Auditor Change Disclosures as Signals of Earnings Management and Risk

Auditor resignations are considered more negative signals than auditor dismissals, but firms’ self-reported distinction between the two may not offer a complete or reliable representation of the nature of the auditor change. 8-K regulations require the disclosure of the adjournment of an audit engagement even if a successor auditor has not yet been named. In compliance with this requirement, some firms file two 8-k’s related to the same auditor change. Exploiting these dual 8-K filings, we create a new measure of the nature of auditor changes and show that 1) both self-reported auditor resignations and dual 8-K filings are related to measures of earnings management and risk; and 2) auditor changes identified as both self-reported resignations and dual 8-K filings are associated with the most negative economic implications (as reflected by the likelihood of financial statement manipulation and bankruptcy risk). We suggest that dual 8-K filings and self-reported resignations are complementary negative signals each capturing unique dimensions of the underlying economic factors

Can auditors be independent? – Experimental evidence on the effects of client type

Recent regulatory initiatives stress that an independent oversight board, rather than the management board, should be the client of the auditor. In an experiment, we test whether the type of client affects auditors’ independence. Unique features of the German institutional setting enable us to realistically vary the type of auditors’ client as our treatment variable: we portray the client either as the management preferring aggressive accounting or the oversight board preferring conservative accounting. We measure auditors’ perceived client retention incentives and accountability pressure in a post-experiment questionnaire to capture potential threats to independence. We find that the type of auditors’ client affects auditors’ behaviour contingent on the degree of the perceived threats to independence. Our findings imply that both client retention incentives and accountability pressure represent distinctive threats to auditors’ independence and that the effectiveness of an oversight board in enhancing auditors’ independence depends on the underlying threat

Institutional investors and corporate governance

We provide a comprehensive overview of the role of institutional investors in corporate governance with three main components. First, we establish new stylized facts documenting the evolution and importance of institutional ownership. Second, we provide a detailed characterization of key aspects of the legal and regulatory setting within which institutional investors govern portfolio firms. Third, we synthesize the evolving response of the recent theoretical and empirical academic literature in finance to the emergence of institutional investors in corporate governance. We highlight how the defining aspect of institutional investors – the fact that they are financial intermediaries – differentiates them in their governance role from standard principal blockholders. Further, not all institutional investors are identical, and we pay close attention to heterogeneity amongst institutional investors as blockholders

Impact of Immunization Technology and Assay Application on Antibody Performance – A Systematic Comparative Evaluation

Antibodies are quintessential affinity reagents for the investigation and determination of a protein's expression patterns, localization, quantitation, modifications, purification, and functional understanding. Antibodies are typically used in techniques such as Western blot, immunohistochemistry (IHC), and enzyme-linked immunosorbent assays (ELISA), among others. The methods employed to generate antibodies can have a profound impact on their success in any of these applications. We raised antibodies against 10 serum proteins using 3 immunization methods: peptide antigens (3 per protein), DNA prime/protein fragment-boost (“DNA immunization”; 3 per protein), and full length protein. Antibodies thus generated were systematically evaluated using several different assay technologies (ELISA, IHC, and Western blot). Antibodies raised against peptides worked predominantly in applications where the target protein was denatured (57% success in Western blot, 66% success in immunohistochemistry), although 37% of the antibodies thus generated did not work in any of these applications. In contrast, antibodies produced by DNA immunization performed well against both denatured and native targets with a high level of success: 93% success in Western blots, 100% success in immunohistochemistry, and 79% success in ELISA. Importantly, success in one assay method was not predictive of success in another. Immunization with full length protein consistently yielded the best results; however, this method is not typically available for new targets, due to the difficulty of generating full length protein. We conclude that DNA immunization strategies which are not encumbered by the limitations of efficacy (peptides) or requirements for full length proteins can be quite successful, particularly when multiple constructs for each protein are used

Streamlining Digital Modeling and Building Information Modelling (BIM) Uses for the Oil and Gas Projects

The oil and gas industry is a technology-driven industry. Over the last two decades, it has heavily made use of digital modeling and associated technologies (DMAT) to enhance its commercial capability. Meanwhile, the Building Information Modelling (BIM) has grown at an exponential rate in the built environment sector. It is not only a digital representation of physical and functional characteristics of a facility, but it has also made an impact on the management processes of building project lifecycle. It is apparent that there are many similarities between BIM and DMAT usability in the aspect of physical modeling and functionality. The aim of this study is to streamline the usage of both DMAT and BIM whilst discovering valuable practices for performance improvement in the oil and gas projects. To achieve this, 28 BIM guidelines, 83 DMAT academic publications and 101 DMAT vendor case studies were selected for review. The findings uncover (a) 38 BIM uses; (b) 32 DMAT uses and; (c) 36 both DMAT and BIM uses. The synergy between DMAT and BIM uses would render insightful references into managing efficient oil and gas’s projects. It also helps project stakeholders to recognise future investment or potential development areas of BIM and DMAT uses in their projects

Bank Leverage Ratios and Financial Stability: A Micro- and Macroprudential Perspective

Bank leverage ratios have made an impressive and largely unopposed return; they are mostly used alongside risk-weighted capital requirements. The reasons for this return are manifold, and they are not limited to the fact that bank equity levels in the wake of the global financial crisis (GFC) were exceptionally thin, necessitating a string of costly bailouts. A number of other factors have been equally important; these include, among others, the world's revulsion with debt following the GFC and the eurozone crisis, and the universal acceptance of Hyman Minsky's insights into the nature of the financial system and its role in the real economy. The best examples of the causal link between excessive debt, asset bubbles, and financial instability are the Spanish and Irish banking crises, which resulted from nothing more sophisticated than straightforward real estate loans. Bank leverage ratios are primarily seen as a microprudential measure that intends to increase bank resilience. Yet in today's environment of excessive liquidity due to very low interest rates and quantitative easing, bank leverage ratios should also be viewed as a key part of the macroprudential framework. In this context, this paper discusses the role of leverage ratios as both microprudential and macroprudential measures. As such, it explains the role of the leverage cycle in causing financial instability and sheds light on the impact of leverage restraints on good bank governance and allocative efficiency

Shadow money and the public money supply: the impact of the 2007-2009 financial crisis on the monetary system

This article explores the effects of the political reactions to the 2007–2009 financial crisis on the monetary system. It chimes in with the view that shadow banks create ‘shadow money’, i.e. private substitutes for bank deposits. The article analyses how the three main forms of shadow money – money market fund shares, overnight repurchase agreements and asset-backed commercial papers – were affected by the short-term government intervention and medium-term regulation during and after the 2007–2009 financial crisis in the United States. The analysis reveals that the measures taken between 2007 and 2014 integrated some shadow money forms in the public money supply. In the year after the Lehman collapse, the initially private shadow money supply was either publicly backstopped or de-monetised as it had broken par to bank deposits. The public backstops took on the form of emergency facilities established by the Federal Reserve and guarantees proclaimed by the Treasury. Those backstops imply that the public institutional framework to protect bank deposits was extended to some forms of shadow money during the crisis. This tendency has continued in post-crisis regulation. Accordingly, the 2007–2009 financial crisis has triggered a paradigmatic change in the monetary system, attributable to the political decisions of US authorities