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It is well-reported that financial and investment sectors of the economy have grown in recent years, but also that problems of corruption, both institutional and venal, are…
Abstract
It is well-reported that financial and investment sectors of the economy have grown in recent years, but also that problems of corruption, both institutional and venal, are present. Within the sector, financial auditors and investment consultants have been entrusted to work with and for those for whom financial sector stability and adequate financial returns are crucial. However, these two professions have too often served as handmaidens of corruption. This chapter reviews the history of financial auditing and investment consulting and outlines areas in which corruption manifests. It argues for an end to corruption and it asserts that the two professions could and should be the core of an uncorrupted robust system of financial practice and regulation. Such an arrangement could safeguard a world in which investment business practices are sustainable, honest, and truly productive.
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John Turner, Gerard Hughes and Michelle Maher
This paper aims to analyze how the administrative structure of pension regulators affects regulatory capture or regulatory influence. It uses a historical institutionalist…
Abstract
Purpose
This paper aims to analyze how the administrative structure of pension regulators affects regulatory capture or regulatory influence. It uses a historical institutionalist methodology to analyze regulatory capture.
Design/methodology/approach
The authors argue that the less complex allocation of regulatory authority in Ireland makes it more susceptible to regulatory capture or regulatory influence by the regulated industry than in the USA. Also, it is argued that stand-alone agencies are more susceptible to regulatory capture than are agencies that are embedded within larger departments of government. The authors present a five-step process in regulatory capture, with the later steps being used by the regulated industry if the earlier ones have failed.
Findings
The authors find that if the regulated industry has difficulty achieving regulatory capture through influencing the executive branch of government, it can also attempt to influence the legislative and judicial branches, as evidenced by a regulatory episode the USA has recently completed. Ireland has also recently completed reforms that may make regulatory capture more difficult. With a complex regulatory structure including overlapping authority as in the USA, when one agency has been strongly influenced by the regulated industry, another agency may take action to protect the public.
Originality/value
The paper presents international evidence as to the effect of the administrative structure of regulators on regulatory outcomes. It tests a hypothesis that the more complex, overlapping allocation of regulatory authority in the USA makes it less susceptible to regulatory capture.
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Deborah G. Heilizer, Brian L. Rubin and Andrew M. McCormick
The paper's aim is to describe a recent increase in FINRA enforcement activity and to discuss how broker‐dealers and representatives may want to prepare themselves for FINRA's…
Abstract
Purpose
The paper's aim is to describe a recent increase in FINRA enforcement activity and to discuss how broker‐dealers and representatives may want to prepare themselves for FINRA's increasing willingness to sanction members in the wake of the recent financial crisis.
Design/methodology/approach
The paper analyzes FINRA's recent enforcement record, including trends over the past several years in disciplinary actions and fines. It also discusses FINRA's top enforcement issues in 2011; advertising, short selling, auction rate securities, and suitability; and recommends increased compliance efforts in light of FINRA's growing aggressiveness.
Findings
It is important that firms and representatives understand how the priorities of this self‐regulatory organization have changed since the financial crisis, fueling this recent growth in FINRA enforcement activity.
Originality/value
The paper offers practical guidance from experienced financial services lawyers.
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Abstract
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In recent years, the concept of cultural intelligence has attracted increased interest among scholars and practitioners in global leadership research. This chapter aims to…
Abstract
In recent years, the concept of cultural intelligence has attracted increased interest among scholars and practitioners in global leadership research. This chapter aims to contribute to the understanding of the impact of Experiential Learning Theory on the development of cultural intelligence in global leaders. It proposes a model that addresses the relationship between four modes of experiential learning and four facets of cultural intelligence; and hypothesizes that learning styles exercise a moderating effect on the relationship between international experience and cultural intelligence. Managerial implications for global talent selection and leadership development are also proposed based on the model.
The use of social networking websites by companies to disclose corporate news and by investors to collect information for investment purposes is increasing rapidly. However, the…
Abstract
Purpose
The use of social networking websites by companies to disclose corporate news and by investors to collect information for investment purposes is increasing rapidly. However, the role of investors’ affective reactions to corporate disclosures on social networking websites is under-researched. This paper aims to examine how the disclosure platform (disclosing news on a company’s Facebook Web page or the corporate investor relations Web page) and news valence (positive or negative) jointly influence investors’ affective reactions to corporate news and stock price change judgments.
Design/methodology/approach
The authors conduct an experimental study using 364 participants from Amazon’s Mechanical Turk website as a proxy for reasonably informed investors.
Findings
Results show that the disclosure platform influences investors’ affective reactions and stock price change judgments when the corporate news is negative, but not when the corporate news is positive. In addition, investors’ affective reactions mediate the influence of the disclosure platform on investors’ stock price change judgments when the corporate news is negative rather than positive.
Originality/value
This paper extends the theory on affective reactions to a social networking context by showing that differences in disclosure platforms and news valence influence investors’ affective reactions to corporate news. In addition, the study’s theory and findings have significant implications for researchers, company managers and public relations specialists, capital market participants, regulators and investor education organizations and users of social networking websites.
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Jeffery E. Schaff and Michele L. Schaff
Explains the US Department of Labor’s newly proposed “Conflicts of Interest” rule and provides a critical analysis of its impact should it be adopted as proposed.
Abstract
Purpose
Explains the US Department of Labor’s newly proposed “Conflicts of Interest” rule and provides a critical analysis of its impact should it be adopted as proposed.
Design/methodology/approach
Explains the DOL’s proposed Conflict of Interest rule and discusses how it changes the current fiduciary standards of care under ERISA. The article then probes more deeply into the practical matters involved in implementing the rule, and into the realities of how it would impact fiduciary standards generally, investors, the financial services industry and securities arbitrations. Reactions to the proposed rule are then explained against the backdrop of the practical implications thereof.
Findings
This article concludes that the DOL’s proposed Conflict of Interest rule, albeit well-intended, is not reasonably designed to achieve its stated goal and would instead likely harm those whom it purports to help. Ironically, it also potentially waters down the existing high standards of current fiduciaries. The article supports the DOL’s goal of greater responsibility for financial service professionals and proffers an alternative solution that could achieve the desired result more effectively.
Originality/value
This article offers valuable insight on the realities of the proposed law and practical guidance on its implications to the investing public, the financial services industry and securities attorneys.