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Rice’s Theorem is a notorious stumbling block in Computer Science. We review some previous work of us that shows that we can extend Rice’s result to large segments of everyday mathematics, so that similar stumbling blocks appear in many areas of mathematics, as well as applied areas such as mathematical economics; one of its applications (Koppl’s conjecture) is discussed in some detail. Note: this paper has been written in an informal style.

This paper aims to investigate the hydrodynamic instability properties of a mixed convection flow of nanofluid in a porous channel.

The treated single-phase nanofluid is a suspension consisting of water as the working fluid and alumina as a nanoparticle. The anisotropy of the porous medium and the effects of the inclination of the magnetic field are highlighted. The effects of viscous dissipation and thermal radiation are incorporated into the energy equation. The eigenvalue equation system resulting from the stability analysis is processed numerically by the spectral collocation method.

Analysis of the results in terms of growth rate reveals that increasing the volume fraction of nanoparticles increases the critical Reynolds number. Parameters such as the mechanical anisotropy parameter and Richardson number have a destabilizing effect. The Hartmann number, permeability parameter, magnetic field inclination, Prandtl number, wave number and thermal radiation parameter showed a stabilizing effect. The Eckert number has a negligible effect on the growth rate of the disturbances.

Linear stability analysis of Magnetohydrodynamics (MHD) mixed convection flow of a radiating nanofluid in porous channel in presence of viscous dissipation.

Based on a sample of 1,435 Vietnamese listed firms over the period from 2005 to 2017, this study examines the sensitivity of unexpected investment to free cash flow and its mechanism.

We tested three hypotheses using two-step system-GMM to investigate investment–cash flow sensitivity for various firm scenarios while accounting for confounding variables.

Firms with negative free cash flow are more likely to engage in underinvestment; conversely, overinvestment is found primarily in firms with positive free cash flow. In terms of the mechanism, while underinvesting decisions are caused mainly by financial constraints, overinvesting behaviour primarily resulted from agency problems, typically in the form of principal-principal conflicts. Interestingly, under the impact of negative cash flow observations, financial constraints tend to decrease investment–cash flow sensitivity. Conversely, the agency costs hypothesis reveals that agency problems are more likely to increase investment–cash flow sensitivity.

These findings not only contribute to the current corporate literature but also provide some important practical implications for stock market investors, corporate managers, and policy-setting bodies, specifically in the Vietnamese market.

This research aims to examine the relations between Shariah compliance and earnings quality.

The authors study three Shariah features: Shariah compliance status, level of Shariah compliance (H-Score) and Shariah compliance persistence. The sample consists of 463 firms from the Middle East and North Africa from 2011 to 2018. A variable determining the level of Shariah compliance was created in accordance with the methodology of S&P 500 Shariah and its underlying index, S&P 500. Then, a probate relapse study was created to identify the link between Shariah compliance and earnings quality.

Results show that Shariah-compliant firms engage in lower earnings management compared to their Shariah-non-compliant counterparts. This paper reveals that Shariah compliance status and high level of Shariah compliance have significant positive association with earnings quality. The authors also find novel evidence that persistence of the Shariah-compliant status has a significant negative association with earnings quality.

This study only examines firms listed on MENA stock markets. It is recommended to further study different markets in addition to the emerging Arab markets in order to compare and contrast the results. Further, larger sample observations from a greater date range can be used.

Few studies have examined the earnings management behavior of Shariah-compliant firms vs Shariah-non-compliant ones in emerging markets; however, no study has focused on Shariah-compliant firms and their level of Shariah compliance. To the best of our knowledge, this is the first study which uses all four proxies for earnings quality in association with Shariah compliance and used new Shariah variables such as Level of Shariah Compliance and Persistent Shariah Compliance status.

For most companies, growth measures such as asset growth are positively correlated with accrual measures. Just like investment in fixed assets, current accrual represents one form of investment and is an integral part of a firm’s business growth. This makes it difficult to distinguish between the growth-based and earnings quality-based interpretations of the accrual effects, because high accruals can represent both high growth and inflated earnings. The purpose of this paper is to add to the literature by examining an issue that has not received much attention: the correlation between asset growth and accruals and its implication on stock return predictability. The authors address the issue using Fama and Macbeth’s (1973) cross-sectional regressions that are conditional on the correlations between the two variables.

The authors partition firms based on whether the correlation between current accrual and asset growth in the past five years is positive (ρ+) or negative (ρ−). The authors refer to these two types of firms such as “positive correlation” and “negative correlation” groups. For both groups, the authors examine whether firms with higher asset growth and higher accruals are associated with lower future stock returns. The authors implement Fama and MacBeth’s cross-sectional regressions incorporating the effect of correlations between growth and accrual measures. In addition, the authors regress hedge portfolio returns on Fama and French (1993) three-factor and Fama and French (2015) five-factor models to see if the intercepts (a’s) from these regressions are significantly different from 0.

For each year, the authors partition firms based on whether the correlation between asset growth and current accrual is positive or negative. For both the “positive correlation” and “negative correlation” firms, the authors examine the association between accruals and future stock returns. The authors find that accruals remain strong in predicting future stock returns for both groups. The accrual effects from the “negative correlation” group cannot be attributed to the growth-based hypothesis because for these firms, when accruals are high, growth measures tend to be relatively low and vice versa. The effects are most likely driven by the alternative hypothesis that investors overvalue the accrual part of earnings.

There exist a few issues when investors actually implement these strategies. These include liquidity costs, institutional holdings and short sale constraints. Lesmond (2008) concludes that the bulk of the trading profits is derived from the short side of the trade, but that this position suffers from high liquidity costs that reduces institutional holdings with consequent short sale constraints. The net gains after taking into account these issues remain an open question be addressed in the future.

The empirical results indicate that investors can do an implementable portfolio strategy of going long for a year on an initially equally weighted lowest asset growth (accrual) decile portfolio and going short for a year on an initially equally weighted highest asset growth (accrual) decile portfolio, which produces significant abnormal returns. The results further show that these abnormal returns can be improved if investors classify stocks into “the positive correlation” and “negative correlation” groups and implement trading similar trading strategies.

The empirical evidence finds that firm-year observations that exhibit a negative correlation between growth and accrual measures represents a significant 30 percent of the total firm-year observations during the sample period from July 1974 to June 2017. This highlights the necessity to undertake a detailed analysis on the issue. The authors continue to find accrual effects among these groups of firms. Therefore, the accrual effect cannot be attributed to the diminishing marginal return hypothesis. This is the main contribution of the paper.

This study examines the effect of stock liquidity on the magnitude of the accrual anomaly.

This paper examines the relation—both time-series and cross-sectional—between stock liquidity and the magnitude of the accrual anomaly and use the 2001 minimum tick size decimalization as a quasi-experiment to establish causality.

There is both cross-sectional and time-series evidence that stock liquidity is negatively related to the magnitude of the accrual anomaly. Moreover, the extent to which investors overestimate the persistence of accruals decreases with stock liquidity. Results from a difference-in-differences analysis conducted using the 2001 minimum tick size decimalization as a quasi-experiment suggest that the effect of stock liquidity on the accrual anomaly is causal. The findings of this study are consistent with the enhancing effect of stock liquidity on pricing efficiency.

The study's findings are well aligned with the mispricing-based explanation for the accrual anomaly, suggesting that the improvement in market-wide stock liquidity drives the contemporaneous decline in the magnitude of the accrual anomaly, at least to a great extent.

The present study seeks to shed further light on the effectiveness of Basu (1997) and Khan and Watts' (2009) differential timeliness metrics in detecting predictable differences in conservatism following corrections of restated earnings.

Using cross-sectional and time-series analyses for companies listed on the Tehran Stock Exchange during 2009–2013, the results indicate lower conservatism for restating firms as compared to their counterparts during prerestatement period.

Using cross-sectional and time-series analyses for companies listed on the Tehran Stock Exchange during 2009–2013, the results indicate lower conservatism for restating firms as compared to their counterparts during prerestatement period. In contrast, our findings are indicative of higher conservatism among these restating firms during the years of restatements. Moreover, the time-series approach captures a higher conservatism for the restating firms during restatement years than prerestatement periods. Overall, these results provide insight into the usefulness of the metrics used in the restatement setting.

Similar to recent papers, the present study seeks to shed further light on the ability of Basu-based coupled with Khan–Watts-based measures of conservatism to detect situations in which companies' earnings are known to be significantly restated.

The purpose of this paper is to establish a direct link between securitizations and accrual-based earnings management by investigating whether financial statements in the periods of securitizations are more likely to be restated at a later time. In addition, this study examines whether the association between securitization and accounting restatements is more pronounced in the pre-financial crisis period and for banks with less independent or industry-specialized auditors.

This study covers a sample of bank holding companies with restatement information between 2001 and 2012. Using the incidence of material accounting restatements as a proxy for accrual earnings management, this study investigates whether securitizations are likely used as a tool for accrual earnings management. A logistic model is applied with standard errors clustered at the firm-year level. Various robustness tests are conducted to rule out the possibilities that the results are driven by unintentional reporting errors or endogeneity of the securitization decisions.

The empirical results reveal a positive and significant association between banks’ securitization activities and the likelihood of having accounting restatements. Moreover, this positive association is more pronounced in the pre-financial crisis period and for banks with less independent or industry-specialized auditors.

The findings suggest that managers take advantage of discretions on accounting rules for securitizations to manage earnings. This evidence provides multi-dimension implications for standard setters and practitioners, as well as investors.

This is one of the very first papers to document evidence that accrual earnings management is involved in securitization.

The purpose of this article is to analyze the effects of accruals-based earnings management (AEM) and institutional and financial development on corporate risk of Latin-American firms.

The GMM estimator was used according to Arellano and Bond (1991) for panel data on a sample of 914 non-financial companies between 2005 and 2017.

AEM practices significantly increase corporate risk. This result indicates that the risk increase is associated to weakening of the corporate governance of companies. Positive discretionary accruals also have the same impact on corporate risk. In addition, accrual-based earnings management has a non-linear impact on corporate risk. Higher institutional and financial development systemically reduces the risk of Latin American firms. Institutional development can mitigate the effects of earnings management on corporate risk.

These results support that AEM represents a practice that managers use to weaken firms' corporate governance and expropriate wealth from shareholders. These practices promote higher firm's risk. However, the institutional and financial development reduces the corporate risk and contributes to mitigate the impact of AEM on it. These results have relevant implications for firms' corporate governance because they warn the relevance to control AEM practices and its impact over corporate risk perception by investors. These results also are relevant to policymakers because they orient the financial policies design to strengthen the institutional and financial development as a systematic way to reduce the firm's risk.

El propósito de este artículo es analizar los efectos de la gestión de ganancias basada en devengos (AEM) y el desarrollo institucional y financiero sobre el riesgo corporativo de las empresas latinoamericanas.

Se utilizó el estimador GMM de Arellano y Bond (1991) sobre una muestra de 914 empresas no financieras entre 2005 y 2017.

Las prácticas de AEM aumentan significativamente el riesgo corporativo. Este resultado indica que el aumento del riesgo está asociado al debilitamiento del gobierno corporativo de las empresas. Los devengos discrecionales positivos también tienen el mismo impacto en el riesgo corporativo. Además, la gestión de ganancias basada en el devengo tiene un impacto no lineal sobre el riesgo. Un mayor desarrollo institucional y financiero reduce sistémicamente el riesgo de las empresas. El desarrollo institucional puede mitigar los efectos de la gestión de ganancias sobre el riesgo corporativo.

Estos resultados revelan que AEM es una práctica que debilita los gobiernos corporativos y permite expropiar riqueza de los accionistas. Estas prácticas promueven un mayor riesgo corporativo, aunque el desarrollo institucional y financiero lo reduce. Estos resultados tienen implicancias relevantes para el gobierno corporativo de las empresas porque indican la relevancia de controlar estas prácticas en la percepción de riesgo de los inversionistas. Estos resultados también son relevantes para los reguladores porque orientan el diseño de políticas financieras hacia el fortalecimiento del desarrollo institucional y financiero como una vía sistemática que reduce el riesgo de las empresas.

We document the emergence of the Lead Independent Director (LID) board role in a sample of U.S. firms from 1999–2015. We find that firms that adopt an LID board role are larger and have more independent boards, higher institutional investor holdings, and an NYSE listing. Firms with greater anticipated benefits from monitoring also adopt an LID role, e.g., firms with dual CEO-Chairman, with more takeover defense mechanisms, and with higher cash holdings. Using an event study methodology, we find that investors respond positively to the adoption of an LID board role. Lastly, using instrumental variables to address endogeneity in the LID board role, we find that firms with an LID are more likely to terminate poorly performing CEOs. Taken as a whole, these results suggest that the LID board role enhances firm value and improves the quality of corporate governance.