会计欺诈外文翻译文献
会计信息失真 外文文献译文及原文
封面目录1 绪论 (3)1 Introduction (4)2 会计信息失真的原因 (5)2.1 会计法律法规体系的局限性 (5)2.2 会计工作人员的疏漏 (5)2.3 职业道德的背离 (5)2.4 政府监管机制不完善 (6)2 The reason of the accounting information distortion (7)2.1 The limitation of accountant laws and regulations system (7)2.2 The accountancy fault (7)2.3 Occupational ethics deviating (8)2.4 The imperfect government mechanism (8)3 会计信息失真的对策 (9)3.1 建立标准化的会计准则，加强会计制度的建设 (9)3.2 建立和完善公司内部监管体系 (9)3.3 完善会计人员监管体系，加大违规的惩处力度 (9)3.4 完善职业资格证制度，加大后续教育的力度，提高会计人员的综合素质 (10)3 The Countermeasure of Accounting Information Distortion (11)3.1 Standard accounting guide line and strengthen the construction of accounting system .. 113.2 Establishing and perfecting enterprise internal control system. (11)3.3 Perfecting accountant supervises system, enhancing punishment. (12)3.4 Consummating employed qualifications system, enhancing following education,improving the accountant quality comprehensively. (12)4 结论 (14)Conclusions (15)摘要这些年，会计信息失真已经影响到了社会经济秩序，本文主要分析了我国会计信息失真产生的原因，及其对策。
外文翻译--关于打击财务报告舞弊的研究
本科毕业论文（设计）外文翻译外文题目Fighting Financial Reporting Fraud外文出处Internal Auditor外文作者Green, Scott原文：Fighting Financial Reporting FraudCONGRES PASSED THE U.S. SARBANES-OXLEY ACT of 2002 with the goal of rebuilding investor confidence and protecting capital markets. It recognized that strong internal controls were an important component of confidence building. Section 404 of the act addresses this component by mandating an annual evaluation of internal controls and procedures for financial reporting and requiring management to assess and certify the effectiveness of these controls.In addition Sarbanes-Oxley requires a company's external auditor to complete a separate report that attests to management's assessment of the effectiveness of internal controls and procedures for financial reporting. In short, the external auditor must perform testing to validate management's assessment of the internal control structure.A strong internal audit function can provide both management and the public accountants with comfort that the control structure is being evaluated regularly and that deficiencies are remedied. Documenting and evaluating a company's processes and related control structure are traditional internal audit tasks that protect the enterprise. However, the degree to which internal auditors focus on the accuracy of their organization's financial reporting presentation and disclosure, in addition to operational audits, is a matter of judgment. Critical factors that will determine the scope of internal auditing involvement in the financial reporting process include the strength and experience of the external auditors as well as the extent of their reliance on the internal control function the transparency and culture of the enterprise andaudit priorities based on solid risk analysis.There are three steps every auditor should take-regardless of their level of' involvement-to help protect the organization from fraudulent financial reporting: * Listen to rogues and whistleblowers.* Ask focused questions that may lead to red flags of financial reporting trouble.* Watch for financial oddities by benchmarking performance. Investors depend on interim financial reports and need to believe these reports are fair and accurate. Internal auditing can provide valuable oversight to organizations by helping to ensure that communications arc free from inappropriate financial engineering.THE ART OF LISTENINGOne of the problems with financial reporting scandals is that an unscrupulous chief financial officer (CFO) and members of his or her team are unlikely to announce their intentions. In fact, a common thread running through World Com, Enron, and other high-profile financial sandals is that each company had a strong, respected CFO who kept the number of people involved in the scandal to a minimum, exerted incredible control over the working group and commanded the group's loyalty above all other ethical considerations. These CFOs reportedly rewarded those who supported them and intimidated, excluded, and punished those who did not. No auditor can reasonably expect such II tightly knit group to volunteer that their boss is playing with the numbers. The CFO's sycophants will court his or her approval at the expense of all else even the total destruction of the enterprise.The good news is that, in recent cases, there were outsiders who were willing to step forward. At Enron, for example, Sherron Watkins, a corporate vice president, specifically told both Andersen and senior executives of her concerns regarding the conflict of interest between Enron and the special purpose entities (SPEs) the CFO administered as well as the perception of improper accounting at many of the SPEs he created. She also raised the possibility of the complete financial collapse of the company. Had they listened to Watkins, the fraud might have been identified earlier, thereby limiting the damage to the company and its employees.The lesson for auditors is clear: Listen the rogues who complain. Particu1arly towhere constructive criticism is viewed as an act of disloyalty, those who arc not viewed as a part of the team can be a terrific source information. It is often too easy to dismiss the grumbling of those who arc perceived as outsiders or on the fast track to termination. Internal auditors should resist passive behavior and listen, evaluate, and, if warranted, investigate what they hear.IDENTIFY RED FLAGSAlthough the number of possible disclosure omissions and financial presentation errors are many, internal auditors can look for patterns to help focus their activities to where they will be most effective. Uncovering these red flags may take some digging and may require the auditor to ask tough questions.AGGRESSIVE REVENUE RECOGNITION POLICIESA typical red flag is revenue that is matched to future performance or expense. Qwest Communications has stated that, between 1999 and 200l, it incorrectly accounted for more than $1.1 billion in transactions. Revenues were contingent on the purchase of fiber capacity and future services, but they were improperly booked as earned.Unify Corp, a provider of software products, reportedly went even further when it boosted revenue by loaning money to customers. Those customers then bought Unify's products with no reasonable expectation of ever repaying the loans. A $15 million profit was eventually restated into a 57 million loss.Understanding when revenues are recognized is the first step to comprehending the quality of the revenue stream.Revenues of the highest quality are those that are booked after the customer has received, accepted, and paid for the product or service without any further performance requirement or contingency. To identify aggressive accounting and contingencies, auditors can:* Make a direct inquiry to management ns to the existence of loans to customers or asset- swap agreements.* Conduct a detailed analysis or debt obligations, which may uncover undisclosed contingencies.* Evaluate alternative revenue recognition methodologies available to the company and ask the CFO and external auditors why these were rejected in favor of the current practice. Such inquiry is not a sign of ignorance, but instead demonstrates prudence and due diligence.The revenue policy applied must have a sound business rationale that is easily understood by senior management and directors. If it doesn't, this issue should be raised with the audit committee.EVER-PRESENT NONRECURRING CHARGESCompanies are continually making provisions expenses, even if they are not sure of their exact amount. There has been an epidemic of merger. Product return, lawsuit, obsolete inventory, and bad loan expenses that usually give rise to reserves or nonrecurring charges. The Center for Business Innovation reports that the number of Standard and Poor's 500 (S&P 500) firms declaring special losses grew from 68 in 1982 to Z33 in 2000. 1 n other words, a whopping 47 percent of the S&P 500 had nonrecurring charges in 2000.There arc many legitimate nonrecurring expenses - due to acts of nature, mergers, and asset sales. So how does an auditor identify the misuse of this accounting method to hide underlying weaknesses in operating results? One clue is if a company regularly reverses reserves, such as reorganization expenses, back into operating income. This type of activity creates inflation in reported results. To identify such activity, an auditor should ask probing questions such as:* Why the charge nonrecurring and not a part of normal operating income?* How was the amount of the charge determined and how accurate is it?* What is the likelihood that all or a portion of the charge neither will nor be used?* What will be disclosed about the charge in the financial statements?Confusing or hesitant answers be investigated further. Auditors should have responses documented and on hand future meetings. If nonrecurring for charges are reversed at a later date, auditors should and challenge detailed explanations regarding this treatment.REGULAR CHANGES TO RESERVE, DEPRECIATION, AMORTIZATION,OR COMPREHENSIVE INCOME POLICY Frequent changes in accounting guidance can also mask manipulation of the numbers. It is to be expected that the dollar amount of reserves will change with the business c1imare, bur the method used to calculate reserves should not. If an increase in sales results in an increase in accounts then a corresponding and proportional increase in reserves and bad debt expenses would be expected. I f there does not seem to be a direct correlation; internal auditors should challenge the consistency of the reserve calculation.Likewise, capitalized costs should not increase at a rate greater than revenue over time. There may be a lag in related revenue until after major capitalized projects are completed. Auditors should question capitalization techniques that appear aggressive. Any change in methodology should be just; 6ed by long-term trends, not short-term needs.RELATED·PARTY TRANSACTIONSRelated panics are entities whose management or operating policies can be controlled or influenced by another party. Although related-parry transactions are particularly difficult to identify, there are auditors can regularly several activities undertake to help reveal this red flag. As discussed earlier, ongoing communications with rogues can be effective; however, quarterly procedures should also include activities designed to conflicts, such as:* Maintaining open communications with outside auditors.* Conducting periodic balance-sheet analyses.* Scheduling regular management interviews.At Enron, the external auditors were intimately involved in the creation of SPEs and were aware of the potential conflicts of interest associated with them. SPEs can be effective financing and risk management vehicles if used correctly. A parent company's debt level or other can hinder the capability of risk factors a strong: business segment to obtain favorable interest rates to finance its operations. In such a situation, the parent can create an SPE and transfer the asset to it with the goal of receiving more favorable lending rates. As long as there is another independent third-party investor that has contributed at least 3 percent of the assets, the PE doesnot be consolidated into the parent have to for financial-reporting purposes. Furthermore, if the assets in the SPE are of high quality, banks will perceive the entity as a desirable borrower, resulting in lower lending rates. The SPE will then use this money to pay the parent for the asset received. The bottom line is that the company obtains the money it requires, bur pays less to obtain it than it would without the SPE.Enron ran out of quality assets, so the company transferred inferior assets and pledged Enron stock as a guarantee of payment to the banks. According to the Report of Investigation by the Special Investigative Committee of the Board of Directors of Enron Corp. (Powers Report), Enron reported earnings from the third quarter of 2000 through the third quarter of 2001 of almost $1 billion more than should have been reported us a result of this shell game. External auditors routinely request that management attest to and disclose their knowledge of related-party transactions. Simply asking the external auditors about their knowledge of related-party transactions would identified this potential threat to the organization. Such inquiries can be easy for the internal audit department if it maintains it strong relationship with the external auditors. Insightful analyses of balance sheet movements, particularly at year-end when the pressure to report strong results is at its peak, might also identify related-party transactions. The asset movements at Enron were large, and inquiry into their removal from the balance sheet would have uncovered the SPEs and the conflicts of interest with the CFO. Internal auditors need to: ask management directly about any related-party activities and, where appropriate, raise their existence to the audit committee.COMPLEX PRODUCTS Some companies provide complex financial products, such as structured financia1 instruments containing derivatives, or use hedging strategies that few understand. When a star performer produces complex products, few want to challenge this success or reveal that they don't understand how the system works. This is evidenced by the Joe Jett story, the infamous trader who executed seemingly profitable trades that, in reality, had no economic benefit. These trades caused the investment bank Kidder Peabody to port more than S300 million in bogus profits. No one was sure how Jett made his margins, but no one - from supervisors, toauditors, to finance staff wanted to admit their ignorance. Several internal controls should have identified this control break; however, simply requiring that the process be documented in derail may have dissolved the mirage of profitability.An auditor can insist that managers or their employees map out complex strategies. Jett's supervisor would not have able to do this because he did not been know how Jett made money on his trades. Likewise, Jett would not be able to document the process, as the fraud has been discovered.Green, Scott. Fighting Financial Reporting Fraud [J]. Internal Auditor, 2003, 60(6).译文：关于打击财务报告舞弊的研究美国于2002年通过了《萨班斯-奥克斯利法案》，旨在重建投资者的信心和保护资本市场的有效运行。
财务欺骗的英文作文
财务欺骗的英文作文下载温馨提示:该文档是我店铺精心编制而成，希望大家下载以后，能够帮助大家解决实际的问题。
文档下载后可定制随意修改，请根据实际需要进行相应的调整和使用，谢谢!并且，本店铺为大家提供各种各样类型的实用资料，如教育随笔、日记赏析、句子摘抄、古诗大全、经典美文、话题作文、工作总结、词语解析、文案摘录、其他资料等等，如想了解不同资料格式和写法，敬请关注!Download tips: This document is carefully compiled by theeditor. I hope that after you download them,they can help yousolve practical problems. The document can be customized andmodified after downloading,please adjust and use it according toactual needs, thank you!In addition, our shop provides you with various types ofpractical materials,such as educational essays, diaryappreciation,sentence excerpts,ancient poems,classic articles,topic composition,work summary,word parsing,copyexcerpts,other materials and so on,want to know different data formats andwriting methods,please pay attention!Financial fraud is a serious issue that affects individuals, businesses, and even entire economies. It is a deceptive practice that involves manipulating financial statements, misrepresenting information, or engaging in illegal activities to deceive investors, creditors, or the general public. The consequences of financial fraud can be devastating, leading to loss of trust, financial instability, and legal repercussions.In today's fast-paced world, where competition isfierce and the pressure to achieve financial success is high, some individuals and organizations resort to fraudulent practices to gain an unfair advantage. They may engage in creative accounting techniques, such as inflating revenues or understating expenses, to make their financial performance appear better than it actually is. This can mislead investors and stakeholders, leading to wrong investment decisions and potential financial losses.Financial fraud can also take the form of insider trading, where individuals with access to confidential information use it to their advantage by buying or selling securities. This unfair practice undermines the integrityof financial markets and erodes investor confidence. It isa breach of trust that can result in significant financial harm to those who are not privy to the inside information.Another common form of financial fraud is Ponzi schemes, where individuals or companies promise high returns on investments but use new investors' money to pay off earlier investors. This unsustainable model eventually collapses, leaving many people with substantial financial losses.Ponzi schemes rely on the constant influx of new investorsto sustain the illusion of profitability, making them inherently fraudulent and unethical.Fraudulent activities can also occur in the corporate world, where executives manipulate financial statements to hide losses, inflate profits, or deceive investors. Thiscan involve overstating assets, understating liabilities,or engaging in off-balance sheet transactions. Suchpractices not only mislead investors but also undermine the credibility of financial reporting, making it difficult for stakeholders to make informed decisions.The impact of financial fraud extends beyond financial losses. It erodes trust in institutions, undermines the integrity of financial markets, and can lead to economic instability. When investors lose confidence in the accuracy and reliability of financial information, they may withdraw their investments, leading to a decline in capital markets. This can have far-reaching consequences for businesses, employees, and the overall economy.In conclusion, financial fraud is a serious issue that has far-reaching consequences. It involves deceptive practices aimed at manipulating financial information to deceive investors, creditors, or the general public. From creative accounting techniques to insider trading and Ponzi schemes, financial fraud takes various forms and can have devastating effects on individuals, businesses, and economies. It is crucial to have robust regulations, strictenforcement, and increased transparency to prevent and detect financial fraud.。
财务造假英语作文
财务造假英语作文In the realm of corporate governance, integrity and transparency are paramount. However, the specter of financial fraud continues to loom, casting a shadow on the trust that investors place in companies. This essay delves into the concept of financial fraud, its implications, and the measures that can be taken to mitigate its occurrence.Financial fraud, also known as financial misrepresentation,is the deliberate manipulation of financial accounts or statements to deceive stakeholders. This can involve exaggerating revenues, understating expenses, or misrepresenting assets and liabilities. The motive behind such actions is often to present a more favorable financial position than what actually exists, thereby attracting investment or maintaining share prices.The consequences of financial fraud are far-reaching and severe. For investors, it can lead to significant financial losses as they may make investment decisions based on misleading information. Companies found guilty of such practices can face legal repercussions, including hefty fines and sanctions. Moreover, the reputational damage can be irreparable, leading to a loss of customer trust and a tarnished brand image.One of the most notorious cases of financial fraud was the collapse of Enron Corporation in 2001. The company'sexecutives were found to have inflated financial statements, which led to the company's bankruptcy and a widespread loss of confidence in the financial markets.To combat financial fraud, regulatory bodies have implemented stringent accounting standards and auditing requirements. The Sarbanes-Oxley Act in the United States, for instance, was enacted to protect investors by improving the accuracy and reliability of corporate disclosures.Furthermore, companies can adopt internal controls and compliance programs to detect and prevent fraudulent activities. Training employees on ethical business practices and establishing a culture of integrity can also serve as a deterrent.In conclusion, financial fraud is a serious offense with grave consequences for all parties involved. It is imperative for companies to maintain high standards of financial reporting and for regulatory bodies to enforce strict oversight. By doing so, we can foster a business environment that is built on trust and transparency.。
会计舞弊财务舞弊外文文献翻译
会计舞弊财务舞弊外文文献翻译___ confidence and have taken n to address this issue. The n of ns, standards, and guidelines aims to ___ global financial systems.During ___, ___ in more than one country, and most of these ___ the Sarbanes-Oxley Act of 2002, reforms were also initiated worldwide. The primary purpose of this paper is twofold: (1) ___; and (2) ___, the public accounting n, and global capital markets.In n, ___ activities, ___ financial fraud are significant and can have long-___, it is essential for companies to ___ fraud, ___.Global Regulatory n for Corporate and Accounting Reforms In response ___, U.S. lawmakers passed the Sarbanes-Oxley Act of 2002. This Act aims to protect public interest and restore investor confidence in the capital market. President Bush signed the Act into law on July 30, 2002. The Act ___ It requires executives, boards of directors, and ___, responsibility, ___. The Act, along with subsequent SEC initiatives, ___ since 1933. Other U.S. regulatory bodies, such as NYSE, NASDAQ, and the State Societies of CPAs, have also ___ and their external auditors.Note: ___ if it should be ___.The ___ (IFAC) is a global ___ is to serve the public interest, ___ worldwide, and contribute to the development of strong nal ___ high-___ such as the Global Financial Stability Forum (FSF), the nal n of Securities ns (IOSCO), the World Bank, and the European ___ 2002, the ___ in Financial Reporting to address theglobal ___. The task force's report, titled "Rebuilding Public Confidence in Financial Reporting: An nal Perspective," ___ issuers. One of the key ___.All public ___ report to the board and address concerns related to financial n, internal controls, or the audit. It is ___ financial reporting, financial controls, the internal audit n, as well as mending, working with, and monitoring the external auditors. The members of ___, and a majority should have ___.8. A principles-based approach ___ credentials, n, ___.Note: ___ (OECD) has been deleted as it is not clear how it relates to the rest of the text.___ (OECD) is a quasi-think tank consisting of 30 member countries, including the United States and the United Kingdom. It also has working nships with over 70 other countries. In 2004, the OECD unveiled the updated n of its "Principles of Corporate Governance," ___ (including the U.S. and UK) in 1999. Although these principles are nonbinding, they serve as a reference for nal n and n, as well as provide guidance for stock exchanges, investors, ns, ___ policymakers, investors, ns, ___ OECD and non-OECD countries.4. Recognizing the ___.6. ___ party ___.In n, member states of the European n have proposed a code of conduct for independent auditors, ___ every five years. Moreover, the nal governments of individual European countries ___. For example, in July 2002, the British ___ to the Company Law. These ___ misleading auditors, redefining the roles of directors, ___.全球企业和会计改革监管行动正在进行中，旨在恢复投资者对财务报告、会计行业和全球金融市场的信心。
会计舞弊财务舞弊外文文献翻译
会计舞弊财务舞弊外文文献翻译(含：英文原文及中文译文)文献出处：Badawi I M. Global corporate accounting frauds and action for reforms[J]. Review of Business, 2005, :26(:2).英文原文Global Corporate Accounting Frauds and Action for ReformsIbrahim BadawiSt. John’s UniversityAbstractThe recent wave of corporate fraudulent financial reporting has prompted global actions for reforms in corporate governance and financial reporting, by governments and accounting and auditing standard-setting bodies in the U.S. and internationally, including the European Commission; the International Federation of Accountants; the Organization for Economic Cooperation and Development; and others, in order to restore investor confidence in financial reporting, the accounting profession and global financial markets.IntroductionDuring the recent series of corporate fraudulent financial reporting incidents in the U.S., similar corporate scandals were disclosed in several other countries. Almost all cases of foreign corporate accounting frauds were committed by entities that conduct their businesses in more than onecountry, and most of these entities are also listed on U.S. stock exchanges. Following the legislative and regulatory reforms of corporate America, resulting from the SarbanesOxley Act of 2002, reforms were also initiated worldwide. The primary purpose of this paper is twofold: (1) to identify the prominent American and foreign companies involved in fraudulent financial reporting and the nature of accounting irregularities they committed; and (2) to highlight the global reaction for corporate reforms which are aimed at restoring investor confidence in financial reporting, the public accounting profession and global capital markets.Cases of Global Corporate Accounting FraudsThe list of corporate financial accounting scandals in the U.S. is extensive, and each one was the result of one or more creative accounting irregularities. Exhibit 1 identifies a sample of U.S. companies that committed such fraud and the nature of their fraudulent financial reporting activities.Who Commits Financial Fraud and HowThere are three groups of business people who commit financial statement frauds. They range from senior management (CEO and CFO); mid- and lower-level management; and organizational criminals [6,16]. CEOs and CFOs commit accounting frauds to conceal true business performance, to preserve personal status and control and to maintain personal income and wealth. Mid- and lower-level employees falsifyfinancial statements related to their area of responsibility (subsidiary, division or other unit) to conceal poor performance and/or to earn performance-based bonuses. Organizational criminals falsify financial statements to obtain loans or to inflate a stock they plan to sell in a “pump-and-dump” scheme. Methods o f financial statement schemes range from fictitious or fabricated revenues; altering the times at which revenues are recognized; improper asset valuations and reporting; concealing liabilities and expenses; and improper financial statement disclosures.Global Regulatory Action for Corporate and Accounting ReformsIn response to corporate and accounting scandals, the effects of which are still being felt throughout the U.S. economy, and in order to protect public interest and to restore investor confidence in the capital market, U.S. lawmakers, in a compromise by the House and Senate, passed the Sarbanes-Oxley Act of 2002. President Bush signed this Act into law (Public Law 107-204) on July 30, 2002. The Act resulted in major changes to compliance practices of large U.S. and non-U.S. companies whose securities are listed or traded on U.S. stock exchanges, requiring executives, boards of directors and external auditors to undertake measures to implement greater accountability, responsibility and transparency of financial reporting. The statutes of the Act, and the new SEC initiatives that followed [1,4,8,12,15], are considered the mostsignificant legislation and regulations affecting the corporate community and the accounting profession since 1933. Other U.S. regulatory bodies such as NYSE, NASDAQ and the State Societies of CPAs have also passed new regulations which place additional burdens on publicly traded companies and their external auditors.The Sarbanes-Oxley Act (SOA) is expressly applicable to any non-U.S. company registered on U.S. exchanges under either the Securities Act of 1933 or the Security Exchange Act of 1934, regardless of country of incorporation or corporate domicile. Furthermore, external auditors of such registrants, regardless of their nationality or place of business, are subject to the oversight of the Public Company Accounting Oversight Board (PCAOB) and to the statutory requirements of the SOA.The United States’ SOA has reverberated around the globe through the corporate and accounting reforms addressed by the International Federation of Accountants (IFAC); the Organization for Economic Cooperation and Development (OECD); the European Commission (UC); and authoritative bodies within individual European countries.International Federation of Accountants (IFAC)The IFAC is a private governance organization whose members are the national professional associations of accountants. It formally describes itself as the global representative of the accounting profession, with the objective of serving the public interest, strengthening theworldwide accountancy profession and contributing to the development of strong international economies by establishing and promoting adherence to high quality standards [9]. The Federation represents accountancy groups worldwide and has served as a reminder that restoring public confidence in financial reporting and the accounting profession should be considered a global mission. It is also considered a key player in the global auditing arena which, among other things, constructs international standards on auditing and has laid down an international ethical code for professional accountants [14]. The IFAC has recently secured a degree of support for its endeavors from some of the world’s most influential interna tional organizations in economic and financial spheres, including global Financial Stability Forum (FSF), the International Organization of Securities Commissions (IOSCO), the World Bank and, most significantly, the EC. In October 2002, IFAC commissioned a Task Force on Rebuilding Public Confidence in Financial Reporting to use a global perspective to consider how to restore the credibility of financial reporting and corporate disclosure. Its report, “Rebuilding Public Confidence in Financial Reporting: An International Perspective,” includes recommendations for strengthening corporate governance, and raising the regulating standards of issuers. Among its conclusions and recommendations related to audit committees are:1. All public interest entities should have an independent auditcommittee or similar body.2. The audit committee should regularly report to the board and should address concerns about financial information, internal controls or the audit.3. The audit committee must meet regularly and have sufficient time to perform its role effectively.4. Audit committees should have core responsibilities, including monitoring and reviewing the integrity of financial reporting, financial controls, the internal audit function, as well as for recommending, working with and monitoring the external auditors.5. Audit committee members should be financially literate and a majority should have “substantial financial experience.” They should receive further training as necessary on their responsibilities and on the company.6. Audit committees should have regular private “executive sessions” with the outside auditors and the head of the internal audit department. These executive sessions should not include members of management. There should be similar meetings with the chief financial officer and other key financial executives, but without other members of management.7. Audit committee members should be independent of management.8. There should be a principles-based approach to definingindependence on an international level. Companies should disclose committee members’ credentials, remuneration and shareholdings.9. Reinforcing the role of the audit committee should improve the relationship between the auditor and the company. The audit committee should recommend the hiring and firing of auditors and approve their fees, as well as review the audit plan. 10. The IFAC Code of Ethics should be the foundation for individual national independence rules. It should be relied on in making decisions on whether auditors should provide non-audit services. Non-audit services performed by the auditor should be approved by the audit committee.11. All fees, for audit and non-audit services, should be disclosed to shareholders.12. Key audit team members, including the engagement and independent review partners, should serve no longer than seven years on the audit.13. Two years should pass before a key audit team member can takea position at the company as a director or any other important management positionOrganization for Economic Cooperation and Development (OECD) The Organization for Economic Cooperation and Development (OECD) is a quasi-think tank made up of 30 member countries, includingthe United States and United Kingdom, and it has working relationships with more than 70 other countries. In 2004, the OECD unveiled the updated revision of its “Principles of Corporate Governance” that had originally been adopted by its member governments (including the U.S. and UK) in 1999. Although they are nonbinding, the principles provide a reference for national legislation and regulation, as well as guidance for stock exchanges, investors, corporations and other parties [11,13]. The principles have long become an international benchmark for policy makers, investors, corporations and other stakeholders worldwide. They have advanced the corporate governance agenda and provided specific guidance for legislative and regulatory initiatives in both the OECD and non-OECD countries.The 2004 updated version of “Principles of Corporate Governance” includes recommendations on accounting and auditing standards, the independence of board members and the need for boards to act in the interest of the company and the shareholders. The updated version also sets more demanding standards in a number of areas that impact corporate executive compensation and finance, such as:1. Granting investors the right to nominate company directors, as well as a more forceful role in electing them.2. Providing shareholders with a voice in the compensation policy for board members and executives, and giving these stockholders theability to submit questions to auditors.3. Mandating that institutional investors disclose their overall voting policies and how they manage material conflicts of interest that may affect the way the investors exercise key ownership functions, such as voting4. Identifying the need for effective protection of creditor rights and an efficient system for dealing with corporate insolvency.5. Directing rating agencies, brokers and other providers of information that could influence investor decisions to disclose conflicts of interest, and how those conflicts are being managed.6. Mandating board members to be more rigorous in disclosing related party transactions, and protecting soca lled “whistle blowers” by providing the employees with confidential access to a board-level contact.U.S.-EU Cooperation for Corporate Reforms Initially, the European Union resented applicability of U.S. Sarbanes-Oxley Act reforms to European companies and accounting firms operating in the U.S. However, after a series of negotiations, the U.S. and EU authorities have agreed to cooperate and decided to develop a compatible set of regulations. The regulatory bodies on both continents have undertaken a two-way cooperative approach based on effective equivalence of regulation and oversight authorities. Furthermore, member states of the European Union have proposed a code of conduct on the independent auditors whichincludes a five-year auditor rotation requirement. Furthermore, the national governments of the individual European countries have proposed reforms of their corporate laws. For example, in July 2002, the British government released a white paper proposing changes to the Company Law, which included harsher penalties for misleading auditors; redefining the roles of the directors; and creating standards for boards in accounting supervision and other disclosure issues. The British government is also reviewing the roles of non-executive directors and is considering the regulation of audit committees.中文译文全球企业会计欺诈与改革行动易卜拉欣·巴达维圣约翰大学摘要最近一波企业欺诈性财务报告激发了全球公司治理和财务报告改革，政府和会计和审计机构在美国和国际上的标准制定机构，包括欧盟委员会，国际会计师联合会;经济合作与发展组织;以恢复投资者对财务报告，会计行业和全球金融市场的信心。
会计舞弊财务舞弊外文翻译文献
会计舞弊财务舞弊外文翻译文献(文档含中英文对照即英文原文和中文翻译)原文：Global Corporate Accounting Frauds and Action for Reforms1、IntroductionDuring the recent series of corporate fraudulent financial reporting incidents in the U.S., similar corporate scandals were disclosed in several other countries. Almost all cases of foreign corporate accounting frauds were committed by entities that conduct their businesses in more than one country, and most of these entities are also listed on U.S. stock exchanges. Following the legislative and regulatory reforms of corporate America, resulting from the SarbanesOxley Act of 2002, reforms were also initiated worldwide. The primary purpose of this paper is twofold: (1) to identify the prominent American and foreign companies involved in fraudulent financial reporting and the nature of accounting irregularities they committed; and (2) to highlight the global reaction for corporate reforms which are aimed at restoring investor confidence in financial reporting, the public accounting profession and global capital markets.2、Cases of Global Corporate Accounting FraudsThe list of corporate financial accounting scandals in the U.S. is extensive, and each one was the result of one or more creative accounting irregularities. Exhibit 1 identifies a sample of U.S. companies that committed such fraud and the nature of their fraudulent financial reporting activities.EXHIBIT 1. A SAMPLE OF CASES OF CORPORATE ACCOUNTING3、Global Regulatory Action for Corporate and Accounting ReformsI. U.S. Sarbanes-Oxley Act of 2002 (SOA 2002)In response to corporate and accounting scandals, the effects of which are still being felt throughout the U.S. economy, and in order to protect public interest and to restore investor confidence in the capital market, U.S. lawmakers, in a compromise by the House and Senate, passed the Sarbanes-Oxley Act of 2002. President Bush signed this Act into law (Public Law 107-204) on July 30, 2002. The Act resulted in major changes to compliance practices of large U.S. and non-U.S. companies whose securities are listed or traded on U.S. stock exchanges, requiring executives, boards of directors and external auditors to undertake measures to implement greater accountability, responsibility and transparency of financial reporting. The statutes of the act, and the new SEC initiatives that followed, are considered the most significant legislation and regulations affecting the corporate community and the accounting profession since 1933. Other U.S. regulatory bodies such as the New York StockExchange (NYSE), the National Association of Securities Dealers Automated Quotation (NASDAQ) and the State Societies of CPAs have also passed new regulations which place additional burdens on publicly traded companies and their external auditors.The Sarbanes-Oxley Act (SOA) is expressly applicable to any non-U.S. company registered on U.S. exchanges under either the Securities Act of 1933 or the Security Exchange Act of 1934, regardless of country of incorporation or corporate domicile. Furthermore, external auditors of such registrants, regardless of their nationality or place of business, are subject to the oversight of the Public Company Accounting Oversight Board (PCAOB) and to the statutory requirements of the SOA .The United States' SOA has reverberated around the globe through the corporate and accounting reforms addressed by the International Federation of Accountants (IFAC); the Organization for Economic Cooperation and Development (OECD); the European Commission (UC); and authoritative bodies within individual European countries.II. International Federation of Accountants (IFAC)The International Federation of Accountants (IFAC) is a private governance organization whose members are the national professional associations of accountants. It formally describes itself as the global representative of the accounting profession, with the objective of serving the public interest, strengthening the worldwide accountancy profession and contributing to the development of strong international economies by establishing and promoting adherence to high quality standards. The Federation represents accountancy groups worldwide and has served as a reminder that restoring public confidence in financial reporting and the accounting profession should be considered a global mission. It is also considered a key player in the global auditing arena which, among other things, constructs international standards on auditing and has laid down an international ethical code for professional accountants. The IFAC has recently secured a degree of support for its endeavors from some of the world's most influential international organizations in economic and financial spheres, including global Financial Stability Forum (FSF), the International Organization ofSecurities Commissions (IOSCO), the World Bank and, most significantly, the European Communities(EC).In October 2002, IFAC commissioned a Task Force on Rebuilding Public Confidence in Financial Reporting to use a global perspective to consider how to restore the credibility of financial reporting and corporate disclosure. Its report, "Rebuilding Public Confidence in Financial Reporting: An International Perspective," includes recommendations for strengthening corporate governance, and raising the regulating standards of issuers. Among its conclusions and recommendations related to audit committees are :1. All public interest entities should have an independent audit committee or similar body .2. The audit committee should regularly report to the board and should address concerns about financial information, internal controls or the audit .3. The audit committee must meet regularly and have sufficient time to perform its role effectively .4. Audit committees should have core responsibilities, including monitoring and reviewing the integrity of financial reporting, financial controls, the internal audit function, as well as for recommending, working with and monitoring the external auditors.5. Audit committee members should be financially literate and a majority should have "substantial financial experience." They should receive further training as necessary on their responsibilities and on the company.6. Audit committees should have regular private "executive sessions" with the outside auditors and the head of the internal audit department. These executive sessions should not include members of management. There should be similar meetings with the chief financial officer (CFO) and other key financial executives, but without other members of management.7. Audit committee members should be independent of management .8. There should be a principles-based approach to defining independence on an international level. Companies should disclose committee members' credentials,remuneration and shareholdings.9. Reinforcing the role of the audit committee should improve the relationship between the auditor and the company. The audit committee should recommend the hiring and firing of auditors and approve their fees, as well as review the audit plan.10. The IFAC Code of Ethics should be the foundation for individual national independence rules. It should be relied on in making decisions on whether auditors should provide non-audit services. Non-audit services performed by the auditor should be approved by the audit committee.11. All fees, for audit and non-audit services, should be disclosed to shareholders.12. Key audit team members, including the engagement and independent review partners, should serve no longer than seven years on the audit .13. Two years should pass before a key audit team member can take a position at the company as a director or any other important management position .III. Organization for Economic Cooperation and Development (OECD)The Organization for Economic Cooperation and Development (OECD) is a quasi-think tank made up of 30 member countries, including the United States (U.S.) and the United Kingdom (UK), and it has working relationships with more than 70 other countries. In 2004, the OECD unveiled the updated revision of its "Principles of Corporate Governance" that had originally been adopted by its member governments (including the U.S. and UK) in 1999. Although they are non-binding, the principles provide a reference for national legislation and regulation, as well as guidance for stock exchanges, investors, corporations and other parties .The principles have long become an international benchmark for policy makers, investors, corporations and other stakeholders worldwide. They have advanced the corporate governance agenda and provided specific guidance for legislative and regulatory initiatives in both the OECD and non-OECD countries.The 2004 updated version of "Principles of Corporate Governance" includes recommendations on accounting and auditing standards, the independence of board members and the need for boards to act in the interest of the company and theshareholders. The updated version also sets more demanding standards in a number of areas that impact corporate executive compensation and finance, such as :1. Granting investors the right to nominate company directors, as well as a more forceful role in electing them.2. Providing shareholders with a voice in the compensation policy for board members and executives, and giving these stockholders the ability to submit questions to auditors.3. Mandating that institutional investors disclose their overall voting policies and how they manage material conflicts of interest that may affect the way the investors exercise key ownership functions, such as voting .4. Identifying the need for effective protection of creditor rights and an efficient system for dealing with corporate insolvency .5. Directing rating agencies, brokers and other providers of information that could influence investor decisions to disclose conflicts of interest, and how those conflicts are being managed .6. Mandating board members to be more rigorous in disclosing related party transactions, and protecting so-called "whistle blowers" by providing the employees with confidential access to a board-level contact .4、ConclusionThe Sarbanes-Oxley Act of 2002 was the U.S. government's response to the wave of fraudulent corporate financial reporting experienced during the 1990s and early 2000s an represented a significant step in regaining investors' confidence in the global financial reporting process. The SOA created new and stricter statutes to avoid a repeat of previous corporate financial disasters. The Act not only applies to U.S. entities but also covers primarily large non-U.S. companies whose securities are listed or traded on U.S. stock exchanges, as well as their non-U.S. external auditors, regardless of their nationality or place of business. Foreign entities have to comply with the SOA by June 2005 .Across the Atlantic, the IFAC, OECD and EU have recognize the recent eruption of corporate scandals in Europe and affirmed the inevitable need forcorporate governance reforms and regulation of the public accounting profession worldwide. The International Federation of Accountants (IFAC) has passed the Code of Professional Ethics for international accounting firms. The Organization for Economic Cooperation and Development (OECD) has passed guidelines for improving corporate governance. The European Union (EU) has proposed a code of conduct for independent auditors, which include a five-year auditor rotation requirement. European countries are also individually involved in improving their corporate laws through governance codes of practice.Sourse: Badawi, Ibrahim M. Review of Business; Spring2005, Vol. 26 Issue 2, p8-14, 7p译文：全球公司会计舞弊和改革行为一、前言随着最近一系列公司虚假财务报告事件在美国发生,类似丑闻也在其他国家被曝光。
在财务报告的责任：检测欺诈性公司外文文献翻译
文献信息：文献标题：Accountability in financial reporting:detecting fraudulent firms（在财务报告的责任：检测欺诈性公司）国外作者：Hawariah Dalnial，Amrizah Kamaluddin，Zuraidah Mohd Sanusi，Khairun Syafiza Khairuddin文献出处：Procedia - Social and Behavioral Sciences, 2014, 145:61-69字数统计：英文2507单词，14114字符；中文4242汉字外文文献：Accountability in financial reporting:detecting fraudulentfirmsAbstract This paper aims to investigate whether there are any significant differences between the means of financial ratios of fraudulent and non-fraudulent firms and to identify which financial ratio is significant to detect fraudulent reporting. The sample comprises of 65 fraudulent firms and 65 samples of non-fraudulent firms of Malaysian Public Listed Firms, available between the year of 2000 and 2011. The study found that there are significant mean differences between the fraud and non-fraud firms in ratios such as total debt to total equity, account receivables to sales. In addition, Z score which measures the bankruptcy probability is significant to detect fraudulent financial reporting.Keywords：Financial Ratio; Financial Statement Analysis; Fraudulent Financial Reporting; Public Listed Companies; Malaysia1.IntroductionFraud firms are identified through offences made against the listings requirement of Bursa Malaysia. Fraud is a broad concept with two basic types of fraud seen inpractice. The first is the misappropriation of assets and the second is fraudulent financial reporting (FFR). FFR usually occurs in the form of falsification of financial statements in order to obtain some forms of benefit. Others believe that fraud involves an intentional distortion of financial statements (Ata and Syerek, 2009).Fraud detection is among the highest priorities for capital market participants and other stakeholders in the financial reporting process (e.g., Elliott, 2002; PCAOB, 2007). Market participants such as investors experienced significant financial losses when fraud occurs in publicly-traded companies such as Enron and WorldCom. Some experts suggest that the rate of fraudulent financial reporting will likely increase during the current economic recession and further reiterate the importance of continuous research into ways to flush out fraud (Mintz, 2009).Fraud detection is one of the specific tasks assigned to auditors as stated in ISA 240. Auditors commonly use tools known as analytical procedures to assist them in detecting fraud (Albrecht, Albrecht and Zimbelman, 2009). Analytical procedures refer to the analysis of significant ratios and trends as well as the resulting investigation of fluctuations and relationships that are inconsistent with other relevant information or which deviate from predicted values. Many researchers and fraud investigators recommend financial ratios as an effective tool to detect fraud (Subramanyam and Wild, 2009; Bai, Yen and Yang, 2008; Spathis, 2002; Persons, 1995).The objectives of this paper are firstly, to investigate the significant differences between the mean of financial ratios of fraud and non fraud companies. Secondly, this paper investigates which financial ratios are significant to fraudulent reporting.2.Literature ReviewFinancial distress is an important criteria to monitor when assessing the likelihood of fraudulent financial reporting. When a firm is doing poorly, there is a greater motivation to engage in FFR. Hamer (1983) suggests that most models predict bankruptcy with similar accuracy which implies that poor financial conditions may motivate unethical insiders to improve the appearance of the firms financial positionor perhaps to reduce the threats of loss of employment or to garner as many resources as possible.Overstating assets and revenue is a result of recording revenue prematurely or by using ficticious records. Another study classified the act of manipulating profits into broad categories which include changing accounting methods, fiddling with management estimated cost (Worthy, 1984). Reports by Spathis (2002) suggest that summing up net profit and working capital is a significant predictor of fraud. The reason is, when firms experience a lower net profit versus sales ratio, this indicates that the firm is facing a low return on assets and may attempt to manipulate the financial statement by either increasing revenue or reducing expenditure. Working capital to total assets which reflect in lower liquidity is an incentive for managers to commit fraud and eventually to manipulate the accounting records, thus firms affected by fraud tend to have low liquidity. In addition, Leksrisakul and Evans (2005), stated that firm with consistent operating losses will have shrinking current assets in relation to total assets as evidenced by studies on Thai listed companies.Regardless of the public and policy makers’concern over the management of fraudulent practices, to the best knowledge, there is little empirical research that assesses the probability of fraudulent financial reporting using published data. Few models introduced or employed internationally or locally, provide a list of indicators only meant for insiders especially the auditors and include subjective judgment as developed by Loebbecke, Einning and Willingham (1989). The authors developed a management-fraud assessment model that lists indicators related to fraud. The model involves a great deal of subjective judgment and non-public information, which is available only to the auditors, or insiders of a firm. Investors and policy makers cannot use this model to identify firms engaging in fraudulent financial reporting.Premise on the review of significant articles from previous studies, it is evident that there is still a large gap and an open question on the subject matter. A question of public interest remains as to whether the published data are readily and publicly available and can be used to identify firms engaging in fraudulent financial reporting. Following the research done by Persons (1995) and Spathis (2002), this paper followsthe same approach to detect fraudulent financial statement by using published financial data to detect manipulation of financial statement.3.Hypotheses DevelopmentFor this study, two hypotheses were developed for further testing as well as to support the research objectives. There are a few studies that identify the factors associated with fraudulent financial reporting. Persons (1995) found that financial leverage, calculated as total liabilities to total assets, is the most significant factor associated with fraudulent financial reporting. This suggests that the financial statements of fraudulent firms differ from non fraudulent firms in certain aspects such as higher financial leverage which is denoted by a high means ratio of 0.6096 for fraudulent firms and 0.4868 for non-fraudulent firms , lower capital turnover denoted by the value of 0.2486 for fraudulent firms and 0.3050 for non-fraudulent firms , and assets in fraudulent firms which consist of a higher proportion of current assets particularly inventory and account receivables. Based on the relevant studies, this study investigates the significant differences between financial ratios of fraudulent and non fraudulent public listed firms in Malaysia. With this notion, the hypothesis is as follows:H1: There is a significant difference between the means of the financial ratios between fraudulent and non- fraudulent firms.Financial statement analysis is the application of tools and techniques to financial statements and related data (Subramanyam and Wild, 2009). This is to drive estimates and inferences useful in making decisions. From the financial statement analysis, it reduces the reliance on intuition, presumption and perception that may lead to uncertainty. However, this does not reduce the need of expert judgment; rather it provides a systematic basis for analysis. Ratio analysis is among the most popular and widely used tool for financial statement analysis (Subramanyam and Wild, 2009；Spathis，2002；Persons，1995). Evidence suggests that accounting data are useful when differentiating between fraudulent firms and non fraudulent firms. Accounting data is useful to assist investors in making investment decisions as well as to enablethe auditor to assess the likelihood of fraudulent financial reporting as part of auditor’s duty is to plan the investigation and search for errors or any irregularities that would have material effects on the financial statements (Persons, 1995). This suggests that there is an association between financial statement analyses and fraudulent financial reporting as reported by Bai et al., (2008). Analysing financial information can be used to identify fraudulent and non fraudulent firms via the financial data. Based on those foundations, a second hypothesis was developed:H2: Financial Ratios are significant predictors to fraudulent financial reporting.3.1.Research designThis study examined 130 samples consisting of 65 samples for fraudulent firms and 65 samples of non fraudulent firms from the Malaysian Public Listed Firms available between the year of 2000 and 2011 with financial data collected from Data Stream. Firms involving in fraudulent reporting are obtained from the Bursa Malaysia media centre. This study utilizes the secondary data obtained from published audited financial statements as the main source of information from the corporate annual reports of the public listed firms in Malaysia and also from Data Stream.3.2.Independent variables, dependent variables and control variable3.2.1.Independent variablesFor the purpose of this study, seven aspects of a firm’s financial ratios were identified. These variables are financial leverage, profitability, asset composition, liquidity, capital turnover, size and also overall financial condition. The independent variables are comprised of:(a)Financial leverageFinancial Leverage is measured by Total Debt to Total Equity (TD/TE) and also Total Debt to Total Asset (TD/TA). Higher leverage is typically associated with a higher potential for violations of loan agreements and a reduced ability to obtain additional capital through borrowing. As concluded by Christie (1990), leverage is potentially correlated with income enhancing accounting policies. If these policies are not sufficient to avoid violations of debt covenants, managers may be motivated to understate liabilities or assets. Therefore these variables should be in positive figures.This means, the higher the leverage, the higher the potential for violations and the higher the likelihood of fraud.(b)ProfitabilityProfitability is measured by Net Profit to Revenue (NP/REV). Lower profits may provide management with an incentive to overstate revenues or understate expenses. Kreudfelt and Wallace (1986) finds firms with profitability problems have significantly more errors in their financial statements than other firms. Spathis (2002) also reported that a very low value of the ratio indicates that these firms are facing difficulties of low returns in relation to assets and try to manipulate the financial statement either by increasing revenue or by reducing expenditure. Therefore the variables are expected to be negative values. This means, the lower the profit, the higher the tendency to overstate revenue or expenses and thus a higher likelihood to detect fraud.(c)Asset compositionAsset Composition is measured by Current Assets to Total Assets (CA/TA), Receivables to Revenue (REC/REV) and Inventory to Total Assets (INV/TA). Account receivables as claimed by Feroz, Park and Wetzel (1991) are more likely to be manipulated due to the subjective nature of judgment involved.The reported value ultimately relies on estimating uncollected accounts and obsolete inventory. Due to the subjective nature of the accounts, managers may use these accounts as tools for financial statement manipulation (Summers and Sweeney 1998). Investigations of fraudulent firms involved in FFR indicate that the current assets of these firms consist mostly of receivables and inventory. These findings are consistent with Feroz et al., (1991) who discovered that overstatements of receivables and inventory represent about three – fourths of all SEC enforcement cases. Pierre and Anderson (1984) also found a high frequency of lawsuits against auditors involving inventory and receivables. Loebbecke et al., (1987), Sorenson, Grove and Selto (1983) and Beasly, Carcello and Hermanson (1999) confirm that account receivables and inventory are important variables when assessing the risk of fraud and that both are common items misstated in accounts. These variables are expected to be positivevalues, which show that the higher the amount of both items, the higher the risk of overstatements in the account, which leads to an increase in the likelihood of fraud.(d)LiquidityLiquidity is measured by Working Capital to Total Assets (WC/TA). Lower liquidity may be an incentive for managers to engage in FFR. This argument is supported by Kreutzfelt and Wallace (1986) who found that firms with liquidity problems have significantly more errors in their financial statements than other firms. In addition, Spathis (2002) reports that firms productively utilizing its assets and resources are able to gene rate profits and this is often seen as an indication of a firm’s performance. In addition, firms with a very low working capital to total assets ratio indicates that they cannot meet their obligations. Thus these ratios are expected to be negative values, concluding that the lower a firm’s liquidity the more likely it is for managers to engage in FFR.(e)Capital turnoverCapital Turnover is measured by Revenue to Total Assets (REV/TA). The turnover represents the sales generating power of the firm’s assets. It also measures management’s ability to deal with competitive situations. Managers of fraudulent firms may be less competitive than that of non fraudulent firms in using the firm’s assets to generate sales. This inability to compete successfully may be an incentive for engaging in fraudulent financial reporting. These variables therefore should be negative figures. In other words, firms having difficulty in generating sales are more likely to engage in FFR.(f)Overall financial positionFinancial distress may be a motivation for FFR (Stice，1991). A lower Z-score reflects a higher degree of financial distress, which may be a motive for management fraud (Persons, 1995). Hamer (1993) suggests that most models predict bankruptcy with a similar ability. Poor financial conditions may motivate unethical insiders to take steps intended to improve the appearance of the firm’s financial position. This aspect is measured by the Z-Score. This score measures the rate of bankruptcy of firms. The elements of this Z-Score with their associated weighting are as follows:Z = 1.2 (working capital/total assets) + 1.4 (retained earnings/total assets) + 3.3 (earnings before interest and taxes/ total assets) + 0.06 (market value of equity/book value of total debt) + 1.0 (sales/total assets)Although certain variables mentioned in the Z score are also included in the variables to be tested, an addition of the Z score in the model estimation stage enables us to measure the relative role of the Z score compared to individual variables comprising of the Z score alone. These variables are expected to be negative figures as firms with poorer financial conditions (smaller Z score) are more likely to engage in FFR.3.2.2.Dependant variableThe dependent variable comprises fraud firms and non fraud firms. The lists of fraud firms are obtained from Bursa Malaysia Media Centre. Each fraudulent firm is matched with a corresponding non fraudulent firm on the basis of industry, size and also time period. Firms in the same industry are subject to the similar business environment as well as similar accounting and reporting requirements (Pierre and Anderson, 1984).3.2.3.Control variableSize is measured by the Natural Logarithm of book value of total assets at the end of the fiscal year (SIZE). Feroz et al., (1991) found that most of the firms being closely monitored by the SEC are relatively smaller ones. This variable aims to control total assets to confirm the method of selection.3.3.Regression modelThe following logic model was estimated using the financial ratios from the firms to determine which of the ratios were related to FFR. By including the data set of fraudulent and non fraudulent firms, we may discover what factors significantly influence them:where:SIZE = SizeTD/TE = Total debt/Total equityTD/TA = Total debt/Total AssetNP/REV= Net Profit/RevenueCA/TA = Current Assets/Total Asset REC/REV= Receivable/RevenueINV/TA = Inventories/Total Assets WC/TA = Working Capital/Total Assets REV/TA= Revenue/Total AssetsZ = Z- score中文译文：在财务报告的责任：检测欺诈性公司摘要本文旨在探讨公司欺诈行为与非欺诈行为的财务比率间存在的差别，并确定哪些财务比率是显著的虚假报告。
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会计欺诈外文翻译文献(文档含中英文对照即英文原文和中文翻译)译文：会计欺诈和机构投资者查得·R·拉森介绍美国资本市场依赖财务报告系统来帮助有效分配资本。
最近的财务报告过程中故障在许多高调公司新的人员的监管机构,会计欺诈和市场参与者的兴趣。
两个重要的经验规律的文献记录极端操纵收益的决定因素和后果。
首先,股票市场反应的启示会计处理显著负面。
估计下降公告后的市场价值会计操作范围从20 - 40%( Palm rose、理查德森和 2003李,和马丁2007)。
第二,会计操作是可预测的。
文献会计操作的文档可以预测的措施准确的质量、会计性能、非金融变量声明和股市变量(如,Beneish 1999;Dechow,通用电气,拉尔森和斯隆2007)。
虽然会计操作导致重大投资损失和与公司相关的特点和性能,几乎没有证据表明存在成熟的投资者是否能够避免损失与会计欺诈。
机构投资者已成为市场的重要力量在过去的几十年。
上世纪八十年代初到九十年代末,机构投资者所有权翻倍,股市50%以上(龚帕斯和Metric时,2001)。
机构投资者在美国市场存在的上升有意义的促使文献调查他们是否执行是有利可图的交易。
文献的结果是喜忧参半。
几项研究文档积极变化之间的相互关系,这些机构投资者的资产和未来的收益和回报,这表明机构通知交易员(如，柯和2005;阿里列弗,确认我也承认泰德•克里斯坦森的指导,没有它我就不会了博士学位的挑战。
最后,我感谢我的家人的支持。
没有这篇论文的完成并不意味着几乎一样多。
介绍美国资本市场依赖财务报告系统来帮助有效分配资本。
最近的财务报告过程中故障在许多高调公司新的人员监管机构,会计欺诈和市场参与者的兴趣。
两个重要的经验规律的文献记录极端操纵收益的决定因素和后果。
首先,股票市场反应的启示,会计处理显著负面。
估计下降公告后的市场价值会计操作范围从20 - 40%(Palm rose、理查德森和朔尔茨2003;Karpo_,李,和马丁2007)。
第二,会计操作是可预测的。
文献会计操作的文档可以预测的措施,合格的质量、会计性能、非金融变量声明和股市变量(如,Beneish 1999;Dechow,通用电气,拉尔森和斯隆2007)。
虽然会计操作导致重大投资损失和与公司相关的特点和性能,几乎没有证据表明存在成熟的投资者是否能够避免损失与会计欺诈。
机构投资者已成为市场的重要力量在过去的几十年。
从八十年代初到九十年代末,机构投资者所有权翻倍,股市50%以上(。
机构投资者在美国市场存在的上升促使文献调查他们是否执行有利可图的交易。
文献的结果是喜忧参半。
几项研究文档积极变化之间的相互关系,这些机构投资者的资产和未来的收益和回报,这表明机构通知交易员(如。
、柯和Ramalingegowda 2005;柯和Petron 2004;阿里Dutch列弗,Trembles 2004)。
另一方面,一些文献表明,知情交易可能更有限,发现性能优越的共同基金很少持续(Carat 1997;布朗一个曼1995年)和交易考虑通知可能只是动量交易的结果(Bushee和古德曼,2007)。
会计欺诈和大市场的可预测性与会计欺诈相关的损失表明,它是一个理想的设定检查成熟的机构投资者。
如果机构投资者拥有优越的信息和复杂的会计信息的使用者对会计欺诈,他们应该在欺诈上市公司公开披露前欺诈。
我的主要研究问题是机构投资者预期会计欺诈的启示和剥离的股票欺诈公司公开披露之前骗子。
作为一个次要的研究问题,我检查是否机构作为有效的公司监控预防欺诈。
我使用的会计、审计和执行版本(AAER)涉及欺诈和会计操作作为一个代理第一新闻文章Factiva提及会计违规的公众披露欺诈。
我检查机构交易模式在322年企业,美国证券交易委员会(SEC)中标识执行行动从1982年到2005年有操纵会计收益。
我的分析是在两个阶段进行。
第一阶段是本文分析聚合机构公司级和欺诈检查他们的交易行为。
第二阶段是一个阶段分析,利用机构投资者之间的异构性,欺诈行为检查他们的交易行为。
公司的分析,我遵循Bushee(2001)组织机构分为三类根据自己的投资风格:瞬态和专用。
多元化的投资组合和较低的投资组合营业额机构的特点。
多样化的投资组合,投资组合交易描述瞬态高机构,和高度集中的投资组合和较低的投资组合营业额专门机构的特点。
符合文学之前,我希望发现瞬态机构最有可能发起有利交易欺诈启示的预期和机构不大可能发起有利益可得交易欺诈的预期启示我没有强烈的专门机构研究预测通常找到贸易基于即将到来的未来事件。
然而,欺诈是一个独特的设置可能导致专门机构剥离他们的位置。
如果专门机构投资公司基于他们的信心的和意愿完整性管理、检测欺诈行为会引起专门机构剥离他们的股份。
此外,由于专门机构的特点是高度的投资组合,他们可能会有更大比例的投资组合风险欺诈是否显示。
因此,他们可能会有最强的激励预测欺诈和诈骗剥离他们的股票。
文献表明,机构投资者作为公司监控(如果是这样的话,那么有可能是诈骗公司低水平的机构投资欺诈行为,因为他们之前缺乏效率监控。
因此,我的第一组测试检查机构所有权水平是否欺诈公司立即释放之前第一次欺诈收益报告不同于人口控制的公司。
在不变的分析中,我发现欺诈公司实际上有更高水平的总机构所有权,所有权和瞬态比公司所有权制度。
专门机构所有权没有显著区别样本公司。
接下来,我将进行回归分析,控制公司的特点。
我立即发现欺诈的开始之前,机构所有权欺诈公司的总体水平高于制度所有权控制公司的一个示例。
然而,我发现更高层次的机构主要是所有权的结果表明斜面更高层次的瞬态机构所有权,专门机构所有权控制后几乎是相同的形式特征。
大学和回归结果表明,机构所有权水平不作为一个伶俐的监控装置在欺诈的预防。
我的下一套测试提供相关的证据,我的主要研究问题。
我第一次检查机构所有权水平变化在欺诈公司在此期间公司提交欺诈。
季度发行前的第一次欺诈收益报告,直到季度会计欺诈的公开披露之前,我发现机构所有权欺诈公司增加了近14%,代表一家欺诈公司已发行股份的 3.9%。
2因为欺诈公司经验股价下跌约35%一旦发现欺诈,欺诈的机构增加3.9%所有权不是微不足道的。
事实上,计算表明,总机构损失322年我的样品是诈骗公司的1380亿美元。
增加3.9%机构所有权欺诈时期代表约200亿美元的损失。
之前的研究已经检查机构是否能预测即将发生的事件在短窗口(Briber,詹金斯和王,2006)。
因此,在我的下一组测试,我观察机构所有权的变化后的季度马上前,公开揭露欺诈。
我在季度立即欺诈曝光之前,所有权制度降低了大约一个半欺诈公司已发行股份的百分比。
我发现能有效的降低瞬态机构持有,而专门的机构持有的变化无关紧要的不会。
我也在季后立即找到有效减少欺诈启示。
这些结果是强劲的几个控制变量包括现在和过去的股票回报,意想不到的收益,以及分享营业额的变化。
虽然我找到证据表明瞬态机构能够预测欺诈前一个时期它的启示,这些证据必须解释的证据我之前测试。
一个半百分比下降机构所有权欺诈曝光之前,虽然显著,稍微减轻相当大的机构投资者的损失。
机构更异于三类我受聘于企业层面分析。
因此,我进行第二次分析进一步利用机构投资者之间的异质性。
我创建代理机构的信息环境和机构的激励机制,以避免负面的市场后果与会计欺诈的启示。
条件拥有欺诈公司股票欺诈开始之前,我测试是否与机构的所有权的变化相关联的代理是欺诈公司前会计欺诈的启示。
结果提供一些证据表明与最强的激励制度,以避免会计欺诈和最高的质量信息环境剥离前股票欺诈公司会计欺诈的启示。
尽管数据符合资产剥离率的增加在这些机构中,我无法确定这些关系的结果通知交易或自然的所有权水平均值回归。
这项研究应该感兴趣的机构投资者和研究者。
研究结果表明,机构投资者失去钱的重要性通过投资公司提交会计欺诈。
进一步的证据有助于我的研究文献记录复杂的机构投资者。
至少在这个特殊的背景下,大多数机构似乎没有复杂的会计信息用户;然而,我确实提供了有限的证据前立即通知本季度交易欺诈机构之间的一个子集的启示。
这些投资的标准可能会导致这些机构倾斜特征,更有可能来证明他们的投资组合的审慎投资。
例如发现高的银行向企业倾斜投资组合标准普尔股票评级。
Bushee和古德曼(2007) ,这是一个指示符变量等于一个如果一个机构的市场价值的股票投资组合的五等分顶层，否则所有机构在一个特定的季度和0。
因为大多数机构拥有更多的资源,我希望ISIZE是一个机构的代理获取和处理信息的能力。
因此,我认为,大型机构将更有可能出售公司的股票有欺诈行为。
我发现了两个额外的措施,代理机构的私人信息和激励措施,以避免会计欺诈。
选择,第一个是一个变量,措施的相对大小的股权机构风险在一个特定的公司。
打赌测量作为应声股本旗下机构j公司我在一季度t扩展机构j的总市场价值的投资组合在季度t。
我希望押注是负相关的制度变迁在欺诈公司的所有权。
与更高水平的机构选择相对比水平较低的企业风险价值选择,因此,这些机构有更大的激励来收集私人信息,避免投资公司有欺诈行为。
我最后的机构公司水平变量,这是一个指示符变量等于一个如果一个机构持有的流通股总量的百分比在公司五等分顶层的制度,公司所有权和零。
我希望块与私人信息优势,因为这些机构更有可能获得私人信息和更愿意承担私人信息采集和处理的成本。
因此,我希望阻止将负相关的机构持有的诈骗公司的变化。
Bushee和古德曼(2007)是第一个采用这两种措施指出是一个很好的衡量去激励收集公司信息。
原文：Accounting Fraud and Institutional InvestorsBy Chad R. LarsonI also acknowledge the mentorship of Ted Christensen without which I would have never taken on the challenge of a doctorate. Lastly, I am grateful for the support of my family. Without them the completion of this dissertation would not mean nearly as much. Introduction U.S. capital markets rely on financial reporting systems to help effectively allocate capital. The recent breakdowns in the financial reporting process at many high profile companies have renewed researchers', and market participants' interest in accounting fraud. Two important empirical regularities emerge from the body of literature documenting the determinants and consequences of extreme earnings manipulations. First, stock market reactions to the revelation of accounting manipulations are significantly negative. Estimated declines in market value following the public announcement of accounting manipulations range from 20 to 40 percent (Palmore, Richardson, and Scholz 2003; Karpo_, Lee, and Martin 2007). Second, accounting manipulations are predictable. A body of literature documents that accounting manipulations can be predicted with measures of accurate quality, accounting performance, non-financial statement variables, and stock market variables (e.g., Beneish 1999; Dechow, Ge, Larson, and Sloan 2007). Although accounting manipulations result in significant investor losses and are associated with firm characteristics and performance, little evidence exists on whether sophisticated investors are able to avoid losses associated with accounting fraud..Institutional investors have become a significant market force over the last several decades. From the early 1980s to the late 1990s, institutional investors doubled their ownership in the equity markets to over 50 percent (Gompers and Metrick, 2001). The rising presence of institutional investors in the U.S. markets has spurred a signi_cant body of literature investigating whether they execute pro_table trades. The results of the literature are mixed. Several studies document positive associations between changes in institutional investors' holdings and future earnings and returns, suggesting that institutions are informed traders (e.g., Ke and Ramalingegowda 2005; Ke andPetroni 2004; Ali, Durtschi, Lev, and Thrombley 2004). On the other hand, some literature suggests that informed trading might be more limited, finding that superior mutual fund performance is rarely persistent (Carhart 1997; Brown an Goetzmann 1995) and trading patterns previously considered informed might simply be the result of momentum trading (Bushee and Goodman, 2007).The predictability of accounting fraud and the large market losses associated with accounting fraud suggest that it is an ideal setting to examine the sophistication of institutional investors. If institutional investors possess superior information and are sophisticated users of accounting information with respect to accounting fraud, they should sell shares in fraud firms prior to public revelations of fraud. My primary research question is whether institutional investors anticipate accounting fraud revelations and divest shares in fraud firms prior to the public revelation of frauds. As a secondary research question, I examine whether institutions act as effective firm monitors in the prevention of fraud. I use Accounting, Auditing, and Enforcement Releases (AAER) involving accounting manipulations as a proxy for fraud and the first press article in Factiva mentioning an accounting irregularity as the public revelation of fraud.1 I examine institutional trading patterns in 322 firms that the Securities and Exchange Commission (SEC) identified in enforcement actions from 1982 through 2005 as having manipulated their accounting earnings. My analysis is conducted in two stages. The first stage is a firm-level analysis that aggregates institutions at the firm-level and examines their trading behavior in fraud _rms. The second stage is an institution-level analysis that exploits the heterogeneity among institutional investors and examines their trading behavior in fraud _rms. For my firm-level analysis, I follow Bushee (2001) by grouping institutions into three categories based on their investment styles: quasi-indexer, transient, and dedicated. Diversified portfolios and low portfolio turnover characterize quasi-indexer institutions. Diversified portfolios and high portfolio turnover characterize transient institutions, and highly concentrated portfolios and low portfolio turnover characterize dedicated institutions. Consistent with prior literature, I expect to find that transient institutions are the most likely to initiate profitable trades in anticipation of a fraud revelation and quasi-indexer institutions are unlikely to initiate profitable trades in anticipation of a fraudrevelation (e.g., Ke and Ramalingegowda 2005; Hribar, Jenkins, and Wang 2006). I make no strong predictions for dedicated institutions as research typically finds that they do not trade based on impending future events. However, fraud is a unique setting that may lead dedicated institutions to divest their positions. If dedicated institutions invest in firms based on their confidence in the vision and integrity of management, detecting a fraud might lead dedicated institutions to divest their shares. In addition, since dedicated institutions are characterized by highly-concentrated portfolios, they are likely to have a larger percentage of their portfolios at risk if fraud is revealed. Therefore, they are likely to have the strongest incentives to anticipate fraud and divest their shares in fraud _rms. A body of literature suggests that institutional investors act as firm monitors (e.g.Chung, Firth, and Kim 2002; Chen, Harford, and Li 2007). If this is the case, then it is possible that fraud firms have low levels of institutional investment prior to committing fraud because they lack efficiency monitoring. Therefore, my first set of tests examines whether institutional ownership levels in fraud firms immediately prior to the release of a first fraudulent earnings report differ from a population of control firms. In unvaried analysis, I find that fraud firms actually have higher levels of total institutional ownership, quasi-indexer ownership, and transient institutional ownership than non-fraud firms. Dedicated institutional ownership is not significantly different from the non-fraud sample of firms. Next, I conduct regression analysis that controls for firm characteristics. I find that immediately prior to the beginning of a fraud, fraud firms' total level of institutional ownership is higher than institutional ownership for a sample of control firms. However, I find that the higher level of institutional ownership is primarily the result of a sign cant higher level of transient institutional ownership, while quasi-indexer and dedicated institutional ownership is nearly identical after controlling form characteristics. The university and regression results suggest that the level of institutional ownership does not act as a sapient monitoring device in the Prevention of fraud.My next sets of tests provide evidence relating to my primary research question. I first examine changes in institutional ownership levels in fraud firms over the period firms commit fraud. From the quarter prior to the issuance of a first fraudulent earnings report until the quarter prior to thepublic revelation of an accounting fraud, I find that institutional ownership in fraud firms increases by almost 14 percent, representing 3.9 percent of a fraud firm's outstanding stock.2 Because fraud firms experience stock price declines of approximately 35 percent once the fraud is revealed, the 3.9 percent increase in institutional ownership over the fraud period is not trivial. In fact, calculations suggest that total institutional losses for the 322 fraud firms in my sample are in order of $138 billion. The 3.9 percent increase in institutional ownership over the fraud period represents approximately $20 billion of those losses. Prior research has examined whether institutions can predict impending events over short windows (Hribar, Jenkins, and Wang, 2006). Accordingly, in my next set of tests, I observe changes in institutional ownership in the quarters immediately prior to and following the public revelation of fraud. I am that in the quarter immediately prior to a fraud revelation, institutional ownership decreases by approximately one and a half percent of a fraud firm's outstanding stock. I find significant decreases for transient institutional holdings, while changes in quasi-indexer and dedicated institutional holdings are insignificant. I also find significant decreases in the quarter immediately following the fraud revelation.These results are robust to several control variables including current and past stock returns, unexpected earnings, and changes in share turnover. Although I find come evidence that transient institutions are able to anticipate fraud one period prior to its revelation, this evidence must be interpreted in light of evidence from my previous tests. The one and a half percent decrease in institutional ownership prior to fraud revelations, though statistically significant, only slightly mitigates substantial losses for institutional investors.Institutions are more heterogeneous than the three categories I employ in my firm-level analysis. Therefore, I conduct a second analysis at the institution-level that further exploits the heterogeneity among institutional investors. I create proxies for institutions' information environments and institutions' incentives to avoid the negative market consequences associated with the revelation of accounting fraud. Conditional on owning fraud firm shares prior to a fraud beginning, I test whether the proxies are associated with institutions' ownership changes in fraudfirms prior to the revelation of an accounting fraud. The results provide some evidence that institutions with the strongest incentives to avoid accounting fraud and with the highest quality information environments divest shares in fraud firms prior to the revelation of accounting fraud. Although the data are consistent with an increased rate of divestitures among these institutions, I am unable to establish whether these relations are a result of informed trading or natural mean reversion in ownership levels.This study should be of interest to both institutional investors and researchers. The results suggest that institutional investors lose significant amounts of moneyby investing in firms that commit accounting fraud. My study contributes further evidence to the body of literature documenting the sophistication level of institutional investors. At least for this particular context, most institutions do not appear to be sophisticated users of accounting information; however, I do provide limited evidence of informed trading in the quarter immediately prior to fraud revelations among a subset of institutions.The remainder of my dissertation proceeds as follows. Chapter 2 examines prior literature and outlines my empirical predictions. Chapter 3 outlines my research design. Chapter 4 describes my sample selection process and provides descriptive statistics. Chapter 5 details my tests and presents results and chapter 6 concludes. Prior Literature and Empirical Predictions My dissertation builds on two streams of prior literature. The first stream of literature examines the determinants and consequences of accounting manipulations. The second stream of literature examines the trading behavior of institutional investors.Accounting Manipulations Prior research has identified characteristics of firms that manipulate their financial statements. Dechow, Ge, Larson, and Sloan (2007) investigate a comprehensive sample of all 895 firms subject to Accounting, Auditing, and Enforcement Releases (AAER) from 1982 through July 2005. They examine the use of several financial statement variables, o_-balance sheet and non-financial variables, and market-related variables to predict accounting manipulations. They had that firms accused by the SEC of manipulating their _financial performance tend to have had strong performance prior to manipulations. They also and thatmanipulations appear to be motivated by managers' desire to obfuscate deteriorating financial performance. During manipulation years, they find that cash profit margins and return on assets are declining while accruals are increasing. They also find that firms manipulating financial reporting are more likely to issue debt and equity.Ranking firms based on the predicted likelihood of accounting manipulations from a logistic model, they classify almost 50 percent of manipulation firms in the top 20 percent of their manipulation index and 65 percent of manipulation firms in the top 40 percent of their index. Beneish (1999) creates a fraud prediction model based on a sample of 74 firms that manipulated earnings and a sample of 2,332 matched firms. Estimating probity models of accounting manipulations as a function of eight accounting based variables (indexed day's sales in receivables, gross margin, asset quality, sales growth, depreciation, sales, general and administrative expenses, leverage, and accruals to total assets) he is able to correctly classify approximately 50 to 75 percent of fraud firms, while incorrectly classifying only 10 to 20 percent of matched firms. Several other studies document relations between earnings manipulation firms and firm characteristics. Two other notable studies include Dechow, Sloan, and Sweeney (1996) and Brazel, Jones, and Zimbelman (2006). Dechow et al. (1996) examine a sample of 92 firms with an AAER from 1982 to 1992. They document that AAERs are associated with external financing needs and poor corporate governance. They also show that AAER firms experience signifies cant increasesin their cost of capital after the revelations of accounting manipulations. Brazel etffal. (2006) also and that several non-financial measures can be useful in predicting accounting manipulations.Although the number of Type I errors in fraud prediction models is relatively high, the relative cost of Type I to Type II errors for institutional investors is likely extremely low. Several studies have estimated investment losses when accounting manipulations are revealed. The latest large sample evidence suggests that the cost of Type II errors average approximately 40 percent of an institution's investment in a fraud firm (Karpo, Lee, and Martin, 2007). On the other hand, the cost of a Type I error is extremely low in a market with many substitute assets as investors can simply choose not to hold firms with a high probability of fraud. Investors may alsobe privy to private information regarding firm performance and accounting manipulations. To the extent that investors possess private information and choose to use other qualitative information, they may be able to significantly reduce the number of Type I and II errors incurred when attempting to identify accounting frauds. The high number of Type I errors associated with using earnings manipulation prediction models might also suggest that investors would be willing to live with the negative returns associated with fraud _firms if the negative returns are balanced out with suficiently positive returns from non-fraud _firms with strong signals of fraud. In a concurrent working paper, Beneish and Nichols (2007), show that this is not the case. Their results reveal that _firms with a high probability of manipulated earn have lower future earnings and returns. They also show that a trading strategy based on the probability of earnings manipulation yields an abnormal hedge return of 13.9 percent.Through additional tests they conclude that the returns, which are concentrated on the short side, are not a result of asymmetric arbitrage costs, but rather a result of asymmetric errors in market expectations.Beneish and Nichols (2007) do not provide direct evidence on _firms that actually manipulate earn, rather they examine portfolios of firms with a high probability of manipulation. They find that institutional investors increase their holdings in firms with a high probability of manipulation. My study focuses on the actual incidence of fraud. I am able to provide more detailed and direct evidence on the trading behavior of institutions in actual fraud _firms before, during, and after the period in which firms commit fraud and the frauds become public. 2.2 Institutional Investors From 1980 to 1996, institutional investors doubled their share of the market and now control over half of the U.S. equity market (Gompers and Metrick, 2001). The increased importance and perceived sophistication of institutional investors has spawned a large body of literature.One branch of the literature examines whether institutional investors act as monitors and influence managements' decisions. The evidence suggests that the level of institutional ownership and the composition of a firm's institutional ownership base matters when determining whether institutional owners are likely to act as effective monitors. Bushee (1998) finds that managers are less likely to cut research and development expenses when facing an earnings shortfall ifinstitutional ownership is high. But he also finds that large proportions of ownership by institutions that trade based on momentum and have high portfolio turnover increase the likelihood that a firm will cut research and development to meet an earnings shortfall. Chung, Firth, and Kim (2002) find that large institutional shareholdings in a firm reduce the likelihood of earnings management using accruals. Chen, Harford, and Li (2007), using acquisition decisions to reveal monitoring, find that institutions with long-term investments specialize in monitoring while other institutions do not monitor. Bushee (2001) finds that high levels of short-term investors are associated with an over-weighting of near-term expected earnings and under-weighting oflong-term expected earnings. In light of this combined evidence, my first prediction is that fraud firms, prior to the issuance of their first fraudulent earnings report, are likely to have low levels of institutional ownership. I also expect that fraud firms will have higher levels of short-term, transient, institutional ownership and lower levels of long-term, dedicated, institutional ownership. Much of the accounting research on institutional investors' trading behavior suggests that institutional investors are sophisticated users of accounting information. For example, previous literature has documented that the higher the level of institutional ownership, the smaller the market reaction surrounding earnings announcements (El-Gazzar, 1998). Balsam, Bartov, and Marquardt (2002) find that the valuation implications of large discretionary accruals are incorporated into stock prices more quickly for _rms with large institutional investor bases. The presence of institutional investors is also positively associated with the extent that prices lead earnings (Jiambalvo, Raj Gopal, and Venkatachalam, 2002). Studies have also shown that institutional investors exploit accounting based stock price anomalies such as the post-earnings announcement drift (Ke and Ramalingegowda,2005) and the accruals anomaly (Collins, Gong, and Hribar, 2003). Lev and Nissim (2006) also show that the accruals anomaly is exploited by some institutional investors, but the magnitude of this accruals-related trading is rather small. They show that the continued persistence of the accruals anomaly is not explained by a lack of understanding among institutions, but rather an institutional distaste for extreme-accruals firms that are typically small, unprofitable, and risky. Ke and Ramalingegowda (2005) find thatinstitutions also possess information that allows them to avoid negative stock price shocks associated with a break in a string of consecutive earnings increases.Although much of the literature on institutional investors suggests that they are sophisticated users of financial information, this literature stands in contrast to evidence that questions whether institutions profit from informational advantages. For example, much of the literature on mutual fund performance suggests that superior performance is not persistent (e.g., Brown and Goetzmann 1995). Additionally, O'Brien and Bhushan (1990) _find that institutions are attracted to firms with more analyst following. Similarly, Bushee and Noe (2000) _find that institutions are attracted to firms with high-quality disclosure regimes. Therefore, if public and private information are substitutes, institutions should have fewer opportunities to benefit from informational advantages. If institutional investors possess superior private information or information processing abilities, I expect to find support for my second prediction that institutional investors divest shares in firms that are committing accounting fraud. A lack of evidence that institutions divest shares in fraud firms prior to public revelations of fraud would suggest that either investors are unable to use private information to anticipate public announcements of fraud or the cost of anticipating the public announcements of fraud are too great relative to the benefits. Institutional investors exhibit heterogeneity in their investment styles. Prior literature has shown that the likelihood of informed trading varies with institutional investors' characteristics (e.g., Hribar and Jenkins 2004; Ke and Ramalingegowda2005). Much of the prior literature has relied on a methodology proposed by Bushee (1998). In this methodology, institutions are first classified into one of three investment strategies (quasi-indexer, transient, and dedicated institutional investors) based on portfolio turnover and stake sizes. The institutions are then aggregated at the firm level. The body of evidence that uses this methodology typically finds that profitable trading in anticipation of future events is only identity able for the transient investor category. Therefore, I expect any evidence that institutional investors predict accounting fraud will be concentrated among transient institutional investors. Because dedicated institutional owners have the largest portion of their portfolios at stake when a fraud is revealed, I also anticipate the possibility thatthey may divest shares in anticipation of fraud revelations.In a recent paper, Bushee and Goodman (2007) exploit the heterogeneity among institutional investors and the positions they hold by conducting an analysis that includes not onlyinstitution-level variables such as portfolio size and trading strategy but also institution firm-level characteristics such as the size of a position in a particular firm and the size of the position in a firm relative to an institution's portfolio size. They find that private information trading are most pronounced when large positions are taken by investment advisers in small firms. In the spirit of Bushee and Goodman (2007), I conduct an institution-level analysis that exploits the heterogeneity among institutional investors that are not captured by the threemtypes of trading strategies employed in my firm-level analysis. Using proxies for the quality of an institution's information environment and the incentives an institution has to avoid fraud _firms, I expect to_find that institutions with the strongest incentives to avoid accounting fraud and higher-quality information environments are more likely to divest shares in fraud firms prior to the revelation of accounting fraud. I define and discuss in the institution-level analysis section the total institutional ownership representing only a 4.7 percent decrease in total institutional holdings. The decrease in transient institutional ownership in the quarter immediately prior to the fraud revelations represents only a 15.1 percent decrease in their institutional holdings. Thus, although institutions mitigate losses by divesting fraud firms prior to fraud revelations, overall they still lose a considerable amount of their investments. 5.2 Institution-level Analysis Institutions exhibit significant heterogeneity beyond the three investment styles I employ in my first analysis; therefore, I conduct a second analysis at the institution level. In this analysis, I test whether institution-level proxies for incentives to avoid accounting fraud and for private information are negatively associated with changes in institutions' ownership of fraud _rms. In this section, private information refers to both an institution's ability to gather private information and an institution's ability to process both private and public information. I employee two sets of variables in my tests. The first set is measured at the institution level and the second set is measured at theinstitution-firm level.。