BizQuizShethra #9
17. In Finance parlance what does "Anderson Effect" mean?
Ans: A reference to auditors performing more careful due diligence when auditing companies, in order to prevent accounting errors. This extra level of accounting scrutiny often leads to companies restating earnings even though they have not necessarily intentionally misrepresented material accounting information. The Andersen effect takes its name from the accounting firm Arthur Andersen LLP, which was indicted in a number of accounting scandals, particularly that of Enron. The Andersen effect usually occurs as a result of a change in accountants.
18. In Finance parlance, what does "Chinese Wall" mean?
Ans: Maintaining client confidentiality is crucial to any firm, but particularly large multi-service businesses. Where firms are providing a wide range of services, clients must be able to trust that information about themselves will not be exploited for the benefit of other clients with different interests. And that means clients must be able to trust in Chinese Walls. Some Wall Street scandals in recent years, however, have made some people doubt the effectiveness of Chinese Walls, as well placed executives of respectable firms have traded illegally on inside information for their own benefit.
Learning Facilitator
Prof. M. Subramanian
prof.ms14@gmail.com
17. In Finance parlance what does "Anderson Effect" mean?
Ans: A reference to auditors performing more careful due diligence when auditing companies, in order to prevent accounting errors. This extra level of accounting scrutiny often leads to companies restating earnings even though they have not necessarily intentionally misrepresented material accounting information. The Andersen effect takes its name from the accounting firm Arthur Andersen LLP, which was indicted in a number of accounting scandals, particularly that of Enron. The Andersen effect usually occurs as a result of a change in accountants.
18. In Finance parlance, what does "Chinese Wall" mean?
Ans: Maintaining client confidentiality is crucial to any firm, but particularly large multi-service businesses. Where firms are providing a wide range of services, clients must be able to trust that information about themselves will not be exploited for the benefit of other clients with different interests. And that means clients must be able to trust in Chinese Walls. Some Wall Street scandals in recent years, however, have made some people doubt the effectiveness of Chinese Walls, as well placed executives of respectable firms have traded illegally on inside information for their own benefit.
Learning Facilitator
Prof. M. Subramanian
prof.ms14@gmail.com
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