Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Companies restricting shareholder rights selected Arthur Anderson firm

20.03.2007
Companies that placed most of the power in the hands of managers as opposed to shareholders were more likely to choose the defunct Arthur Anderson accounting firm as opposed to the other "Big Six" firms, according to a Penn State researcher.

Pornsit Jiraporn, assistant professor of finance at Penn State Great Valley graduate school, in suburban Philadelphia, said it's hard to say exactly why this was the case. Could it be that Arthur Anderson was inferior to the other "Big Six" accounting firms—as some prior research has concluded—and thus less likely to catch auditing errors or "fudged" financial statements, was there perhaps something more complicit at work, or neither?

"For some reason, Arthur Anderson attracted companies with weak shareholder rights," he said. "There's been a question in the accounting world of whether the Houston office and the Enron fiasco brought the company down, or whether there were company-wide problems that spread throughout the organization. Based on this study, I think the whole system at Arthur Anderson was faulty."

Jiraporn published his findings in the article "Shareholder Rights, Corporate Governance, and Arthur Anderson," in the fall/winter issue of Journal of Applied Finance,

In the study, the Penn State researcher employed the Governance Index, which measures the restrictions placed on shareholder rights, to rate more than 1,000 companies. It is widely accepted that companies that score high on the GI place greater power in the hands of management, often to the detriment of shareholder return.

When shareholders have greater rights, this signals a stronger link between ownership and control, and typically leads to better return on their investment. The corporate clients of Arthur Anderson tended to score higher on this index than those of the other "Big Six" accounting firms.

This correlation between weak shareholder rights and employing Arthur Anderson was not present in regulated firms, according to the study.

"I argue that this is because regulatory monitoring substitutes for external auditing and, hence, influences the association between shareholder rights and auditor choice," said Jiraporn.

David Jwanier | EurekAlert!
Further information:
http://www.psu.edu

More articles from Business and Finance:

nachricht Europe's microtechnology industry is attuned to growth
10.03.2017 | IVAM Fachverband für Mikrotechnik

nachricht Preferential trade agreements enhance global trade at the expense of its resilience
17.02.2017 | International Institute for Applied Systems Analysis (IIASA)

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Giant Magnetic Fields in the Universe

Astronomers from Bonn and Tautenburg in Thuringia (Germany) used the 100-m radio telescope at Effelsberg to observe several galaxy clusters. At the edges of these large accumulations of dark matter, stellar systems (galaxies), hot gas, and charged particles, they found magnetic fields that are exceptionally ordered over distances of many million light years. This makes them the most extended magnetic fields in the universe known so far.

The results will be published on March 22 in the journal „Astronomy & Astrophysics“.

Galaxy clusters are the largest gravitationally bound structures in the universe. With a typical extent of about 10 million light years, i.e. 100 times the...

Im Focus: Tracing down linear ubiquitination

Researchers at the Goethe University Frankfurt, together with partners from the University of Tübingen in Germany and Queen Mary University as well as Francis Crick Institute from London (UK) have developed a novel technology to decipher the secret ubiquitin code.

Ubiquitin is a small protein that can be linked to other cellular proteins, thereby controlling and modulating their functions. The attachment occurs in many...

Im Focus: Perovskite edges can be tuned for optoelectronic performance

Layered 2D material improves efficiency for solar cells and LEDs

In the eternal search for next generation high-efficiency solar cells and LEDs, scientists at Los Alamos National Laboratory and their partners are creating...

Im Focus: Polymer-coated silicon nanosheets as alternative to graphene: A perfect team for nanoelectronics

Silicon nanosheets are thin, two-dimensional layers with exceptional optoelectronic properties very similar to those of graphene. Albeit, the nanosheets are less stable. Now researchers at the Technical University of Munich (TUM) have, for the first time ever, produced a composite material combining silicon nanosheets and a polymer that is both UV-resistant and easy to process. This brings the scientists a significant step closer to industrial applications like flexible displays and photosensors.

Silicon nanosheets are thin, two-dimensional layers with exceptional optoelectronic properties very similar to those of graphene. Albeit, the nanosheets are...

Im Focus: Researchers Imitate Molecular Crowding in Cells

Enzymes behave differently in a test tube compared with the molecular scrum of a living cell. Chemists from the University of Basel have now been able to simulate these confined natural conditions in artificial vesicles for the first time. As reported in the academic journal Small, the results are offering better insight into the development of nanoreactors and artificial organelles.

Enzymes behave differently in a test tube compared with the molecular scrum of a living cell. Chemists from the University of Basel have now been able to...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

International Land Use Symposium ILUS 2017: Call for Abstracts and Registration open

20.03.2017 | Event News

CONNECT 2017: International congress on connective tissue

14.03.2017 | Event News

ICTM Conference: Turbine Construction between Big Data and Additive Manufacturing

07.03.2017 | Event News

 
Latest News

Argon is not the 'dope' for metallic hydrogen

24.03.2017 | Materials Sciences

Astronomers find unexpected, dust-obscured star formation in distant galaxy

24.03.2017 | Physics and Astronomy

Gravitational wave kicks monster black hole out of galactic core

24.03.2017 | Physics and Astronomy

VideoLinks
B2B-VideoLinks
More VideoLinks >>>