Whether Sensible Business Tool or Deceptive Scheme to Conceal, the Special Purpose Entities Are here to Stay
Bibliographic record
Abstract
This study examines whether the corporate use of Special Purpose Entities (hereafter, SPE) has changed in the wake of many well-publicized business failures and laws that followed them. In response to the Enron scandal, the Financial Accounting Standards Board (hereafter, FASB) released revised guidance in 2003 (49R) on consolidation procedures involving SPEs. Again, as the Financial Crisis unfolded in 2008, the FASB issued yet another standard, Statement No. 166, on the topic. On surface, having to consolidate SPEs may make their use less attractive to management. We discuss whether SPEs are an appropriate business practice or a deceptive tool of concealment as we test whether the use of reported SPEs by S&P 500 firms declined as a result of the Sarbanes Oxley Law (hereafter, SOX), and whether the use of SPE (or Variable Interest Entities, VIE’s) in the banking sector declined as a result of the Financial Credit Crisis of 2008, or the subsequent passage of the Dodd-Frank law. Using a random sample of 30 S&P 500 firms, we compare the average number of reported SPEs pre (2001) and post (2004) SOX. We use another sample of 30 financial institutions to compare average number of reported SPE/VIEs during pre/post SOX (2001 vs. 2004), pre/post financial crisis of 2008 (2006 vs. 2009), and pre-post Dodd Frank Law (2010 vs. 2012) periods. The results show that major business failures, credit crisis, and the subsequent laws have not curbed the appetite of the business community for SPEs.
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How this classification was reachedexpand
Full frame distilled prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.
Codex and Gemma teacher scores by category
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.003 | 0.014 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.000 | 0.000 |
| Bibliometrics | 0.000 | 0.002 |
| Science and technology studies | 0.001 | 0.000 |
| Scholarly communication | 0.002 | 0.001 |
| Open science | 0.001 | 0.001 |
| Research integrity | 0.000 | 0.001 |
| Insufficient payload (model declined to judge) | 0.000 | 0.001 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one teacher head, not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".