Browsing by Subject "SEC"
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Item Credit rating agencies and conflicts of interest(2012-05) Crumley, Diana G.; Galbraith, James K.; McGarity, Thomas O.Credit rating agencies are controversial yet influential financial gatekeepers. Many have attributed the recent failures of credit rating agencies to conflicts of interest, such as the agencies’ issuer-pays business model and the agencies’ provision of ancillary services. This report identifies these conflicts; examines recently-finalized Security and Exchange Commission (SEC) regulations proscribing these conflicts; and suggests other possible regulatory measures. The strategies available to regulators are diverse and differ widely in their political and administrative feasibility. These strategies include outright prohibition of conflicts; removing regulatory references to credit ratings; enhancing agency liability; organizational firewalls; performance disclosures; demonstrating due diligence and its results; increasing competition; staleness reforms; internal governance; administrative registration; and requiring alternative business models. While the report primarily focuses on how the most recent financial crisis—and the related market for asset-backed securities—highlighted conflicts of interest at credit rating agencies, this report also examines how credit ratings—and their limitations—affect sovereign debt markets.Item OATS, CAT, and CARDS : financial regulation in the era of big data(2015-05) Moore, Peter Austin; Flamm, Kenneth, 1951-; Von Hippel, PaulThe explosion of data in the financial industry has led regulators to seek better ways to utilize big data analytics. This paper analyzes the inception and development of three major regulatory programs borne from market failures. These programs represent the promise of big data, but have had to withstand criticisms of their cost, effectiveness, and necessity. The focus is on the twin goals of these programs: to reconstruct the market and to detect market abuse; and how the promises have been met and criticisms have been replied to.Item The challenges of improving revenue-recognition standard for multiple-element firms:evidence from the software industry (SOP 97-2)(Texas A&M University, 2008-10-10) Srivastava, AnupI investigated whether implementing SOP 97-2, the revenue-recognition standard for the software industry, reduces earnings informativeness. This standard is particularly important for two reasons: First, its provisions coincide with provisions of SAB 101, the current general revenue-recognition standard. Second, the software industry provides a laboratory setting for examining multiple-element firms, whose revenue-recognition challenges keep mounting as more and more firms bundle multiple products and services. I found that implementing SOP 97-2 leads to additional revenue deferrals and a decline in earnings informativeness. However, the market prices these deferrals as revenues, as if these amounts had not been deferred. Moreover, the proforma earnings, which I calculated by undoing the revenue deferrals, more strongly correspond with market returns than do the reported earnings. My findings indicate that the accounting numbers calculated using the pre-SOP 97-2 revenue-recognition rules more strongly correspond with market returns than do those calculated using SOP 97-2. My findings should interest FASB in its project on developing a new revenue-recognition standard.