Accounting

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    Fundraising and crowdfunding platforms operate in a regulatory void

Fundraising and crowdfunding platforms operate in a regulatory void

In March 2017 a terrorist drove a car over Westminster Bridge near the Houses of Parliament killing six people and injuring at least 50. In May of that year another terrorist detonated 
a home-made bomb at the Manchester Arena killing over 20 people, wounding more than 100 including many children and causing countless others psychological trauma. In the following […]

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    Automation and disruption in the professional business model

Automation and disruption in the professional business model

Professional firms have long been able to use technology to preserve the commercial value of their business model. From the electronic calculator to spreadsheet software, technological advances allowed these firms to streamline operations by delegating labour-intensive, low-value tasks to cheaper and more efficient machines.

However, the story of technology and professional work is about to change. A new generation of […]

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    Disclosure helps project creators get crowdfunding on Kickstarter

Disclosure helps project creators get crowdfunding on Kickstarter

Crowdfunding, essentially a type of microfinance, has experienced an unprecedented growth over the last few years, becoming an important driver of economic and financial development. Recently, the World Bank has estimated that crowdfunding could reach U.S. $90 billion by 2020, surpassing venture capital and angel capital as a means of financing. While much of this growth has been spurred […]

Introducing valueism and social contract accounting

In her final article at the Financial Times, business editor Sarah Gordon summarises what she learned over 20 years and concludes, “Many businesses are badly run, but business is not bad”. It is a pretty damning conclusion, supported by the large list of examples she offers. Her conclusion does not surprise me. In my past writings I have often referred […]

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    Capitalising or expensing: R&D accounting affects the amount that firms invest

Capitalising or expensing: R&D accounting affects the amount that firms invest

We examine the effect of capitalisation versus expensing on the amount of UK firms’ research and development (R&D expenditures). We focus on the years immediately before and after the UK switched from the UK Generally Accepted Accounting Practice (UK GAAP) to International Financial Reporting Standards (IFRS) in 2005. Under UK GAAP, firms had the option to capitalise or expense […]

March 14th, 2019|Accounting|0 Comments|
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    How the rhetoric in decision-making processes affects the world

How the rhetoric in decision-making processes affects the world

What drives radical shifts in regulatory policy? A common answer to this question is that new policies emerge as a response to the demands of a rapidly changing environment. When existing policies become less relevant, they are replaced with more suitable approaches that address the current issues more effectively. The digital economy, for example, has brought with it a […]

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    The dynamics of (dis)integration in enterprise risk management

The dynamics of (dis)integration in enterprise risk management

When the word ‘integrated’ is associated to a business practice, an organisational environment, or a workplace, it is often good news. The term has a positive connotation in common language, expressing something that is ‘systematic’, ‘comprehensive’, ‘coherent’, ‘cohesive’ etc. Indeed, dictionary definitions leave no doubt. Something is integrated if ‘two or more things [are] combined in order to become […]

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    Credit market investors may not be paying enough attention to fundamental asset volatility

Credit market investors may not be paying enough attention to fundamental asset volatility

Fixed income markets are very large. As of 31 December, 2016 there were over $12 trillion of outstanding corporate debt from companies in developed markets. Yet, despite the size of this asset class, little research has explored the role of fundamental analysis in the context of credit markets.

Default risk, i.e., the risk that a debt issuer will not make […]

May 28th, 2018|Accounting|0 Comments|
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    How much attention do investors pay to rounding in earnings forecasts?

How much attention do investors pay to rounding in earnings forecasts?

Evidence exists that investors are subject to attentional constraints when making economic decisions and as a result focus on subsets of publicly available information that are more salient, i.e. that tend to stand out and are easier to process. Selective attention to salient stimuli can be economically justified if time and attention are costly.

A large literature to date examines […]

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    The quality of financial information explains why stocks and bonds co-move

The quality of financial information explains why stocks and bonds co-move

The sensitivity of corporate bond returns to changes in the value of equity is a fundamental input for portfolio asset allocation. Since imperfect correlation of asset returns is a key assumption in portfolio theory, stock-bond return co-movement is important to determine the diversification benefits of bonds, and to hedge common exposures across the two asset markets. Because bonds exhibit […]

Algorithms raise a number of critical issues for regulation

The regulation of and by algorithms has become of growing relevance to the delivery of public services, coinciding with the related interest in open and big data. Debates about the consequences of the rise of algorithms have been however limited. Early contributions considered whether the rise of algorithmic regulation and new information technologies represented a fundamental (mostly benevolent) change […]

Why flying is safer than ever and what we can learn from it

When it was reported that there had been no deaths from commercial passenger jet accidents in 2017, President Trump was quick to claim credit on Twitter: “Since taking office I have been very strict on Commercial Aviation. Good news – it was just reported that there were Zero deaths in 2017, the best and safest year on record!”

But the […]

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    Accounting played a central role in the rise of financial capitalism as we know it today

Accounting played a central role in the rise of financial capitalism as we know it today

Since the pioneer writings of Weber and Sombart, the debate on the nexus between accounting and the rise of capitalism has caused a lot of ink to flow. Literature on the subject has focused on assessing the capacity of the double-entry form to promote “rational” decision-making based on profit calculation. While the classical approach, drawing on Weber and Sombart’s […]

A loophole in bankers’ bonus cap

Sometimes we ask ourselves: after the damages caused by the financial crisis, what has been done to limit the misbehaviour of those who run the banks? The answer is that a huge number of regulations has been introduced, but often they are bypassed. An example for all: the loophole in bankers’ bonus cap.

A loophole in the bonus cap

Let’s take […]

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    Regulating in the dark: the challenges of overseeing the secret services

Regulating in the dark: the challenges of overseeing the secret services

One of the most well-known principles in the canon of Jeremy Bentham’s writings on government is the general principle of transparency. All activities, according to Bentham, were to be made open so as to allow for external scrutiny. One sector, however, was exempted from this universal principle: the security or intelligence services. The reason for this exemption appears straightforward; […]

Managing risk in the age of disruption

The context of risk management and risk preparedness has changed in recent years.

Structural disruption

We are living through a period of multi-dimensional disruption that is often dubbed as the fourth industrial revolution. Developments in extreme connectivity and extreme automation have consequences beyond the world of technology: business models, industries, markets, regulatory, and governance regimes have been thrown into a flux. […]

The effortful nature of risk management practice

In managing risk, organizational actors are constantly engaged in the work of representing it. From a philosophical point of view, this co-mingling of risk and representation is unsurprising. Risks are contingencies or future possibilities which have not yet crystallized into events. As non-real possibilities, they literally do not exist and cannot be seen until they are represented and processed […]

Harmonising accounting standards across the globe

Over a decade has passed since the European Union (EU) mandated a uniform set of accounting standards, i.e. International Financial Reporting Standards (IFRS), for all companies listed on the major European stock exchanges in 2005. Since then, over 100 countries are currently requiring their listed firms to prepare financial reports either under IFRS or under a closely linked accounting […]

Challenging the accountability agenda for NGOs

The past two decades have seen a steady increase in the number of organizations that prescribe accountability measures to improve the perception of trustworthiness of non-governmental organisations (NGOs). These include GuideStar (1994), the Sphere Project (1997), the Charity Navigator (2001), the INGO Accountability Charter (2008), and the Core Humanitarian Standard (2014). This push for accountability measures reflects a wider trend in NGO self-regulation as the best means to promote good […]

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    The risk culture in financial institutions needs fixing, but how?

The risk culture in financial institutions needs fixing, but how?

Canary Wharf Skyline, by David Iliff, under a CC-BY-SA-3.0 licence
In the aftermath of the financial crisis and other large scale corporate scandals, a large number of public inquires and documents written by regulators, consulting firms and professional associations drew attention to something that needs fixing: the risk culture of financial sector organisations (see, for example, publications by the International institute of Finance, the Financial […]