Comparability is a central feature of financial reporting systems. Comparability is defined by FASB (2010, 19) as “the qualitative characteristic that enables users to identify and understand similarities in, and differences among, items.” The Accounting Principles Board ranked comparability as one of the most important objectives of financial reporting and Generally Accepted Accounting Principles have underscored the importance of comparability for the past four decades. Using empirical measures of financial statement comparability, studies confirm that comparability plays an important role in analyst following, audit fees, credit risk, acquisition decisions, stock price volatility, the cost of debt, the cost of equity, and cash holdings. This dissertation, investigates the impact of comparability on trade credit, earnings management through classification shifting, and on non-Big4 auditors. Prior studies find that comparable firms enjoy a lower cost of equity capital and a lower cost of debt. They should, therefore, require less trade credit. I also find that comparable smaller and/or financially distressed firms require less trade credit whereas they normally require higher levels of trade credit. The results presented in my first essay support this hypothesis in that comparability and trade credit are significantly negatively associated. The results presented in my second essay show that managers’ earnings management through classification shifting is significantly influenced by the degree of financial statement comparability with other firms. I also find that comparable firms engage in less classification shifting and that the impact of comparability is more pronounced after the passage of the Sarbanes Oxley Act. The results presented in my third essay show that companies audited by non-Big4 auditors are less comparable than the companies audited by Big4 auditors. Non-Big4 auditors are thus less likely to be able to apply the same audit process to multiple clients. I find that this results in greater audit effort, as proxied by higher audit fees, for Non-Big4 firms.

This thesis investigates the relationship between tertiary education, Basel knowledge and risk-aversion in credit managers in the market for unsecured loans in Sweden. A survey was made to test these links and the sample of respondents consisted of 30 credit managers. Results showed no obvious effect of tertiary education on risk-aversion, managers ability to contravene the algorithm and the non-occurrence of default. It showed that there may be an effect of the inability to contravene the algorithm on the occurrence of ‘bad business’ and that there may be an effect of acquired tertiary education on Basel knowledge. This implies that not allowing credit managers to contravene algorithms may increase the occurrence of default. The results also imply that banks, credit institutes and regulators should take action towards improving the understanding of the Basel directive and regulations among credit managers.

In this dissertation, I consider a range of topics in bankruptcy, credit risk and asset pricing. The first chapter proposes a structural-equilibrium model to examine some economic implications arising from voluntary filing of Chapter 11. The results suggest that conflict of interests (between debtors and creditors) arising from the voluntary filing option causes countercyclical losses in firm value. The base calibration shows that these losses amount to approximately 5% of the ex-ante firm value and are twice those produced by a model without incorporating the business cycles. Furthermore, besides countercyclical liquidation costs as in Chen (2010) and Bhamra, Kuehn and Strebulaev (2010), countercyclical pre-liquidation distress costs and the conflict of interests help to generate reasonable credit spreads, levered equity premium and leverage ratios. The framework nests several important models and prices the firm's contingent claims in closed-form. The second chapter proposes a structural credit risk model with stochastic asset volatility for explaining the credit spread puzzle. The base calibration indicates that the model helps explain the credit spread puzzle with a reasonable volatility risk premium. The model fits well to the dynamics of CDS spreads and equity volatility in the data. The third chapter develops a consumption-based learning model to study the interactions among aggregate liquidity, asset prices and macroeconomic variables in the economy. The model generates reasonable risk-free rates, equity premium, real yield curve, and asset prices in equity and bond markets. The base calibration implies a long-term yield spread of around 185 basis points and a liquidity premium of around 55 basis points for an average firm in the economy. The calibrated yield spread and liquidity premium are consistent with the empirical estimates.

This dissertation studies the relationship between the existence of multiple means of payment and the effects of monetary policy. Chapter 1 studies the choice of endogenous means of payment when holding money is risky. In steady state equilibrium, the marginal rate of substitution of cash goods for credit goods depends on the crime rate as well as the nominal interest rate. Credit may be used when the return on money is not positive. A positive money injection reduces the crime rate and transactions costs. When the crime rate is positive, welfare increase with inflation, and the Friedman rule is not necessarily optimal. Chapter 2 discusses the risk-sharing role of monetary policy when the asset market is segmented. A fraction of households exchange money for interest-bearing government nominal bonds in the asset market. The government injects money through open market operations with only participating households. In equilibrium, money is nonneutral and there are distributional effects of monetary policy. With idiosyncratic endowment risk, monetary policy cannot perfectly insure households. The optimal money growth rate can be positive and the Friedman rule is not optimal in general. Chapter 3 is built on the work of Chapter 1 and Chapter 2 in exploring distributional effects of monetary policy when individuals can choose means of payment among alternatives. In equilibrium, monetary policy has distributional effects. With a positive money injection, some households purchase a greater variety of goods with cash while others purchase a greater variety of goods with credit. Consumption may increase or decrease because household can choose alternative means of payment. Credit is used to dampen fluctuations in consumption arising from monetary policy. The liquidity effect arises under a certain condition.

Attitudes of husband and wife regarding the use of the bank credit card were compared and related to the couple's marital happiness rating. The sample consisted of 40 young married couples residing in campus married student housing at Utah State University during Fall Quarter 1970. Subjects had at least one child and we r e U. S. born citizens between the ages of 20 and 35. The instruments used we r e: (1) a background questionnaire, (2) a marital happiness rating scale, and (3) a series of eight case study situations . The statistical tests us ed were the paired-comparison t-test and the Pearson r. No significant difference was found between attitudes of husband and wife regarding the use of the bank credit card. There was no significant relationship between attitudes of husband and wife regarding the use of the bank credit card and couples expressing a "Very Happy" marital happiness rating or couples expressing other than a "Very Happy" marital happiness rating.

A study was made of the use of credit by a randomly selected sample of the Ut ah State University staff personnel during 1964 and 1965. The information was obtained by means of a questionnaire. The major objective of the study was to examine the relationship between income and consumer debt with specific reference to reasons underlying the demand for consumer credit, the relationships between amount of consumer credit and variables such as family income, family size , age of family head and amount of liquid assets, and the nature of the demand function for consumer credit. Analysis o f t he information supplied by the questionnaires suggested the following conclusions : (1) Although credit and the variables were closely related, no really significant linear relationship could be established from t he data on hand . (2 ) Use of consumer credit was most frequent among the university personnel under 40 years of age. (3) The major purpose of us ing credit was to purchase automobiles. (4) The most important source of credit was the credit union, with commercial banks, auto s ales finance companies, and retail outlets in the second , third, and fourth places respectively. (5) The use of consumer credit is a middle class phenomenon, with the concentration of borrowers in the $5 ,250 to $9,249 income range.

Consumer credit has become an area of major importance i n the financial planning of most , if not all, families in the Uni ted States. In absolute amount s, total consumer credit extended had increased more than 11 times, from $5,665 million to $63,164 million, since the end of World War II to 1962 ; and total installment credit had increased more than 19 times. During the same period disposable personal income had grown only about 2.5 times (15).

The purpose of this thesis is to analyze the drivers and dynamics of credit losses in Australasian banking over an extended period of time in order to improve the means by which financial institutions manage their credit risks and regulatory bodies safeguard the stability and integrity of the financial system. The analysis is based on a specially constructed data base of credit loss and provisioning data retrieved from original financial reports published by Australian and New Zealand banks. The observation period covers 1980 to 2005, starting at the time when such information was published for the first time in bank financial statements. It moreover covers the time of major crises which occurred in both Australia and New Zealand in the late 1980s and early 1990s. The heterogeneity of reporting the data both amongst banks and through time requires the development of a reporting typology which allows data extraction with equivalent informational content. As a thorough study of credit risks requires long data series often not available from third party data providers, the method developed here will provide value to a range of researchers. Based on an evaluation of many alternative proxies which track a bank's credit loss experience (CLE), the thesis proposes a preferred model for impaired assets expense (as % of loans) as dependent variable, mainly because of its timely nature and good data availability. Explanatory variables include aggregate macro variables of which changes in unemployment and the return in the share markets are found to have the most significant influence on a bank's credit losses. Bank-specific control variables include a pre-provision earnings proxy whose significance points to the use of provisions for the purpose of income smoothing by Australasian banks. The model also controls for size and nature of lending as smaller, retail-oriented housing lenders, on average, exhibit lower loan losses. Clear results are found with regard to the effect of rapid expansion which appears to be followed by a surge of bad debt provisions 2 to 3 years later. Moreover, inefficient banks tend to suffer greater credit losses. An important part of the thesis looks at the characteristics of alternative CLE proxies such as stock of provisions, impaired assets and write-offs which have been used by earlier literature. Estimating the preferred model with such alternative CLE parameters confirms their peculiarities such as the memory character of stock of provisions and the delayed nature of write-offs. These measures correlate rather poorly amongst themselves which calls for caution in the comparative interpretation of earlier studies that use differing CLE proxies.

The documentary letters of credit transaction is the most common method of payment for goods in international trade. Its use has been considered so important that it is referred to as the �lifeblood� of international commerce. The purpose of this thesis is, through analysing the present regime of documentary credit established under the The Uniform Customs and Practice for Documentary Credits, 1993 Revision (�UCP�), to identify the rights and duties of all parties in such transactions and the reasons for the frequent occurrence of fraudulent activities associated with the documents required under the credits. It identifies that the present system fails to either encourage or implement substantial realisation of �reasonable care� or �good faith� on the part of the banks, or realisation of the requirement of �good faith� from beneficiaries. As a result, the independence principle has been left without substance, with resulting huge opportunities for fraudsters to cheat on the documents and obtain payment without the need to actually perform their duties to banks and buyers. Such issues have become more acute against the background of an underlying shift in the allocation of risk between the respective parties to letters of credit. There has been a depreciation in the value of the primary document of title and security held by the issue, the bill of lading, with the advent of container shipping. As the letter of credit system is wholly dependent on the integrity of the documents, it is being undermined by these developments. This has represented a shift in the traditional scheme of risk allocation from the seller to the bank. In practice, banks have taken countermeasures by insisting that applicants provide other types of collateral, and by subjecting applicants to rigorous credit checks. Thus, applicants ultimately have had to bear the brunt of costs associated with this reallocation of risk. It will be demonstrated that the UCP does not incorporate adequate or clear enough duties to be exercised on the part of issuers toward applicants, and severely restricts the applicant�s right to sue if the issuer has wrongfully honoured. Ultimately, a balance must be struck between the desirability of protecting the applicant from the beneficiary�s fraud against the benefits gained by maintaining the letter of credit as a commercial instrument and business device. Obviously, there is public interest in protecting both of these commercial values. This thesis advocates that a mechanism in addition to the fraud exception must be introduced to safeguard the system against the ramifications of these changes � increased fraud. The thesis is structured into five chapters. Chapter 1 sets out to demonstrate the circumstances under which the respective risks are borne by each participant in the letter of credit transaction, and how developments in trade practice have caused the burden of certain of these risks among the parties to a letter of credit transaction to shift. Chapter 2, after briefly visiting the historical origins of the letter of credit and the birth of the UCP, explores the implications of the dominance of banking interests over the drafting and interpretation of the UCP, how the UCP has in practice excluded the intrusion of other sources of law and the general reluctance of courts to intervene by applying non-letter of credit principles, the implication of the UCP�s assumption of the law in practice, the resulting marginalisation of local laws, and the inequality in bargaining power between banks and applicants that precludes a choice of law other than the UCP. Chapter 3 explores the independence principle and question of documentary compliance, why the system is ridden with non-compliant documents and the lack of incentive and meaningful duty for the banks to check for �red flags� that may indicate fraud on the documents or in the transaction. It will be emphasised that documentary validity, rather than mere documentary compliance, should be the focus under the letter of credit. Chapter 4 examines the fraud exception to the independence principle, the typical high thresholds of proof that applicants had to overcome to estopp payment, and explores recent trends towards the gradual lowering of such thresholds. Finally, Chapter 5 considers practical measures and proposals for reform that would help to redress the imbalance in the allocation of risk identified in the thesis.

<p>Credit derivatives are very popular on financial markets in recent days.</p><p>The most liquid credit derivative is a credit default swap (CDS). In</p><p>this research we investigate methods for modeling and monitoring of the</p><p>price process of CDS. We study Hull and White model to calculate CDS</p><p>spread and have data for our analysis. We consider different methods for</p><p>monitoring of the price process of CDS. In particular we study CUSUM</p><p>method. And we calculate more commonly used perfomance measures</p><p>for this method.</p>