PhD in Accounting, 2011

Bitcoin is a digital asset that was first mined in January 2009 after the global financial crisis of 2007–2008. Over a decade later, there is still no consensus across different market regulations on the classification, use cases, policies, and economic implications of bitcoin. However, there is an increasing demand for digital currency, as an alternative to fiat currency which would spur financial innovation and inclusion. This study reviews regulations on digital assets across countries. It further discusses some use cases for bitcoin to reduce financial risk and facilitate cross border transactions. The study also discusses challenges related to bitcoin such as: cryptocurrencies substitution, cross border financing, cyber risk and security, and benefits in terms of the effect of coronavirus on the speed of capital market innovation and hence bitcoin usage. The study concludes by examining the economic effect of bitcoin halving events on the U.S. capital market to better understan...

I investigate the impact of the voluntary adoption of clawback provisions on managerial ability. The U.S. Securities and Exchange Commission (SEC, 2003) describes the adoption of clawback through the Sarbanes-Oxley Act (SOX) Section 304 as an action to improve the "tone at the top". In line with this description, I predict that clawback provisions will motivate managers to exert more efforts following the adoption of clawback and these efforts will be in the form of an increased managerial efficiency. Using a propensity score matched sample of firms that adopt clawback versus firms that did not adopt clawback between 2007-2013, I find a significant positive association between voluntary clawback adoption and the change in both rank and score of managerial ability. Further analysis suggests that this association is driven by proactive clawback provisions targeting bonuses and reversed when clawback provisions are reactively triggered by misconduct. My study highlights the unintended consequences on clawback provisions on CEO's behavior and contributes to the ongoing debate on the importance of proactively and carefully drafting clawback policies, further signifying the importance of the SEC's efforts (Rule 10D-1) to enforce clawback policies.

Regression of Information Asymmetry on the interaction term between ICDs and Number of Lenders (Syndication) …………………………………………. 18 Regression of Information Asymmetry on the interaction term between ICDs and Credit Rating……………………………………………………………….. 19 Regression of Information Asymmetry on the interaction term between ICDs and Debt Covenant………………….………………………………………….. 20 Regression of Information Asymmetry on the interaction term between CL and Number of Lenders (Syndication) …………………………………………...... 21 Regression of Information Asymmetry on the interaction term between CL and Credit Rating……….…………………………………………………………… 22 Regression of Information Asymmetry on the interaction term between CL and Debt Covenants………….…………………………………………………….

The main thesis of our study is to provide a comprehensive review on the disclosure of Internal Control Weaknesses (ICWs) reported under the Sarbanes-Oxley Act of 2002. More specifically, we classify research on ICWs into three main streams: (1) antecedents, (2) characteristics and (3) consequences of ICWs. Throughout the review, we refer to the multifaceted aspects of the disclosure of ICWs on various important topics such as corporate governance, financial reporting quality, audit quality and information asymmetry. We also discuss the possible implications of the 2013 updated Committee of Sponsoring Organizations (COSO) internal control-integrated framework on accounting literature. Our review and framework help researchers as well as policy makers to better understand the mechanisms by which the existence, discovery and disclosure of ICWs affect the U.S. firms. Further, this study provides avenues for future research and helps regulators and policy makers in setting standards and provisions related to internal controls.

This study examines the association between four pivotal audit committee characteristics and accounting conservatism. Using a sample of 7,668 Australian firm-year observations from 2004 to 2012, a positive association is found between accounting conservatism and: (a) a director with financial expertise on the audit committee; (b) an experienced director on the audit committee; and (c) frequency of audit committee meetings. Within an agency theoretical framework, results suggest that audit committees act as effective monitoring mechanisms in restricting management's opportunistic behaviour and overstatement of earnings. Results also suggest that regulators (and other stakeholders) should pay greater attention to the financial expertise, experience of members and meeting frequency of the audit committee when judging the committee's value.

This case is fictitious but draws upon facts from actual occurrences. It requires students to apply auditing concepts and professional standards in an international setting. An affiliate of a U.S. accounting firm, Loxon Shanghai CPA Ltd., has received a request from the SEC for the audit workpapers of one of their Chinese clients, Great Lead Software. If Loxon complies with the SEC, it may violate Chinese State Secrecy Laws. After revelations of fraud by Great Lead Software surface, Loxon’s decision regarding the workpapers becomes more perilous. The case provides an opportunity for students to achieve multiple learning objectives, including identify audit deficiencies in a globalized setting, identify auditor’s responsibility in the United States versus China, describe the benefits of International Standards on Auditing, describe how culture may affect financial reporting systems including transparency and regulatory issues, and identify potential conflicts between U.S. regulatory ...

Bitcoin is a digital asset that was first mined in January 2009 after the global financial crisis of 2007-2008. Over a decade later, there is still no consensus across different market regulations on the classification, use cases, policies, and economic implications of bitcoin. However, there is an increasing demand for digital currency, as an alternative to fiat currency which would spur financial innovation and inclusion. This study reviews regulations on digital assets across countries. It further discusses some use cases for bitcoin to reduce financial risk and facilitate cross border transactions. The study also discusses challenges related to bitcoin such as: cryptocurrencies substitution, cross border financing, cyber risk and security, and benefits in terms of the effect of coronavirus on the speed of capital market innovation and hence bitcoin usage. The study concludes by examining the economic effect of bitcoin halving events on the U.S. capital market to better understand the influence of bitcoin on financial markets and key drivers of its intrinsic value. The empirical evidence from this study suggests that bitcoin halving events are associated with significant negative stock market reaction, signaling a trading tradeoff between cryptocurrencies and U.S. stock markets.

We examine the association between audit-committee expertise and asymmetric information in the U.S. equity market. Using precise private information extracted from a decomposed bid-ask spread, we find that the existence of an audit committee with financial expertise is negatively associated with information asymmetry. We further find CEO duality to mediate the association between audit-committee financial expertise and information asymmetry. More specifically, we document a significant positive association between the interaction term of CEO duality and audit-committee financial expertise and information asymmetry. Our results are robust to several market-microstructure measures of asymmetric information (e.g., quoted spread, effective spread, price impact, the probability of informed trading), firm-specific characteristics, and market-liquidity measures.

I investigate the impact of the voluntary adoption of clawback provisions on managerial ability. The U.S. Securities and Exchange Commission (SEC, 2003) describes the adoption of clawback through the Sarbanes-Oxley Act (SOX) Section 304 as an action to improve the "tone at the top". In line with this description, I predict that clawback provisions will motivate managers to exert more efforts following the adoption of clawback and these efforts will be in the form of an increased managerial efficiency. Using a propensity score matched sample of firms that adopt clawback versus firms that did not adopt clawback between 2007-2013, I find a significant positive association between voluntary clawback adoption and the change in both rank and score of managerial ability. Further analysis suggests that this association is driven by proactive clawback provisions targeting bonuses and reversed when clawback provisions are reactively triggered by misconduct. My study highlights the unintended consequences on clawback provisions on CEO's behavior and contributes to the ongoing debate on the importance of proactively and carefully drafting clawback policies, further signifying the importance of the SEC's efforts (Rule 10D-1) to enforce clawback policies.

Regression of Information Asymmetry on the interaction term between ICDs and Number of Lenders (Syndication) …………………………………………. 18 Regression of Information Asymmetry on the interaction term between ICDs and Credit Rating……………………………………………………………….. 19 Regression of Information Asymmetry on the interaction term between ICDs and Debt Covenant………………….………………………………………….. 20 Regression of Information Asymmetry on the interaction term between CL and Number of Lenders (Syndication) …………………………………………...... 21 Regression of Information Asymmetry on the interaction term between CL and Credit Rating……….…………………………………………………………… 22 Regression of Information Asymmetry on the interaction term between CL and Debt Covenants………….…………………………………………………….

Consistent with the prediction that political instability is strongly reflected in the performance of the economy, we examine whether the 2011 Egyptian Revolution mediates the association between audit committee characteristics and accounting conservatism. More specifically, we examine the association between five audit committee characteristics: independence, financial expertise, size, diligence, and members' multiple directorships and the levels and changes of accounting conservatism post the 2011 Egyptian Revolution. Using 205 firm-year observations between 2009 and 2013, we find evidence that audit committee independence, financial expertise, diligence, and members' multiple directorships (size) are positively (negatively) associated with accounting conservatism after the Egyptian Revolution. This result suggests a shift in the role played by audit committee members post the Egyptian Revolution. It lends support to the Developmental Democracy Theory, which emphasizes the power of people as responsible community citizens. The results in this study are robust to the use of alternative model specifications (e.g., an index for audit committee effectiveness, two stages regression, and a Propensity-Score Matching Sample).