Earnings Management to Avoid Losses: a cost of debt explanation

In this paper we analyze firms’ earnings management behavior to avoid losses conditional on the (asymmetric) incentive underlying market (positive/negative) returns. Our intuition is that firms with negative returns in the period (bad news, BN) face a higher incentive to undertake earnings management, and that their ultimate intention is to hide from credit markets a signal (loss) that could be translated into a negative impact on their cost of debt. The empirical evidence supports this intuition. BN firms show higher earnings management pervasiveness than their counterparts with good news (GN), and the set with simultaneous BN and prior period positive earnings undertake more pervasive earnings manipulation than BN firms in general. Within this restricted set of firms, and consistent with a cost of debt explanation, we find that firms with larger needs of debt show a higher incidence of earnings management to avoid losses. The overall empirical evidence challenges the implicit assumption in Burgstahler and Dichev (1997) that the incentive to manage earnings is homogeneous to all firms, and suggests that the discontinuities around zero in the earnings distributions are driven, at least partly, by firms’ earnings management behavior.earnings management, earnings thresholds, earnings discontinuities, cost of debt

Piecewise Linear Accrual Models: do they really control for the asymmetric recognition of gains and losses?

The asymmetric recognition of gains and losses underlying conservative accounting is not taken into account by Jones (1991)-type accrual models. Recently, Moreira (2002) and Ball and Shivakumar (2005a) have proposed piecewise linear accrual models designed to control for this asymmetric impact. Our paper first discusses the sign of the expected measurement error in discretionary accruals (DAC) estimates when models do not control for the asymmetry underlying conservatism. We find that DAC in firms with bad news (BN) are expected to be understated, while those in good news (GN) firms will be overstated. Based on this original result we empirically test, using graphical and statistical tools, whether piecewise linear accrual models correct such a measurement error. The empirical evidence shows mixed results. For GN firms the estimates are corrected downwards, as expected; for BN firms, unexpectedly, part of the estimates is also corrected downwards. The reason for this unexpected result seems to lie in a non-linear relationship between accruals and the proxy for BN that the models are unable to control for. Thus, DAC estimates under piecewise linear models are not deemed to be of better quality than those of traditional accrual models.accrual models; piecewise linear accrual models; conservatism; earnings management

Discretionary accruals : the measurement error induced by conservatism

This paper discusses the sign of the expected measurement error in discretionary accruals (DAC) estimates when accrual models do not control for the asymmetric treatment of gains and losses underlying conservatism. I show that DAC in firms with "bad news" are expected to be understated (positive measurement error), while those in "good news" firms will be overstated (negative measurement error). Based on this original result, and using graphical analysis, I discuss an empirical illustration, which corroborates the expectations

A adoção do padrão internacional de relatórios financeiros em portugal: podem os custos esperados ser reduzidos?

In this paper we use a cost-benefit framework to discuss some of the expected effects related to the Portuguese adoption of the International Financial Reporting Standards (IFRS). Given the circumstances underlying this implementation, we anticipate that the overall net result following an analysis of costs and benefits will be negative. Therefore, we also examine what seems to be the causal factor behind this outcome and a potential way of reducing the net cost of adopting the IFRS. The costs are related to the professional updating of accounting skills of those directly or indirectly involved in the accounting process. A part of these costs will be incremental and permanent over time mainly due to the fact that two accounting systems will be kept in place. The adoption of a single accounting system, that based on the IFRS, would appear to be a possible solution to reduce such costs

Anatomical and physiological changes in pelvic diaphragm in patients with chagasic megacolon submitted to Duhamel surgery

AbstractOriginal contributionunderstand the reasons why Duhamel surgery results in clinical improvement of constipation in patients with Chagasic colopathy.BackgroundDuhamel surgery is one of the most widespread techniques for the treatment of Chagasic megacolon, with low rates of recurrence of constipation.Objectiveevaluate the anatomical and physiological changes in the pelvic diaphragm of patients with chagasic colopathy, as well as changes occurring after undergoing Duhamel surgery.Designclinical data and results of cinedefecography, electromanometry and anorectal ultrasound of the anal canal were evaluated in patients with Chagasic colopathy, before and after Duhamel surgery.LocationService of Coloproctology – Departament of Surgery, Faculdade de Medicina da Universidade Federal de Goiás. Patients: patients with positive serology for Chagas Disease, with constipation and radiological megacolon, who presented consecutively to the Chagas outpatient clinic and freely agreed to participate in this study, were prospectively included.Resultsa total of 20 patients were included, with a mean age of 53.2 years, of which 16 were women. The following parameters were observed in the postoperative period: change in bowel frequency, of, on average, one evacuation every ten days to daily bowel movement; 16 patients used laxatives preoperatively and only one did, intermittently, in postoperative period. Electromanometry showed, postoperatively, a decrease in anal resting pressure (60.88 to 37.2mmHg p < 0.001) and anal squeeze pressures (244.3mL to 161.25 p=0.01), whereas ultrasound showed that 75% of the patients had abnormalities of the internal anal sphincter in the posterior anal canal juxtaposed to the pulled-through colon. Postoperative rectal emptying observed in cinedefecographic tests occurred more quickly and with less effort when compared with the preoperative findings. There was a change in the anorectal angle postoperatively, which became more obtuse, both during rest, straining and during evacuation.Conclusionsthe anatomical and functional changes in the pelvic diaphragm are significant after Duhamel surgery and together, they result in clinical improvement of patients

Preclinical and Clinical Evidence of Antioxidant Effects of Antidepressant Agents: Implications for the Pathophysiology of Major Depressive Disorder

Major depressive disorder (MDD) is a common mental disorder associated with a significant negative impact on quality of life, morbidity/mortality, and cognitive function. Individuals who suffer with MDD display lower serum/plasmatic total antioxidant potentials and reduced brain GSH levels. Also, F2-isoprostanes circulatory levels are increased in MDD subjects and are correlated with the severity of depressive symptoms. Urinary excretion of 8-OHdG seems to be higher in patients with MDD compared to healthy controls. Despite the fact that antidepressant drugs have been used for more than 50 years, their mechanism of action is still not fully understood. This paper examines preclinical (in vitro and animal model) and clinical literature on oxidative/antioxidant effects associated with antidepressant agents and discusses their potential antioxidant-related effects in the treatment of MDD. Substantial data support that MDD seems to be accompanied by elevated levels of oxidative stress and that antidepressant treatments may reduce oxidative stress. These studies suggest that augmentation of antioxidant defences may be one of the mechanisms underlying the neuroprotective effects of antidepressants in the treatment of MDD

Surface photochemistry: photodegradation study of pyrene adsorbed onto microcrystalline cellulose and silica

Ground-state diffuse reflectance, time resolved laser-induced luminescence, diffuse reflectance laser flash-photolysis transient absorption and chromatographic techniques were used to elucidate the photodegradation processes of pyrene adsorbed onto microcrystalline cellulose and silica. Ground-state diffuse reflectance showed that on both substrates low concentrations display absorption of pyrene monomers. At high concentrations spectral changes attributed to aggregate formation were observed. Laser induced fluorescence showed that pyrene onto microcrystalline cellulose mainly presents fluorescence from monomers, while for silica, excimer-like emission was observed from low surface loadings (greater than or equal to 0.5 mumol g(-1)). Transient absorption and photodegradation studies were performed at concentrations where mainly monomers exist. On silica, pyrene presents transient absorption from its radical cation. On microcrystalline cellulose both radical cation, radical anion and pyrene triplet-triplet absorption were detected. Irradiation followed by chromatographic analysis showed that pyrene decomposes on both substrates. For pyrene on microcrystalline cellulose 1-hydroxypyrene was the main identified photoproduct since in the absence of oxygen further oxidation of 1-hydroxypyrene was very slow. For pyrene on silica photodegradation was very efficient. Almost no 1-hydroxypyrene was detected since in the presence of oxygen it is quickly oxidized to other photooxidation products. On both substrates, pyrene radical cation is the intermediate leading to photoproducts and oxygen it is not involved in its formation

THE ADOPTION OF THE INTERNATIONAL FINANCIAL REPORTING STANDARDS IN PORTUGAL: CAN EXPECTED COSTS BE REDUCED?

In this paper we use a cost-benefit framework to discuss some of the expected effects related to the Portuguese adoption of the International Financial Reporting Standards (IFRS). Given the circumstances underlying this implementation, we anticipate that the overall net result following an analysis of costs and benefits will be negative. Therefore, we also examine what seems to be the causal factor behind this outcome and a potential way of reducing the net cost of adopting the IFRS. The costs are related to the professional updating of accounting skills of those directly or indirectly involved in the accounting process. A part of these costs will be incremental and permanent over time mainly due to the fact that two accounting systems will be kept in place. The adoption of a single accounting system, that based on the IFRS, would appear to be a possible solution to reduce such costs

Towards a genome-wide transcriptogram: the Saccharomyces cerevisiae case

A genome modular classification that associates cellular processes to modules could lead to a method to quantify the differences in gene expression levels in different cellular stages or conditions: the transcriptogram, a powerful tool for assessing cell performance, would be at hand. Here we present a computational method to order genes on a line that clusters strongly interacting genes, defining functional modules associated with gene ontology terms. The starting point is a list of genes and a matrix specifying their interactions, available at large gene interaction databases. Considering the Saccharomyces cerevisiae genome we produced a succession of plots of gene transcription levels for a fermentation process. These plots discriminate the fermentation stage the cell is going through and may be regarded as the first versions of a transcriptogram. This method is useful for extracting information from cell stimuli/responses experiments, and may be applied with diagnostic purposes to different organisms

Voice Conversion Using K-Histograms and Residual Averaging

The main goal of a voice conversion system is to modify the voice of a source speaker, in order to be perceived as if it had been uttered by another specific speaker.   Many approaches found in the literature convert only the features related to the vocal tract of the speaker. Our proposal is to convert those characteristics of the vocal tract, and also to process the signal passing through the vocal chords. Thus, the goal of this work is to obtain better scores in the voice conversion results.Fil: Uriz, Alejandro José. Universidad Nacional de Mar del Plata. Facultad de Ingenieria. Departamento de Electronica. Laboratorio de Comunicaciones; ArgentinaFil: Pablo D. Agüero. Consejo Nacional de Invest.cientif.y Tecnicas. Centro Cientifico Tecnol.conicet - Mar del Plata;Fil: Castiñeira Moreira; Jorge. Universidad Nacional de Mar del Plata. Facultad de Ingenieria. Departamento de Electronica. Laboratorio de Comunicaciones;Fil: Tulli, J. C.. Universidad Nacional de Mar del Plata. Facultad de Ingenieria. Departamento de Electronica. Laboratorio de Comunicaciones; ArgentinaFil: González, Esteban Lucio. Consejo Nacional de Invest.cientif.y Tecnicas. Centro Cientifico Tecnol.conicet - Mar del Plata; ArgentinaFil: Bonafonte, A.. Universidad Nacional de Mar del Plata. Facultad de Ingenieria. Departamento de Electronica. Laboratorio de Comunicaciones; Argentin