nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2008‒03‒08
four papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Fundamentals of Functional Business Valuation - Polish Version (Later Version of 4621) By Matschke, Manfred Jürgen; Brösel, Gerrit
  2. Discourses of transparency in the Intellectual Capital reporting debate: Moving from generic reporting models to management defined information By Nielsen, Christian; Madsen, Mona Toft
  3. Integrating Income Tax and National Insurance: an interim report By Stuart Adam; Glen Loutzenhiser
  4. Stock Market Liquidity and Firm Performance: Wall Street Rule or Wall Street Rules? By Vivian W. Fang; Thomas H. Noe; Sheri Tice

  1. By: Matschke, Manfred Jürgen; Brösel, Gerrit
    Abstract: After a brief overview of different company valuation theories, this paper presents the main functions (decision, arbitration, and argument or negotiation function) of company valuation according to the functional (i.e. purpose-oriented) theory. The main body of the paper focusses on the decision function and shows how the decision value can be derived as a subjective limit value that different economic agents assign to the company. Finally, the differences between the functional and the market value oriented theory of company valuation are discussed.
    Keywords: Unternehmensbewertung; business valuation; decision function; decision Value; subjective limit value; waluacja przedsiębiorstwa; funkcjonalna waluacja przedsiębiorstwa; subiektywna waluacja przedsiębiorstwa
    JEL: G34 M4
    Date: 2008–02
  2. By: Nielsen, Christian (Department of Business Studies, Aarhus School of Business); Madsen, Mona Toft (Department of Management)
    Abstract: Our study of the field intellectual capital reporting indicates the necessity of an emancipation from the normative understanding of transparency being merely a question of disclosing as much information as possible. Through a critical discourse analysis of the intellectual capital reporting debate, we identify a movement from generic reporting models to frameworks based on management defined information. The latter discourse argues that transparency is a question of providing fewer, more structured disclosures as well as focusing on illustrating flows, e.g. of intellectual capital and value creation, rather than providing static descriptions of passives and assets. In essence, our theorization of the intellectual capital reporting agenda suggests that we will see a shift in companies’ supplementary reporting practices in the years to come; a shift that will invoke less amounts of voluntary information in business reporting, e.g. concerning intellectual capital and sustainability. This, however, has the implication that users of intellectual capital reporting may become victims of management’s selected “right” information, by Strathern (2000) designated as the “tyranny of transparency”.
    Keywords: Transparency; Intellectual Capital; Business Reporting; Discourse Analysis
    Date: 2007–03–13
  3. By: Stuart Adam (Institute for Fiscal Studies); Glen Loutzenhiser
    Abstract: <p><p><p>Income Tax and National Insurance are now sufficiently similar that merging them appears to be a plausible option, yet still sufficiently different that integration raises significant difficulties. This paper surveys the potential benefits of integration - increased transparency and reduced administrative and compliance costs - and the potential obstacles, assessing the extent to which each of the differences between Income Tax and NICs - in particular the contributory principle, the levying of an employer charge and the differences in tax base - constitute serious barriers to integration. The paper concludes that few of the difficulties look individually prohibitive, but that trying too hard to avoid significant reform of the current policy framework could produce a merged tax so complicated as to nullify much or all of the benefits of integration.</p></p></p>
    Keywords: Taxation, social insurance, administration
    JEL: H24 H25 H83 K34
    Date: 2007–12
  4. By: Vivian W. Fang; Thomas H. Noe; Sheri Tice
    Abstract: This paper investigates the relation between stock liquidity and firm performance. We find that firms with liquid stocks have better firm performance as measured by the market-to-book ratio. This result holds even when we include industry or firm fixed effects, control for idiosyncratic risk, control for endogenous liquidity with instrumental variables, or use alternative measures of liquidity. To identify the causal effect of liquidity on firm performance, we study an exogenous shock to liquidity---the decimalization of stock trading---and document that the increase in liquidity around decimalization improved firm performance. We next investigate the causes of liquidity’s beneficial effect and find support for liquidity enhancing performance by increasing the information content of market prices, and strengthening the incentive effects of performance based compensation contracts. We find no evidence that liquidity enhances blockholder intervention. Finally, momentum trading, analyst coverage, investor overreaction and liquidity’s valuation effects do not appear to drive our results.
    Keywords: Stock Market Liquidity; Firm Performance; Feedback Mechanism; Managerial Compensation; Blockholder Intervention.
    Date: 2008

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