Winsway Missed Bond Payment Heightens Chinese Default Risk
April 9, 2015
Investors in coal-related companies face heightened default risks after one that relies on markets in China and Mongolia became the latest Chinese corporate to miss an interest obligation.
Winsway Enterprises Holdings Ltd., an importer of coal for steelmakers, didn’t make a $13.15 million semi-annual coupon payment due Wednesday on $309.3 million of notes maturing in April 2016, according to a stock exchange filing. It plans to use a 30-day grace period to discuss restructuring the debt after hiring Akin Gump Strauss Hauer & Feld LLP as a legal adviser to an expected group of bondholders. Continue reading
Updated : 2015-04-09 18:46
Ex-Keangnam chief found dead
Probe into energy projects expected to hit wall
By Lee Kyung-min
Former Keangnam Enterprises Chairman Sung Woan-jong was found dead on Mt. Bukhan in an apparent suicide, Thursday. He has been at the center of an investigation into the failed “energy diplomacy” of the previous Lee Myung-bak administration. Continue reading
Raju found guilty in Satyam scam but size of sentence is what really matters
by R Jagannathan Apr 9, 2015 13:01 IST
How many days does it take a legal system to convict a self-confessed white collar criminal?
The answer: Six years and 92 days.
Satyam Comuputer’s iconic former owner, B Ramalinga Raju was today (9 April) convicted for financial fraud that he had voluntarily confessed to on 7 January 2009. During this time he has spent some time in prison, along with his brother and other co-conspirators, but he has been more out of jail than in it as he pleaded ill-health. Continue reading
Revised Auditing Standard Puts Onus on Auditor to Read Annual Reports
NEW YORK (APRIL 8, 2015)
BY MICHAEL COHN
The International Auditing and Assurance Standards Board has released a revised International Standard on Auditing that encourages auditors to thoroughly read through a company’s annual report when auditing, as it provides critical information to the auditor and is ultimately beneficial to the public interest.
Do Accounting Errors Breed Fraud?
Vivian W. Fang University of Minnesota – Twin Cities – Department of Accounting
Allen Huang Hong Kong University of Science and Technology – Department of Accounting
Wenyu Wang Indiana University – Kelley School of Business – Department of Finance
April 5, 2015
Kelley School of Business Research Paper No. 15-29
This paper links accounting errors to firms’ incentives for fraud. While errors discourage fraud by lowering the value relevance of reported earnings, they also incentivize fraud by providing camouflage. We analyze the two effects in the framework of Fischer and Verrecchia (2000) and generate hypotheses. Using intentional and unintentional misstatements as empirical proxies for fraud and errors, respectively, we document a hump-shaped relationship between an industry’s prevalence of fraud and that of errors. This result is robust to using SEC enforcement actions or the likelihood of meeting or marginally beating analyst consensus forecasts as alternative proxies for fraud. Motivated by three causes of errors (i.e., transaction complexity, regulation ambiguity, and staffing deficiency), we use firms’ number of items in their quarterly filings, rules-based characteristics of accounting standards, and state boards’ CPA requirements as alternative proxies for errors. These proxies are associated with fraud in a similar fashion as errors. Our results highlight an important economic implication of accounting errors and shed light on the recent debate on “principles-based” versus “rules-based” accounting systems.