to subsequent performance of firms and audit quality in previous research. This paper argues that despite the negative effects‚ real earnings management can be beneficial for listed firms. On the one hand‚ from the perspective of Signaling Theory and Agency Theory‚ future performance of listed firms benefits from engaging REM. On the other hand‚ REM is also positively associated with audit quality. This paper presents empirical evidence from recent research to support this argument; in addition‚ suggestions
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Managers are hired to act on behalf of the shareholders of a firm. However‚ this is not always the case as both parties have different objectives. The difference in interests between shareholders and managers ‘derives from the separation of ownership and control in a corporation’ (Berk and DeMarzo‚ 2011: 921). Whereas shareholders are interested in maximising their own wealth‚ managers may have more personal interests which differ to that of the shareholders. Downs and Monsen (no date‚ cited in Chin
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puzzled economists and researchers for a long time. Ongoing meticulous researches have been conducted through various empirical studies in order to understand companies’ dividend behaviour and shareholders’ preferences towards dividend payouts. Many theories have been stated and established as an effort to understand dividend policy better‚ however the relevance is still questionable and the issue is still yet to be resolved (Bhattacharyya 2007‚ 4). Dividend policy has a strong tie with the decision
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Comparative Advantage. a. Explain how the theory of comparative advantage relates to the need for international business. ANSWER: The theory of comparative advantage implies that countries should specialize in production‚ thereby relying on other countries for some products. Consequently‚ there is a need for international business. b. Explain how the product cycle theory relates to the growth of an MNC. ANSWER: The product cycle theory suggests that at some point in time‚ the
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Financial Accounting Theory‚ 3rd edition‚ McGraw Hill‚ Australia. Godfrey‚ J‚ Hodgson‚ A‚ Holmes‚ S & Tarca‚ A 2006‚ Accounting theory‚ 6th edn‚ John Wiley & Sons Australia‚ Milton‚ Queensland. Healy‚ PM & Palepu‚ KG 2001‚ ‘Information asymmetry‚ corporate disclosure‚ and the capital markets: A review of the empirical disclosure literature’‚ Journal of Accounting and Economics‚ vol.31‚ nos.1-3‚ pp.405-440‚ viewed 13 August 2009‚ . Hendriksen‚ ES & Breda‚ MFV 1992‚ Accounting theory‚ 5th edn‚ McGraw-Hill
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problems. 2. Comparative Advantage a. Explain how the theory of comparative advantage relates to the need for international business. i. It suggests that each country should use it’s comparative advantage to specialize in its production and rely on other countries to meet other needs. Therefore all countries would need to trade with each other competitively for the products that they are not able to produce. b. Explain how the product cycle theory relates to the growth of an MNC. i. The product cycle
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insurance companies. Although there are many side benefits of pursuing such growth strategy like dispersion of the entrepreneurs’ financial risk and gains from the specialised human capital of managers‚ there remains a significant problem: the principle-agent problem. While this problem is largely believed to be a phenomena belonging to transition economies‚ it concerns all economies as it directly affects access to capital hence the performance of businesses. The UK‚ US‚ Germany and Japan demonstrate some
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Topic︰Rich Pickings at the Fruit Market — Is it a crash to the ICAC？ Introduction Hong Kong Independent Commission Against Corruption (ICAC) has been a model for emulation throughout the world. When people studying the corruption problem of Hong Kong in 1960s and 1970s‚ most of them will study the Godber case. Few of them will discuss about the Rich Pickings at the Fruit Market. In the 1970s‚ ICAC’s investigation into the Rich Pickings at the Fruit Market met with a debilitating strong reaction
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Principal-Agent Conflict with Three Dimension Analysis ----The Case Report of Conor Medsystems 2010-12-20 Corporate Finance team assignment 1 Parisa khatabakhsh 8004019769 Amanda kolobaric 881020-3920 Can Zhao 8701239231 Jin Zhang 880812F340 “…I think valuation is critical‚ but I’d also say that a deal should never go on just valuation alone. The quality of an investor‚ their understanding of the technology and space‚ and their support of the company over multiple financings are all just
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INTRODUCTION In early July 2007‚ the New York based hedge fund Perry Capital proposed to raise its stake in NEC Electronics Corporation (NECE)‚ the then publicly listed subsidiary of Japanese conglomerate‚ NEC Corporation‚ from 4.8 percent to 25 percent. The offering was ¥5‚000 a share‚ at about 60 percent premium. Perry’s investment in NECE traced back to late 2005‚ the year its first exposure to Asian markets‚ with the initial investment cost at around ¥3‚200 a share. Perry believed the intrinsic
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