Accounting, Economics, and Law: A Convivium

Published by De Gruyter

Volume 4 Issue 2 -

Issue of Accounting, Economics, and Law: A Convivium

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Contents
Journal Overview

Publicly Available June 19, 2014

Frontmatter

Page range: i-iii

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Research Articles

Publicly Available October 23, 2013

Collective Action Clauses in Sovereign Bond Contracts and Investment Treaty Arbitration – An Approach to Reconcile the Irreconcilable

Tomoko Ishikawa

Page range: 63-98

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Abstract

Among various attempts to achieve swift and orderly sovereign debt restructuring (“SDR”), the approach to include collective action clauses (“CACs”) in bond contracts has been widely adopted. CACs are expected to reduce the holdout litigation risk as they allow a specified supermajority of creditors to impose changes to the restructuring terms on holdout creditors. Meanwhile, SDR faces a new challenge in the sphere of the law on foreign investment: recent investment arbitration tribunal decisions on SDR opened the gate to investment treaty arbitration for holdout creditors. Investment arbitration has potential to surpass the contractual restrictions set by CACs and therefore undermine the primary purpose of CACs to reduce the risk of holdout litigation. This may cause delay in the SDR process, which is not in the best interest of either the creditors or the debtor state’s economic recovery. The protection of foreign investments should be, therefore, balanced against the need for a swift SDR. Against this background, this article argues that a way to achieve the balance is to set limits on the use of investment treaty arbitration by holdout creditors, and defaults and restructurings of international bonds and/or the implementation of CACs should be excluded from the scope of investment treaty arbitration. This is because while liabilities under investment treaties arise from the exercise of sovereign power of the host state, such acts do not constitute acts of a sovereign with respect to the bondholders but remain in the realm of commercial transactions. To demonstrate this, this article first examines the distinction between acta jure gestionis and acta jure imperii, which has been developed in the context of the doctrine of restrictive state immunity, and finds that issuance and default of international sovereign debts have been treated as commercial activities by English and US courts, the two major dispute settlement forums for disputes arising from international sovereign bonds. Bearing in mind the difference between (a) the question these courts face (i.e. whether they have jurisdiction over contractual claims) and (b) the question before investment treaty arbitration (i.e. whether there are treaty claims to be protected by investment treaties), this article then argues that investment arbitration tribunals should reach the same conclusion as to the nature of the host state’s acts concerning international sovereign bonds/implementation of CACs. The criterion to delimit the boundaries is therefore as follows: the protection under investment treaties should not be extended to situations where the creditors’ rights are not subject to the exercise of the sovereign power of the debtor state, and where the relevant acts in the SDR process are the good faith implementation of CACs included in the original bond terms. It is hoped that the theory proposed by this article helps both SDR and the investment treaty regime to operate in harmony, without compromising each other’s interests.

Publicly Available November 19, 2013

“The People Demand Social Justice”A Case Study on the Impact of Protests on Financial Markets

Yulia Chernin, Yaron Lahav

Page range: 99-121

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Abstract

In Israel, the summer of 2011 will be remembered as the summer of social protestation. Steadily increasing food prices that showed no sign of abating motivated people across the nation to voice their discontent in massive weekly protests attended by thousands. As the movement gathered momentum and the impacts of the protests increased, it caught the attention of policy makers, food manufacturers, and food channel retailers. In this article, we show how certain important events during this summer negatively affected the price of food retailers’ stocks. We also show that a proper response to the events by retailers targeted by the protestors prevented their stock from falling. We show that a proper response of one retailer converted the goal of protestors and increased its market value.

Notes and Comments

Publicly Available July 10, 2013

The Embedded Firm: Corporate Governance, Labor, and Finance Capitalism – Commentary

George A. Mocsary

Page range: 123-136

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Abstract

Enlightened shareholder wealth maximization – long-term thinking about improving and perfecting the corporation’s products and services that translates into sustainably increased future cash flows – has almost entirely given way to an overzealous focus on short-term stock performance. This commentary synthesizes a few basic concepts before this backdrop: (1) Any theory that suggests the solution rather than a solution is bound to fail because people will learn to game it. It is more appropriate to have a number of theories – including shareholder wealth maximization – to take from the shelf and apply as needed. (2) All major corporate stakeholders exercise their often significant power over corporate affairs to their financial benefit. (3) Shareholders are not always the residual claimants of a corporation’s assets because, for example, of bankruptcy or regulation.

Book Review Symposium on ‘Accounting for Value’ by Stephen Penman (Columbia U Press, 2010)

Book Reviews

Publicly Available September 17, 2013

The Value of Accounting for Value

Huifeng Liu

Page range: 137-138

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Abstract

This is a book review for Accounting for Value . The book draws upon “Ten Commandments” instead of boring accounting jargon. Its unique value is based on renewed valuation formula to interpret the usefulness of fundamental accounting information that is consistent with historical cost accounting.

Publicly Available August 3, 2013

Commentary on “Accounting for Value” by Stephen Penman

Giuseppe Marzo

Page range: 139-164

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Abstract

“Accounting for Value” by Stephen Penman is thought-provoking in its challenge to mainstream in both finance and accounting. This fosters a reflection on models and tools employed for valuation. Some points about the book should be underlined. Penman states that he adheres to finance theory principles, but he moves away from them, as he offers a complete reinterpretation of such principles from a fundamentalist perspective. He also puts a distance between the finance theory approach and his own. Value is about business, he says, not about paper. The finance approach is focused on paper (stocks, bonds) and neglects business. Knowledge about business and prudence should be adopted by analysts in order to challenge market prices and find profit opportunities. Accrual accounting should be used instead of the discounted cash-flow approach, he says, and therefore “accounting for value” is not only about value but about accounting too. However, Penman argues, good accounting is not the one currently proposed by accounting standards.

About this journal

Objective
The Journal of Accounting, Economics, and Law: A Convivium (CONVIVIUM) aims to encourage a comprehensive understanding of the relationship between individuals, organizations, and institutions in economy and society. Among other matters, attention will be paid to financial, economic, and legal methods and languages that have an important albeit neglected role in this relationship. Concerns of finance, control, accountability, responsibility, valuation, regulation, and governance will be raised in their connection with accounting, economics, law, sociology, anthropology, history, finance, political science, and the management and policy sciences. The journal encourages works that seek to recombine disciplinary domains in response to practical and relevant issues, including theoretical advances and insights, and comparative historical perspectives.

The journal is published with the collaboration of the Maison des Sciences de l'Homme - Paris Nord

Editorial Policy
While many journals cover accounting, economics and law separately, the intersection of these fields denotes common and significant concerns in society. Institutional rules and social norms are critical to workings of organizations. Beyond their technical aspects, these issues have broader societal and global consequences. CONVIVIUM is intended to their study.

This journal will pay attention to the institutional analysis of families, businesses, non-business organizations; and their management, finance, control, accountability, responsibility, valuation, regulation, and governance. Financial, economic, and legal devices lie at the heart of business and non business governance and regulation. The journal will examine their influence in the context of social, cultural, and political economy and history.

The journal will explore links among the disciplines in order to yield theoretical insights and perspectives on practice, and seek methodological pluralism and tolerance. Proposals are welcome from sociology, anthropology, history, political science, policy studies, finance, and management sciences.

Focusing at the connections among social disciplines, CONVIVIUM is a unique outlet for inter-disciplinary and combined perspectives. It welcomes transnational co-operative contributions, cross-fertilization of ideas, and will provide a supportive peer review process.

Methodological tolerance and pluralism
Methodological tolerance and pluralism is integral to interdisciplinary research. Formal modeling and quantitative methods of research can serve as a powerful discipline to abstract from myriad of details the essentials of a phenomenon. At the same time, not all the featuring aspects of phenomena are subject to quantification. Therefore, the journal will accept both quantitative and qualitative methods devoted to enhance our understanding of the phenomena of interest. Use of qualitative, quantitative, statistical and modeling methods is recognized.

The journal recognizes that comparative and combined approaches are the most suitable for its purpose. Theoretical, normative, explanatory, interpretative, and historical approaches with contemporary implications will be included. Descriptive studies that provide syntheses of national or international issues; comments, replies and rejoinders; and replications of works published by the journal will be encouraged.

Geographical variety
The journal encourages geographically-varied contributions, particularly those that draw on localized traditions of thought and experience to speak to common concerns. Accordingly, the Editorial Board may accept submissions in languages in English, French, and Italian, with the understanding that the authors' will provide a complete English version of the accepted paper for publication.

Supportive Peer Review Process
The journal welcomes submissions of articles, symposia, and proposals for thematic issues. It supplements its screening and evaluation peer reviews by discussion and cross-fertilization between editors, authors and reviewers, allowing them to move beyond the anonymity of the process, if they so choose, which seems to have outlived its usefulness in the Internet age. Blind peer review is always a choice if this is not preferable.

The reviewers will be expected not only to consider the final publication, but also to submit (i) a relevant set of "suggestions" (further references, structural amendments, and changes), and (ii) a "comment" discussing the paper from their own viewpoint. This comment, and any rejoinder by the author, may be published together with the paper subject to the reviewer's and editor's agreement.

Moreover, each paper will be generally read by at least two reviewers and one member of the Boards, of which at least one will have a primary interest relevant to - but different from - that of the author.

In summary, the journal seeks to attract potential authors through its systematic dedication to the enhancement of their work. The journal wishes to be, in Dante Alighieri's words, a 'Convivium,' convening compelling minds worldwide and promoting significant contributions to the understanding of social phenomena.

Topics

The quality and regulation of accounting
A critique of norms and standards of accounting, such as historical cost, fair value and mark-to-market accounting
National and international institutions of accounting, governance, and regulation
Corporate, fiscal, and securities laws and regulations
Business and not-for-profit accounting, economics, and regulation
Shareholder and stakeholder values and governance
Governmental accounting, economics, and regulation
Socio-economic analysis of family and divorce
Comparative history of accounting, economic, legal thoughts and experiences
Regulation of industries and markets, including environmental and public interest issues
Experimental and behavioral accounting, finance and economics
Accounting, economic, and legal issues in relation to social and cultural norms
Accounting, economic, and legal issues in relation to the theory and analysis of financial and monetary systems
Accounting, economic, and legal issues in relation to the theory and analysis of enterprise groups and multinational firms
Accounting, economic, and legal issues of ownership and property
The role of accounting and control in financial systems, including crises, instability, and resilience

Article formats
Original Research Articles, Commentaries, and Book Reviews.

Information on submission process