Research Study Capital-Market Effects of Corporate Disclosures and Disclosure Regulation Christian Leuz Peter Wysocki June 26, 2006 Commissioned by the Task Force to Modernize Securities Legislation in Canada Christian Leuz Christian Leuz is currently the Professor of Accounting at the University of Chicago, Graduate School of Business. He is also the David G. Booth Faculty Fellow. Prior to this position, Professor Leuz was the Harold Stott Term Assistant Professor in Accounting at
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lag and an increase in the level of discretionary accruals. Contrary to expectations, adopting more ERP modules did not augment these effects. These results should be of interest to financial statement preparers initially adopting or implementing new versions of ERP applications, auditors serving clients with ERP systems, and regulators overseeing the financial markets and consolidation in the ERP industry. Keywords: ERP systems; discretionary accruals; implementation;
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Table of Contents Abstract 3 Return on Assets Analysis 3 Return on Common Equity Analysis ….11 Ratio Analysis 16 ORRF’s management issue 26 Conclusion 30 Annex 31 Reference 34 Abstract In this paper, we are engaged in deepening our analysis on the Orrstown financial services Inc. (ORRF). First, we analyze the ORRF’s profitability by using two major indicators; the rate of return on assets (ROA) and the rate of return on common share holder’s equity (ROCE). ORRF’s ROA is compared with
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reports: Balance Sheet Cash-Flow statement Income statement Figure 1 Cash flowproduction cycle (Operating) working capital: movement of cash into inventory Investment: flow from cash into new fixed assets Depreciation: the loss in value of fixed assets ⇒ increase in value of merchandise made + needed for growth Solvency: ability to have cash to buy fixed assets and inventory (outflow cash) The balance sheet Equity= assets - liabilities current assets cash inventories Financial
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Wor9 - 1 04 - 0 71 R EV: JU LY 2 6 , 2 00 4 RO BERT S. KAPLAN D A VI D KIR O N Accounting Fraud at WorldCom WorldCom could not have failed as a result of the actions of a limited number of individuals. Rather, there was a broad breakdown of the system of internal controls, corporate governance and individual responsibility, all of which worked together to create a culture in which few persons took responsibility until it was too late . — Richard Thornburgh, former U.S. attorney general1 On
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Information provided by 3 annual reports: Balance Sheet Cash-Flow statement Income statement Figure 1 Cash flowproduction cycle (Operating) working capital: movement of cash into inventory Investment: flow from cash into new fixed assets Depreciation: the loss in value of fixed assets ⇒ increase in value of merchandise made + needed for growth Solvency: ability to have cash to buy fixed assets and inventory (outflow cash) Financial statements: Balance sheet The balance sheet
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included as part of the cost of either purchased or manufactured goods; instead, period costs are expensed on the income statement in the period in which they are incurred using the usual rules of accrual accounting. Keep in mind that the period in which a cost is incurred is not necessarily the period in which cash changes hands. For example, as discussed earlier, the costs of liability insurance are spread across the periods that benefit from the insurance—regardless of the period in which the insurance
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Question-1: What is finance? Ans: Finance is the life blood of every corporation. In the era of modern trade and commerce, business firm have to decide from where they will raise fund, where they will invest and how much of the profit will be distributed among the shareholders. “Finance” Came from Latin word “finis” means “dealing with the money”.finace is called the art and science of managing money. At the micro level, finance is the study of financial planning, asset management and fund raising
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iv. It does NOT show cash receipts & cash disbursements c. Items shown on Statement of Owner's Equity: i. Paid-in Capital ii. Retained Earnings iii. Treasury Stock iv. Accumulated Other Comprehensive Income 3. Know the Accounting equation a. Assests = Liabilities + Equity 4. Understand debits and credits a. 5. Understand the timing of recording transactions 6. Understand when revenue and expenses are recognized a. Revenue Recognition Principal: Under the accrual basis of accounting,
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Principles of Measurement Mosso member of the FASB FASB’s Conceptual Framework project over the period 1973-1985 Define measurement Measurement is the assignment of numerals and other symbols to represent the magnitude of an attribute of a phenomenon Phenomenon A thing or event of interest E.g. a table, a performance, an exam Attribute A characteristic or quality of the phenomenon to be measured Magnitude The extent to which the phenomenon has the attribute Often we can’t directly observe
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