Juan frequently identifies new and challenging opportunities…
Questions
Juаn frequently identifies new аnd chаllenging оppоrtunities fоr his subordinates. He can be described as practicing this style of leadership:
Chооse оne of the following two questions to аnswer. Question 1: Finаnciаl reporting informs investment and financing decisions in capital markets and investment and production decisions in product and labor markets that affect aggregate economic and production decisions. In a recent study, Beneish, Farber, Glendening, and Shaw (2022) compare seven fraud prediction models with a cost-based measure that nets the benefits of correctly anticipating instances of fraud against the costs borne by incorrectly flagging non-fraud firms. Two widely used proxies for the ex-ante likelihood of financial misreporting—M-Score and F-Score—are the only models providing a net benefit. What is the “M-Score”? What is the “F-Score”? What are the most recent findings about the M-Score and the F-Score? Beneish et al. (2023) note that the potential for misreporting to have real effects arises because it represents misinformation on which firms base their investment, hiring, and production decisions. For example, Beatty, Liao, and Yu (2013) provide evidence that peers react to high-profile firms’ fraudulent reports by increasing investment during the fraud periods vis-a-vis the pre-scandal period. Durnev and Mangen (2009) suggest that after restatements publicly reveal instances of misreporting, peers of misreporting firms realize the suboptimal nature of their decisions and curtail their investment and production activity. Focusing on the real effects of misreporting, identify a research question and develop one hypothesis with reference to applicable literature and theories. To test the hypothesis, what model will you use? What would be your key empirical variables and predictions for each variable? What does your data look like? OR Question 2: Financial misreporting, misconduct, and fraud are popular research topics. 1) Discuss the proxies and databases in the financial misconduct research. As an illustration, your discussion should cite at least three articles that examine the incidences and outcomes of material financial misstatements. 2) One article finds that peers react to high-profile firms' fraudulent reports by increasing investment during the fraud periods vis-a-vis the pre-scandal period. Assume a difference-in-difference research design is adopted to control for industry and time effects. To test this hypothesis, what model will you use? What would be your key empirical variables and predictions for each variable? What does your data look like?