nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2006‒04‒01
seven papers chosen by
Alexander Harin
Modern University for the Humanities

  1. The Changes of Accounting Standards and Structural Reform in Japanese companies By Yasuhiro Asami
  2. Pension accounting and corporate earnings: the world according to GAAP By Peter Fortune
  3. Differences between domestic accounting standards and IAS: measurement, determinants and implications By Ding, Yuan; Hervé, Stolowy; Hope, Ole-Kristian; Jeanjean, Thomas
  4. Rent Extraction by Large Shareholders: Evidence Using Dividend Policy in the Czech Republic By Jan Hanousek; Jan Bena
  5. Corporate Debt Restructuring and Public Financial Institutions in Japan -Do Government-Affiliated Financial Institutions Soften Budget Constraints?- By Kenya Fujiwara
  6. Tax Evasion, Public Investment, and Welfare Effects of a Tariff Reform By Manoj Atolia
  7. Should You Turn Yourself In? The Consequences of Self-Policing By Sarah L. Stafford

  1. By: Yasuhiro Asami (Japan Science and Technology Agency)
    Abstract: In the business year beginning on April 1 1999 or later our accounting standards have been greatly changed. Concretely (1) the disclosure of consolidated financial statements as audited documents, (2) onsolidated statements of cash flows, and (3) tax consequences accounting have been introduced in the business year beginning on April 1 1999 or later. In addition (4) the standard for fair value accounting of financial instruments and (5) the accounting standard for employees’ retirement benefits (Hereafter this accounting standard will be abbreviated to retirement benefits accounting) have been introduced in the business year beginning on April 1 2000 or later. This has been often called, ‘Big Bang Reforms of Accounting Standards’ in our country. The reforms of accounting standards are still now in progress.
    Keywords: accounting standards, Japan, reform, structural reform
    JEL: D21 D23 D24 H25
    Date: 2006–12
  2. By: Peter Fortune
    Abstract: This study’s underlying premise is that current pension plan accounting has two important negative effects. First, it distorts the measurement of earnings and net worth in the short run, as well as the pattern of earnings over future periods. Second, this distortion can send incorrect signals to investors about a firm’s health, resulting in the mispricing of a firm’s outstanding debt and equity instruments. The author demonstrates how these distortions are introduced, examines the magnitude of the distortions, and discusses proposals for reform.
    Keywords: Corporations - Accounting ; Pensions
    Date: 2005
  3. By: Ding, Yuan; Hervé, Stolowy; Hope, Ole-Kristian; Jeanjean, Thomas
    Abstract: This study analyzes determinants and effects of differences between Domestic Accounting Standards (DSA) and Internationake Accounting Standards (IAS).
    Keywords: International accounting differences; institutional factors; earnings managements; synchronicity
    JEL: M40 M41
    Date: 2005–03–30
  4. By: Jan Hanousek; Jan Bena
    Abstract: Using cross-sectional analysis of corporate dividend policy we show that large shareholders extract rents from forms and expropiate minority shareholders in the weak corporate governance environment of an emerging economy. By comprising divideneds paid across varying corporate ownership structures- concentration, type, and domicile of ownership - we quantify these effects and reveal that they are substantial. We find that the target payout ratio for firms with majotiry ownership is low but that the prescence of a significant minority shareholder increases the target payout ratio and hence precludes a majority owner from extracting rent. In contrast to other studies from developed markets, our unique dataset from teh Czech Republic for the period 1996-2003 permits us to take account of teh endogencity of ownership.
    Date: 2006–03
  5. By: Kenya Fujiwara (Kobe University)
    Abstract: There are two different views on the effects of public financial institutions on corporate debt restructuring: the soft budget view and the hard budget view. The former view, which is held by Kornai (1979, 1983), Dewatripont and Maskin (1995), and others insists that because centralized public financial institutions have difficulty committing themselves to refrain from providing additional funds to distressed firms, corporate reorganizations often result in overinvestment. On the other hand, the latter view argues that public financial institutions should prefer corporate liquidation rather than the continuation of business because public financial institutions are secured by mortgages to a greater extent and are more reluctant to forgive the debts than private financial institutions.
    Keywords: public financial institutions, debt restructuring, soft budget view, hard budget view, Kornai, Dewatripont, Maskin, corporate reorganizations, corporate liquidation, private financial institutions, debt
    JEL: G28 G33 G34
    Date: 2006–12
  6. By: Manoj Atolia (Department of Economics, Florida State University)
    Abstract: For developing countries the usual gain from a tariff reform must be balanced against the losses that arise due to their limited ability to raise domestic taxes and prevent tax evasion. If the revenue loss from the tariff reform is not fully offset, the government budget shrinks. As public investment is much more productive on the margin than the private investment in developing countries, the resulting loss from the fall in public investment must be offset against the gain from the tariff reform. In addition, to the extent a coordinated domestic tax reform is implemented, there is a distortionary loss due to tax evasion that must also be balanced against such gain. While in the second-best world, it is always possible to lose from a tariff reform, such an outcome becomes quite likely when very plausible such constraints are imposed on the government policy in developing countries. The paper, therefore, further strengthens the criticism of the IMF and World Bank's recommendation to developing countries to reduce border taxes. This criticism can also be reinterpreted as an argument about the proper sequencing of economic reforms.
    Keywords: Trade Reform, Welfare Analysis, Public Investment, Tax Evasion
    JEL: D61 D63 F13 H26
    Date: 2003–10
  7. By: Sarah L. Stafford (Department of Economics, College of William and Mary)
    Abstract: Facilities that self-police under the Environmental Protection AgencyÕs Audit Policy are eligible for reduced penalties on disclosed violations. This paper investigates whether self-policing has additional consequences, in particular whether self-policing reduces future enforcement activity. Using data on U.S. hazardous waste enforcement and disclosures, I find that facilities that self-police are rewarded with a lower probability of inspection in the future, although facilities with good compliance records may receive a smaller benefit than facilities with poor records. Additionally, facilities that are inspected frequently are more likely to disclose than facilities that face a low probability of inspection, perhaps because they have more to gain from decreasing future enforcement efforts.
    Keywords: Self-Policing, Enforcement, Targeting, Compliance, Hazardous Waste
    JEL: K32 K42 Q52 Q58
    Date: 2006–02–23

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