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A Loophole in Financial Accounting: a Detailed Analysis of Repo
The Journal of Applied Business Research – September/October 2011 Volume 27, Number 5 A Loophole In Financial Accounting: A Detailed Analysis Of Repo 105 Chun-Chia (Amy) Chang, Ph.D., San Francisco State University, USA Joanne Duke, Ph.D., San Francisco State University, USA Su-Jane Hsieh, Ph.D., San Francisco State University, USA ABSTRACT From 2000 to 2008, Lehman used repo transactions to hide billions of dollars on their statements. They also misrepresented the repo transactions as “secured borrowings” even though they actually recorded the transactions as sales. Valukas’ report in 2010 stimulated an extensive coverage of the repo transactions and spurred an array of studies addressing issues related to the collapse of financial institutions. Since the Repo 105 maneuver of Lehman provides a good example on how regulatory deficiencies can induce companies to obscure financial reporting and the importance of ethics in deterring these abuses, our study intends to examine repo transactions related accounting standards, illustrate how repo transactions can enhance a bank’s financial statements, and discuss the importance of business ethics in curtailing accounting irregularities. Keywords: Repo 105; creative accounting; business ethics INTRODUCTION n March 2010, the Wall Street Journal (WSJ hereafter) published a series of reports regarding a practice called Repo 105 that was employed by the Lehman Brothers Holdings Inc. to obscure approximately $50 billion of liabilities from investors.1 A “Repo” is a “repurchase agreement” that enables short-term Iborrowers to gain liquidity. During a repo transaction, a company “sells” assets to others with a repurchase agreement signed simultaneously at the time of the sale. -
Mogul Studios | White Paper V0.9 Mogul Studios | White Paper V0.9
mogul Mogul Studios | White Paper V0.9 Mogul Studios | White Paper V0.9 MOGUL STUDIOS Liquid Film Financing White Paper v0.9 [email protected] mogul mogulstudios.com | 2 Mogul Studios | White Paper V0.9 Disclaimer The introduction and description of the basic condition of the project in this document is an invitation to the general public. It is not and cannot be regarded as an investment or declaration of commitment to any specific or unspecified subject. It is neither nor can it be considered as a specific team’s project. It’s not a commitment nor a guarantee. The Mogul team reserves all rights to modify, delete, add, abrogate, and interpret related behaviors of this document. Those who have the intention to participate, invest, and cooperate in this project must clearly understand the full risks of this project. Participants shall enter into a written cooperation agreement for participation in this project. The cooperation agreement shall clearly and completely indicate the cooperation, participation or investment. Participants should indicate in written or verbal form that they have fully understood and accepted all the risks that the project has generated or may have, and take corresponding responsibility. mogul mogulstudios.com | 3 Mogul Studios | White Paper V0.9 Mogul will also help optimize the film funding and production process Executive by enhancing financial transparency at every level. No longer will it be possible for filmmakers to hide exorbitant expenses behind the black Summary box of “Hollywood accounting.” Now, investors can ensure things are The movie business has always been done right, with their interests as about making dreams come true -- investors and film fans are always not just the dreams of viewers in considered first. -
Honorsthesis-Wiecedeborahlynn
ACCOUNTING FOR MOTION PICTURES: AN EXAMINATION OF THE QUALITY OF TWO ACCOUNTING STANDARDS An Undergraduate Distinction Project Presented in Partial Fulfillment of the Requirements for Graduation with Distinction in the College of Business at The Ohio State University By Deborah Lynn Wiece * * * * * The Ohio State University 2000 Distinction Examination Committee: Dr. Richard Murdock, Adviser Approved by Dr. Daniel Jensen Dr. Raymond Krasniewski ~~Department of Accounting and MIS ABSTRACT FAS 53, Financial Reporting by Producers and Distributors of Motion Picture Films, was issued in 1981 and set the requirements for external financial reporting in the motion picture industry. However, due primarily to changes in the industry since then, there have been many criticisms regarding the statement. In an attempt to address these criticisms, a proposed Statement of Position (PSOP) was written. This PSOP addresses some of the more controversial accounting methods allowed under FAS 53, and it requires more conservative income recognition policies. The goal of this distinction project was to determine which of these two accounting standards—FAS 53 or the PSOP—is of higher quality, with my hypothesis being that the PSOP was a higher-quality standard. To determine the quality of a standard, one can look at the characteristics, primarily the relevance and reliability, of the information it provides. In order to assess the quality of the information, I asked users of financial statements for their opinions through the use of a survey. 150 surveys were sent out to entertainment industry professionals, public accountants, and university accounting professors, and a response rate of 11.33% was achieved. Despite the low response rate, respondents indicated a preference for the PSOP in most areas. -
Leveraged Buyouts, and Mergers & Acquisitions
Chepakovich valuation model 1 Chepakovich valuation model The Chepakovich valuation model uses the discounted cash flow valuation approach. It was first developed by Alexander Chepakovich in 2000 and perfected in subsequent years. The model was originally designed for valuation of “growth stocks” (ordinary/common shares of companies experiencing high revenue growth rates) and is successfully applied to valuation of high-tech companies, even those that do not generate profit yet. At the same time, it is a general valuation model and can also be applied to no-growth or negative growth companies. In a limiting case, when there is no growth in revenues, the model yields similar (but not the same) valuation result as a regular discounted cash flow to equity model. The key distinguishing feature of the Chepakovich valuation model is separate forecasting of fixed (or quasi-fixed) and variable expenses for the valuated company. The model assumes that fixed expenses will only change at the rate of inflation or other predetermined rate of escalation, while variable expenses are set to be a fixed percentage of revenues (subject to efficiency improvement/degradation in the future – when this can be foreseen). This feature makes possible valuation of start-ups and other high-growth companies on a Example of future financial performance of a currently loss-making but fast-growing fundamental basis, i.e. with company determination of their intrinsic values. Such companies initially have high fixed costs (relative to revenues) and small or negative net income. However, high rate of revenue growth insures that gross profit (defined here as revenues minus variable expenses) will grow rapidly in proportion to fixed expenses. -
Fight for Net-Profits Payments from Blockbuster Hollywood Productions
JOURNAL OF LAW, TECHNOLOGY& THE INTERNET· VOL. 4 ·No. 2 · 2013 JouRNALOFLAw, TECHNOLOGY&THElNTERNET · VoL.4 · No.2 · 2013 Personal Health Information Shared Via Social Networking HIT LOSERS: THE GOOD (FAITH) the problem until information is inappropriately disclosed results in little opportunity for a meaningful remedy. FIGHT FOR NET-PROFITS PAYMENTS Federal regulations would protect the value placed on control of PHI by attaching protection to the information itself. It is more FROM BLOCKBUSTER HOLLYWOOD realistic to place restrictions on what can be done with acquired PRODUCTIONS information than to attempt detailed regulation of this rapidly evolving industry.209 While users should also participate in the protection of their personal information through use of the privacy Max Bialystock: You were saying that, under the right settings afforded, deceptive privacy advertisement and obtuse privacy circumstances, a producer could make more money with a flop policies should not render this participation meaningless. than he could with a hit. Preemptively establishing a set of federal regulations as a benchmark Leo Bloom: Yes. It's quite possible. for addressing these kinds of issues before they arise will help mitigate Max Bialystock: You keep saying that, but you don't say how! 1 the harms that are otherwise sure to follow. Federal regulations Leo Bloom: Well, it's simply a matter of creative accounting. requiring meaningful privacy disclosures and truthful advertising, Gould: I think conservatively, you and me, we build ourselves establishing guidelines for use of PHI, and providing causes of action in to split, ten percent. (Pause.) with precedential value would keep pace with reality of the evolution Fox: Of the net. -
Asset Sales Or Loans: the Case of Lehman Brothers' Repo 105S Chao
THE ACCOUNTING EDUCATORS’ JOURNAL Volume XXI 2011 pp. 79- 88 Asset Sales or Loans: The Case of Lehman Brothers’ Repo 105s Chao-Shin Liu University of Notre Dame Thomas F. Schaefer University of Notre Dame Abstract Lehman Brothers, Inc. was one of the very early casualties of the 2008-09 worldwide financial crisis becoming the largest bankruptcy of a U.S. financial institution. Prior to its demise, Lehman Brothers periodically employed an accounting technique known as Repo 105 for its financial reporting of certain transactions involving repurchase agreements. The Repo 105 accounting allowed Lehman to temporarily reduce its debt levels during periods that included financial statement preparation. The purpose of this case is to summarize the accounting for Lehman Brothers’ Repo 105 transactions, present some classroom discussion points, and provide student review questions related to accounting and financial reporting issues underlying the Repo 105 transactions. Background On September 15, 2008, Lehman Brothers, a former global financial services firm, became the largest firm at the time to declare bankruptcy in United States history. In several time periods prior to the bankruptcy, Lehman employed an accounting technique euphemistically referred to as either “Repo 105” or “Repo 108.”Although the role of these repurchase agreements in the bankruptcy is not completely clear, many argue that the technique enabled Lehman Brothers to hide large amounts of liabilities for the purpose of misinforming investors, business partners, and regulators. -
Sarbanes-Oxley and Corporate Greed Adria L
University of Connecticut OpenCommons@UConn Honors Scholar Theses Honors Scholar Program Spring 5-8-2011 Sarbanes-Oxley and Corporate Greed Adria L. Stigliano University of Connecticut - Storrs, [email protected] Follow this and additional works at: https://opencommons.uconn.edu/srhonors_theses Part of the Accounting Commons, and the Business Law, Public Responsibility, and Ethics Commons Recommended Citation Stigliano, Adria L., "Sarbanes-Oxley and Corporate Greed" (2011). Honors Scholar Theses. 207. https://opencommons.uconn.edu/srhonors_theses/207 Sarbanes-Oxley & Corporate Greed Adria L. Stigliano Spring 2011 Sarbanes-Oxley & Corporate Greed Adria L. Stigliano Spring 2011 Adria L. Stigliano Honors Thesis Spring 2011 Sarbanes-Oxley and Corporate Greed Sigmund Freud, the Austrian psychologist, believed that every human being is mentally born with a “clean slate”, known as Tabula rasa , where personality traits and character are built through experience and family morale. Other psychologists and neurologists believe individuals have an innate destiny to be either “good” or “bad” – a more fatalistic view on human life. Psychological theories are controversial, as it seems almost impossible to prove which theory is reality, but we find ourselves visiting these ideas when trust, ethics, reputation, and integrity are violated. The Sarbanes-Oxley Act is still a relatively new federal law set forth by the Securities Exchange Commission in 2002. Since its implementation, individuals have been wondering if Sarbanes-Oxley is effective enough and doing what it is meant to do – catch and prevent future accounting frauds and scandals. With the use of closer and stricter rules, the SOA is trying to prevent frauds with the use of a created Public Company Accounting Oversight Board. -
Filed: New York County Clerk 12/21/2010 Index No
FILED: NEW YORK COUNTY CLERK 12/21/2010 INDEX NO. 451586/2010 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 12/21/2010 SUPREME COURT OF TH:E STATE OF NEW YORK COUNTY OF NEW YORK THE PEOPLE OF THE STATE OF NEW YORK By ANDREW M. CUOMO, Attorney General ofthe State ofNew York, Plaintiff, Index No. SUMMONS - against- Plaintiff designated New York ERNST & YOUNG LLP, County as the place of Trial Defendant. TO THE ABOVE-NAMED DEFENDANT: YOU ARE HEREBY SUMMONED to answer in this action and serve a copy of your answer, or if the complaint is not served with the summons to serve a notice of appearance, on the Plaintiffs attorney within twenty (20) days after the service ofthe summons, exclusive of the day of service. If the summons is not personally served upon you, or if the summons is served upon you outside of the State of New York, then your answer or notice of appearance must be served within thirty (30) days. In case of your failure to appear or answer, judgment will be taken against you by default, for the relief demanded in the complaint. Dated: December 21,2010 ANDREW M. CUOMO New York, New York Attorney General ofthe State ofNew York MARIA T. VULLO Executive Deputy Attorney General for Economic JusticeL By: J1/A MARIA T. VULLO 120 Broadway, 23rd Floor New York, New York 10271 (212) 416-8521 Counselfor Plaintiff SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK THE PEOPLE OF THE STATE OF NEW YORK By ANDREW M. CUOMO, Attorney General of the State of New York, Plaintiff, Index No. -
IP & Antitrust
September 2018 This newsletter contains an overview of recent publications concerning intellectual property issues. The abstracts included below are as written by the author(s) and are unedited. IP & Antitrust Antitrust and intellectual property in the United States and the European Union Douglas H. Ginsburg (U.S. Court of Appeals for the District of Columbia Circuit; George Mason University - Antonin Scalia Law School, Faculty) Damien Geradin (Tilburg Law & Economics Center (TILEC); University College London - Faculty of Laws) Keith Klovers (FTC) The Interplay Between Competition Law and Intellectual Property - An International Perspective, Gabriella Muscolo and Marina Tavassi eds., Kluwer Law International, Forthcoming https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3237788 The United States and the European Union each have a strong legal regime designed both to protect competition and to foster innovation. Because the competition and intellectual property (IP) laws are occasionally in some tension, each jurisdiction has developed detailed legal rules that govern when and how competition law restrictions apply to IP rights. Recognizing that innovation benefits consumers, each regime presumes a patentee may lawfully use, license, and sell its IP rights freely unless that activity would impair competition on the merits by (i) coordinating with other entities to restrain trade unreasonably; (ii) unilaterally acquiring (in the U.S.) or exercising (in the EU) market power; or (iii) transferring IP through an anticompetitive merger or acquisition. This chapter summarizes and briefly compares the applicable law in the U.S. and the EU, and then identifies the most prominent differences between the two regimes. Note that, because most of the applications discussed herein concern patents, the term patents is used throughout to refer to all kinds of IP unless the difference matters. -
The Net Profits Puzzle
Columbia Law School Scholarship Archive Faculty Scholarship Faculty Publications 1997 The Net Profits Puzzle Victor P. Goldberg Columbia Law School, [email protected] Follow this and additional works at: https://scholarship.law.columbia.edu/faculty_scholarship Part of the Business Organizations Law Commons Recommended Citation Victor P. Goldberg, The Net Profits Puzzle, 97 COLUM. L. REV. 524 (1997). Available at: https://scholarship.law.columbia.edu/faculty_scholarship/681 This Essay is brought to you for free and open access by the Faculty Publications at Scholarship Archive. It has been accepted for inclusion in Faculty Scholarship by an authorized administrator of Scholarship Archive. For more information, please contact [email protected]. ESSAY THE NET PROFITS PUZZLE Victor P. Goldberg* The use of "net profits" clauses in the movie business poses a problem. The standardperception is that Hollywood accountingresults in successful films showing no net profits. If that is indeed so, then why have they survivedfor over four decades? This Essay argues that a successful movie will fail to yield net profits only if a "grossparticipant" (a major star whose compensa- tion is in part afunction of the film's gross receipts) becomes associated with the film. Since the net profits participants typically are associated with a project first, the question becomes: Why would they be willing to sacrifice some (or all) of their contingent compensation when a gross participant is added to the project? The answer is that the net participantsare made better off, ex ante, both directly by increasing their expected earnings, and indi- rectly because the studio is willing to payfor the increasedflexibility. -
Corporate Collapse and the Role of Audit Committees: a Case Study of Lehman Brothers
World Journal of Social Sciences Vol. 7. No. 1. March 2017. Pp. 19 – 29 Corporate Collapse and the Role of Audit Committees: A Case Study of Lehman Brothers Abdullahi Adamu Dodo* This paper examined the roles and effectiveness of Audit Committees (herein ACs) as provided by corporate governance codes, in relation to corporate failures, whether the failure is as a result of the ineffectiveness of the ACs. Given that the AC is perceived to be a means of strengthening the external financial reporting process and facilitating the detection and prevention of corporate misconducts and scandals. It is believed that many financial and governance failures experienced in the recent past could be detected much earlier, had ACs been discharging their duties effectively. Secondary sourced data were used to investigate the roles of AC in the case of Lehman Brother’s corporate failure. A qualitative case study method was employed to carry out the study, by identifying and evaluating specific areas of interaction between ACs and other parties which affect audit process. The finding shows that many corporate failures are associated with the ineffectiveness of ACs, and that ACs could have prevented the occurrence of several corporate failures if they were efficient. However, the ACs cannot be 100% blamed for the failures, this is because their effectiveness is subjected to so many factors, and lack of any one factor always renders the AC ineffective. Some of the findings are consistent, while others are contrary to previous empirical studies on effectiveness of ACs. The study exposed specifically the process involved in the conduct of ACs in an organization and this add to the current debate on the need for improvement in the roles played by the AC as public gatekeepers. -
Vision 2020 Strategic Plan Vision 2020 and the Budget
City of West Hollywood Operating Budget ◆ Two Fiscal Years 2010 - 2011 & 2011 - 2012 Capital WOrk plan ◆ Five Fiscal Years 2010 - 2015 West Hollywood, California West “What Do You Like Most About WEHO?” Read the responses to this question by West Hollywood's residents on the back of each divider. PHOTOGRAPHY | Cover: Sierra Bonita Housing Project by Art Gray, Cover: Hancock Housing Project by Eric Staudenmaier, Legislative Executive Tab: City Hall at Night by Ryan Gierach Contributing City of West Hollywood Photographers: Joshua Barash, Jonathan Moore, Richard Settle ,and Brett White. West Hollywood City CounCil John Heilman John J. Duran Lindsey Horvath Abbe Land Jeffrey Prang Mayor Mayor Pro Tempore Council Member Council Member Council Member 2010-2011 2010-2011 City ManageMent teaM City Manager Director of Human Services Paul Arevalo Sam C. Baxter City Attorney Director of Housing and Rent Stabilization Mike Jenkins Allyne Winderman Assistant City Manager Director of Public Information and Joan English Prosecution Services Helen J. Goss, Esq. Deputy City Manager/ Director of Community Development Director of Public Works Anne McIntosh Oscar Delgado Director of Administrative Services Sheriff’s Department Vivian Love Captain Kelley Fraser Director of Finance and Technology Services Anil H. Gandhy Citywide Organizational Chart West Hollywood Residents City Council Commissions Advisory Boards City City Attorney (Contract) ¾ Arts and Cultural Affairs ¾ Disabilities Manager ¾ Business License ¾ Lesbian and Gay ¾ Historic Preservation ¾