. In the last decade, the ESG (environmental, social, governance) paradigm has been actively developing in commercial organization management and investment decision-making. The article examines the ...impact of ESG factors on the financial state and investment attractiveness of Russian public companies. The concepts of sustainable development and corporate governance constitute the theoretical framework of the research. To analyze the impact of ESG factors on the financial state and investment attractiveness of Russian public companies, we used multiple linear regression models using the least squares method. The empirical evidence is data on 80 organizations from RAEX ESG Ranking of Russian companies based on reports for 2020. A statistically significant positive relationship was found between EBITDA and return on assets, dividend yield, cash flows and ESG factors, as well as a statistically significant negative relationship was found between the price/earnings multiplier, beta coefficient and ESG factors. The study demonstrates that there is a mixed statistically significant relationship between the indicator of financial leverage and ESG factors. At that, ESG factors, which are positioned as necessary and having a positive influence on companies’ activities, can threaten both their financial state and investment attractiveness. Further ESG research imply a more detailed study of the model for assessing the impact of ESG factors on a company’s financial performance and the possibility of integrating financial and non-financial reporting standards.
Prior research finds that the Sarbanes-Oxley Act (US-SOX) of 2002has affected earnings management in the United States. Cohen et al. (2008) indicate that accrual-based earnings management has ...declined since the passage of US-SOX, while real earnings management has increased. Further, Gilliam et al. (2015) show that the zero-earnings discontinuity has disappeared since its passage, indicating that earnings management to avoid losses has decreased as a result. In Japan, the Financial Instruments and Exchange Act of 2006, the so-called Japanese version of SOX (J-SOX), was implemented for fiscal years starting in April 2008. Similar to US-SOX, J-SOX aims to reinforce the corporate governance of financial reporting. This study investigates whether the discontinuity in the distributions of earnings and earnings changes disappeared after J-SOX implementation. In contrast to US-SOX, the results indicate that the discontinuity in the earnings distribution at zero did not disappear after J-SOX implementation. However, the discontinuity in the earnings change distribution at zero almost disappeared after J-SOX implementation, indicating that earnings management to avoid earnings decreases became less prevalent. In addition, the results indicate that the discontinuity in the distribution of earnings changes before J-SOX implementation was mainly caused by habitual beaters and that earnings management by habitual beaters to avoid earnings decreases was less prevalent after J-SOX implementation.
Not surprisingly, the recent accounting scandals look different when viewed from the perspectives of the political/regulatory process and of the market for corporate governance and financial ...reporting. We do not have the opportunity to observe a world in which either market or political/regulatory processes operate independently, and the events are recent and not well researched, so untangling their separate effects is somewhat conjectural. This paper offers conjectures on issues such as: What caused the scandalous behavior? Why was there such a rash of accounting scandals at one time? Who killed Arthur Andersen-the Securities and Exchange Commission, or the market? Did fraudulent accounting kill Enron, or just keep it alive for too long? What is the social cost of financial reporting fraud? Does the United States in fact operate a "principles-based" or a "rules-based" accounting system? Was there market failure? Or was there regulatory failure? Or both? Was the Sarbanes-Oxley Act a political and regulatory overreaction? Does the United States follow an ineffective regulatory model?
Securities and Exchange Commission (SEC) comment letters provide independent and timely feedback on the clarity of disclosures and on the extent to which filings comply with Generally Accepted ...Accounting Principles and SEC reporting regulations. We investigate factors that affect the probability of receiving a 10-K comment letter, the extent of comments received, and the cost of remediation. We find that in addition to factors explicitly stated to increase SEC scrutiny in Section 408 of the Sarbanes-Oxley Act, low profitability, high complexity, engaging a small audit firm, and weaknesses in governance are positively associated with the receipt of a comment letter, the extent of comments, and the cost of remediation. The probability that the comment letter results in a restatement is higher for smaller companies and for companies engaging a small audit firm. We also provide evidence that comments relating to accounting issues result in higher remediation costs, largely due to the additional time required to resolve comments relating to classification issues and fair value issues. Our findings should be of interest to stakeholders who use SEC comment letters to assess disclosure quality and reporting compliance, and to managers and other stakeholders impacted by costs associated with the SEC's review process.
We examine the effects of city-level auditor industry specialization and scale economies on audit pricing in the United States. Using a sample of Big N clients for the 2000–2007 period, and a scale ...measure based on percentile rankings of the number of audit clients at the city-industry level, we document significant specialization premiums and scale discounts in both the pre- and post-Sarbanes-Oxley Act (SOX) periods. However, the effects of industry specialization and scale economies on audit pricing are highly interactive. The negative effect of city-industry scale on audit fees obtains only for clients of specialist auditors. By contrast, clients of non-specialist auditors obtain scale discounts only when they enjoy strong bargaining power, suggesting that auditors are "forced" to pass on scale economies to clients with greater bargaining power.
SUMMARY The Sarbanes-Oxley Act of 2002 (SOX) effectively bars an auditor from providing nonaudit services to an audit client based on the belief that the resulting economic bonding undermines the ...auditor's independence and quality of the audit (U.S. House of Representatives 2002). The accounting profession has strongly debated this view and counter-argues that auditor-provided nonaudit services benefit the client. We contribute to this debate by examining the effect of auditor-provided nonaudit services on the effectiveness and efficiency of the audit. We find that higher nonaudit service fees are associated with shorter audit report lags—a potential indicator of audit efficiency—prior to the passage of SOX, but such effects dissipate after SOX. We find that discretionary accruals and financial restatements—potential indicators of audit effectiveness—do not increase when shorter audit lags occur in conjunction with high nonaudit service fees. We also find that the firms with the highest levels of nonaudit service fees prior to SOX have the largest increase in audit lags after SOX. These results suggest that there is some merit to the profession's argument that auditor-provided nonaudit services benefit clients without leading to a loss of audit effectiveness. Data Availability: All data are publicly available from sources identified in the text.
Using a sample of borrowing firms that disclosed internal control weaknesses (ICW) under Section 404 of the Sarbanes-Oxley Act, this study compares various features of loan contracts between firms ...with ICW and those without ICW. Our results show the following. First, the loan spread is higher for ICW firms than for non-ICW firms by about 28 basis points, after controlling for other known determinants of loan contract terms. Second, firms with more severe, company-level ICW pay significantly higher loan rates than those with less severe, account-level ICW. Third, lenders impose tighter nonprice terms on firms with ICW than on those without ICW. Fourth, fewer lenders are attracted to loan contracts involving firms with ICW. Finally, our within-firm analyses show that banks increase loan rates charged to ICW firms after their disclosure of internal control problems and that banks reduce loan rates after firms remediate previously reported ICW.
The work reflects on the transformations, continuities, and ruptures that the intervention of the Argentinean State has undergone in infrastructure sectors. The provision and operation of railway, ...water and sanitation services, and the production of hydrocarbons through state-owned enterprises were justified based on various aspects. These aspects include public health concerns, the need for critical infrastructure construction, and lack of private investment, the necessity to control the production of strategic goods, control of monopolies, income redistribution, and stimulation of industrialization, among others. Building upon this contextualization, the work reflects on a set of contributions made by state-owned enterprises to the economic and social development of the country. This qualitative study systematizes a broad range of documentary sources, including specialized documents from companies and public organizations, regulations, and statistics.
El trabajo reflexiona en las transformaciones, continuidades y rupturas que ha tenido la intervención del Estado argentino en sectores de infraestructura. La provisión y explotación del servicio de ferrocarril, agua y saneamiento y la producción de hidrocarburos mediante empresas públicas se justificó en aspectos variados. Entre los que se incluyen aspectos de salud pública, necesidades de construcción de infraestructuras críticas, falta de inversión privada, necesidad de control de la producción de bienes estratégicos, el control de los monopolios; la redistribución del ingreso y la estimulación de la industrialización, etc. A partir de dicha contextualización se reflexiona en torno a un conjunto de aportes que han realizado las empresas públicas al desarrollo económico y social del país. Se trata de un trabajo cualitativo que sistematiza un conjunto amplio de fuentes documentales que incluyen documentos especializados de las empresas y organismos públicos, normativas, y estadísticas.
The participation of “Yacimientos Petrolíferos Fiscales” (YPF SA nowadays) has contributed throughout 100 years of the argentine oil industry, to the economic, productive, and social development of ...the 24 subnational jurisdictions and, at the same time, has been useful as an emblem of social cohesion and construction of a national identity throughout our vast Nation.
Thus, YPF has performed, on the field, as the “captain” of the national team and has developed in every segment of the country’s hydrocarbon and energy industry, which is why it has become the omnipresent “Aleph”.
La participación de Yacimientos Petrolíferos Fiscales SE (hoy YPF SA) ha contribuido, a lo largo de 100 años de historia petrolera argentina, al desarrollo económico, productivo y social de las 24 jurisdicciones subnacionales, y al mismo tiempo ha servido de estandarte a la cohesión social y construcción de una identidad nacional a lo largo, a lo ancho y en lo profundo de nuestra vasta Nación. Así, YPF se ha desempeñado, en la cancha, como el “capitán” del equipo nacional y ha desplegado una actuación en todos los segmentos de la industria hidrocarburífera y energética del país, por lo que se ha convertido en el “Aleph” omnipresente allí donde miremos.
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