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on Accounting and Auditing |
| By: | Dimitrios D. Thomakos (University of Peloponnese, Greece and The Rimini Centre for Economics Analysis, Italy.); George Papanastasopoulos (University of Peloponnese, Greece); Tao Wang (Queens College, City University of New York, USA) |
| Abstract: | In this paper, we investigate the informational content of retained and distributed earnings for future profitability and market mispricing. We find that investors act as if the components of retained earnings (current operating accruals, non current operating accruals and retained cash flows) have similar implications for future profitability, leading to an overvaluation of their differential persistence. They also do not distinguish between the distinct properties of distributed earnings, correctly anticipate the persistence of net cash distributions to debt holders (net debt repayment) and underestimate the persistence of net cash distributions to equity holders (dividends minus net stock issues). Our evidence suggests that the accrual anomaly documented in the accounting literature and the anomaly on net stock issues documented in the finance literature could be a subset of a larger anomaly on retained earnings. Overall, our findings on the sources of this anomaly, indicate that it is primary attributable to investorÕs limited attention or limited cognitive power on understanding managerial empire building tendencies and managerial violation of accounting principles. |
| Keywords: | retained earnings, distributed earnings, accruals, net stock issues, earnings management. |
| JEL: | M4 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:46-07&r=acc |
| By: | Giorgio Coricelli (CNRS); Mateus Joffily (CNRS); Claude Montmarquette (CIRANO, University of Montréal); Marie-Claire Villeval (CNRS-GATE, University of Lyon and IZA) |
| Abstract: | The economic models of tax compliance predict that individuals should evade taxes when the expected benefit of cheating is greater than its expected cost. When this condition is fulfilled, the high compliance however observed remains a puzzle. In this paper, we investigate the role of emotions as a possible explanation of tax compliance. Our laboratory experiment shows that emotional arousal, measured by Skin Conductance Responses, increases in the proportion of evaded taxes. The perspective of punishment after an audit, especially when the pictures of the evaders are publicly displayed, also raises emotions. We show that an audit policy that induces shame on the evaders favors compliance. |
| Keywords: | tax evasion, emotions, neuro-economics, physiological measures, shame, experiments |
| JEL: | C91 C92 D87 H26 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp3103&r=acc |
| By: | Dimitrios D. Thomakos (University of Peloponnese, Greece and The Rimini Centre for Economics Analysis, Italy.); George Papanastasopoulos (University of Peloponnese, Greece); Tao Wang (Queens College, City University of New York, USA); Gikas Hardouvelis (University of Piraeus, Greece) |
| Abstract: | In this paper we investigate the relation of the anomalies on accruals and net stock issues with the value/glamour anomaly. Our findings reveal, that hedge strategies on retained earnings, total accruals, net operating assets (accrual proxies), cash distributions to equity holders (net stock issues proxy), past sales growth, book to market ratio and free cash flow yield (value/glamour proxies) constitute statistical arbitrage opportunities. We also find that the generated abnormal returns from hedge strategies that combine information on retained earnings (and on other accrual proxies) or cash distributions to equity holders and value/glamour proxies are significantly higher than those from each proxy alone. Thus, if one agrees that the notion of statistical arbitrage is incompatible with market efficiency our evidence suggests that the anomalies on accruals and net stock issues capture distinct forms of mispricing with the value glamour anomaly. Alternatively, our evidence suggests the specification of a broader set of risk factors to existing asset pricing models. |
| Keywords: | accrual anomaly, net stock issues anomaly, value/glamour anomaly, market efficiency |
| JEL: | M4 |
| Date: | 2007–07 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:47-07&r=acc |
| By: | Sandrine Spaeter; Marc Willinger |
| Abstract: | In this paper, we investigate an audit policy that allows a regulator to control past declarations of an agent who is caught to fraud in the current period or to adopt an action that is not desirable for Society. Coupled with redistribution effects due to the production of a public good, we show that retroactivity has not always the desired effect on the level of evasion or the level of effort, once the agent has decided to deviate from a given objective. Nevertheless, we derive conditions under which retroactivity lessens fraudulent behaviors, in quantity and in value. As a related result, authorities should communicate about how they use the individual contributions but information should not be completely transparent in order to fight efficiently against deviation. Redistribution and retroactivity may have opposite effects on the behavior of the agent when combined together. |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:lam:wpaper:06-12&r=acc |
| By: | Antonella Cugini (Università di Padova); Giovanna Michelon (Università di Padova) |
| Abstract: | Notwithstanding a growing interest towards performance management systems for universities, little is known on their application to academic departments. Being an institution dedicated to research, a department presents specific characteristics: creativity, professional autonomy, low degree of repetitiveness, uncertainty on results, unclear relation between input and output. Such peculiarities make the evaluation and measurement of its performance particularly difficult. The purpose of the paper is the exploration and development of a performance evaluation approach which is suitable for the particular features of an academic department. As this paper is explorative in nature, we use a qualitative methodology, to identify dimensions of performance evaluation suitable for application to an academic department. Data are collected for the case study of a department of the University of Padua, Italy. After identifying the relations between the four perspective of the balanced scorecard and identifying the strategic maps, the case study proposes a set of goals and measures which are suitable to satisfy the managerial needs of the analyzed department. The paper contributes to the performance evaluation literature in three main ways. It extends the concept of customer by considering a wider systems of stakeholders; it emphasize the strategic role of the financial dimension as a driver for achieving the mission and it highlights the need to coordinate the different stakeholders involved in the enhancement of strategy, from academic and administrative staff, to different types of customers and the community in general. |
| Keywords: | performance measurement, strategy map, balanced scorecard, university, departments |
| JEL: | M10 M41 |
| Date: | 2007–11 |
| URL: | http://d.repec.org/n?u=RePEc:pad:wpaper:0054&r=acc |