Better to hire big fish from little ponds; Companies are getting better at spotting great character

June 2, 2014 3:34 pm

Better to hire big fish from little ponds

By Philip Delves Broughton

Companies are getting better at spotting great character

In the recent National Football League draft, the New York Giants had an unusual criterion for selecting players from college. Obviously, it wanted big, fast, strong young men, able to endure the brutality of professional American football. But it also wanted them “clean” and upstanding, with no scandals and no behavioural problems. And of its seven draftees, five had served as captains on their college teams.

Tom Coughlin, the Giants’ manager, explained why this mattered: “It’s someone who leads by example. It isn’t about talking; it isn’t about all that stuff. It’s about playing hard, being consistent, having virtues and values that you believe in and are not willing to sacrifice them for popularity.” Read more of this post

Returns of pre-packaged fund – also known as model portfolios – hit by huge fees

June 2, 2014 7:42 pm

Packaged fund returns hit by huge fees

By Emma Dunkley

The investment returns on “pre-packaged” portfolios sold by wealth managers could vary by as much as £46,000 over a decade on a £500,000 pension due to the wide range of fees charged, a report reveals.

Research by investment platform Skandia based on data from The Lang Cat, an independent consultancy, shows the total cost of investing in these pre-packaged funds – also known as model portfolios – can have a substantial impact, knocking thousands of pounds off returns.

Model portfolios invest in a number of funds to target a level of returns and a degree of risk. Wealth managers may offer a number of such portfolios, often assigning them a risk rating to suit different types of investor. Read more of this post

China faces crucial choice over future growth; Growth can be robust or consumption-led but not both

June 2, 2014 6:08 am

China faces crucial choice over future growth

By Manoj Pradhan

Growth can be robust or consumption-led but not both

China has always divided investor opinion. The biggest debate now is about the future path China’s growth will take. Bulls say the transition to sustainable growth will be smooth; bears argue it will be volatile. Yet both agree consumption will rise to offset weaker investment. The result? Economic growth of 6 per cent, give or take, led by consumption.

This may turn out to be wishful thinking. Growth in China can either be robust, or consumption-led, but not both. If China chooses consumption-led growth, it could also be choosing much lower growth than the 6 per cent or so most have in mind.

There are three reasons for this. First, high investment growth in the past few years has added capital and supported labour income and hence consumption. Lower investment growth would weaken that support. Read more of this post

Do not be fooled by fund rankings; Memory of risks fades as crisis drops out of performance tables

Last updated: June 2, 2014 11:18 am

Do not be fooled by fund rankings

By Stephen Foley

Memory of risks fades as crisis drops out of performance tables

To the extent that good can come from calamity, the silver lining of the credit crunch is that it has begat an era of more cautious lending, tougher capital rules and wider regulation, plus more risk-aware investment processes. The crisis was so searing that its lessons will be carried by a whole generation of finance professionals.

It is not the fading of human memories that should worry us most. It is a fading of statistical memory.

As we have checked off the string of “fifth anniversaries” of credit crisis milestones, the period is being erased from some of the most important metrics used by investors to plan their portfolios – with the result that the risks in those portfolios may be unwittingly drifting upwards. Read more of this post

Australia: End of the boom; A cooling Chinese economy has hurt the mining sector, prompting protests over the tough new budget

June 2, 2014 6:19 pm

Australia: End of the boom

By Jamie Smyth

A cooling Chinese economy has hurt the mining sector, prompting protests over the tough new budget

The small coal mining town of Singleton was so over-run by contractors seeking jobs during Australia’s decade-long mining boom that some had to join waiting lists for apartments. Unemployment was virtually non-existent and businesses thrived as an army of workers arrived to work in the dozen mines that ring the town.

“It was so vibrant here it was impossible to keep good staff. Most went to highly paid jobs in the mines,” says Danny Gresham, director of the Singleton Tyre and Battery Centre, a local industry supplier. Read more of this post

New Immunotherapy Drug Data Show Promise in Treating Cancer; Drugs From Bristol-Myers and Merck Shown to Prolong Lives of Some Cancer Patients

New Immunotherapy Drug Data Show Promise in Treating Cancer

Drugs From Bristol-Myers and Merck Shown to Prolong Lives of Some Cancer Patients

PETER LOFTUS and RON WINSLOW

June 2, 2014 7:30 a.m. ET

Drugs designed to unleash the body’s own immune system against cancer are significantly prolonging the lives of some people with hard-to-treat forms of the deadly disease. WSJ’s Jeanne Whalen joins Tanya Rivero on Lunch Break to explain. Photo: Getty

CHICAGO—Drugs designed to unleash the body’s own immune system against cancer are significantly prolonging the lives of some people with hard-to-treat forms of the deadly disease.

The latest evidence: Patients with the skin cancer melanoma who received a combination of two Bristol-Myers Squibb Co. BMY -1.31% immunotherapies in a clinical trial lived an average of more than three years, researchers reported Monday. In another study, about 70% of advanced melanoma patients receiving aMerck MRK +0.12% & Co. immunotherapy were still alive after one year of treatment. Read more of this post

Economic Wind Doesn’t Fill Companies’ Sales; This is a break from the usual pattern, where public-company sales increase at a much faster pace than overall sales during economic expansions and fall much more during recessions.

Economic Wind Doesn’t Fill Companies’ Sales

JUSTIN LAHART

Updated June 2, 2014 3:48 p.m. ET

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Even with a tepid economy, it is surprising just how difficult it has been for U.S. companies to get sales going.

With nearly all the results in, it looks like revenue at companies in the S&P 500 rose 3.6% in the first quarter from a year earlier, according to S&P Dow Jones Indices. That is only marginally higher than the 3.4% gain in economywide sales, as measured by final sales of goods and services produced in the U.S.

This is a break from the usual pattern, where public-company sales increase at a much faster pace than overall sales during economic expansions and fall much more during recessions. Nor is the weakness of corporate sales a recent phenomenon. They have increased just 3.4% over the past two years, while economywide sales have risen 6.9%. Read more of this post

Apple’s Soft Launch for New Devices

Apple’s Soft Launch for New Devices

DAN GALLAGHER

June 2, 2014 5:27 p.m. ET

Apple‘s AAPL -0.69% faithful were predictably wowed at its developers’ conference kickoff. The bigger test comes this fall once customers get an actual look at Apple’s new products.

That matters because, for all the focus on software in Monday’s opening keynote, Apple remains a hardware firm, using software and content to push sales of high-end devices at high margins. And with new designs like a large-screen iPhone and maybe a smartwatch expected in coming months, the question is how to maintain those margins.

It won’t be easy. Apple may have pioneered touch screen smartphones, but competition from the likes of GoogleGOOGL -1.28% Microsoft MSFT -0.37% andSamsung Electronics 005930.SE +1.65% has forced it to raise the stakes to stay competitive. Read more of this post

Index ETFs May Not Track Benchmarks as Expected; The Basic Idea: Their Returns Trail by the Amount of Fund Expenses. But That Isn’t the Whole Story

Index ETFs May Not Track Benchmarks as Expected

The Basic Idea: Their Returns Trail by the Amount of Fund Expenses. But That Isn’t the Whole Story.

ARI I. WEINBERG

Updated June 2, 2014 5:21 p.m. ET

The party line on index exchange-traded funds is that they offer easy exposure to a benchmark, less the fund’s expense ratio. If a stock index were to gain 10% this year, for instance, and an index ETF charges 0.1% of fund assets a year in expenses, an investor in that ETF might expect to earn 9.9%.

The reality is messier. The fund’s costs to buy and sell securities, and other aspects of portfolio management, influence your return as well.

For most stock ETFs, this slippage beyond the expense ratio is usually marginal: The median added cost is four-hundredths of a percentage point for ETFs with more than $100 million in assets that invest in U.S. stocks, according to data from research firm ETF.com. Some ETFs even overcome some costs to deliver tighter index-hugging than their expense ratios would indicate.

In other cases, the lag in ETF performance is significantly greater than one might expect based on fund expenses alone. Read more of this post

A Big-Name Index Is No. 2 in Returns; The Russell 2000 Trails the S&P SmallCap 600 Over Multiple Periods

A Big-Name Index Is No. 2 in Returns

The Russell 2000 Trails the S&P SmallCap 600 Over Multiple Periods

TOM LAURICELLA

June 2, 2014 5:20 p.m. ET

The lineup of stocks in the Russell 2000 small-stock index—and all the index funds that track it—gets an annual tweaking this month. One thing that may not change: the venerable benchmark’s lagging performance versus a younger rival.

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For tracking small-company stocks, the 30-year old Russell 2000 is the go-to metric for most investors. But there’s another game in town, and it has often chalked up better total returns than the Russell: the S&P SmallCap 600. Since its launch, the S&P 600 has beaten the Russell 2000 in 12 of 19 years. The S&P benchmark is ahead for the five-, three- and one-year periods through the end of May, including leading by 20.2% to 16.8% over the latest 12 months. Read more of this post

‘Alternative’ Mutual Funds: Different, Yes. Better? Not Lately. Funds With Nontraditional Strategies Haven’t Beaten Stocks Over the Past Few Years

‘Alternative’ Mutual Funds: Different, Yes. Better? Not Lately.

Funds With Nontraditional Strategies Haven’t Beaten Stocks Over the Past Few Years

DAISY MAXEY

Updated June 2, 2014 5:22 p.m. ET

Investors spooked by the stock-market collapse of 2008 have been pouring money into so-called alternative mutual funds ever since. It’s a strategy that they hope will help cushion the blow if stocks take another dive.

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It may still do that yet. But meanwhile, many of those investors have taken a beating on their alternative funds as stocks staged an impressive recovery. Consider it a lesson in what to expect from funds whose mission is to set a different course from the stock market. If these funds perform as expected, “you’re protected on the downside, but you’re really going to pay a price if the market is raging,” says Adam Zoll, an analyst at research firm Morningstar Inc. Read more of this post

Stock Investors Can Handle the Truth; The ban on ‘locking’ markets has the effect of hiding the best prices

Stock Investors Can Handle the Truth

The ban on ‘locking’ markets has the effect of hiding the best prices.

CAMERON SMITH

June 2, 2014 7:33 p.m. ET

Most investors would be surprised to learn that current stock-market regulations actually prevent them from seeing and receiving the best price. Why? Well, in 2005 federal regulators at the Securities and Exchange Commission decided, in the immortal words of Jack Nicholson in “A Few Good Men,” that investors “can’t handle the truth” and that seeing true market prices would only confuse them.

Given the SEC’s willingness to conduct pilot programs to make U.S. markets more efficient and competitive, one would hope that eliminating a regulation that reduces transparency and thus harms investors would move to the top of the pilot-program list.

This can’t-handle-the-truth rule is a seemingly arcane part of the SEC’s Regulation NMS, implemented in 2007, that prohibits a market from displaying a quote that would “lock” the quote of another market. In other words, if one market is displaying, say an offer at $15.50 in IBMIBM +0.72% then another market should not display a matching bid in IBM at $15.50.

The simple reason is that, in theory, if a bid is the same as an offer, it should result in a trade. Indeed, the stated purpose of the prohibition is that it promotes healthy interaction between buyers and sellers and contributes to a fair and orderly market. Read more of this post

China Keeps Tiananmen Chatter Under Wraps Ahead of Anniversary

China Keeps Tiananmen Chatter Under Wraps Ahead of Anniversary

Dozens Detained, Questioned or Put Under House Arrest, Rights Groups Say

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BRIAN SPEGELE and JOSH CHIN

Updated June 2, 2014 3:14 p.m. ET

In Hong Kong, protesters recreated scenes from the Tiananmen Square crackdown. In mainland China, however, such displays were forbidden. Associated Press

BEIJING—China’s leadership is leaving little to chance ahead of this week’s 25th anniversary of the bloody quashing of the Tiananmen Square protests, having embarked on a widespread clampdown on dissent that has targeted lawyers, rights activists and journalists, among others.

Rights groups say dozens have been detained, questioned or put under house arrest to try to make sure no commemorations are held. The group Chinese Human Rights Defenders puts the number at 50 “detained, disappeared or summoned.” Read more of this post

The recent collapse of highflying technology and health-care stocks has stung buyers who paid steep prices for shares sold by the companies earlier this year in a surge of follow-on offerings

Secondary Sales Squeeze Investors

Slide in Technology, Health-Care Stocks Has Cooled Demand for Follow-On Sales

MATT JARZEMSKY

June 2, 2014 7:23 p.m. ET

A gold rush in public-company stock offerings has failed to pan out for many investors.

The recent collapse of highflying technology and health-care stocks has stung buyers who paid steep prices for shares sold by the companies earlier this year in a surge of deals known as follow-on offerings.

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That has cooled demand for the sales, meaning companies won’t see the same strong pricing that prevailed earlier in the year. At the same time, the stock prices of companies that completed offerings before the rout may come under pressure as investors use any rebounds to sell and reduce their losses.

When it comes to deals involving these once top-performing stocks, “Every purchase has been a bad purchase and every sale has been too small,” said Andrew Cupps, chief investment officer of Cupps Capital Management LLC. Read more of this post

Is this the new Lululemon? Twin entrepreneurs are heading to the US with their online activewear enterprise

Is this the new Lululemon?

June 2, 2014

Christine D’Mello

Twin entrepreneurs are heading to the US with their online activewear enterprise.

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Julie and Sali Stevanja have their eyes on one of the biggest markets in the world.

The growth of the fitness industry in Australia has spawned many associated businesses.

From 24-hour gyms and outdoor fitness facilities to sporting gear and activewear, various enterprises are tapping into the opportunities.

One sector to benefit is activewear. The local athletic apparel industry increased 8.3 per cent from 2006 to 2012, according to an industry outlook report by Ken Research.

Activewear boasts such glamorous names as adidas by Stella McCartney, Nike and Jodhi Meares’ The Upside, while Australian brands Vie Active, Running Bare and Lorna Jane are doing a roaring trade. In fact the Brisbane-based Lorna Jane will be put up for sale for a reported $500 million. Read more of this post

How to attract great clients

How to attract great clients

May 30, 2014

Big ideas are what successful business is all about. Each week Alexandra Cain takes a look at anything and everything to help your business shoot the lights out.

I’ve had a couple of instances recently where I’ve bumped heads with clients due to mismatched expectations about how the relationship should progress. It reminded me of a piece of advice I was given when I set up my business: train your clients, or they will run rings around you.

Maybe the word “train” is a bit harsh, but it is important to make sure both sides of the relationship have a common understanding about its nature. If they don’t, guaranteed it will end in tears.

I also think it’s important to keep in mind the client is coming to you for your advice. If they knew how to do the job themselves, they would. But they don’t, so they’ve asked you. Read more of this post

How Can Accounting Researchers Become More Innovative?

Accounting Horizons Vol. 26, No. 4 DOI: 10.2308/acch-10311 2012 pp. 851–870

How Can Accounting Researchers Become More Innovative?

Sudipta Basu

SYNOPSIS: This essay is based on a presentation at the American Accounting

Association Strategy Retreat in May 2011 on the assertion ‘‘Accounting research as of

2011 is stagnant and lacking in significant innovation that introduces fresh ideas and

insights into our scholarly discipline.’’ It poses the question ‘‘How can accounting

researchers become more innovative?’’ and discusses why accounting researchers may

have become less innovative. It also outlines some changes in incentive structures and

editorial processes needed to achieve greater innovation in accounting research.

Empirical Evidence on Repeat Restatements

Accounting Horizons Vol. 28, No. 1 DOI: 10.2308/acch-50615 2014 pp. 93–123

Empirical Evidence on Repeat Restatements

Rebecca Files, Nathan Y. Sharp, and Anne M. Thompson

SYNOPSIS: This study examines the characteristics and market consequences of repeat

restatements. We find that 38 percent of the restating companies in our sample restate at

least twice between 2002 and 2008, and 31 percent of repeat restatement firms restate

three or more times during the same period. Our tests identify several auditor and

restatement characteristics that distinguish single from repeat restatements at the time of

the first restatement. Repeat restatements are more likely among clients of non-Big N

auditors and those with lower ex ante accounting quality. However, firms that switch

auditors between the end of their misstatement period and the restatement announcement

are less likely to experience repeat restatements. Although subsequent restatements tend

to be less severe than the first in a series of restatements, firms suffer similar declines in

stock prices with up to three restatement announcements. In addition, firms often restate

the same fiscal periods multiple times, and these ‘‘overlapping’’ restatements are more

frequent when managers are distracted by other difficulties, such as discontinued

operations or internal control weaknesses. Our findings should be valuable to investors,

regulators, and other parties interested in repeat restatements. We provide research

design recommendations for researchers to incorporate in future research.

Are Capitalized Software Development Costs Informative About Audit Risk?

Accounting Horizons American Accounting Association Vol. 28, No. 1 DOI: 10.2308/acch-50580 2014 pp. 39–57

Are Capitalized Software Development Costs Informative About Audit Risk?

Gopal V. Krishnan and Changjiang (John) Wang

SYNOPSIS: Capitalization of software research and development costs (SDC) under

SFAS No. 86 is the only exception to SFAS No. 2 that calls for immediate expensing of

R&D costs. Although intangible assets have become increasingly relevant for firm

valuation, they remain largely unexplored in audit research. This is an important topic

because intangible assets, especially those that are internally developed, pose greater

challenges in assessing audit risk relative to tangible assets. Capitalization of SDC offers

a unique opportunity to study how auditors assess audit risk associated with the

recognition of this intangible asset. While capitalized SDC could shed light on software

products’ potential commercial success and inform the auditor about the client’s

business risk, the accounting flexibility allowed by SFAS No. 86 also increases the risk of

earnings management, and thus implies higher audit risk. Using audit fees as a proxy for

audit risk, our results indicate that capitalized SDC are negatively associated with audit

fees for firms where capitalization is inconsequential to beating analysts’ forecasts, and

also for firms with low analysts’ following. These results support the notion that

capitalized SDC signal lower business risk, especially for firms with low earnings

management risk or high private information.

Is sin always a sin? The interaction effect of social norms and financial incentives on market participants’ behavior

Accounting, Organizations and Society Volume 39, Issue 4, May 2014, Pages 289–307

Is sin always a sin? The interaction effect of social norms and financial incentives on market participants’ behavior

Yanju LiuaHai Lub, , Kevin Veenstrac

Abstract

Using alcohol, tobacco, and gaming consumption data and people’s attitudes toward these sin products to proxy for social norm acceptance levels, we show a strong interaction effect between social norms and financial incentives, which significantly influence the behavior of market participants. Specifically, institutional investors’ shareholdings and analyst coverage of sin companies increase with the degree of social norm acceptance. The association between shareholdings/coverage and social norm acceptance is less pronounced for firms with higher future expected performance. Our results show that social norms and financial incentives have a powerful interaction effect in determining the behavior of market participants, suggesting that social norms can be crossed when motive and opportunity exist.

 

Fear and risk in the audit process

Accounting, Organizations and Society Volume 39, Issue 4, May 2014, Pages 264–288

Fear and risk in the audit process

Henri Guénin-Paracinia, , ,

Bertrand Malschb, ,

Anne Marché Pailléc, 

Abstract

Relying on an ethnographic study conducted in the French branch of a big audit firm and using a psychodynamic perspective to interpret the collected data, we show that auditors’ sense of comfort (Pentland, 1993) arises only at the end of the audit process, and that the rest of the time, public accountants are inhabited primarily by fear. Fear plays a crucial but ambivalent role in auditing. On one hand, auditors and audit firms cultivate this feeling through informal and formal techniques to stimulate vigilance, encourage self-surpassment, mitigate the anesthetizing effect of habit and maintain reputation. On the other hand, audit teams’ members strive to alleviate their fear in order to form and convey their conclusions with a certain degree of comfort. In the field, driven by fear, they manage to finally become comfortable either by mobilizing their ‘practical intelligence’ (an intelligence of the body which helps them handle that which, in their mission, cannot be obtained through the strict execution of standardized procedures) or by adopting defensive strategies (such as distancing themselves from work-related problems, mechanically applying audit methodologies or relaxing their conception of a job well done). Fear and risk are closely related phenomena. Michael Power (2007a, p. 180) notes that ‘the significant driver of the managerialization of risk management is an institutional fear and anxiety’. Yet the experience of fear and the role that fear plays in risk management processes is most often overlooked in the literature. In this respect, our study contributes to ‘emotionalize’ and challenge the cognitive and technical orientation adopted by most academics and regulators in their understanding of audit risks and auditors’ scepticism. We also discuss a number of avenues for future research with a view to encouraging further examination of the role that emotions play in the audit process.

 

Fee pressure and audit quality

Accounting, Organizations and Society 39 (2014) 247–263

Fee pressure and audit quality q

Michael Ettredgea,⇑, Elizabeth Emeigh Fuerherma, Chan Li b

abstract

This study investigates the association of audit fee pressure with an inverse measure of

audit quality, misstatements in audited data, during the recent recession. Fee pressure in

a year is measured as the difference between benchmark ‘‘normal’’ audit fees and actual

audit fees. We find fee pressure is positively and significantly associated with accounting

misstatements in 2008, the center of the recession. Our results suggest that auditors made

fee concessions to some clients in 2008, and that fee pressure was associated with reduced

audit quality in that year

 

The effect of rankings on honesty in budget reporting

Accounting, Organizations and Society 39 (2014) 237–246

The effect of rankings on honesty in budget reporting q

Jason L. Browna,⇑, Joseph G. Fisher a, Matthew Sooy b, Geoffrey B. Sprinklea

abstract

We conduct an experiment to investigate the effect of rankings, which are pervasive in

practice, on the honesty of managers’ budget reports, which is important for sound

decision making in organizations. Participants in our experiment are ranked in one of four

ways: (1) firm profit, (2) own compensation, (3) both firm profit and own compensation,

and (4) randomly, which serves as our baseline condition. None of the rankings affect

participants’ remuneration. Compared to our baseline (random rankings) setting, where

participants indeed exhibit honesty concerns, we find that rankings based on firm profit

significantly increase honesty and that rankings based on own compensation significantly

decrease honesty. Participants who received both rankings were significantly more honest

than participants in the own compensation rankings condition. We did not, however, find

significant differences in honesty between the both rankings and firm profit rankings

conditions. As such, participants in the both rankings condition seemed to focus more on

the firm profit metric than on the financially congruent own compensation metric. We also

find that our results are stable across periods, suggesting that the effects of rankings

neither increased nor dissipated over time. We discuss the contributions of our study

and concomitant findings to accounting research and practice.

Hospitals’ Prices for Common Services on the Rise; Vascular and Chest-Pain Treatments Show Some of Biggest Upticks

Hospitals’ Prices for Common Services on the Rise

Vascular and Chest-Pain Treatments Show Some of Biggest Upticks

STEPHANIE ARMOUR, CHRISTOPHER WEAVER and MELINDA BECK

June 2, 2014 7:58 p.m. ET

WASHINGTON—Federal data released Monday show an increase in the average price hospitals charge to treat common conditions, with vascular procedures and chest-pain treatment showing some of biggest upticks.

The numbers from the Centers for Medicare and Medicaid Services include 2012 prices at 3,376 hospitals for the 100 most-common inpatient stays by Medicare patients. It is the second year the agency has released such data, and it reflects $57 billion in payments from Medicare, the federal insurance program for the elderly and disabled.

The data show what each hospital charges on average for individual services alongside the typically much lower rates Medicare actually pays, based on a set schedule of fees. Private insurers also negotiate their own reduced amount. Read more of this post

Funds Ship Out in Search of Returns; Some Hedge Funds Recently Are Betting Freight Rates for Shipping Are Set to Soar

Funds Ship Out in Search of Returns

Some Hedge Funds Recently Are Betting Freight Rates for Shipping Are Set to Soar

CHRISTIAN BERTHELSEN

June 2, 2014 7:14 p.m. ET

Hedge funds seeking big returns are heading for the high seas.

Ospraie Management LLC and Vermillion Asset Management LLC are among the funds that are betting freight rates for shipping are set to soar as global demand for everything from iron ore and coal to grains and sugar increases. Some investors argue that, in coming years, there won’t be enough ships to accommodate the growing need for transport, a situation that is likely to push freight rates higher.

Managers such as Louis Dreyfus Group are even starting new funds dedicated to shipping rates.

“There’s strong demand, and you don’t have the ships,” said John Kartsonas, a portfolio manager who oversees freight investments for Vermillion, a commodities hedge-fund firm with $1.1 billion under management. “For the next two years, there’s not a lot of things you can do to bring this market back to balance.” Read more of this post

New Chip to Bring Holograms to Smartphones; Ostendo’s Tiny Projectors Are Designed to Display Crisp Video, Glasses-Free 3-D Images

New Chip to Bring Holograms to Smartphones

Ostendo’s Tiny Projectors Are Designed to Display Crisp Video, Glasses-Free 3-D Images

EVELYN M. RUSLI

June 2, 2014 7:49 p.m. ET

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An Ostendo chip with an affixed lens sitting in the palm of a hand. Evelyn M. Rusli for The Wall Street Journal

Ostendo’s CEO says that ‘display is the last frontier.’ Above, a company chip that can produce a hologram.Sam Hodgson for The Wall Street Journal

In the future, virtual reality won’t require strapping a bulky contraption to your head.

Instead, imagine stepping into an empty room and then suddenly seeing life-size, 3-D images of people and furniture. Or looking down at a smartwatch and seeing virtual objects float and bounce above the wrist, like the holographic Princess Leia beamed by R2-D2 in the movie “Star Wars.” Read more of this post

Away From the U.K.’s Tech Capital, a Challenger Emerges; Hut’s Offer of Shares, Promotions and Cheap Rent Has Bright Young Things Shunning London

Away From the U.K.’s Tech Capital, a Challenger Emerges

Hut’s Offer of Shares, Promotions and Cheap Rent Has Bright Young Things Shunning London

LISA FLEISHER

June 2, 2014 7:47 a.m. ET

NORTHWICH, ENGLAND—In the gentle hills of Cheshire, more than three hours northwest of London’s buzzing startup scene, hundreds of young software engineers, salespeople and analysts have come to work at an e-retailer tucked into a manicured office park here.

The lure? What every would-be startup founder wants: the chance to run a company.

“I run four separate businesses, four separate entities,” said Adam Knappy, a 25-year-old who oversees four brands for The Hut Group, a closely held online retailer that sells a variety of products such as protein supplements, makeup and videogames. Read more of this post

Symbol of Resistance Catching Fire in Bangkok

Jun 2, 2014

Symbol of Resistance Catching Fire in Bangkok

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NEWLEY PURNELL

A woman holds up a three-fingered salute during a protest against the Thai military coup at a popular shopping mall in Bangkok on Sunday. The salute is from the movie “The Hunger Games: Catching Fire.”

Anti-coup protesters in Thailand are adopting a symbol of resistance from a science fiction movie in which citizens struggle against a tyrannical government in a dark, dystopian future.

A few dozen demonstrators on Sunday gathered in a flash-mob style protest at a Bangkok shopping mall, where many held anti-army signs and raised their hands in a three fingered salute aimed at nearby troops. Read more of this post

OMG: In China, This Language Teacher Has Swag

Jun 2, 2014

OMG: In China, This Language Teacher Has Swag

Ms. Beinecke poses with fans in Beijing. Ms. Beinecke poses with a fan wearing a fake tattoo with the Chinese characters for ‘swag’

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Jessica Beinecke gets this reaction a lot: She’s walking down the street in a Chinese city, and she’ll be recognized by one of her 400,000 Weibo followers or even one of the 40 million who have watched her videos. With platinum blonde hair and big blue eyes, the young woman who has taught Americans how to say “twerk” in Mandarin and students in China how to talk about “House of Cards” stands out. Read more of this post

Big Four Audit Firms in China in Settlement Talks With SEC Enforcers; Dispute Arose Over Access to Audit Documents About Chinese Clients

Big Four Audit Firms in China in Settlement Talks With SEC Enforcers

Dispute Arose Over Access to Audit Documents About Chinese Clients

MICHAEL RAPOPORT

June 2, 2014 7:35 p.m. ET

U.S. securities regulators and the Chinese affiliates of the Big Four accounting firms have been discussing a potential settlement of their dispute over access to the firms’ audit documents about their Chinese clients, according to a filing late Monday.

The firms—the Chinese arms of PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young and KPMG—have been in “continued settlement efforts” with the Securities and Exchange Commission’s enforcement division, according to the filing, issued by the five-member SEC.

“We’ve definitely been trying” to reach a settlement, said Amy Call Well, an Ernst & Young spokeswoman. A PwC spokeswoman confirmed the information in the filing but said she couldn’t comment further. The other two firms and the SEC couldn’t immediately be reached for comment. Read more of this post

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