DOCSLIB.ORG

Staff Accounting Bulletin (SAB) Revises Or Rescinds Portions of the Interpretive Guidance Included in the Codification of the Staff Accounting Bulletin Series

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Staff Accounting Bulletin (SAB) Revises Or Rescinds Portions of the Interpretive Guidance Included in the Codification of the Staff Accounting Bulletin Series SECURITIES AND EXCHANGE COMMISSION 17 CFR PART 211 [Release No. SAB 114] Staff Accounting Bulletin No. 114 AGENCY: Securities and Exchange Commission. ACTION: Publication of Staff Accounting Bulletin. SUMMARY: This Staff Accounting Bulletin (SAB) revises or rescinds portions of the interpretive guidance included in the codification of the Staff Accounting Bulletin Series. This update is intended to make the relevant interpretive guidance consistent with current authoritative accounting guidance issued as part of the Financial Accounting Standards Board’s Accounting Standards Codification. The principal changes involve revision or removal of accounting guidance references and other conforming changes to ensure consistency of referencing throughout the SAB Series. EFFECTIVE DATE: March 28, 2011 FOR FURTHER INFORMATION CONTACT: Lisa Tapley, Assistant Chief Accountant, or Annemarie Ettinger, Senior Special Counsel, Office of the Chief Accountant, at (202) 551-5300, or Craig Olinger, Deputy Chief Accountant, Division of Corporation Finance, at (202) 551-3400, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. SUPPLEMENTARY INFORMATION: The statements in staff accounting bulletins are not rules or interpretations of the Commission, nor are they published as bearing the Commission’s official approval. They represent interpretations and practices followed by the 1 Division of Corporation Finance and the Office of the Chief Accountant in administering the disclosure requirements of the Federal securities laws. Elizabeth M. Murphy Secretary Date: March 7, 2011 PART 211 — [AMENDED] Accordingly, Part 211 of Title 17 of the Code of Federal Regulations is amended by adding Staff Accounting Bulletin No. 114 to the table found in Subpart B. Staff Accounting Bulletin No. 114 This Staff Accounting Bulletin (SAB) revises or rescinds portions of the interpretive guidance included in the codification of the Staff Accounting Bulletin Series. This update is intended to make the relevant interpretive guidance consistent with current authoritative accounting guidance issued as part of the Financial Accounting Standards Board’s Accounting Standards Codification (FASB ASC). The principal changes involve revision or removal of accounting guidance references and other conforming changes to ensure consistency of referencing throughout the SAB Series. The following describes the changes made to the Staff Accounting Bulletin Series and certain specific topics that are presented at the end of this release: a. The SAB Series is amended to update authoritative accounting literature references to the FASB ASC throughout. In addition, several conforming formatting changes were made for consistency across SAB topics. Due to the number of these changes, the SAB Series is 2 represented in its entirety in this release. All of the changes are technical in nature, and none of the changes are intended to change the guidance provided in the SAB Series. Topic 1: Financial Statements a. Topic 1.D.1, the introductory facts are amended to conform to changes made to Items 17 and 18 of Form 20-F to reflect that certain disclosures are required only if a basis of accounting other than U.S. generally accepted accounting principles (GAAP) or International Financial Reporting Standards as issued by the International Accounting Standards Board is used. The introductory facts are also amended to remove the reference to Form F-2, as this form was eliminated effective December 1, 2005. Finally, the introductory facts are amended to reflect the foreign issuer reporting enhancements contained in SEC Release No. 33-8959. b. Topic 1.I, the footnote previously numbered 6 within the interpretive response to question 1 is removed as the referenced guidance is now within the FASB ASC, and thus a history of the prior source is no longer relevant. c. Topic 1.I, the footnote previously numbered 7 within the interpretive response to question 2 is removed as the term “ADC” is now defined within the body of SAB Topic 1.I. d. Topic 1.K, the interpretive response to question 3 is amended to conform to the accounting guidance contained in FASB ASC Topic 350, Intangible Assets – Goodwill and Other. This conforming change reflects the fact that goodwill is no longer subject to amortization. The interpretive response to question 3 is also amended to replace the term “carrying value” with the term “fair value” to reflect the measurement guidance for financial assets and liabilities as stated in FASB ASC Topic 820, Fair Value Measurements and Disclosures. 3 e. Topic 1.K, the interpretive response to question 4, is amended to replace Item 7 of Form 8-K with Item 9.01 of Form 8-K. Topic 3: Senior Securities a. Topic 3.A, the interpretive response is amended to replace Rule 11-02(a)(7) of Regulation S-X with Rule 11-02(b)(7) of Regulation S-X. Topic 5: Miscellaneous Accounting a. Topic 5.F, the introductory facts and interpretive response are amended to replace the term “restatement” with the term “retrospective adjustment,” to replace the term “restate(d)” with the term “retrospectively adjust(ed)” and to replace the term “retroactively” with the term “retrospectively” to conform to the accounting guidance contained in FASB ASC Topic 250, Accounting Changes and Error Corrections. b. Topic 5.F, the interpretive response is amended to remove an unnecessary reference to FASB Statement No. 5 and FASB Statement No. 13. c. Topic 5.M, the footnote previously numbered 8 within the interpretive response is removed to delete a reference which is not included in the FASB ASC. d. Topic 5.S, the interpretive responses to questions 2, 4 (including footnote 29) and 5 are amended to revise the quoted accounting guidance to conform to the language as published in the FASB ASC. The interpretive response to question 4 is amended to remove guidance which is not included in the FASB ASC. The footnote previously numbered 31 within the interpretive response to question 4 is removed to delete a reference which is not included in the FASB ASC. e. Topic 5.V, the interpretive response to question 1 is amended to remove an unnecessary reference to SAB Topic 5.E, as the referenced guidance in SAB Topic 5.E was 4 removed with the issuance of SAB No. 112. As a result, the related footnote previously numbered 38 is removed. f. Topic 5.Y, the interpretive response to question 3 is amended to remove the reference to Regulation S-B, as this Regulation was eliminated effective February 4, 2008. g. Topic 5.Z.4, footnote 51 is amended to remove an unnecessary reference to SAB Topic 5.E. h. Topic 5.BB, the introductory facts are amended to revise the quoted accounting guidance to conform to the language as published in the FASB ASC. Topic 6: Interpretations of Accounting Series Releases and Financial Reporting Releases a. Topic 6.K.3, the interpretive response is amended to conform to the accounting guidance contained in FASB ASC Topic 350, Intangible Assets – Goodwill and Other. This conforming change reflects the fact that goodwill is not amortized, but rather only tested for impairment. b. Topic 6.L is amended throughout to update the references to the AICPA Audit and Accounting Guide, Depository and Lending Institutions with Conforming Changes as of June 1, 2009 (Audit Guide). Quoted guidance has been amended to conform to the language as published in the Audit Guide. Topic 8: Retail Companies a. Topic 8.A, the interpretive response is amended to remove unnecessary background information on the issuance of pre-FASB Codification standards. Topic 13: Revenue Recognition a. Topic 13.A.4.c, the interpretive response is amended to revise the quoted accounting guidance to conform to the language as published in the FASB ASC. 5 b. Topic 13.B, questions 2, 3, 4 and 5 and the interpretive responses and footnotes related to questions 2, 3, 4 and 5 are removed to eliminate unnecessary references and guidance specifically related to the original adoption of this SAB Topic. Topic 14: Share-Based Payment a. Topic 14.G is removed to eliminate unnecessary guidance on non-GAAP financial measures. Staff guidance on non-GAAP financial measures can be found in the Division of Corporation Finance’s Compliance and Disclosure Interpretations. b. Topics 14.H, 14.J, 14.K and 14.M are removed to eliminate unnecessary transition guidance specifically related to the first time adoption of FASB Statement No. 123(R), Share-Based Payment. Companies that had share-based payment arrangements prior to the adoption of FASB Statement No. 123(R) were required to apply this transition guidance in 2006 and therefore for these companies the guidance in Topics 14.H, 14.J, 14.K and 14.M is no longer relevant. For companies now entering into share-based payment arrangements for the first time, the guidance in FASB ASC Topic 718, Compensation – Stock Compensation, should be applied. c. Topic 14.L is removed to conform to changes made to Items 17 and 18 of Form 20-F to reflect that reconciling items are required for disclosure only if a basis of accounting other than U.S. generally accepted accounting principles or International Financial Reporting Standards as issued by the International Accounting Standards Board is used. [Note: The text of SAB 114 will not appear in the Code of Federal Regulations.] TABLE OF CONTENTS TOPIC 1: FINANCIAL STATEMENTS A. Target Companies B. Allocation Of Expenses And Related Disclosure In Financial Statements Of 6 Subsidiaries, Divisions Or Lesser Business Components Of Another Entity 1. Costs reflected in historical financial statements 2. Pro forma financial statements and earnings per share 3. Other matters C. Unaudited Financial Statements For A Full Fiscal Year D. Foreign Companies 1. Disclosures required of companies complying with Item 17 of Form 20-F 2. “Free distributions” by Japanese companies E. Requirements For Audited Or Certified Financial Statements 1.
Load more

Recommended publications
  • Evolution of Accounting for Corporate Treasury Stock in the United States Norlin Gerhard Rueschhoff
    View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by eGrove (Univ. of Mississippi) Accounting Historians Journal Volume 5 Article 1 Issue 1 Spring 1978 1978 Evolution of accounting for corporate treasury stock in the United States Norlin Gerhard Rueschhoff Follow this and additional works at: https://egrove.olemiss.edu/aah_journal Part of the Accounting Commons, and the Taxation Commons Recommended Citation Rueschhoff, Norlin Gerhard (1978) "Evolution of accounting for corporate treasury stock in the United States," Accounting Historians Journal: Vol. 5 : Iss. 1 , Article 1. Available at: https://egrove.olemiss.edu/aah_journal/vol5/iss1/1 This Article is brought to you for free and open access by the Archival Digital Accounting Collection at eGrove. It has been accepted for inclusion in Accounting Historians Journal by an authorized editor of eGrove. For more information, please contact [email protected]. Rueschhoff: Evolution of accounting for corporate treasury stock in the United States Norlin G. Rueschhoff ASSOCIATE PROFESSOR UNIVERSITY OF NOTRE DAME THE EVOLUTION OF ACCOUNTING FOR CORPORATE TREASURY STOCK IN THE UNITED STATES Abstract: Is treasury stock an asset or a reduction of net equity? This study is concerned with the process of accounting for treasury stock from as early as 1720 to date. It illustrates the many methods which have been used to create funds by the purchase and sale of treasury stocks and concludes with a consideration of the effects of the Internal Revenue Act of 1934 and the Security Exchange Act of 1934 on the treatment of treasury stock. In 1919, William A.
    [Show full text]
  • Comptroller of the Currency, Treasury § 7.2024
    Comptroller of the Currency, Treasury § 7.2024 § 7.2018 Lost stock certificates. (5) Reduce costs associated with If a national bank does not provide shareholder communications and meet- for replacing lost, stolen, or destroyed ings. stock certificates in its articles of as- (c) Prohibition. It is not a legitimate sociation or bylaws, the bank may corporate purpose to acquire or hold adopt procedures in accordance with treasury stock on speculation about § 7.2000. changes in its value. § 7.2019 Loans secured by a bank’s [64 FR 60099, Nov. 4, 1999] own shares. § 7.2021 Preemptive rights. (a) Permitted agreements, relating to bank shares. A national bank may re- A national bank in its articles of as- quire a borrower holding shares of the sociation must grant or deny preemp- bank to execute agreements: tive rights to the bank’s shareholders. (1) Not to pledge, give away, transfer, Any amendment to a national bank’s or otherwise assign such shares; articles of association which modifies (2) To pledge such shares at the re- such preemptive rights must be ap- quest of the bank when necessary to proved by a vote of the holders of two- prevent loss; and thirds of the bank’s outstanding voting (3) To leave such shares in the bank’s shares. custody. (b) Use of capital notes and debentures. § 7.2022 Voting trusts. A national bank may not make loans The shareholders of a national bank secured by a pledge of the bank’s own may establish a voting trust under the capital notes and debentures.
    [Show full text]
  • Securities Laws and the Social Costs of Inaccurate Stock Prices
    Duke Law Journal VOLUME 41 APRIL 1992 NUMBER 5 SECURITIES LAWS AND THE SOCIAL COSTS OF "INACCURATE" STOCK PRICES MARCEL KAHAN* INTRODUCTION ................................................ 979 I. LEGAL REGULATIONS AND STOCK PRICE ACCURACY .... 982 II. A TAXONOMY OF INACCURACIES ........................ 987 A. The Dimension of Cause ............................ 988 1. Inaccuracies Caused by Non-Public Information .. 988 2. Inaccuracies Caused by Misassessment ............ 989 3. Inaccuracies Caused by Speculative Trading ...... 990 4. Inaccuracies Caused by Liquidity Crunches ....... 992 B. The Dimension of Manifestation ..................... 994 1. Short-Termism .................................. 994 2. Excess Market Volatility ......................... 995 3. Random Short-Run Inaccuracies ................. 996 4. Industry-Wide Inaccuracies ...................... 997 5. Systematic Discounts ............................ 997 6. Other Manifestations ............................ 998 C. The Dimension of Scope ............................. 999 1. The Timing of Mispricing........................ 999 2. The Degree of Mispricing ........................ 1000 3. The Number and Importance of Firms Affected... 1000 D. Dimensions of Mispricing and the Insider Trading R ule ............................................... 1001 1. Insider Trading and the Causes of Inaccuracies ... 1001 * Assistant Professor of Law, New York University School of Law. I would like to thank Lucian Bebchuk, Vicki Been, Chris Eisgruber, Andrea Fastenberg, Ron Gilson, Jeff
    [Show full text]
  • Corporate Securities Qualification Examination (Test Series 62)
    Corporate Securities Qualification Examination (Test Series 62) Study Outline © 2015 FINRA Introduction The FINRA Corporate Securities Limited Representative Qualification Examination (Series 62) is used to qualify individuals seeking registration with FINRA under By-Laws Article III, Section 2, and the Membership and Registration Rules. Registered representatives in this category of registration may trade common and preferred stocks, corporate bonds, rights, warrants, closed-end investment companies, money-market funds, privately issued mortgage-backed securities, other asset-backed securities, and REITS. This category, by itself, does not allow a registered representative to trade municipal securities, direct participation programs, other securities registered under the Investment Company Act of 1940, variable contracts, nor options. Candidates seeking to trade these latter products must also register in one or more of FINRA’s other limited representative categories, or as General Securities Registered Representatives. This study outline can assist FINRA member firms in preparing candidates to sit for the Series 62 exam. Members may use it to structure or prepare training material and to develop lecture notes and seminar programs. This outline can also be used by the individual candidate as a training aid. The outline and the test are divided into the four sections listed below along with the number of items in each section. Section Description Number of Items 1 Types and Characteristics of Securities and Investments 25 2 The Market for Corporate Securities 40 3 Evaluation of Securities and Investments 14 4 Handling Customer Accounts and Securities Industry 36 Regulations Total 115 Structure of the Exam The exam is composed of 120 multiple-choice items covering all of the materials in the following outline in accordance with the subject-matter distribution shown above.
    [Show full text]
  • Do Firms Follow GAAP When They Record Share Repurchases?
    Advances in Accounting, incorporating Advances in International Accounting 34 (2016) 41–54 Contents lists available at ScienceDirect Advances in Accounting, incorporating Advances in International Accounting journal homepage: www.elsevier.com/locate/adiac Do firms follow GAAP when they record share repurchases? Monica Banyi a,⁎, Dennis Caplan b a College of Business and Economics, University of Idaho, Moscow, ID 83843, United States b University at Albany (SUNY), Albany, NY, United States article info abstract Article history: This paper examines U.S. firms' accounting for share repurchases and the accounting choice provided to Received 4 May 2016 Delaware-incorporated firms between the treasury and retirement methods. This accounting choice does not Received in revised form 15 July 2016 affect income, cash flows, or net assets, but it nevertheless affects financial reporting transparency and the allo- Accepted 19 July 2016 cation of equity between retained earnings and contributed capital. According to Generally Accepted Accounting Available online 4 August 2016 Principles (GAAP), the accounting choice to record share repurchases should reflect management's intended disposition of the repurchased shares. We compare characteristics of Delaware-incorporated treasury and retire- Keywords: fi fi Share repurchases ment rms and nd that the choice between the two accounting methods is not always consistent with GAAP, Treasury stock but neither is it random; rather, this choice is related to a number of firm characteristics including firm growth, Accounting choice industry membership, trading exchange, and price–earnings ratio. We also find that a firm's accounting method for share repurchases is associated with a firm's propensity to make future share repurchases.
    [Show full text]
  • The Sale of Treasury Stocks and Protection of Management Rights
    KDI FOCUS May 1 , 2017 (No. 82, eng.) For Inquiry: KDI Communications Unit Address: 263, Namsejong-ro, Sejong-si 30149, Korea Tel: 82-44-550-4030 Fax: 82-44-550-0652 Authors | Sung Ick Cho, Fellow at KDI (82-44-550-4137) KDI FOCUS | Analysis on critical pending issues of the Korean economy to enhance public understanding of the economy and provide useful policy alternatives Korea’s Leading Think Tank www.kdi.re.kr The Sale of Treasury Stocks and Protection of Management Rights Sung Ick Cho, Fellow at KDI “Treasury stocks play a vital role in retaining, protecting and transferring management rights in large enterprises. However, the sale of treasury stocks is essentially identical to the issuance of new shares in economic nature. Therefore, using treasury stocks to protect management rights could obscure the equal treatment of shareholders. Even if such practices are permitted for policy purposes, the government needs to put other measures into place to protect general and minority shareholders from the damages that may arise.” Ⅰ. Introduction Treasury stocks have garnered mounting attention in the wake of the Cheil Industries Inc. (formerly Samsung Everland) and Samsung C&T merger in 2015 and Samsung Electronics’ recent review of a split-off. At the same time, however, the myriad of highly technical and complicated contents in relation to legal and accounting matters have created more confusion than understanding. In order to shed light on the issue of treasury stocks, take the merger between Cheil * Based on Cho, Sung Ick and Yong Hyeon Yang, A New Discipline for the Inter-Corporate Sharehold- ing, Research Monograph, 2016-05, Korea Development Institute, 2016 (in Korean).
    [Show full text]
  • Analysis on Market Maker System in the NEEQ
    International Journal of Business and Social Science Volume 9 • Number 2 • February 2018 Analysis on Market Maker System in the NEEQ Weibin Luo Department of Accountancy Central University of Finance and Economics 39th South College Road, Haidian District, Beijing China Abstract This paper introduces the development of the NEEQ and the present situation of listed enterprises in the NEEQ, explains the trading system of the market maker system, and analyzes the revenues and the risks of the market makers, and then points out the existing problems of the market maker system. This paper finally offers some proposals of countermeasures and suggestions on perfecting market maker system in the NEEQ. Keywords: Market Maker System, NEEQ, Quotation, Supervision. 1. Introduction The NEEQ (National Equities Exchange and Quotations) is the third national securities exchange in China after Shanghai Stock Exchange and Shenzhen Stock Exchange, and is the first company system securities exchange place which has been approved by the State Council. According to the objective of constructing a sound, multi- level, highly developed securities market, the securities market system in China should be composed by the Shanghai and Shenzhen main board market, the Shenzhen small and medium sized board and growth enterprise market, and the NEEQ over-the-counter market. These three levels of market form the shape of Pyramid, where the Shanghai and Shenzhen main board market is the top, the small and medium-sized board and growth enterprise board are the middle part, and the NEEQ over-the-counter market is the base of the Pyramid. The NEEQ in China was established in 2006, and developed slowly before 2013.
    [Show full text]
  • Order Approving a Proposed Rule Change and Amendments No. 1
    SECURITIES AND EXCHANGE COMMISSION (Release No. 34-54999; File No. SR-NYSE-2006-30) December 21, 2006 Self-Regulatory Organizations; New York Stock Exchange, Inc. (a/k/a New York Stock Exchange LLC); Order Approving a Proposed Rule Change and Amendments No. 1 & 2 Thereto Relating to the Treasury Share Exception in NYSE Listed Company Manual Section 312.03, Section 312.04, Section 703.01(A), and Section 903.02 I. Introduction On May 5, 2006, the New York Stock Exchange LLC (the “Exchange” or “NYSE”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)1 and Rule 19b-4 thereunder,2 a proposed rule change relating to the “treasury share exception” in NYSE Listed Company Manual Sections 312.03, 312.04, 703.01(A), and 903.02. On August 11, 2006, the Exchange filed Amendment No. 1 to the proposed rule change.3 On September 25, 2006, the Exchange filed Amendment No. 2 to the proposed rule change.4 The proposed rule change, as amended, was published for comment in the Federal Register on October 16, 2006.5 The Commission received one comment on the proposal.6 This order approves the proposed rule change, as amended. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 Amendment No. 1 replaced and superseded the original filing in its entirety. 4 See Partial Amendment No. 2 to Form 19b-4 dated September 25, 2006 (“Partial Amendment No. 2”). 5 See Securities Exchange Act Release No.
    [Show full text]
  • News Release Nomura Holdings Nomura Determines to Make Disposition of Treasury Shares As Stock Award (PDF)
    News Release Nomura Determines to Make Disposition of Treasury Shares as Stock Award Tokyo, May 27, 2020—Nomura Holdings, Inc. (the “Company”) today announced that its Executive Management Board has determined to make a disposition of treasury stock as outlined below (the “Decision”)1. 1. Purpose of Disposition of Treasury Stock As the Company announced in “Nomura to Grant Restricted Stock Units (RSUs)” issued on May 8, 2020, the Company has determined to grant Restricted Stock Units (RSUs) based on the RSU plan (the “Plan”) for directors, executive officers, and employees of the Company and its subsidiaries (the “Allottees”) as deferred compensation using the Company’s treasury stock. Under this Plan, in principle, after the expiration of a deferral period determined beforehand by the Company, the Company will dispose of and allot treasury stock in a number corresponding to the number of RSUs granted to each Allottee which number is determined beforehand by the Company, by having the Allottees make a contribution in kind to the Company of monetary compensation claims granted to the Allottees. The allotment date for the disposition of treasury stock under the Decision corresponds to the above-mentioned deferral period and is generally a date that is approximately one, two or three years from the date of the Decision, respectively, for RSU No.15 to No.17. As for certain overseas employees who are subject to remuneration regulations in Europe, the allotment date is a date that is approximately four, five, six or seven years from the date of the Decision, respectively, for RSU No.18 to No.21.
    [Show full text]
  • Annual Report December 31, 2009
    ANNUAL REPOR T 2 0 0 9 Corporate Information EXECUTIVE OFFICE: DIRECTORS & OFFICERS 150 King Street West OF THE COMPANY: Suite 1702, Toronto, Ontario Thomas S. Caldwell, C.M. M5H 1J9 Director and President Telephone: (416) 595-9106 Toronto, Ontario Facsimile: (416) 862-2498 John R. Campbell, Q.C. TRANSFER AGENT & REGISTRAR: Director and CIBC Mellon Trust Company Vice-President P.O. Box 7010, Toronto, Ontario Adelaide Street Postal Station Bethann Colle Toronto, Ontario Director M5C 2W9 Toronto, Ontario AUDITORS: DELOITTE & TOUCHE LLP Michael B.C. Gundy Brookfield Place Director 181 Bay Street Toronto, Ontario Suite 1400 George Mencke Toronto, Ontario M5J 2V1 Director INDEPENDENT REVIEW Toronto, Ontario COMMIT TEE: Jean Ponter Robert Guilday Chief Financial Officer H. Clifford Hatch Jr. Harry Liu Sharon Kent Corporate Secretary Urbana Corporation’s Common Shares, Non-Voting Class A Shares are listed for trading on the Toronto Stock Exchange. Ticker Symbols: URB (Common Shares) URB.A (Non-Voting Class A Shares) Website: www.urbanacorp.com URBANA CORPORATION Year-End Report To Shareholders For the year ended December 31, 2009 The past year was essentially flat for Urbana Corporation (“Urbana”). The financial industry debacle of 2008 was compounded in the exchange space by existing low barriers to entry for numerous, low cost, new trading venues which resulted in hyper competition for most stock markets. The resulting squeeze on volumes and margins was evident within both Europe and North America. Emerging markets, such as India, still have enough barriers to entry to contain the destructive influence of institutions effectively re-mutualizing the exchange industry through their use of proprietary Alternative Trading Systems.
    [Show full text]
  • Fundamental Analysis and the Cross-Section of Stock Returns: a Data-Mining Approach
    Fundamental Analysis and the Cross-Section of Stock Returns: A Data-Mining Approach Abstract A key challenge to evaluate data-mining bias in stock return anomalies is that we do not observe all the variables considered by researchers. We overcome this challenge by constructing a “universe” of fundamental signals from financial statements and by using a bootstrap approach to measure the impact of data mining. We find that many fundamental signals are significant predictors of cross-sectional stock returns even after accounting for data mining. This predictive ability is more pronounced following high-sentiment periods, during earnings-announcement days, and among stocks with greater limits-to-arbitrage. Our evidence suggests that fundamental- based anomalies are not a product of data mining, and they are best explained by mispricing. Our approach is general and can be applied to other categories of anomaly variables. October 2015 “Economists place a premium on the discovery of puzzles, which in the context at hand amounts to finding apparent rejections of a widely accepted theory of stock market behavior.” Merton (1987, p. 104) 1. Introduction Finance researchers have devoted a considerable amount of time and effort to searching for stock return patterns that cannot be explained by traditional asset pricing models. As a result of these efforts, there is now a large body of literature reporting hundreds of cross-sectional return anomalies (Green, Hand, and Zhang (2013), Harvey, Liu, and Zhu (HLZ 2014), and McLean and Pontiff (2014)). An important debate in the literature is whether the abnormal returns documented in these studies are compensation for systematic risk, evidence of market inefficiency, or simply the result of extensive data mining.
    [Show full text]
  • Balance Sheet. Consolidated (Million Euros)
    balance sheet. consolidated (million euros) ITEMS 1995 1996 1997 1998 1999 1999 $ (2) SUBSCRIBED SHARES NOT PAID-IN 1.0 - 2.7 3.1 3.3 3.3 FIXED ASSETS 24,729.8 27,978.0 29,973.1 39,993.4 49,521.6 49,828.6 Capital increase expenses 4.3 3.5 14.0 97.9 170.1 171.1 Netintangible assets 1,906.6 2,030.4 2,140.3 6,612.2 7,006.1 7,049.5 Property, plant and equipment 39,297.2 42,219.1 45,714.2 52,324.3 72,948.6 73,400.9 Depreciation of fixed assets (17,676.2) (18,335.7) (20,783.5) (24,502.7) (37,193.7) (37,424.3) Netfixed assets 21,621.0 23,883.4 24,930.7 27,821.6 35,754.9 35,976.6 Investments 1,197.9 2,060.7 2,888.1 5,461.7 6,590.5 6,631.4 GOODWILL ON CONSOLIDATION 286.6 299.3 1,709.0 2,401.8 4,207.0 4,233.1 DEFERRED EXPENSES 849.3 783.1 812.0 831.6 873.6 879.0 CURRENT ASSETS 3,091.6 3,621.1 4,914.8 6,330.3 9,540.8 9,600.0 Subscribed shares not paid-in - - - - - - Inventories 174.5 203.4 226.5 295.5 476.1 479.1 Accounts receivable 2,397.1 3,051.8 3,781.8 5,269.0 7,062.1 7,105.9 Short-term financial investments 410.2 215.4 757.8 363.0 1,458.1 1,467.1 Treasury stock - - 2.2 29.2 1.7 1.7 Cash 71.7 76.0 62.7 143.0 186.1 187.3 Prepayments 38.1 74.5 83.8 230.6 356.7 358.9 ASSETS=LIABILITIES AND SHAREHOLDERS' EQUITY 28,958.3 32,681.5 37,411.6 49,560.2 64,146.3 64,544.0 SHAREHOLDERS' EQUITY 9,294.5 11,201.4 11,968.4 13,500.0 14,484.8 14,574.6 Paid-in share capital 2,823.2 2,823.2 2,823.2 3,079.8 3,262.8 3,283.0 Reserves 5,840.1 7,612.5 8,228.8 9,112.5 9,417.2 9,475.6 Netincome for year 800.6 963.3 1,142.3 1,307.7 1,804.8 1,816.0 Interim dividend (169.4)
    [Show full text]