nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2009‒05‒09
five papers chosen by
Alexander Harin
Modern University for the Humanities

  1. About intellectual forgery in romanian accounting law By Bunget, Ovidiu-Constantin
  2. Opinions on allocation of profit carried forward to dividends By Bunget, Ovidiu-Constantin
  3. Valuation Errors Caused by Conservative Accounting in Residual Income and Abnormal Earnings Growth Valuation Models By Skogsvik, Kenth; Juettner-Nauroth, Beate
  4. The Role of Banks in the Subprime Financial Crisis By Michele Fratianni; Francesco Marchionne
  5. Determinants of the Long Run Growth Rate of Bangladesh: An ARDL Approach By Rao, B. Bhaskara; Hassan, Gazi

  1. By: Bunget, Ovidiu-Constantin
    Abstract: Although it is the only criminal offence stipulated by accounting law, forgery foreseen by article 43 of Accounting Law no. 82/1991, republished, represents a special variant of the criminal offence foreseen by article 289 of the Criminal Code, and, in this context, we discuss about a text conjuncture and not about a conjuncture of criminal offences. The provisions of the Criminal Code will be mentioned only as regards the applicable penalty (6 months to 5 years). Article 43 contains an incrimination specific to the area covered by the special law, and the description of the elements of criminal offence is complete.
    Keywords: accounting; intellectual false; true and fair view; crime
    JEL: M41
    Date: 2009–04–30
  2. By: Bunget, Ovidiu-Constantin
    Abstract: In our opinion, the allocation of profits carried forward to dividends complies with the legal requirements in this field, as long as these results arise from current profits of previous financial years. However, an adverse aspect for companies is related to taxation of this subsequent distribution, due to the risk that tax authorities might reclassify this operation and, implicitly, apply penalties for late payment of dividends, starting with the 1st of January of the financial year following the one in which the carry forward of the profits of the previous financial year has been approved, and until the payment of related tax.
    Keywords: result carried forward; dividends; general meeting of shareholders; dividend tax
    JEL: M41
    Date: 2009–05–01
  3. By: Skogsvik, Kenth (Dept. of Business Administration, Stockholm School of Economics); Juettner-Nauroth, Beate (Deutsche Bundesbank)
    Abstract: The impact of conservative accounting in residual income valuation (RIV) and abnormal earnings growth (AEG) valuation modeling is investigated in this paper. Unconstrained and two types of constrained model specifications are evaluated regarding their ability to withstand biases in book values and earnings due to accounting conservatism. Given that the “clean surplus relation” holds and that the precision of forecasted accounting numbers is unaffected by the type of accounting principles, the unconstrained valuation models are – not surprisingly – found to be immune to conservatism. This does not hold for the constrained models, even though conservatism can be accommodated in these if the time-series specification of the conservative bias fulfils certain conditions. In a comparison between terminal value constrained models, the AEG model is found to be superior to the RIV model if the growth of the conservative bias in the terminal period is not too extreme. Comparing the information dynamics constrained models being proposed in Ohlson (1995) and Ohlson & Juettner-Nauroth (2005), the AEG model is potentially more accurate than the RIV model. However, in a company steady state setting with constant growth, there is no comparative advantage for the AEG model. Also, using the same set of forecasted accounting numbers in the information dynamics constrained RIV model as in the corresponding AEG model, the two models cannot be ranked.
    Keywords: Abnormal earnings growth model; Accounting-based valuation; Conservative accounting; Financial analysis; Residual income model
    Date: 2009–04–22
  4. By: Michele Fratianni (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); Francesco Marchionne (Universita Politecnica delle Marche)
    Abstract: The ultimate point of origin of the great financial crisis of 2007-2009 can be traced back to an extremely indebted US economy. The collapse of the real estate market in 2006 was the close point of origin of the crisis. The failure rates of subprime mortgages were the first symptom of a credit boom tuned to bust and of a real estate shock. But large default rates on subprime mortgages cannot account for the severity of the crisis. Rather, low-quality mortgages acted as an accelerant to the fire that spread through the entire financial system. The latter had become fragile as a result of several factors that are unique to this crisis: the transfer of assets from the balance sheets of banks to the markets, the creation of complex and opaque assets, the failure of ratings agencies to properly assess the risk of such assets, and the application of fair value accounting. To these novel factors, one must add the now standard failure of regulators and supervisors in spotting and correcting the emerging weaknesses. Accounting data fail to reveal the full extent of the financial maelstrom. Ironically, according to these data, US banks appear to be still adequately capitalized. Yet, bank undercapitalization is the biggest stumbling block to a resolution of the financial crisis.
    Keywords: accounting, banks, credit, crisis, fair values, risk aversion, undercapitalization
    JEL: G21 N20
    Date: 2009–04
  5. By: Rao, B. Bhaskara; Hassan, Gazi
    Abstract: This short paper conducts growth accounting to estimate total factor productivity (TFP) for Bangladesh and analyses its key determinants. According to Solow (1956) the long run equilibrium growth rate equals TFP. Estimated show that trade openness, foreign direct investment and development of financial sector increase TFP. Inflation and government expenditure have negative effects on TFP.
    Keywords: Solow Model; Total Factor Productivity; Growth Accounting; Bangladesh
    JEL: O11 O10
    Date: 2009–05–02

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