In this study, we conducted an empirical investigation of whether it is possible to rely on two versions of the Altman Model (1968) to predict financial failure of publicly traded companies in Israel between 2000 and 2007. The findings of the study indicated that given the sample and the study term, the preferable model for predicting financial failure of Israeli companies is the Ingbar version of the Altman Model with a critical value of 1 and with the addition of the gray area. In particular, a survival index above 1 predicts a high likelihood of survival, while a lower index predicts low likelihood of survival. According to our study, the model is able to predict bankruptcy of companies with a 95% accuracy rate one year prior to bankruptcy and with an 85% accuracy rate two years prior to bankruptcy.

This paper presents an empirical investigation into the issue of earnings management in the Amer- ican banking system under SFAS 115. The study includes panel data on 88 bank holding compa- nies (BHCs) for the years 1997-2000 on a quarterly basis resulting in 1,408 observations. As hy- pothesized, it was found that the motivation of bank managers to engage in gains trading is nega- tively related to their earnings level before tax and securities net gains.

The purpose of this study is to examine the association between corporate governance characteristics and external audit fees in large public companies in Israel. The results show that board independence (proportion of external directors on the board of directors) and audit committee diligence (number of meetings) are positively and significantly associated with audit fees. The results are consistent with the demand-based perspective of audit services, wherein firms with strong corporate governance characteristics demand additional assurance from the auditors and higher audit quality, resulting in higher external audit fees.The findings of this initial study in Israel offer support for the new proposal of Amendment 10 to the Israeli Companies Law that calls for general adoption of strict principles of corporate governance, including increasing the number of independent directors on the board of directors and expanding the roles of the board's audit committee.

This study presents an empirical examination of the relationship between large banks' investment in available-for-sale securities (AFS) and the interest rate risk of their securities. It concentrates on the years, 1997-2000, when  Held-to-maturity (HTM) Securities -Debt securities that management has the positive intent and ability to hold to maturity.  Trading Securities -Debt and equity securities purchased with the intent to sell in the near term.  Available-for-sale (AFS) Securities -Debt and equity securities not classified as either HTM or Trading securities.The accounting for HTM securities is based on the principle of historical cost: unrealized holding gains and losses are not recognized. In the case of Trading and AFS securities, the accounting is based on fair value (usually the market price). Unrealized holding gains and losses are recorded in income for trading securities and in equity for AFS securities. Barth et al. (1995) found significant increases in the volatility of bank capital under fair value accounting of securities. Because capital ratio is an accepted stability measure in the banking industry, unrealized losses on AFS securities included in capital may signal safety and soundness problems. This could have an adverse effect on regulators and depositors.Previous studies (Ernst and Young, 1993, 1994;Razaee and Lee, 1995, Beatty, 1995) found that managers planned and reduced the maturity of the portfolio in 1993 and 1994, before and immediately after the implementation of SFAS 115. According to Beatty (1995), shortening the maturity of securities may have an