets to the transmission of price innovations from major equity markets during the pre and post periods of the 2008 global financial crisis. In particular, we examine the reaction of returns indices in Malaysia, the Philippines, South Korea, Taiwan, and Thailand as endogenous variables, and compare them to the returns indices of the U.S., the Eurozone, Japan, and China as exogenous variables. The results of VAR models indicate the combined and individual impact of the price innovations from the major equity markets on the volatility of returns of selected countries is relatively trivial during either the pre- or post-financial crisis periods. However, the individual impact of the U.S. innovations is generally higher during the post-financial crisis. The ARCH and GARCH models indicate the stock markets of Southeast Asian countries are more responsive to their own price innovations during both the pre- and the post-crisis periods, although some response to U.S. and Eurozone shocks is also observed

Can Short Sellers Constrain Opportunistic Non-GAAP Earnings Reporting?

Prior research suggests that short sellers can monitor and limit opportunism in the reporting of conventional GAAP earnings. However, firms have increasingly begun to disclose customized earnings metrics calculated by excluding certain income items (usually expenses) to create their own non-GAAP version of earnings (which generally portrays a more optimistic view of performance). We extend this research by exploring how short sellers can influence the frequency and quality of non-GAAP earnings disclosures. Results from our difference-in-differences estimations indicate that short-selling pressure significantly mitigates aggressive non-GAAP earnings disclosures. Cross-sectional tests suggest that short sellers influence the quality of non-GAAP earnings through two channels: (a) the increased costs of misreporting and (b) direct monitoring. We perform a large set of robustness tests to rule out other possible explanations for our results. Given the SEC’s recent concern about non-GAAP reporting, our results have strong policy implications for the SEC’s current consideration of additional regulation of non-GAAP disclosure. Moreover, our evidence contributes both to the literature on earnings management and to ongoing policy debates on short sales constraints.