nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2008‒04‒21
three papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Rethinking public auditing institutions: Empirical evidence from Swiss municipalities By Mark Schelker; Reiner Eichenberger
  2. "Accounting Behavior of Firms Recognizing Impairment Losses"(in Japanese) By Takashi Obinata; Takako Okuda
  3. A web of intercorrelations: culture, financial reporting and social output By DIMA, BOGDAN; CRISTEA, STEFANA MARIA

  1. By: Mark Schelker (University of Fribourg, Switzerland; CREMA); Reiner Eichenberger (University of Fribourg, Switzerland; CREMA)
    Abstract: In the economic literature various political institutions designed to control the government have been analyzed. However, an important institution has been neglected so far: independent auditing institutions with an extended mandate to analyze the budget draft and individual policy proposals. We argue that auditors with an extended mandate improve transparency and provide essential information on the impact of policy proposals on common pool resources. This leads to less wasteful spending and a more efficient allocation of public resources. We empirically analyze the policy impact of local auditors with an extended audit mandate in Switzerland. Auditors, who can evaluate and criticize policy proposals ex ante to policy decisions, significantly reduce the general tax burden and public expenditures. We find similar results with different datasets. These results are robust to various changes in the econometric specification
    Keywords: Auditor, audit court, special interests, political economics, public finance.
    JEL: D70 H10
    Date: 2008
  2. By: Takashi Obinata (Faculty of Economics, University of Tokyo); Takako Okuda (Graduate School of Economics, University of Tokyo)
    Abstract: The purpose of this paper is to investigate the accounting performance of the firms recognizing impairment losses and analyze the accounting behavior of those firms. We focus on two performance measures, i.e. sales margin and earnings to average total asset (ROA). Firms recognizing impairment losses experienced the decrease in ROA before. After the recognition of impairment losses, ROA was improved. That time-series movement is consistent with the conventional view. However, profit margin did not change in such a clear manner. Although, some firms with impairment losses smoothed earnings, we can find only weak evidence on earnings increasing management. On the other hand, we detect the strong evidence of "big bath" accounting. Our results imply the defects in accounting standards of impaired assets, which permits the large room of managerial discretion.
    Date: 2008–04
    Abstract: In the context of a growing literature on the connection between cultural variables and accounting regulations, the general objective of the paper is to provide a theoretical framework and empirical evidence on the recent trends in financial reporting and on their impact on the dynamics of the social output. Thus, the specific objectives are: 1) to provide an operational definition of culture; 2) to advance a model of the interactions between culture, design of accounting regulations and the economic growth; 3) to test some of these interactions at the European based on an empirical pool data model. The dependent variable are: a dummy aiming to capture the specificity of the IFRSs endorsement in EU; the average real GDP rates of growth; and the explanatory variables which are represented by the cultural descriptors derived from World Values Survey questions. The main results of the paper consist in the following theses: the culture is relevant for the national characteristics of IFRSs implementation in European Union; and the accounting framework matters for the outcomes of social decisions.
    Keywords: Accounting harmonization; culture; financial reporting; social output; world values survey; IFRSs
    JEL: C23 M40 M49
    Date: 2008–04–12

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