To obtain the data needed for the question, I first downloaded the dataset per instruction of the question. Specifically, I obtained the data of “rental commitments minimum – 5-year total” and “total liabilities,” assuming that these data reflect firms’ lease commitments and total liabilities. The dataset was then organized as follows:
To throw out the “bad data,” I sorted out all the rows containing blank cells by the “filter” tool and removed all the duplicated rows by the “remove duplicates” tool. One assumption I had made here was this dataset represented all the firms in the market in 2014.
a. By the “filter” tool, I learned that AT&T (ticker symbol “T”) had the largest capitalized value of operating leases, and the dollar …show more content…
6. When a manager causes (or allows) errors in accounting numbers, SEC rules created in 2002 have allowed companies to “clawback” portions of that manager’s compensation. As discussed in the attached WSJ article, however, these SEC provisions have only rarely been applied by company boards (who current decide when to apply the rules). The SEC is now considering changing the rules to remove the boards’ discretion in applying the clawback. Do you think that the proposed new rules are a good idea, or not? Be sure to consider both pros and cons, but come to a clear …show more content…
Under the new rules, mangers are expected to prepare the financial numbers with greater care and assure the accuracy of those numbers because their pays are at risk.
2) On the other hand, with the existence and mandatory execution of such rules, investors could be more comfortable relying on the financial statement numbers provided by the companies and be less concerned about the information asymmetries. As a result, with the financial statement numbers become more value relevant, the financial market is expected to become more liquid.
3) Also, the new rules better protect the shareholders’ equity by clawing back the portions that managers do not earn. This “clawback” policy guards the shareholders’ equity and protects it from misappropriation by managers’ earnings management schemes.
Cons: 1) The new rules are seemingly overreaching and diminish the power of the boards. Previously, the execution of the “clawback” policy is up to the discrepancy of the boards. The new rules mandate the “clawback” rules and therefore diminish the boards’
To throw out the “bad data,” I sorted out all the rows containing blank cells by the “filter” tool and removed all the duplicated rows by the “remove duplicates” tool. One assumption I had made here was this dataset represented all the firms in the market in 2014.
a. By the “filter” tool, I learned that AT&T (ticker symbol “T”) had the largest capitalized value of operating leases, and the dollar …show more content…
6. When a manager causes (or allows) errors in accounting numbers, SEC rules created in 2002 have allowed companies to “clawback” portions of that manager’s compensation. As discussed in the attached WSJ article, however, these SEC provisions have only rarely been applied by company boards (who current decide when to apply the rules). The SEC is now considering changing the rules to remove the boards’ discretion in applying the clawback. Do you think that the proposed new rules are a good idea, or not? Be sure to consider both pros and cons, but come to a clear …show more content…
Under the new rules, mangers are expected to prepare the financial numbers with greater care and assure the accuracy of those numbers because their pays are at risk.
2) On the other hand, with the existence and mandatory execution of such rules, investors could be more comfortable relying on the financial statement numbers provided by the companies and be less concerned about the information asymmetries. As a result, with the financial statement numbers become more value relevant, the financial market is expected to become more liquid.
3) Also, the new rules better protect the shareholders’ equity by clawing back the portions that managers do not earn. This “clawback” policy guards the shareholders’ equity and protects it from misappropriation by managers’ earnings management schemes.
Cons: 1) The new rules are seemingly overreaching and diminish the power of the boards. Previously, the execution of the “clawback” policy is up to the discrepancy of the boards. The new rules mandate the “clawback” rules and therefore diminish the boards’