På senare tid har finansiella skandaler fått ett allt större utrymme i media, vilket skapat en debatt bland allmänheten och näringslivet om revisorns förtroende. Revisionsbranschen utgör en av de viktigaste grundstenarna i samhällsekonomin och ett minskat förtroende för dem är problematiskt. Då förtroende är viktigt, är det nödvändigt att känna till hur revisorer skapar ett förtroende och vad det påverkas av. Uppsatsen avser att beskriva hur revisorer skapar förtroende, vad som påverkar revisorernas förtroende samt att belysa de konsekvenser och risker som finns med minskat förtroende. Studien använder sig av beskrivande metoder, där primärdata består av intervjuer med respondenter och sekundärdata tillhandahölls av vetenskapliga artiklar, böcker, tidningsartiklar och webbsidor. Studien har genomförts med en kvalitativ metod, där verkligheten studerades genom att tillämpa abduktion. Igenom studien kontrolleras det att uppsatsen håller en hög reliabilitet, validitet och objektivitet. Denna empiriska studie visade att revisorns kompetens är centralt för att dess klienter och intressenter ska kunna lita på denne. För att det ska säkerställas att revisorn har de kunskaper som krävs och att det inte finns oseriösa revisorer, är det viktigt att revisorer kvalitetskontrolleras. Författarna har kommit fram till att revisorerna arbetar förhållandevis lika när det gäller kraven och dess ansvar för att skapa förtroende. Detta troligen på grund av att de stora revisionsbyråerna har goda förutsättningar i form av interna system, utbildningar och tillgång till expertis. Förtroendet mellan en revisor och dess klient samt övriga intressenter är relationsbaserat och växer fram med tiden. Förutom kompetens- och kvalitetskontroll bygger revisorers förtroende på att dagens regelverk är bra utformad, revisorers tystnadsplikt och oberoende samt att revisorn har de rätta personliga kvalifikationerna. En konsekvens av ett minskat förtroende för revisorer kan vara att fler bolag kan helt enkelt väljer bort revisionen, vilket även kan komma att påverka hela samhällsekonomin. Slutligen har studien klarlagt att strikt reglering gentemot företagsledningar/internrevisorer och revisorer när det gäller olagliga former av vinstmanipulering inte finns idag. Ett möjligt område för vidare forskning inom ämnet skulle vara att undersöka stora respektive små företags förtroende för revisorer eller att fördjupa sig i om det finns några skillnader i förtroendet för godkända respektive auktoriserade revisorer samt varför. Ett annat tänkbart område är att kontakta några stora respektive små aktiebolag för deras kommentarer och då fördjupa sig i frågan varför revisorer är inblandade i vissa finansiella skandaler. Slutligen skulle ett tänkbart område kunna vara att undersöka massmedias påverkan i revisionens förtroendeskapade process.

The purpose of the thesis is to study share price response to quarterly earnings per share (EPS) announcements in the world steel industry for the last five years (from 2007 to 2011), using the event study methodology. Moreover, the paper attempts to test share price reactions to earnings releases for yearly aggregation (pre-crisis, crisis and post-crisis periods) and countries aggregation (developed and developing countries) of sample steel companies. The research is conducted employing a sample of 30 listed companies, operating in the steel industry. The steel producers’ headquarters are situated in thirteen countries; they are traded on twelve stock markets as primary listing stock exchanges and are referred to thirteen respective indexes.The thesis uses the event study methodology in order to address the purpose of the research. This methodology provides an insight on how numerous corporate events (M&As and takeovers announcements, regulatory changings and earnings announcements) influence company’s stock prices. All the announcements were divided into two groups: “negative” announcements (Group I) and “positive” announcements (Group II). By “negative” announcements it is meant, that new actual earnings per share are smaller than earnings per share from the last quarter, and vice versa for “positive” announcements. The pattern for overall aggregation of sample companies showed the significant and expected share price response to earnings announcements for Group I only. The output for Group II was puzzling. This led to the assumption of negative market perception on the steel industry stock prices as a result of 2007-2008 financial crises. Indeed, for 2007, which was determined as a pre-crisis period for the steel industry, the share price reaction was significant for both groups of EPS announcements. However, within the two other periods (crisis period of 2008-2009 and post-crisis period of 2010-2011) significant and expected pattern was obtained only for Group I once again. The 2007 yearly aggregation comprised only twenty companies due to the data availability. This revealed the assumption, that this sample of twenty steel companies should be tested for the two other periods. However, the pattern remained the same as in the overall aggregation case. Furthermore, the sample steel companies were aggregated on countries basis. The obtained response was analogous to overall aggregation response, the only difference is that Group I reaction was more significant for developed countries than for developing counties sample.

Den här studien undersöker om investerare tar hänsyn till den finansiella informationens kvalitet vid värdering av svenska börsnoterade företag. Tidigare studier har efterfrågat fler empiriska undersökningar av informationen som ingår i de olika teoretiska värderingsmodellerna. Dessa värderingsmodeller skall ur ett teoretiskt perspektiv generera samma värdering men det har visat sig att det inte är så i praktiken. Förklaringen till detta anses dels vara feluppskattningar i prognosvärden och dels vara periodiseringarna – skillnaden mellan kassaflödet och vinsten. Utifrån ett mätningsperspektiv undersöks först vinsternas samt kassaflödenas marknadsvärderelevans och därefter respektive informations kvalitet. Våra resultat visar att informationens kvalitet är relevant för investerare då vinsten har högre marknadsvärderelevans samtidigt som den är av högre kvalitet. Resultaten är robusta för företagsstorlek, branschtillhörighet samt konjunkturförändringar.

Syftet i denna studie är att undersöka förekomsten av resultatmanipulering samt graden av dess förekomst under året för ett vd-byte och året efterföljande ett vd-byte. Tidigare forskning har visat att resultatmanipulering förekommer och att fenomenet i amerikanska och australiensiska företag är kopplat till vd-byten där resultatmanipulering har använts för att sänka resultatet under året för vd-bytet och sedan i syfte att höja resultatet under åren efter ett vd-byte. Urvalet utgörs av företag ur Stockholmsbörsens Large Cap-lista registrerade under perioden 2006 till 2009. Efter bortfall är antalet företag i urvalet 48. Metoden är kvantitativ och består av insamling av sekundärdata. Jones modifierade modell används för att mäta förekomsten av resultatmanipulering och sedan undersöks dess samband med vd-byte. Resultatet visar att resultatmanipulering förekommer samt att företagen tenderade att justera resultaten neråt. Sambandet mellan vd-byten och resultatmanipulering var inte signifikant, men resultatmanipulering förekom i stor utsträckning under året efter ett vd-byte relativt övriga år.

In chapter 1, we show (i) that the risk-return characteristics of our sample of 17 developed stock markets of the world have converged significantly toward each other during our study period 1974 2004, and (ii) that this international convergence in risk-return characteristics is driven mainly by the declining country effect, rather than the rising industry effect, suggesting that the convergence is associated with international market integration. Specifically, we first compute the risk-return distance among international stock markets based on the Euclidean distance and find that the distance thus computed has been deceasing significantly over time, implying a mean-variance convergence. In particular, the average risk-return distance has decreased by about 43% over our sample period. The speed of convergence, however, varies greatly across individual markets, largely reflecting the initial distance of each individual market from the international average risk-return characteristic. Lastly, we document that the risk-return characteristics of our sample of 14 emerging markets have been converging rapidly toward those of developed markets in recent years. This development notwithstanding, emerging markets still remain as a distinct asset class. In chapter 2, we examine the historical evolution of international earnings-to-price ratios for a sample of 17 markets over the period 1980 2004. We introduce a distance measure of earnings-to-price ratios among international stock markets and find that earnings-to-price ratios of 17 markets have significantly converged toward each other during the period. The average distance measure for 17 markets has decreased by about 80 percent during the period. The speed of convergence for individual markets varies and mainly reflects the initial distance of individual markets from the international average. We also find that although both country and industry effects account for convergence in earnings-to-price ratios among the sample markets, country effect dominates industry effect in terms of the magnitude. We further examine what could explain the declining country effect and document that the time trend of dividend-yield distance measure closely follows that of earnings-to-price distance measure. This result suggests that convergence in earnings-to-price ratio is mainly due to convergence in economic factors such as growth opportunities or discount rates rather than due to convergence in accounting practices.

Accounting regulators are concerned about the potential threat of long-term auditor-client relationships on auditor independence, leading to lower audit quality. The main objective of this study is to examine the association between auditor tenure and an important feature of accounting, namely conservatism. Following Basu (1997) and Ball, Kothari and Robin (2000), I define conservatism as the quicker recognition in earnings of bad news about expected future cash flows. I investigate whether long-term auditor-client relationships are associated with less timely recognition of earnings to bad news, and a lower rate of reversal of negative earnings changes. The overall results strongly show that conservatism decreases as auditor tenure lengthens. The results are robust across various measures of conservatism and a series of sensitivity tests. However, auditors¡¯ litigation exposure appears to be able to mitigate the adverse impact of auditor tenure. In additional tests, I find that the reduced conservatism is not driven by the larger clients that auditors have incentives to retain. Moreover, I find that even industry specialists could not avoid the negative impact of longer auditor-client relationships on conservatism. The study provides some support to the regulators who are concerned about the potential negative impact of auditor tenure on audit quality and the rule of mandatory audit firm rotation.

Could the analysts¡¦ forecasting be the important investment decision of the naive investors? This is the significant issue of the study. The study shows the following, in the short run, recommendations have information value; in the long run, forecasting earnings have information value. And electronic industry is the most valuable of all industries in the long run and short run. Although recommendations also have information value in the long run, but the industry returns aren¡¦t consistent. In addition, analysts over predict about the forecasting earnings. Finally, the study also shows the following, forecasting price or recommendation has negative coefficient and statistically significant in large scale company. Because large scale companies are more attentive than small scale companies, and information superiority trader already get the information before analysts¡¦ release. So they can trade the stocks before analysts¡¦ release, naive investors can¡¦t get returns with the analysts¡¦ forecasting.

Insider trading may convey information to the market and promote accurate pricing of stocks. In this dissertation, I investigate insider trading at the turn of the century. In the first essay, I investigate insider trading activity in technology stocks during the high price - high volatility period of the late 1990s. I document that insiders of technology firms were heavy sellers during the ten month pre-peak period in which stock prices more than doubled. The technology stocks that were sold by insiders more extensively in the pre-peak period had lower returns in the post-peak period. I furthermore investigate the relation between the net order flows (buyer initiated minus seller initiated trades) and abnormal insider trading activity. I document that the net order flow is positively related to abnormal insider trading activity. However, this positive relation becomes weaker in the peak period; which implies less price discovery through insider trading during the rise of technology stock prices. In the second essay, I document that disclosure requirements significantly affect insider trading behavior. The Sarbanes-Oxley Act of 2002 requires expedited and on-line disclosure of insider transactions. This increase in the visibility of insider trading reduces informational advantage of insiders and increases the likelihood of facing legal sanctions for insiders. I document that insider purchases significantly declined after the Sarbanes- Oxley Act. In addition, the incidences of insider purchases (sales) prior to positive (negative) earnings surprises declined after the Act. Finally, I document that the earnings announcements become more informative after the Act, which is consistent with less price discovery through insider trading prior to earnings announcements. However, the evidence that the decline in insider trading contributes to more informative earnings announcements is pronounced for insider purchases but not for insider sales.

Prior research has established that stocks with high dispersion of earnings forecasts or short interest are associated with low subsequent returns. Assuming dispersion of forecasts is a proxy for divergence of opinions and short interest is a proxy for short selling constraints, these results have been traditionally attributed to correction for overpricing created by binding short selling constraints. This argument is provided by Miller (1977), and states that prices reflect an optimistic view when investors with pessimistic views can not trade due to short selling constraints, and that the more opinions diverge, the more stocks become overpriced. I test whether dispersion of forecasts exacerbates overpricing, but find evidence contrary to Miller’s theory. When dispersion of forecasts increases, prices decrease. I offer an explanation based on analysts’ reluctance to quickly revise their forecasts downward. I show that some analysts’ sluggish response to bad news results in dispersion of forecasts. The inertia in downward forecast revisions also leads to market underreaction to bad news. Therefore, the negative relationship between dispersion and subsequent returns may be attributable to analysts’ sluggish response to bad news. I also examine the return predictability of firms with high short interest and low institutional ownership. Short interest seems to predict not only future stock returns but also future earnings news, especially for firms with lower institutional ownership. Therefore, the return predictability of short interest seems to be associated with value relevant information short sellers seem to have gathered.

This paper studies the quality of mandatory financial forecasts which announced by Taiwan lists and OTC companies ¡]hereinafter called ¡§the companies¡¨¡^. Does outside financial analyst can offer the public users more useful financial forecast than the companies¡H What¡¦s the difference on precision between financial forecasts issued from the companies and outside analysts¡HBesides, this paper also tests if the companies would perform earnings management for meeting the public expectation. The empirical results indicate that for public investors, the mandatory financial forecasts issued by the companies didn¡¦t show better accrual precision than the financial forecast issued by outside analysts. There wasn¡¦t any significant difference on degree of differential between financial forecast prepared by outside analysts and the companies. The risk for using both of the financial forecasts are the same. That means the investors can rely on none of the companies and outside analysts¡¦ forecasts to do investment decision. And the companies performed earning management to meet the consistent expectation of earning arose from market which can avoid the bad result when the actual financial report differ from forecast. In summary, the mandatory financial forecasts in Taiwan can not offer timely useful information to investors. Most of them only increase the preparation cost and control cost. Some of the companies even use them as the tool to collect money from public for personal welfare. We recommend the government authorities to consider the benefit of voluntary financial forecast system in UAS when they are reviewing the mandatory financial forecast system. The voluntary financial forecast system may solve the problems of incomplete predictability of financial forecast and asymmetry of information, finally increase the usefulness of financial forecasts.