Japan has been implementing drastic changes in the field of accounting. Several new accounting standards have been established to align with the International Accounting Standards. Among these are the requirement of filing consolidated financial statements, semiannual interim reporting, pension cost accounting, income tax allocation accounting, translation of foreign currency, accounting for financial instruments, and fair value reporting on marketable securities. This study examines the impact of the new standards on nineteen of the twenty-three large companies available in the Thompson database during 1999 - 2002. The findings of this study indicate that the new accounting rules in Japan introduce the greatest volatility to the profitability ratios. The volatility of debt/assets ratio...
Historic absorption ratio The IRS in Technical Advise Memorandum 9810003 allowed the taxpayer corporation to use the historic absorption ratio (HAR) election with the simplified production accounting method despite great divergence between the historic and actual ratios. The lack of reasonableness of HARs does not invalidate the election under IRC section 263A regulations. The IRS may at a later date address this problem and depreciation and capitalization problems.
Since 2005, many companies, including those comprising the Dow Jones Industrial Average, have experienced deterioration in common credit ratios, including the debt-to-equity and liability-to-equity ratios. At the same time, the current financial crisis has increased focus on credit analysis and credit metrics. Complicating credit analysis is the implementation of three Financial Accounting Standards Board (FASB) accounting pronouncements: Statement of Financial Accounting Standards (SFAS) No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans -- an amendment of FASB Statements No. 87, 88, 106, and 132(R)"; SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements -- an amendment of ARB No. 51"; and Financial Interpretation 48 (FIN 4...
..., problems in calculating debt and activity ratios, were used. As to the first point the 78.3% of the...
This study investigates the out-of-sample hedging effectiveness and dynamic hedge ratios of floor-traded and E-mini futures with VAR, ECM, bivariate GARCH, Kalman filter, and Markov regime switching in the S&P500 and Nasdaq-100 markets. The empirical results show that both the floor-traded and E-mini futures can be good instruments to be used as hedge objectives. The correlation coefficient between spot and futures increases and hedge effectiveness goes up when the hedging period is extended. Moreover, the bivariate GARCH and Markov regime switching show a higher HEI performance in short-term and long-term hedging periods, respectively. Furthermore, floor-traded futures with an open outcry system surprisingly do better than E-mini futures contracts. This study proposes meaningful ev...
What was termed government-guided merger was a unique banking sector reform implemented in 2002 by the central bank of Malaysia guiding a larger number of depository institutions to form 10 large banks. This paper identifies the factors entering this massive merger exercise. Similar to the finding in bank merger literature, we find larger banks became acquirers. Also, low risk banks had higher probability of becoming an acquiring bank while high-risk banks became targets for takeover. Surprisingly managerial performance-financial ratios and changes in productivity reported as significant factors in prior market-based merger studies-was not significant in this study. Banks closely connected to government had greater chance of becoming acquiring banks while the reverse is true of target b...
... bank performance or efficiency are the accounting ratios and efficiency scores obtained from various...
Researchers testing the usefulness of accounting information in predicting financial distress have used many different responses as proxies for financial distress. They often compare results across these different studies, attempting to make conclusions concerning the usefulness of particular accounting information. However, comparisons are valid only if the various response variables used by the various studies have construct validity; the different response variables all measure the same intended construct, economic financial distress. The primary purpose of this paper is to determine the validity of various response variables of financial distress by observing the stability of results across three different response variables. Similar results across the different response variables w...
... (1983) tested the ability of financial ratios and cash flows to predict nonbankrupt and bankrupt...
... to examine how a significant change in accounting principle will likely affect the financial conditi... Standard) will affect various financial ratios of the company, most notably the Altman Z-score. T...
...SFAS (Statement of Financial Accounting Standards) No. 5 requires the disclosure of a liab... measures or the application of other ratios based on stock return requires risk-adjustment or ...
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