Articles scientifiques

The Effect of Business and Financial Market Cycles on Credit Ratings: Evidence from the Last Two Decades

G. LOBO, L. PAUGAM, H. STOLOWY, P. ASTOLFI

Abacus

mars 2017, vol. 53, n°1, pp.59-93

Départements : Comptabilité et Contrôle de Gestion, GREGHEC (CNRS)

Mots clés : Business cycles; Credit rating agencies; Financial marketcycles; Investor reaction


We analyze the effect of business and financial market cycles on creditratings using a sample of firms from the Russell 3000 index that are ratedby Standard and Poor’s over the period 1986–2012. We also examine inves-tor reaction to credit rating actions in different stages of business andfinancial market cycles. We document that credit rating agencies areinfluenced by business and financial market cycles; they assign lower creditratings during downturns of business and financial market cycles andhigher ratings during upturns. Our study is the first to find strong evidenceof pro-cyclicality in credit ratings using a long window. We also documentstronger investor reaction to negative credit rating actions during down-turns. Our results confirm theoretical predictions and inform regulators

The Effect of Joint Auditor Pair Composition on Audit Quality: Evidence from Impairment Tests

G. LOBO, L. PAUGAM, D. ZHANG, J.-F. CASTA

Contemporary Accounting Research

Spring 2017, vol. 34, n°1, pp.118-153

Départements : Comptabilité et Contrôle de Gestion, GREGHEC (CNRS)

Mots clés : Joint Audits, Audit Quality, Auditor Independence, Impairment Testing, Conservatism


Budgeting in times of economic crisis

S. BECKER, M. MAHLENDORF, U. SCHÄFFER, M. THATEN

Contemporary Accounting Research

Winter 2016, vol. 33, n°4, pp.1489–1517

Départements : Comptabilité et Contrôle de Gestion, GREGHEC (CNRS)

Mots clés : Budgeting, budgeting functions, economic crisis, crisis management

http://ssrn.com/abstract=2605359


This paper examines how corporate reliance on budgets is affected by major changes in the economic environment. We combine survey and archival data from the economic crisis that began in 2008. The results indicate that, as a result of the economic crisis, budgeting became more important for planning and resource allocation but less important for performance evaluation. Additional evidence from interviews and data gathered in a focus group further illustrate these results and show the changes organizations have introduced to respond to the economic crisis. Taken together, and contrary to more general conclusions from the literature such as an overall increase or decrease in the importance of budgeting, we find that companies emphasize certain budgeting functions over others during economic crises

Disciplinary practices in the French auditing profession

C. LESAGE, G. HOTTEGINDRE, C. R. BAKER

Accounting, Auditing and Accountability Journal

2016, vol. 29, n°1, pp.11-42

Départements : Comptabilité et Contrôle de Gestion

Mots clés : Content analysis, Audit quality, Auditing, Disciplinary practices, Public accounting profession, Public interest

http://www.emeraldinsight.com/doi/full/10.1108/AAAJ-12-2012-1169


Purpose – The purpose of this paper is to contribute to understand the role of the statutory auditing profession in France. The study is theoretically based on distinctions between a functionalist view of professions and a neo-weberian view. Prior research, conducted in Anglo-American countries has shown that the auditing profession has focussed primarily on protecting the private interests of the profession. Hence, there is a need to conduct research on this topic in a code law country where the state is expected to play a significant role in protecting the public interest.Design/methodology/approach – The methodology involves a content analysis of 148 disciplinary decisions issued against statutory auditors in France from 1989 to 2006. This analysis identified 21 types of violations grouped into public interest or private interest offences. Because visible offences are public and are more likely to threaten the reputation of the profession, these types of decisions are also studied with respect to their visibility.Findings – The results reveal that in a code law country such as France the auditing profession tends to defend both the public interest as well as its private interests. The results also support the “visibility” effect.Research limitations/implications – The written disciplinary decisions have been anonymized so that the names of the auditors and the clients cannot be identified.Originality/value – This paper differs from previous studies conducted in the Anglo-American context which show an emphasis on protecting the private interests of the auditing profession. Moreover, this study reveals the existence of “mixed” offences and underlines that a profession primarily focusses on these cases. Thus, the work reconciles in part the functionalist and neo-weberian perspectives. Lastly, this paper confirms the importance of the visibility effect

Financial Distress Risk and New CEO Compensation

W.-J. CHANG, R. M. HAYES, S. HILLEGEIST

Management Science

février 2016, vol. 62, n°2, pp. 479 - 501

Départements : Comptabilité et Contrôle de Gestion, GREGHEC (CNRS)

Mots clés : CEO compensation, Compensation premium, CEO incentives, Financial distress risk


We examine how ex ante financial distress risk affects CEO compensation. To disentangle the joint effects of performance on compensation and distress risk, we focus our analyses on new CEOs. Our results indicate that financial distress risk affects compensation through two channels. First, new CEOs receive significantly more compensation when financial distress risk is higher. This finding is consistent with CEOs receiving a compensation premium for bearing this risk since CEOs experience large personal costs if their firms later become financially distressed. Second, financial distress risk is associated with the incentives provided to new CEOs; distress risk is positively associated with pay-performance sensitivity and equity-based compensation and is negatively associated with cash bonuses. Further, financial distress risk is positively associated with pay-risk sensitivity for new CEOs. These findings suggest that financial distress risk alters the nature of the agency relationship in ways that lead firms to provide CEOs with more equity-based incentives. We also build on research that finds a positive relation between forced turnover risk and CEO compensation. Our analyses suggest the compensation effects of forced turnover risk appear to be mainly attributable to financial distress risk. Overall, our results indicate financial distress risk is an economically important determinant of new CEO compensation packages


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