【導讀】TheStockMarket,Expectations,(1?g). g). g). valueeachasset.years.prices.experienceonly.quickly.

　　

【正文】 in financial markets increases asymmetric information problems ? Financial markets do not channel funds into productive investment opportunities Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 733 Why Do Conflicts of Interest Arise? ? Underwriting and Research in Investment Banking – Information produced by researching panies is used to underwrite the securities issued by the same panies. The bank is attempting to simultaneously serve two client groups whose information needs differ. – Spinning occurs when an investment bank allocates hot, but underpriced, IPOs to executives of other panies in return for their panies’ future business. Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 734 Why Do Conflicts of Interest Arise? (cont’d) ? Auditing and Consulting in Accounting Firms – Auditors may be willing to skew their judgments and opinions to win consulting business. – Auditors may be auditing information systems or tax and financial plans put in place by their nonaudit counterparts within the firm. – Auditors may provide an overly favorable audit to solicit or retain audit business. Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 735 Why Do Conflicts of Interest Arise? (cont’d) ? Auditing and Consulting in CreditRating Firms ? Conflicts of interest can arise when: – Multiple users with divergent interests depend on the credit ratings (investors and regulators vs. security issuers). – Creditrating agencies also provide ancillary consulting services (. advise on debt structure). ? The potential decline in the quality of information negatively affects the performance of financial markets. Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 736 Conflicts of Interest: Remedies ? SarbanesOxley Act of 2020 (Public Accounting Return and Investor Protection Act) increased supervisory oversight to monitor and prevent conflicts of interest – Established a Public Company Accounting Oversight Board – Increased the SEC’s budget – Made it illegal for a registered public accounting firm to provide any nonaudit service to a client contemporaneously with an impermissible audit Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 737 Conflicts of Interest: Remedies (cont’d) ? SarbanesOxley Act of 2020 (cont’d) – Beefed up criminal charges for whitecollar crime and obstruction of official investigations – Required the CEO and CFO to certify that financial statements and disclosures are accurate – Required members of the audit mittee to be independent Copyright 169。 2020 Pearson AddisonWesley. All rights reserved. 738 Conflicts of Interest: Remedies (cont’d) ? Global Legal Settlement of 2020 – Required investment banks to sever the link between research and securities underwriting – Banned spinning – Imposed $ billion in fines on accused investment banks – Required investment banks to make their analysts’ remendations public – Over a 5year period, investment banks were required to contract with at least 3 independent research firms that would provide research to their brokerage customers.