Found 17 article(s) for author 'Karthik Ramanna'

Is the SEC Captured? Evidence from Comment-Letter Reviews

Is the SEC Captured? Evidence from Comment-Letter Reviews. Jonas Heese, Karthik Ramanna, April 8, 2017, Paper, “SEC oversight of publicly listed firms ranges from comment letter (CL) reviews of firms’ reporting compliance to pursuing enforcement actions against violators. Prior literature finds that firm political connections (PC) negatively predict enforcement actions, inferring SEC capture. We present new evidence that firm PC positively predict CL reviews and substantive characteristics of such reviews, including the number of issues evaluated and the seniority of SEC staff involved. These results, robust to identification concerns, are inconsistent with SEC capture and indicate a more nuanced relation between firm PC and SEC oversight than previously suggested.Link

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Ruling From the Shadows

Ruling From the Shadows. Karthik Ramanna, November 21, 2015, Opinion. “We’ve come to expect bickering from our politicians. We’re often exasperated by this state of affairs and sometimes we yearn for a quieter, gentler age, when compromise wasn’t a dirty word. But the raucous rivalry in Washington has its benefits: a political process thick with competition. By contrast, political competition in other important parts of our democracy is worrisomely thin. Narrower interests that would otherwise find themselves straining to shape political outcomes often prevail unchallenged. Somewhat perversely, we may well be better off when politics is a bazaar of ideas and incentives. Consider the technical regulations that govern capital markets — the tedious but critical details that determine how companies account for profits, whether banks have as much capital as they say they do, and how insurance and pension entities should measure their obligations …” Link

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Political Standards: Corporate Interest, Ideology, and Leadership in the Shaping of Accounting Rules for the Market Economy

Political Standards: Corporate Interest, Ideology, and Leadership in the Shaping of Accounting Rules for the Market Economy. Karthik Ramanna, 2015, Book. “Prudent, verifiable, and timely corporate accounting is a bedrock of our modern capitalist system. In recent years, however, the rules that govern corporate accounting have been subtly changed in ways that compromise these core principles, to the detriment of the economy at large. These changes have been driven by the private agendas of certain corporate special interests, aided selectively—and sometimes unwittingly—by arguments from business academia.Link

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Thin Political Markets: The Soft Underbelly of Capitalism

Thin Political Markets: The Soft Underbelly of Capitalism. Karthik Ramanna, Winter 2015, Paper. “‘Thin political markets’ are the processes through which some of the most complex and critical institutions of our capitalist system are determined—e.g., our accounting-standards infrastructure. In thin political markets, corporate managers are largely unopposed—because of their own expertise and the general public’s low awareness of the issues. This enables managers to structure the ‘rules of the game’ in self-serving ways. The result is a structural flaw in the determination of critical institutions of our capitalist system, which, if ignored, can undermine the legitimacy of the system. This article provides some ideas on how to fix the problem…” Link

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Auditor Lobbying on Accounting Standards

Auditor Lobbying on Accounting Standards. Abigail M. Allen, Karthik Ramanna, December 22, 2014, Paper. “We examine how Big N auditors’ changing incentives impact their comment-letter lobbying on U.S. GAAP over the first thirty-four years of the FASB (1973-2006). We examine the influence of auditors’ lobbying incentives arising from three basic factors: managing expected litigation and regulatory costs; catering to clients’ preferences for flexibility in GAAP; and being conceptually aligned with the FASB, particularly on the use of fair values in accounting. We find evidence that auditor lobbying is driven by...” Link

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Do Managers Have a Role to Play in Sustaining the Institutions of Capitalism?

Do Managers Have a Role to Play in Sustaining the Institutions of Capitalism? Rebecca Henderson, Karthik Ramanna, October 2014, Paper. “In a capitalist system based on free markets, do managers have responsibilities to the system itself? If they do, should these responsibilities shape their behavior when they engage in the political processes that structure the institutions of capitalism? The  prevailing view—perhaps most eloquently argued by Milton Friedman—is that the first  duty of managers is to maximize shareholder value, and thus that they should take every opportunity…” Link

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Network Effects in Countries’ Adoption of IFRS

Network Effects in Countries’ Adoption of IFRS. Karthik Ramanna, August 22, 2013, Paper. “If the differences in accounting standards across countries reflect relatively stable institutional differences (e.g., auditing technology, the rule of law, etc.), why did several countries rapidly, albeit in a staggered manner, adopt IFRS over local standards in the 2003–2008 period? We test the hypothesis that perceived network benefits from the extant worldwide adoption of IFRS can explain part of countries’ shift away from local accounting standards. That is, as more jurisdictions with economic ties to a given country adopt IFRS…” Link verified August 21, 2014

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The Auditing Oligopoly and Lobbying on Accounting Standards

The Auditing Oligopoly and Lobbying on Accounting Standards. Karthik Ramanna, Abigail M. Allen, August 19, 2013, Paper. “We examine how the tightening of the U.S. auditing oligopoly over the last twenty-five years — from the Big 8 to the Big 6, the Big 5, and, then, the Big 4 — has affected the incentives of the Big N, as manifest in their lobbying preferences on accounting standards. We find, as the oligopoly has tightened, Big N auditors are more likely to express concerns about decreased “reliability” in FASB-proposed accounting standards (relative to an independent benchmark); this finding is robust to controls for various alternative…” Link verified March 28, 2014

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The Auditing Oligopoly and Lobbying on Accounting Standards

The Auditing Oligopoly and Lobbying on Accounting Standards. Abigail M. Allen, Karthik Ramanna, August 19, 2013, Paper. “Since at least the 1970s, the audit market in the U.S. has functioned as an oligopoly, with a few large firms providing audit services for the vast majority of public companies. The past twenty-five years have witnessed a steady tightening of the oligopoly, with the number of big audit firms (hereafter, the Big N) declining from eight in the 1980s to four by 2002, while their combined market share has remained largely unchanged (e.g., GAO 2008). The tightening oligopoly in auditing is…” Link

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A Framework for Research on Corporate Accountability Reporting

A Framework for Research on Corporate Accountability Reporting. Karthik Ramanna, June 2013, Paper. “This paper provides an accounting-based conceptual framing of the phenomenon of corporate accountability reporting. Such reporting is seen as arising from a delegator’s (e.g., a citizenry) demand to hold a delegate (e.g., shareholders) to account. When effective, corporate accountability reporting can internalize certain externalities into firms’ resource-allocation decisions, although doing so will not always serve shareholders’ interests…” Link Verified October 11, 2014

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