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We decompose the total value loss around firms' announcements of financial restatements into components arising from investors' revisions in cash flows and discount rates. First, relative to population benchmarks, restatements represent circumstances in which the cash flow component becomes more important in explaining valuations. While we find significant contributions from both sources, with the cash flow component explaining more than 33% of the variation in stock returns surrounding restatement announcements, this component explains only 13% to 22% in comparable non-restating firms. When restatements are caused by underlying financial fraud, the discount rate impact becomes more important, explaining about 88% of return variation. On the contrary, the cash flow impact is relatively larger for firms with higher earnings persistence or restatements associated with errors. Our decomposition of the value loss helps explain returns in the post-announcement period. Firms with a higher relative discount rate impact experience a significant downward stock price drift after the initial announcement-related price decline. For firms with a higher relative cash flow impact, the evidence suggests the initial impact of the restatement announcement is more complete with no subsequent drift pattern. Our findings close gaps in the evidence on financial restatements and extend the literature on the drivers of stock price movements. [ABSTRACT FROM AUTHOR]

What is the link between stock returns and news about economic growth? Using consensus forecasts from the Philadelphia Fed's Survey of Professional Forecasters, I find that the univariate association between stock returns and gross domestic product (GDP) growth forecast surprises is indistinguishable from zero. Although consistent with prior macro-finance research, this phenomenon is intriguing if one believes that the stock market should move in sync with the economy. I consider two non–mutually exclusive hypotheses for this puzzling phenomenon. The first hypothesis is that GDP growth forecast surprises are correlated with offsetting cash flow news and discount rate news. The second hypothesis is that GDP growth forecast surprises measure news about economic growth with noise. I extract a measure of market-level discount rate news using accounting data and find evidence consistent with the hypothesis of offsetting value-relevant news. Overall, this article makes an important step toward resolving evidence of a disconnect between stock market returns and news about economic growth. More broadly, this article illustrates how accounting constructs and methods can be applied to inform macro-finance questions. [ABSTRACT FROM AUTHOR]

Mr. Schroeder, who is currently a visiting scholar at Rutgers University, provides a thorough and detailed discussion of (1) how new FASB standards are formulated and adopted and (2) how this pertains specifically to the CECL standard. His insights will provide accounting researchers with a better idea about the approach of the FASB and the careful procedures that accompany the formulation of new accounting standards. In its general move toward forward-looking accounting rules, the Financial Accounting Standards Board (FASB) adopted ASU 2016-13, I Measurement of Credit Losses on Financial Instruments i , to better align the recognition of expected credit losses with changes in credit risk. [Extracted from the article]

Public policymakers face the challenge of maintaining incentives for investments in fiber-to-the-premises (FTTP) infrastructure while simultaneously enabling effective competition. In that regard, the ability of vertically integrated operators to discriminate against downstream rivals is regarded as a major regulatory problem, especially as policing nondiscrimination obligations is notoriously difficult for vertically integrated operators. The European regulatory framework mandates functional separation to eliminate discrimination incentives. However, this measure comes with significant drawbacks and caveats and resembles a strong market and ownership intervention. The present article discusses how voluntary vertical separation can achieve the positive effect of a vertically separated industry structure without the need for strong market interventions. We use a discounted cash flow model to compare the financial attractiveness of wholesale-only and integrated business models for a greenfield FTTP rollout. We further discuss and test how public policymakers could positively affect the profitability of a wholesale-only business model. Based on our findings, we recommend public-policymakers and national regulation authorities to proactively define separation scenarios and respective ex ante regulation reductions precisely, to make adjustments to broadband state aid programs that favor wholesale-only providers, and to critically reflect the hampering effect volume and time discount wholesale tariff structures of incumbents have on the emergence of wholesale-only networks. [ABSTRACT FROM AUTHOR]

We consider a company that schedules the tasks of its projects to maximize their expected net present value (ENPV) when tasks may fail. The failure of any task terminates the project immediately. We show that for projects with certain decreasing failure rates, the ENPV optimization problem can be solved using a linear program. The main focus of our work is on how constant task failure rates contribute to decreasing project risk as tasks are completed. Under constant task failure rate, earlier completion of a task improves its probability of success and the risk profile of the project. However, it may also accelerate costs, which worsen discounted cash flow. We show the equivalence of cash flow discount rate and failure rate. Further, if task failures are independent, then the failure rates are additive. We develop a model that (a) recognizes the reduction in project risk when a task is completed, (b) implements this risk reduction into the ENPV calculation, and (c) permits optimization of the ENPV through sequencing and timing decisions for the tasks. We design an algorithm to solve the problem optimally. This enables us to validate the contributions of our work using two computational studies. The first study demonstrates a significant increase in maximum project ENPV from improved project scheduling. The second study demonstrates a significant increase in total project portfolio value as a result of better informed project selection. Our work motivates companies to develop more precise information about the failure risks of their project tasks. [ABSTRACT FROM AUTHOR]

The shift to an entrepreneurial city has inaugurated changes in the surveillance and control of urban space through a myriad of technologies and legal-moral ordering practices. This has occurred as cities attempt to reimage and remarker themselves in the context of regional, national and international inter-urban competition for capital investment. A reemphasis on the visual in the politics of the street underpins changes in the primary definition over urban spatiality and statecraft. This article examines these powerful definitional processes as a strategy to create visually pleasing space that is impacting on discourses and practices of surveillance that target forms of 'crime' and 'incivility' and contribute to the spatial production process itself. It is argued that in producing urban spaces of an entrepreneurial kind, contemporary surveillance practices need to be placed within wider debates about continuing urban inequality and the meaning of spatial justice. [ABSTRACT FROM AUTHOR]

Describes how Modern Asset Pricing (MAP) methods may be used for project evaluation in the upstream petroleum industry. Valuation of a project; Split of cash-flows into two components, namely, revenue and cost; Drawbacks of standard discounted cashflow methods; Comparison of two one-period gas production projects with different costs.

Demonstrates how Modern Asset Pricing (MAP) methods can be applied to petroleum projects where policies for the management of future flexibility must be considered within the context of the valuation. Flexibility in the timing of the exploration, delineation, and development of an oil prospect; Dependence of the value and management of flexibility on the amount of oil price and reserve size uncertainty.

Demonstrates how Modern Asset Pricing (MAP) methods can be applied to the general class of petroleum projects where the project manager does not have any future flexibility that must be analyzed. Usefulness of MAP in fiscal system analysis; Evaluation of a series of oil-field development projects under a variety of fiscal regimes; Comparison between MAP and discounted cash flow.

Describes some of the problems with discounted cash flow methods and outlines how Modern Asset Pricing (MAP) methods mitigate these problems. Historical overview of the development of MAP ideas; Systematic biases; Dependence of DCF on the choice of a project discount or hurdle rate; Comparison between the steps involved in DCF and MAP.

Presents a paper which aims to explain how option valuation may be applied to the petroleum industry. Examination of the valuation of discovered, but undeveloped oil and gas reserves; Use of discounted cash flow (DCF) approach to value petroleum properties; Description of lease-bidding and farm-out applications.

Evaluates the use of techniques of modern financial economics, with a sample application to oil development under a complex tax system. Information on conventional discounted cash flow (DCF); Bias associated with the application of DCF; Concerns about DCF; Details on the theory of valuation; Information on the price oil model.

The article discusses how to analyze the case of the trial and error process by Opt-e-scrip Inc. (OES) founder Fred Huser and his team to market the personalized medicine test (PMT). It mentions the questions about the case including the importance of the issue to the firm's outlook on success or failure, value of personal and professional networks in the firm, and the criteria to be considered in selecting the basic kit categories. It also suggests the use of concepts developed by J. A. Timmons and S. Spinelli in the situation to determine and formulate a marketing opportunity, and requires an industry analysis based on the idea of M.E. Porter. Moreover, a company valuation must be performed using the Internal Rate of Return and Discounted Cash Flow computations.