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Accounting and Finance Essay Example

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Accounting and Finance

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Financial regulation, however, is not entirely dependent on financial statements because financial regulation can cover all of the economy while financial statements from accounting cover only the economic conditions of specific firms or group of firms under a conglomerate (Borio and Tsatsaronis 2005; HM Treasury 2010). For example, financial regulators would also be monitoring liquidity, interest rates, capital flows, and other macroeconomic variables, not merely financial statements. Meanwhile, another type of regulation also uses financial statements but is different from financial regulation: strengthening corporate governance.Academic research contributed to the sciences or fields of accounting, financial regulation, and corporate governance. In the process, academic research protected and advanced modern living and, thus, it can be said that academic research improved our lives. Although not all journal articles are academic research, I review a few accounting journals to illustrate how academic research has been developing the field of accounting and, relatedly, financial regulation. In so doing, I will attempt to illustrate how academic research contributes to making life more bearable and addressing life itself (Humphrey and Lee 2004; Sterling 1975).Barth and Landsman (2010) examined how financial reporting contributed to the financial crisis. They concluded that fair value accounting played little or no role in the financial crisis (Barth and Landsman 2010). Unfortunately, however, the lack of transparency in securitization and derivatives misled investors from assessing properly property values and the riskiness of bank assets and liabilities (Barth and Landsman 2010). Because of this, Barth and Landsman (2010) proposed to require banks to “recognize whatever assets and liabilities they have after the securitization” to reflect better the “underlying economics” of banks. Further, they recommended “disclosure of more disaggregated information, disclosure of the sensitivity of derivative fair values to changes in market risk variables, and implementing a risk-equivalence” to enable investors to understand better the leverage inherent in derivatives” (Barth and Landsman 2010).Future research may or may not confirm the validity of the Barth and Landsman perspective but the important point is that they have forwarded a point of view that promotes research inquiry so their recommendations can

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Andersson, T., Gleadie, P., Haslam, C., and Tsitsianis. N. (2010) ‘Bio-pharma: A financialized business model’. Critical Perspectives on Accounting. 21 pp. 631-641.

Arnold, B. and Lange, P. (2004) ‘Enron: An examination of agency problems’. Critical Perspectives on Accounting. 15 pp. 751-765.

Barth, M. and Landsman, W. (2010) ‘How did financial reporting contribute to the financial crisis’. European Accounting Review. 19 (3) pp. 399-423.

Borio, C. and Tsatsaronis, K. (2005) ‘Accounting, prudential regulation and financial stability: Elements of a synthesis. BIS Working Papers No. 180. Switzerland: Monetary and Economic Department, Bank for International Settlement.

Carvajal, A., Dodd, R., Moore, M., Nier, E., Tower, I., and Zanforlin, L. (2009) ‘The perimeter of financial regulation’. IMF Staff Position Note. 26 March.

Collier, P. (2003) ‘Accounting for managers: Interpreting accounting information for decision-making’. West Sussex: John Wiley & Sons Ltd.

Huizinga, H. and Laeven, L. (2009) ‘Accounting discretion of banks during a financial crisis’. Working Paper 09-207. Washington: International Monetary Fund.

HM Treasury (2010). A new approach to financial regulation: Judgement, focus, and stability. London: HM Treasury.

Humphrey, C. and Lee, B. (2004) ‘The real life guide to accounting research: A strategy for inclusion’. Qualitative Research for Accounting and Management. 1 (1) pp. 66-84.

International Monetary Fund (2009) ‘Lessons of the financial crisis for future regulation of financial institutions and markets and for liquidity management’. Washington: Monetary and Capital Markets Department, International Monetary Fund.

Laux, C., and Leuz, C. (2009) ‘The crisis of fair-value accounting: Making sense of the recent debate. Accounting, Organizations and Society. 34, pp. 826-834.

Lefebrvre, R., Simonova, E., and Scarlat, M. (2009) Fair value accounting: The road to be most travelled. Issue in Focus. Ontario: Certified General Accountants Association of Canada.

Morgan, G. (2010) ‘The use of UK charity accounts data for researching the performance of voluntary organizations’. Working Paper. Centre for Voluntary Sector Research.

Novoa, A., Scarlata, J., and Sole, J. (2009). ‘Procyclicality and fair value accounting’. IMF Working Paper 09/39. Washington: International Monetary Fund.

Oatley, T. (2001) ‘The dilemmas of international financial regulation. Regulation’. Regulation. 23 (4) pp. 36-39.

Penman, S. (2007) ‘Financial reporting quality: A plus or a minus?’ Accounting and Business Research, Special Issue: International Accounting Policy Forum. pp. 34-44.

Rabin, S. (2009) ‘The fair value compromise---A proposed Solution’. The Value Examiner. May/June, pp. 15-17.

Ronen, J. (2008) ‘To fair value or not to fair value: A broader perspective’. ABACUS. 44 (2) pp. 181-208.

Ryan, S. (2008). ‘Accounting in and for the subprime crisis’. New York: Stern School of Business, New York University. Available in: http://www.hbs.edu/units/am/pdf/Accounting%20in%20and%20for%20the%20Subprime%20Crisis.pdf (Accessed 8 May 2011).

Simpson, M. (2010) ‘Role of accounting in finance and financial decisions’. 12 November.

Simpson, M. (2011) ‘Self-interest versus public interest, financial crisis and financial theory. PowerPoint Slide Presentation. 16 March.

Sterling, R. (1975) ‘Towards a science of accounting’. Financial Analyst Journal. September-October pp. 28-36.

Taylor, S. (2009) ‘Capital markets regulation: How can accounting research contribute’ Australian Accounting Review. 51 (19) pp. 319-325.

Truman, E. (2009) ‘The International Monetary Fund and Regulatory Challenges’. Working Paper 09-16. Washington: International Monetary Fund.

Webster, W. (2004) Accounting for managers. New York and London: McGraw Hill.

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preview essay on Accounting and Finance
  • Pages: 6 (1500 words)
  • Document Type: Essay
  • Subject: Unsorted
  • Level: Undergraduate
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