Accounting Restatement Has Been A Hot Subject For Academic Research

Class stratification is a major way that social groups in a hierarchical system that differ from each other in terms of prestige, wealth and power. Many of these social groups or classes usually share a common interest and a common identity that separates them from other social groups within society. In this essay I will discuss 3 contrasting theories, explain the difference between the three theories, apply three contrasting theories as evidence towards the conflicting theories and evaluate the strengths and weaknesses.

SFAC No. 8 addresses the cost constraint on useful financial reporting, “Cost is a pervasive constraint that standard setters, as well as providers and users of financial information, should keep in mind when considering the benefits of a financial reporting requirement.” (SFAC No. 8 BC 3.47) However, the ability to place a dollar value and fully enumerate a cost or benefit is almost an impossible task for standard-setters. Additionally, there is no way to successfully identify and measure all of the economic consequences associated with a new standard. The FASB should be applauded though for advancing uniformity in accounting standards, however; uniform financial reporting suggests a one size fits all approach. “Smaller, non-publicly listed firms (and their auditors) argue that accounting standards are formulated mainly for larger, publicly traded firms” and that “compliance costs are disproportionately higher and the

The financial crisis of the early 2000s left many investors and stockholders nervous about the accuracy of financial statements issued by public companies. The financial crisis resulted after many previously successful companies suddenly tanked due to restatement of their financials. These companies include Enron, Tyco, Sunbeam, Rite-Aid, Xerox and WorldCom amongst others (Kieso, 2014, p. 17). How could many previously successful companies suddenly go belly-up? The evidence was to be seen, these companies had used malicious accounting techniques to hide massive amounts of debts and increase their assets without having to show them accurately in a fair and honest way on their financial statements.

The answers to the questions above are demonstrated in various ways. Firstly, the corporate community is dominated by profit (2006:76). These corporations are often owned by similar families or institutions. The educational and work experiences of their executives are similar. They share similar opponents, legal and accounting firms and many other factors (Domhoff, 2012). This creates a sense of elitism or togetherness which assists them in exerting some sense of common social power. Interlocking directories are also a means of demonstrating and ensuring unity among corporations (2006:111). They also ensure certainty in terms of the overall direction of corporations. It is through interlocking directories that an overlap in membership as well as interests between corporations and the upper-class can be

Class B Common Stock. Consequently, he is able to exert a major influence over all matters requiring stockholder

The ownership structure for Bombardier not only gives the Bombardier family majority ownership of shares, but also superior voting power. Given that Class A shares have ten votes each and Class B shares have one vote each, the Bombardier family is deemed to control 54.35% of all the voting rights of both classes of common shares. This gives the Bombardier family ownership and control over the whole corporation. The non-controlling shareholders have insignificant voting power over the Bombardier family which may make it unfavourable to invest in the company.

       One of the advantages of a corporation from a social standpoint is that every stockholder has equal voting rights, i.e., “one person, one vote.”

A general phenomenon about the corporations is that shareholders must accept majority rule in a company. Shareholders who own majority of the shares, feel that they have right to make majority of all decision because they have more at stake. Minority shareholder can also participate in company affairs by checking majority shareholders power, and promote transparency, ethical practices and good governance (OECD, 2004) but they are often regarded as an unnecessary burden a “dead weight” in corporation (Shkolnikov, 2006)

In the ideal corporate governance system, the definition of a good senior management executive is one that takes into consideration shareholders’ needs above his own. They work diligently to run the corporation both on a day to day basis and to ensure its success in the long run. However, there are often many incentives that disalign the interests between the shareholders (principal) and executives

a policy change, however, one can ask, ever since the SOX implementation, how the quality of financial reporting has effected? Research Question and Hypothesis Development Many studies have addressed disclosure mismanagement of financial statements before and after Enron scandal, however, the few studies that have tackled

The differences between ordinary and preference shares are determined by the terms of issue. A company has the right to issue preference shares, but may only do so either if there is a

k. Stulz demonstrated the correlation between management’s control of voting rights and its impacts shareholder wealth. Specifically, there is an optimal level of management’s control of the right to vote and its corresponding impact on shareholder’s wealth. Management can also change the fraction of the votes it controls through capital structure changes (Stulz, 1988).

The Financial Accounting Standards Board (FASB) is the body in the U.S. that sets the accounting standards. These standards issued are referred to as the Generally Accepted Accounting Principles. FASB has an Accounting Standards Codification (ASC), which is a source of seeing nongovernmental US GAAP. FASB provides a Codification research system website, which can be utilized by accountants, lawyers, and students as a means to view content, perform research, and submit feedback. The goal of the Codification was to give accurate up-to-date standard-setting activity in one spot while being user-friendly by codifying all US GAAP. According to the FASB official website, “…the Codification is expected to: 1. Reduce the amount of time and effort required to solve an accounting research issue 2. Mitigate the risk of noncompliance through improved usability of the literature 3. Provide accurate information with real-time updates as Accounting Standards Updates are released 4. Assist the FASB with the research and convergence efforts (About the Codification v4.10 https://asc.fasb.org/help&cid=1176163588636).”

In the case for a stock, when companies wish to expend but unable to do solely through the income they earn and turn to the financial markets for additional financing by splitting the company up into “stocks,” and then sell a portion of on the open market. A person who buys stock is therefore buying an actual share of the company, which makes him or her part owner (Kenny, 2016). Due to this, the person who owns the stock (with the exception to preferred stocks) is entitled to vote on annual general meeting.

The percentage of firms that do vote for splitting these roles is constantly increasing. Since the corporations are required to have board to oversee the management and ensure that it reflects best interests of shareholders, the argument for separating the roles is constantly rising. Another argument is that combining