This paper examines the issue of perceived value generated by the assignment of financial value to intangibles in financial reporting. In particular, values assigned to goodwill and other intangibles in mergers and acquisitions are examined, and the impact of such intangible valuations as a potential misperception/misdirection as to true underlying entity value is examined.
{"title":"Intangibles: The Impaired Accounting Challenge","authors":"J. Nugent, Dr. Alex Pomelnikov, Kerry S. Webb","doi":"10.2139/SSRN.2893282","DOIUrl":"https://doi.org/10.2139/SSRN.2893282","url":null,"abstract":"This paper examines the issue of perceived value generated by the assignment of financial value to intangibles in financial reporting. In particular, values assigned to goodwill and other intangibles in mergers and acquisitions are examined, and the impact of such intangible valuations as a potential misperception/misdirection as to true underlying entity value is examined.","PeriodicalId":113347,"journal":{"name":"Chicago Booth ARC: Financial Accounting (Topic)","volume":"7 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-01-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122249205","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Jonathan L. Rogers, Douglas J. Skinner, Sarah L. C. Zechman
We describe the process through which the Securities and Exchange Commission (SEC) makes filings “publicly available.” For a sample of Form 4 (insider trade) filings, we show that, during the period we examine, the majority of filings are available to paying subscribers of the SEC's public dissemination system (PDS) feed before they are posted to the EDGAR website, and so provide subscribers and their clients with a private advantage. We show that this advantage translates into an economically significant trading advantage, and prices, volumes, and spreads respond to the news contained in filings beginning around 30 seconds before public posting. These findings indicate that the SEC dissemination process does not always provide a level playing field and that the meaning of publicly available information in capital markets is no longer simple or obvious. In response to our study, the SEC launched an investigation and agreed to eliminate the PDS timing advantage.
{"title":"Run EDGAR Run: SEC Dissemination in a High-Frequency World","authors":"Jonathan L. Rogers, Douglas J. Skinner, Sarah L. C. Zechman","doi":"10.2139/ssrn.2513350","DOIUrl":"https://doi.org/10.2139/ssrn.2513350","url":null,"abstract":"We describe the process through which the Securities and Exchange Commission (SEC) makes filings “publicly available.” For a sample of Form 4 (insider trade) filings, we show that, during the period we examine, the majority of filings are available to paying subscribers of the SEC's public dissemination system (PDS) feed before they are posted to the EDGAR website, and so provide subscribers and their clients with a private advantage. We show that this advantage translates into an economically significant trading advantage, and prices, volumes, and spreads respond to the news contained in filings beginning around 30 seconds before public posting. These findings indicate that the SEC dissemination process does not always provide a level playing field and that the meaning of publicly available information in capital markets is no longer simple or obvious. In response to our study, the SEC launched an investigation and agreed to eliminate the PDS timing advantage.","PeriodicalId":113347,"journal":{"name":"Chicago Booth ARC: Financial Accounting (Topic)","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123847259","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Turkish Abstract: Günümüzde e-ticaret işlemlerinin yoğunlaşmasıyla birlikte web sitesi kurmak artık gerekli bir hale gelmiştir. İşletmeler marka değerlerini artırmak, işletme maliyetlerini düşürmek, reklam ve pazarlama faaliyetlerini yürütmek ile daha birçok nedenle web sitesi kurmaktadırlar. Maliyetlerin azalmasıyla birlikte web sitesi kurulumu da çok kolay bir hal almıştır. Bu makalede web sitelerinin planlanmasında, oluşturulmasında ve tasarımında ortaya çıkan maliyetlerin muhasebeleştirilmesi konusu ele alınmıştır. Yeni Türk Ticaret Kanunu’na (TTK’ya) göre sermaye şirketlerinin web sitesi kurmasının yasal bir zorunluluk haline getirilmesi, işletmelerde web sitesi maliyetlerinin muhasebeleştirilmesi konusunun önemini artırmaktadır. Ayrıca ortaya çıkan bu maliyetlerin Türkiye Muhasebe Standartları’na (TMS) göre nasıl muhasebeleştirileceği de önem arz etmektedir. Web sitesinin kuruluş ve geliştirmesi maliyetleri Türkiye Muhasebe Standartları açısından incelendiğinde; bir kısım web sitesi maliyetlerinin aktifleştirilmesi gerektiği, bir kısmının da gider olarak kaydedilmesi gerektiği anlaşılmaktadır. English Abstract: Building web site has become a necessity today as a result of extensive electronic commerce activities. Businesses build a web site to increase brand value, decrease costs, run marketing and advertising operations as well as other various reasons. Setting up a website has become easier than ever with decreasing costs. This paper discusses the accounting of costs and expenses observed through web site setting, planning and designing phases. The fact that building a web site is now mandatory for stock corporations, accounting of web site costs concept has become much more significant. Moreover, accounting and recognition of web site costs based on Turkish Accounting Standards (TAS) is also a critical issue. When website establishment and development costs are investigated in terms of Turkish Accounting Standards (TAS); it is clear that some web site costs should be activated and capitalized, while some other specific ones should be written off.
{"title":"Web Sitesi ve İnternet Maliyetlerinin Türkiye Muhasebe Standartlarina Göre Muhasebeleştirilmesi (Accounting of Website and Internet Costs Based on Turkish Accounting Standards)","authors":"Cevdet Kizil","doi":"10.18020/kesit.90","DOIUrl":"https://doi.org/10.18020/kesit.90","url":null,"abstract":"<b>Turkish Abstract:</b> Günümüzde e-ticaret işlemlerinin yoğunlaşmasıyla birlikte web sitesi kurmak artık gerekli bir hale gelmiştir. İşletmeler marka değerlerini artırmak, işletme maliyetlerini düşürmek, reklam ve pazarlama faaliyetlerini yürütmek ile daha birçok nedenle web sitesi kurmaktadırlar. Maliyetlerin azalmasıyla birlikte web sitesi kurulumu da çok kolay bir hal almıştır. Bu makalede web sitelerinin planlanmasında, oluşturulmasında ve tasarımında ortaya çıkan maliyetlerin muhasebeleştirilmesi konusu ele alınmıştır. Yeni Türk Ticaret Kanunu’na (TTK’ya) göre sermaye şirketlerinin web sitesi kurmasının yasal bir zorunluluk haline getirilmesi, işletmelerde web sitesi maliyetlerinin muhasebeleştirilmesi konusunun önemini artırmaktadır. Ayrıca ortaya çıkan bu maliyetlerin Türkiye Muhasebe Standartları’na (TMS) göre nasıl muhasebeleştirileceği de önem arz etmektedir. Web sitesinin kuruluş ve geliştirmesi maliyetleri Türkiye Muhasebe Standartları açısından incelendiğinde; bir kısım web sitesi maliyetlerinin aktifleştirilmesi gerektiği, bir kısmının da gider olarak kaydedilmesi gerektiği anlaşılmaktadır. <b>English Abstract:</b> Building web site has become a necessity today as a result of extensive electronic commerce activities. Businesses build a web site to increase brand value, decrease costs, run marketing and advertising operations as well as other various reasons. Setting up a website has become easier than ever with decreasing costs. This paper discusses the accounting of costs and expenses observed through web site setting, planning and designing phases. The fact that building a web site is now mandatory for stock corporations, accounting of web site costs concept has become much more significant. Moreover, accounting and recognition of web site costs based on Turkish Accounting Standards (TAS) is also a critical issue. When website establishment and development costs are investigated in terms of Turkish Accounting Standards (TAS); it is clear that some web site costs should be activated and capitalized, while some other specific ones should be written off.","PeriodicalId":113347,"journal":{"name":"Chicago Booth ARC: Financial Accounting (Topic)","volume":"116 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-12-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132080842","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper studies the influence of conditional conservatism on the auditor resignations, and more importantly, the impact of corporate governance on this relationship. The existing literature has provided evidence on the existence and pervasiveness of accounting conservatism, such as compensation and debt contracts, shareholder litigation, taxation and accounting supervision. However, there is very limited evidence and discussion on the potential impact of accounting conservatism on audit risk and auditor resignation. Furthermore, research on how effective corporate governance affects the relationship is rarely covered. We select the firm-year observations from 2005 to 2015. We find that the conditional conservatism reduces the auditor resignations by reducing the expected audit risk. However, further empirical results show that this reduction in auditor resignations is attenuated by higher corporate governance quality. That is, effective corporate governance will moderate the negative correlation between conservatism and auditor resignations. The empirical results of this paper are of value to firms, auditors, regulators, standard-setters and corporate managers. In addition, this paper expands the literature on the influencing factors of auditor resignations.
{"title":"Corporate Governance, Conservatism and Auditor Resignation","authors":"Jiahui Liang, Changhong Lyu","doi":"10.2139/ssrn.2951607","DOIUrl":"https://doi.org/10.2139/ssrn.2951607","url":null,"abstract":"This paper studies the influence of conditional conservatism on the auditor resignations, and more importantly, the impact of corporate governance on this relationship. The existing literature has provided evidence on the existence and pervasiveness of accounting conservatism, such as compensation and debt contracts, shareholder litigation, taxation and accounting supervision. However, there is very limited evidence and discussion on the potential impact of accounting conservatism on audit risk and auditor resignation. Furthermore, research on how effective corporate governance affects the relationship is rarely covered. \u0000We select the firm-year observations from 2005 to 2015. We find that the conditional conservatism reduces the auditor resignations by reducing the expected audit risk. However, further empirical results show that this reduction in auditor resignations is attenuated by higher corporate governance quality. That is, effective corporate governance will moderate the negative correlation between conservatism and auditor resignations. The empirical results of this paper are of value to firms, auditors, regulators, standard-setters and corporate managers. In addition, this paper expands the literature on the influencing factors of auditor resignations.","PeriodicalId":113347,"journal":{"name":"Chicago Booth ARC: Financial Accounting (Topic)","volume":"20 6","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-11-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"120908609","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Purpose - Our purpose is to examine the impact of the financial crisis that occurred in the United States of America in 2008 on the value relevance of companies ‘financial statements. Also to examine what changed on the importance of the two most significant accounting variables, earnings and book value.
Design/methodology/approach - We determine value relevance basing on Ohlson's model using price models. Our sample consists of companies that constitute the Standard & Poor's 500 Index and we examine the period 2002 to 2014. We split our sample in pre and post crisis period. For each period we study the value relevance of financial statements and the importance of specific accounting variables.
Findings - According to findings, after the crisis there was a decline in value relevance of financial statements as the crisis has created an increase of uncertainty about the financial position of companies. Also earnings have gained in terms of value relevance against Book Value. Investors are expected to pay more attention to the ability of the company to produce wealth and less on financial position.
Research limitations/implications - Because we focus only on a specific Financial Crisis and only on USA listed firms, the research results may lack generalisability. Therefore, researchers are encouraged to test value relevance of financial statements during additional crises periods.
Practical implications - The paper includes implications for the development financial reporting standards as reveals weaknesses of financial statements on crises periods.
Originality/value - This paper fulfills an identified need to study how reliability and importance of financial statements can be changes on a financial crisis.
{"title":"Financial Crisis and Value Relevance of Financial Statements","authors":"Nicholas Belesis, John Sorros, A. Karagiorgos","doi":"10.2139/ssrn.3316084","DOIUrl":"https://doi.org/10.2139/ssrn.3316084","url":null,"abstract":"Purpose - Our purpose is to examine the impact of the financial crisis that occurred in the United States of America in 2008 on the value relevance of companies ‘financial statements. Also to examine what changed on the importance of the two most significant accounting variables, earnings and book value. <br><br>Design/methodology/approach - We determine value relevance basing on Ohlson's model using price models. Our sample consists of companies that constitute the Standard & Poor's 500 Index and we examine the period 2002 to 2014. We split our sample in pre and post crisis period. For each period we study the value relevance of financial statements and the importance of specific accounting variables. <br><br>Findings - According to findings, after the crisis there was a decline in value relevance of financial statements as the crisis has created an increase of uncertainty about the financial position of companies. Also earnings have gained in terms of value relevance against Book Value. Investors are expected to pay more attention to the ability of the company to produce wealth and less on financial position. <br><br>Research limitations/implications - Because we focus only on a specific Financial Crisis and only on USA listed firms, the research results may lack generalisability. Therefore, researchers are encouraged to test value relevance of financial statements during additional crises periods. <br><br>Practical implications - The paper includes implications for the development financial reporting standards as reveals weaknesses of financial statements on crises periods.<br><br>Originality/value - This paper fulfills an identified need to study how reliability and importance of financial statements can be changes on a financial crisis.<br>","PeriodicalId":113347,"journal":{"name":"Chicago Booth ARC: Financial Accounting (Topic)","volume":"48 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-09-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126345823","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Debt financing can be defined as borrowing money without giving up ownership. Debt financing often comes with strict conditions or covenants in addition to having to pay interest and principal at specified dates. Debt "sustainability" is the ability of a company to meet its debt obligations without requiring debt relief. In this working paper we have developed a Debt Sustainability Ratio that companies can use to determine whether it can sustain the burden of its debts or not. Using this ratio the management of a company can take important decisions to meet their future financing needs.
{"title":"Debt Sustainability Analysis for Companies","authors":"Muhammad Adeel Javaid","doi":"10.2139/ssrn.2746828","DOIUrl":"https://doi.org/10.2139/ssrn.2746828","url":null,"abstract":"Debt financing can be defined as borrowing money without giving up ownership. Debt financing often comes with strict conditions or covenants in addition to having to pay interest and principal at specified dates. Debt \"sustainability\" is the ability of a company to meet its debt obligations without requiring debt relief. In this working paper we have developed a Debt Sustainability Ratio that companies can use to determine whether it can sustain the burden of its debts or not. Using this ratio the management of a company can take important decisions to meet their future financing needs.","PeriodicalId":113347,"journal":{"name":"Chicago Booth ARC: Financial Accounting (Topic)","volume":"74 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-03-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124486963","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Drew D. Creal, Leslie A. Robinson, Jonathan L. Rogers, Sarah L. C. Zechman
Using a confidential dataset, we evaluate whether the degree of foreign operations affects U.S. multinational corporation (MNC) value by comparing actual value to imputed value for these firms. We control for differences in discount rates and expected growth rates across countries and industries through time with benchmark firms matched on these dimensions. This isolates the value effects of organizing otherwise independent activities within a multinational network. Our analyses offer robust evidence of a MNC value premium relative to a benchmark portfolio of independent firms operating in the same country-industry footprint as the MNC.
{"title":"The Multinational Advantage","authors":"Drew D. Creal, Leslie A. Robinson, Jonathan L. Rogers, Sarah L. C. Zechman","doi":"10.2139/ssrn.1933777","DOIUrl":"https://doi.org/10.2139/ssrn.1933777","url":null,"abstract":"Using a confidential dataset, we evaluate whether the degree of foreign operations affects U.S. multinational corporation (MNC) value by comparing actual value to imputed value for these firms. We control for differences in discount rates and expected growth rates across countries and industries through time with benchmark firms matched on these dimensions. This isolates the value effects of organizing otherwise independent activities within a multinational network. Our analyses offer robust evidence of a MNC value premium relative to a benchmark portfolio of independent firms operating in the same country-industry footprint as the MNC.","PeriodicalId":113347,"journal":{"name":"Chicago Booth ARC: Financial Accounting (Topic)","volume":"38 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2014-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114083632","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper demonstrate the use of actual financial data from five years annual report and London stock market data. It is contain financial and economical analysis for Britvic Plc. The main objectives of this paper will show at present financial trend and in future. Ratio analysis Rapport’s value driver is the key factor of this analysis. There is showing next three years Britvic Plc forecasting.
{"title":"Rapport’s Value Drive for Equity Report of Britvic Plc","authors":"F. Alam","doi":"10.2139/ssrn.2120622","DOIUrl":"https://doi.org/10.2139/ssrn.2120622","url":null,"abstract":"In this paper demonstrate the use of actual financial data from five years annual report and London stock market data. It is contain financial and economical analysis for Britvic Plc. The main objectives of this paper will show at present financial trend and in future. Ratio analysis Rapport’s value driver is the key factor of this analysis. There is showing next three years Britvic Plc forecasting.","PeriodicalId":113347,"journal":{"name":"Chicago Booth ARC: Financial Accounting (Topic)","volume":"188 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2012-07-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132429111","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2011-09-27DOI: 10.1111/J.1475-679X.2011.00432.X
Hans B. Christensen, Valeri V. Nikolaev
Building on contracting theory, we argue that financial covenants control the conflicts of interest between lenders and borrowers via two different mechanisms. Capital covenants control agency problems by aligning debtholder-shareholder interests. Performance covenants serve as tripwires that limit agency problems via the transfer of control to lenders in states where the value of their claim is at risk. Companies trade off these mechanisms. Capital covenants impose costly restrictions on capital structure, while performance covenants require contractible accounting information to be available. Consistent with these arguments, we find that the use of performance covenants relative to capital covenants is positively associated with (1) the financial constraints of the borrower, (2) the extent to which accounting information portrays credit risk, (3) the likelihood of contract renegotiation, and (4) the presence of contractual restrictions on managerial actions. Our findings suggest that accounting-based covenants can improve contracting efficiency in two conceptually different ways.
{"title":"Capital Versus Performance Covenants in Debt Contracts","authors":"Hans B. Christensen, Valeri V. Nikolaev","doi":"10.1111/J.1475-679X.2011.00432.X","DOIUrl":"https://doi.org/10.1111/J.1475-679X.2011.00432.X","url":null,"abstract":"Building on contracting theory, we argue that financial covenants control the conflicts of interest between lenders and borrowers via two different mechanisms. Capital covenants control agency problems by aligning debtholder-shareholder interests. Performance covenants serve as tripwires that limit agency problems via the transfer of control to lenders in states where the value of their claim is at risk. Companies trade off these mechanisms. Capital covenants impose costly restrictions on capital structure, while performance covenants require contractible accounting information to be available. Consistent with these arguments, we find that the use of performance covenants relative to capital covenants is positively associated with (1) the financial constraints of the borrower, (2) the extent to which accounting information portrays credit risk, (3) the likelihood of contract renegotiation, and (4) the presence of contractual restrictions on managerial actions. Our findings suggest that accounting-based covenants can improve contracting efficiency in two conceptually different ways.","PeriodicalId":113347,"journal":{"name":"Chicago Booth ARC: Financial Accounting (Topic)","volume":"2031 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2011-09-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127461619","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines the prospect of revitalizing asset-backed and non-agency mortgage-backed securitization markets rendered nearly dormant in the wake of the 2008 financial crisis. First, it briefly summarizes the background of the debacle and presents historical parallels for context. Then the analysis details new and proposed regulatory and industry reforms that will affect the supply of and demand for mortgage- and asset-backed securities. Incentives for future securitization will be tempered by amended accounting consolidation rules that result in more costly capital requirements for issuers, and by revised valuation criteria that impact the capital adequacy of investors. Collateral transparency will be paramount in the return of private-label securitization, and revival will depend on economic recovery and pending legislation and regulation. New securitization also will rest on the degree of moral hazard posed by continued underwriting concessions, current loan modification initiatives, and ongoing government subsidies. In any case, the recognition of securitization as an important financing tool, that contributed so much to economic prosperity before the abuses, constitutes a major impetus to its restoration.
{"title":"Will Private-Label Securitization Return?","authors":"William J. Dodwell","doi":"10.2139/ssrn.1624043","DOIUrl":"https://doi.org/10.2139/ssrn.1624043","url":null,"abstract":"This paper examines the prospect of revitalizing asset-backed and non-agency mortgage-backed securitization markets rendered nearly dormant in the wake of the 2008 financial crisis. First, it briefly summarizes the background of the debacle and presents historical parallels for context. Then the analysis details new and proposed regulatory and industry reforms that will affect the supply of and demand for mortgage- and asset-backed securities. Incentives for future securitization will be tempered by amended accounting consolidation rules that result in more costly capital requirements for issuers, and by revised valuation criteria that impact the capital adequacy of investors. Collateral transparency will be paramount in the return of private-label securitization, and revival will depend on economic recovery and pending legislation and regulation. New securitization also will rest on the degree of moral hazard posed by continued underwriting concessions, current loan modification initiatives, and ongoing government subsidies. In any case, the recognition of securitization as an important financing tool, that contributed so much to economic prosperity before the abuses, constitutes a major impetus to its restoration.","PeriodicalId":113347,"journal":{"name":"Chicago Booth ARC: Financial Accounting (Topic)","volume":"60 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-06-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"122998508","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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