International Effects of the Andersen Accounting and Auditing Scandals: Some Evidence from the US, UK and Australian Stock Markets

In this paper, we use event study methodology to examine the effect of two highly publicized accounting failures, at Enron and WorldCom both audited by Arthur Andersen, on the total stock returns of some companies in the UK also audited by Arthur Andersen. The results vary substantially between countries. We find no evidence of a significant impact in the UK or US. There is some evidence of negative abnormal returns at the time of the Enron scandal in Australia. However, this reaction was very short-lived and the negative abnormal returns on the stocks of Andersen-audited companies had been fully recovered within a week. Our results suggest that sharing an auditor with a firm that has issued corrections to accounts which have previously received an unqualified audit opinion does not significantly affect market perceptions of firms’ value, which suggests that the choice of auditor has little, if any, impact on market perceptions of the reliability of published financial information. Key words: Accounting scandals, Enron, WorldCom, Event study, International Stock Markets.

The Dragon evolves:is the social market economy a chimaera?

An earlier study by Deng and Dart (1999) shed a great deal of light on the unfolding dynamics of market orientation, searching out a range of macro-marketing concerns that may significantly impact the adjustment process to a market orientation.Market orientation for many organisations is a conceptual premise demanding change. This applies with particular force to organisations in transition economies, especially those that have to cope with the challenges imposed by the cultural rite of passage from political-based market governance to competitive market systems. The marketing mantra, market orientation, is routinely offered as the basis for business success. While the sincerity of this principle is in little doubt in most developed western economies, implementation in many transition-economy contexts is revealing a range of paradoxes. This paper using China as an example, offers initial observations on the degree to which local companies are adopting a market orientation. Although some of the early results are consistent with those obtained in the West, there is an underlying lacuna that needs to be addressed by offering culture-specific interpretations of localised events. To plug this gap, the paper argues for an approach that accommodates the institutional background, focusing on the temporal, spatial and wider socio-cultural and historical characteristics of marketing itself

Social and cultural factors in FDI flows: Evidence from the Indian states.

Abstract Foreign Direct Investment is of increasing importance for both developing and industrialized countries, with the UN estimating total FDI flows at $560 billion in 2003 (UNCTAD 2004), of which an increasing share went to developing countries. These investment flows can have a major impact on the economic environment and competitiveness of developing countries. Yet they remain uneven, with some countries and some regions within countries attracting more FDI in relation to their population and economic activity than others. This study examines the possible cultural factors affecting FDI in different regions of one large emerging economy, namely India, in terms of the varying religious, social and political backgrounds of the different states. Although a substantial amount of literature exists in relation to the effects of culture on business practice, less has been published on the effects of culture on international trade and investment. In addition, culture is often quite narrowly defined in terms of implicit psychological attitudes, with far less attention being paid to the effects of explicit cultural features such as religion and political philosophy or to sociological factors such as urbanization and education levels, which may have a crucial effect on the ability of countries and regions to attract FDI and on the uses to which FDI inflows are put. This study considers the relationship between a wide range of cultural factors and levels of FDI in the 28 Indian states

Modeling FDI Flows from the USA to Canada: Two Main International Financial Variables Affect the Long-Run Economic Growth

This paper develops a model to predict for the spillover effects of the foreign capital inflows on the long run growth under conditions of international economic exposure to foreign exchange rate fluctuations. The paper utilizes a simple open economy version of the Solow growth model with the main features of real business cycle models. In addition, the paper uses a time series model with substitution techniques to test the impact of the spillover effect of foreign capital inflows from the USA on long run growth in Canada, while controlling for exposure to foreign exchange rate fluctuations, as well as for both external and internal balances. The results support the existence of positive spillover effects from foreign direct investment on the economy. The results also show that foreign exchange rate fluctuations have weaken the impact of underlying changes in productivity on the attractiveness of the economy to overseas investors and hence moderate the overall impact of the technology spillover effect of Foreign Direct Investment (FDI) on long-run growth

The charismatic side of foreign direct investment in the economical and social Giant China.

Market orientation for many organisations seen as conceptual premise to instigate theirchanging points, this applies with particular force to organisations in transitioneconomies. Especially those that have to cope with the challenges imposed by thecultural rite of passage from political-based market governance to competitive marketsystems. The marketing mantra, market orientation, is routinely offered as the basis forbusiness success. While the sincerity of this principle is of little doubt in most developedwestern economies, implementations in many transition-economy contexts are revealinga range of paradoxes. This paper using China as a contextual premise, offers startingobservations in measuring how local companies are adopting a market orientation.Although some of the early results are consistent with those obtained in the West, butthere is an underlying lacuna that needs to be addressed so that useful culture-specificinterpretations are offered vis-à-vis locale-specific knowledge. To plug this gap, thepaper argues for an approach that accommodates the institutional perquisites, focusingthe temporal, spatial and wider socio-cultural an

Corporate risk disclosure by UK firms: trends and determinants

This study explores risk disclosure practice using content analysis of 156 annual reports prepared by 52 UK listed companies in three different periods (1998, 2001 and 2004). The study relates the extent of risk disclosure to firm-specific characteristics. The study found, a trend of increasing amounts of risk disclosure in the annual report over the six-year period influenced by accounting regulation and accounting institutes' recommendations. US dual listing and involvement in heavy industry are significantly and positively correlated with the level of risk information disclosed by the sampled companies. Risk disclosure is not related to size or leverage.risk disclosure; corporate disclosure; dual listed companies; UK; United Kingdom; annual reports; accounting regulations; accounting institute recommendations.

International effects of the Andersen accounting and auditing scandals: Some evidence from the UK, US and Australian stock markets

In this paper, we use event study methodology to examine the effect of two highly publicized accounting failures, at Enron and WorldCom both audited by Arthur Andersen, on the total stock returns of some companies in the UK also audited by Arthur Andersen. The results vary substantially between countries. We find no evidence of a significant impact in the UK or US. There is some evidence of negative abnormal returns at the time of the Enron scandal in Australia. However, this reaction was very short-lived and the negative abnormal returns on the stocks of Andersenaudited companies had been fully recovered within a week. Our results suggest that sharing an auditor with a firm that has issued corrections to accounts which have previously received an unqualified audit opinion does not significantly affect market perceptions of firms’ value, which suggests that the choice of auditor has little, if any, impact on market perceptions of the reliability of published financial information

Port risk management and public private partnerships: factors relating to risk allocation and risk sustainability

Ports are complex operations involving government and private-sector partners in creating economic benefits and in identifying, managing and absorbing economic, environmental and security risks. Allocation and assessment of risks is necessitated and facilitated by the diversity of organisations involved. Allocation of the cost of risks among the partners or its transfer to outside agencies through insurance or financing arrangements is essential. However, this allocation is not purely a function of attributes of the risks themselves and their controllability by each of the partners but depends in part on factors such as power structures within partnerships and capacity to absorb risks

The charismatic side of foreign direct investment in the economical and social Giant China.

Market orientation for many organisations seen as conceptual premise to instigate theirchanging points, this applies with particular force to organisations in transitioneconomies. Especially those that have to cope with the challenges imposed by thecultural rite of passage from political-based market governance to competitive marketsystems. The marketing mantra, market orientation, is routinely offered as the basis forbusiness success. While the sincerity of this principle is of little doubt in most developedwestern economies, implementations in many transition-economy contexts are revealinga range of paradoxes. This paper using China as a contextual premise, offers startingobservations in measuring how local companies are adopting a market orientation.Although some of the early results are consistent with those obtained in the West, butthere is an underlying lacuna that needs to be addressed so that useful culture-specificinterpretations are offered vis-à-vis locale-specific knowledge. To plug this gap, thepaper argues for an approach that accommodates the institutional perquisites, focusingthe temporal, spatial and wider socio-cultural an