FSG In The News
FSG Affiliate, Dr. Daniel S. Hamermesh,
appears on Fox News to discuss "Affirmative Action for Unattractive People?" This topic is addressed in his newly released book, Beauty Pays: Why Attractive People Are More Successful.
Meet More of Our Testifying Experts and Litigation Consultants
Mortgage-Related Litigation
Subprime securities litigation continues to dominate legal headlines. Lawsuits involve market participants in all stages of the underwriting and securitization process, including mortgage lenders, underwriters, issuers, insurers, rating agencies, accounting firms and investors. Across this spectrum of market participants and legal issues, FSG is a firm of choice to advise legal counsel on complex issues underpinning subprime mortgage litigation. Our professionals include:
- Prominent finance, economics and accounting professors from top-tier business schools;
- Financial markets industry professionals experienced in fixed income securities;
- Former audit partners with expertise in accounting, auditing, internal controls and financial reporting; and
- Consulting experts and forensic accountants with expertise in complex financial markets disputes.
Our Practice Areas
Highlights of the Year
DOUBLED OUR ROSTER
of testifying experts and litigation consultants
STRENGTHENED OUR CAPABILITIES
across our practices, especially in Accounting, Economics and Finance
OPENED A FIFTH OFFICE
in Washington DC
NEW AFFILIATION WITH
SONENSHINE PARTNERS
a New York investment bank
About FSG
Finance Scholars Group, Inc. is a privately-held consulting firm that provides litigation support, expert testimony and economic consulting services. With offices in New York, California, Illinois, Texas, and Washington DC, we operate through an integrated business model that combines the expertise of our full-time, seasoned consultants -- most with MBAs, CPAs, CFAs, or PhDs -- with an affiliate network of recognized academic and industry professionals.
For more information about FSG, please visit www.FSGexperts.com or contact Marc Vellrath, CEO, or Jeff Andrien, President, at (212) 490-5800.
FSG is not a CPA firm.
Fall 2011
Welcome to Our Newsletter
Finance Scholars Group provides litigation support, expert testimony and economic consulting services related to complex issues in accounting, economics, finance, intellectual property, marketing and valuation. Our experts include prominent professors from leading universities and experienced, highly-credentialed staff professionals, including CPAs, CFAs, MBAs and PhDs. We serve our clients throughout the country from offices in California, Illinois, New York, Texas and Washington DC.
FSG Insights is another example of our response to the growing needs of our clients. Our newsletter includes commentary on current issues of interest in our areas of expertise, examples of our work, articles authored by our experts and abstracts from current research. We hope you will find our commentary informative, insightful and useful in your professional activities. Please visit www.FSGexperts.com for more information.
In This Issue
Accounting
A Brief Overview of Trends in PCAOB Inspection Reports
Elizabeth Kroger Davis and Joe Moravy
Learn more about specific audit deficiencies identified by the PCAOB as well as broader trends and issues observed during 2007-2009. The article covers two broad areas of inquiry: (1) the audit areas that the PCAOB inspectors have focused on in their own investigations as likely involving heightened levels of audit risk; and (2) the alleged deficiencies among leading audit firms that have been identified by the PCAOB in either the application of GAAP or GAAS procedures, including controls testing.
Voluntary Disclosure and the Duty to Disclose
Dr. Ronald Dye
This working paper examines how corporations decide whether to obey mandatory financial disclosure requirements. Dr. Dye develops a model that evaluates how value-maximizing firms make disclosure decisions. According to Dr. Dye, "Just as motor vehicle drivers evaluate the benefits and costs of obeying mandatory speed limits – and bear the penalties if they get caught exceeding posted limits, corporate managers evaluate the benefits and costs of complying with disclosure requirements – and bear penalties [i.e., pay damages to harmed investors] if they choose to withhold material information from the marketplace."
Antitrust
Damages Principles as Applied to the FCPA
Mark Glueck and Dr. Jeff Armstrong
FSG Managing Director, Mark Glueck, and FSG Principal, Dr. Jeff Armstrong, look at applying market competition principles to the Foreign Corrupt Practices Act (FCPA). The FCPA has been enforced by the DOJ and SEC to combat bribes to foreign officials since 1997. Recently, FCPA enforcement actions have greatly increased and penalties in the hundreds of millions of dollars are not unusual. This article examines enforcement trends and develops ways to think about disgorgement penalties that balance the need to punish unlawful behavior without having a chilling effect on competition and economic growth.
Corporate Governance
Shareholders' Say on Pay: Does It Create Value?
Dr. Ralph A. Walkling
Say on Pay, though controversial, is now official. Corporations are required to give shareholders a vote on executive pay. Advocates argue that increased involvement by owners (the shareholders) will improve firm performance. Opponents worry about the optimal balance between managing and owning and that a subject as complicated as executive compensation is best delegated to the Board of Directors elected to monitor the firm. In an attempt to better understand the actual evidence surrounding the issue, FSG Affiliate, Dr. Ralph A. Walkling, and his colleague, Dr. Jay Cai, conducted several experiments related to Say on Pay. The results, published in the Journal of Financial and Quantitative Analysis, are summarized here.
Finance
FSG Experts Testify Before Congress on Financial Regulatory Issues
Dr. Paul Pfleiderer and Dr. Chester Spatt
Learn more about the testimony of two FSG academic affiliates before subcommittees of the U.S. Senate Committee on Banking, Housing and Urban Affairs. In May, FSG Affiliate, Dr. Chester Spatt, who is the Pamela R. and Kenneth B. Dunn Professor of Finance at the Tepper School of Business at Carnegie Mellon University, testified about the risks associated with derivatives clearinghouses. In August, FSG Affiliate, Dr. Paul Pfleiderer, who is C.O.G. Miller Distinguished Professor of Finance at the Graduate School at Stanford University, testified on the costs and benefits of higher bank capital requirements.
Labor & Employment
Beauty Pays: Why Attractive People Are More Successful
Dr. Daniel S. Hamermesh
In addition to his seminal treatise, Labor Demand, and his influential Economics is Everywhere, FSG Affiliate, Dr. Daniel S. Hamermesh, has just released Beauty Pays: Why Attractive People Are More Successful. Our beauty affects how well we succeed in the workplace, in dating and marriage, and other economic-related endeavors. Dr. Hamermesh’s book lays out the economics of the exchange of beauty for better jobs, spouses, terms on loans and other outcomes. In each case, Dr. Hamermesh evaluates the rapidly-growing bodies of evidence that allows the reader to infer the sizes of these impacts of beauty. A summary of this book is provided.
Measuring Damages on Property Values
Dr. Timothy H. Savage
The use of statistics in the courtroom continues to advance, particularly when measuring damages. In a forthcoming journal article, FSG Principal, Dr. Timothy H. Savage, addresses the use of a specific statistical technique, called "hedonic" analysis, and explores how it can be used to measure damages.