nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2015‒05‒30
six papers chosen by
Alexander Harin
Modern University for the Humanities

  1. How Does Foreign Aid Affect the Relationship between IFRS Adoption and Foreign Direct Investment? By EFOBI Uchenna; NNADI Matthias
  2. Accounting learning preferences: the role of visualisation By Mouhcine Tallaki; Enrico Bracci; Monia Castellini
  3. Towards an International Tax Order for the Taxation of Retirement Income By Bernd Genser
  4. Empirical Research on Depreciation of Business R&D Capital By TONOGI Akiyuki; KITAOKA Michiyo; Wendy C. Y. Li
  5. Improving profitability forecasts with information on earnings quality By Demmer, Matthias
  6. Corporate governance of banking group: international recommendations, european policies and national practices By Nedelchev, Miroslav

  1. By: EFOBI Uchenna (Covenant University, Nigeria); NNADI Matthias (Cranfield University, UK)
    Abstract: This paper constructs a theoretical model to explain the relationship between IFRS adoption, FDI and foreign aid. Using the SGMM estimation technique to check the issue of endogene-ity and reverse causality, this relationship was examined on 92 countries for the period 2003-2012. Overall, IFRS adoption attracts more aid when conditioned on foreign aid; however, when disaggregating foreign aid, the effect of foreign aid on the nexus was contradictory, while multilateral aid flow was positive. This result remained consistent despite the battery of checks.
    Keywords: Accounting Standards; Foreign Aid; Foreign Direct Investment; Globalisation; IFRS Adoption
    Date: 2015–05
  2. By: Mouhcine Tallaki; Enrico Bracci; Monia Castellini
    Abstract: The accounting education environment is changing rapidly due to the increasing attention paid by public and private University and Institutions to the efficacy of course delivery and design. The learning preferences and attitudes of students represent an important starting point to develop an efficient and effective educational programme. Learning theories suggest that learning styles and preferences influence the effectiveness with which individuals learn. The success of educational programmes depends to some degree on students’ acceptance and ability to adapt their learning to the new technologies (Richardson et al , 2013). Learning preferences may include also the visualization as educational tools. In recent years the relevance of visualisation has increased, since it may support a clearer and more efficient representations of accounting information (Libby, 1981; Smith and Taffler. The visualization could stimulate and enhance the engagement of the student in the process of learning (Yalamova, 2010). But little is known about the pedagogical benefits of the use of visualization as defined by accounting literature. The paper tried to highly the gap between learning theory and the concept of visualization in accounting of both accounting students and academics. We present an Italian perspective on the role of visualisation, as learning preference, in accounting education, both in undergraduate and postgraduate courses. We used survey method, submitting Fleming’s questionnaire (Fleming & Baume, 2006) to determine the relevance of visualisation in learning accounting subject.
    Keywords: Accounting; Visualisation; Learning preferences; Vark; Italy
    JEL: A20 M40 M41
    Date: 2015–05–15
  3. By: Bernd Genser (Department of Economics, University of Konstanz, Germany)
    Keywords: income tax reform, taxation of pensions, deferred income taxation
    JEL: H2 H24 H55
    Date: 2015–05–26
  4. By: TONOGI Akiyuki; KITAOKA Michiyo; Wendy C. Y. Li
    Abstract: The Japanese Government is planning to change the estimation methods of the Japanese System of National Accounts (JSNA) in 2016, from the 1993 System of National Accounts (SNA) to the 2008 SNA. Following this change, research and development (R&D) expenditures will be counted as investments and will be capitalized in the GDP accounts. To capitalize R&D expenditures, we need to estimate R&D capital stock; hence, the methods of estimating R&D depreciation rates are critical. This paper investigates the R&D depreciation in the JSNA based on the methodology developed by Li (2012a). By adopting Li’s model and using data on industry outputs and R&D investments from Japan, we estimate the R&D depreciation rates of 20 Japanese industries. The estimates we obtain are consistent with the results of prior studies and the recent survey results reported by Miyagawa et al. (2014).
    Date: 2015–03
  5. By: Demmer, Matthias
    Abstract: Prior literature documents the usefulness of the DuPont disaggregation for predicting firms future profitability, operating income, and stock market returns. In addition, research also emphasizes the importance of earnings quality information. However, there is a lack of research examining how earnings quality affects forecasts of profitability. This paper explores whether different earnings quality factors moderate the accuracy of profitability forecasts. This study contributes to the existing literature along three dimensions. First, contrary to financial statement analysis studies, I find that changes in profit margin provide incremental information for predicting changes in future return on assets. After controlling for earnings quality factors, the incremental usefulness of this accounting signal increases significantly. Second, this paper contributes to the earnings quality literature by providing an approach as how to include this information into forecasts of profitability. In doing so, I incorporate the main drivers of earnings quality (i.e. fundamental performance and the accounting system) into profitability forecasts. Last, the paper adds to the literature on how capital market participants perceive accounting information. I document that both analysts and investors appear to efficiently incorporate earnings quality information in their investment decisions.
    Keywords: financial statement analysis,forecasting profitability,DuPont analysis,earnings quality,conservative accounting,persistence,growth,return on net,operating assets
    JEL: M41
    Date: 2015
  6. By: Nedelchev, Miroslav
    Abstract: The new institutional framework put on the agenda a review of established models and introducing new perspectives in economics. The role of banking groups for economic growth and competitiveness place corporate governance practices of critical analysis. The development of banking in the twentieth century brought to the fore the advantages of conducting activities cross-border. The global economic recession determines the corporate governance of international banking groups as a source of the financial crisis and as a means of reducing its effects. The present stage of development of society is characterized by actions to improve practices in corporate governance at the international, regional and national level. The monograph examines the dynamics of the corporate governance of international banking groups. The analysis of changes in corporate governance encompasses recommendations of international organizations, policies in the EU and practices in Bulgaria. The beginning of conglomerisation in the second half of the twentieth century it was laid by national policies on competitiveness. The deregulation and the related movement of capital identified cross-border activities of banks as a driving force for economic growth. The differences in the laws of individual countries led to organizational units, which began to offer financial services with increased risk. Owing to the new services, the competent authorities have taken several measures to address the transfer of risk across national borders. The international activities of banking groups highlighted the need for international recommendations for coordination of actions at the regional level to improve practices in corporate governance. Banking groups play a key role for development and function of the economy. Their practices of corporate governance have an effect on rest players in market economy. National legislations in some countries have allowed the creation of complex banking structures and financial services that lead to emergent and distribution of financial crisis. To decrease the negative effects by crisis, international organizations initiate a series of measures for improvement of corporate governance practices and prevention of future crises. The changes in corporate governance of transnational banking groups are in following order: recommendation by international organizations -> policies of parent banks in European Union -> practices in subsidiary banks in Eastern Europe. The dynamics of good practices in corporate governance is depended on the role of players. Shareholders have interest to increase their wealth by company deals. Parallel with property rights, shareholders have non-property rights that must exercise advisable. Strict attendances and exercise rights at general meeting of shareholders will contribute to control over managers. Main contribution for bank stability plays the institutional investors which role was decreased because of missing information for their voting policy. Managers have financial incentives to increase shareholders’ wealth by risk undertaking. The board must reconsider the remuneration policy for managers. This recommendation will bring to control over the risk management. Auditors have a double status – to decrease information asymmetry between principal and agent, and to confirm to stakeholders, incl. regulators, for correct preparation of reports. The changes regard audit as a part of regulation policy at national and international levels. Auditors are in charge of assessment of remuneration policy which target is decrease of practices for taking of excessive risk. Regulators of some countries allow the creation of complex organization structures and financial services that are difficult for control and assessment. Decisive factor for stability of economy is concluding and keeping of memorandums among national regulators. The institutional framework has not a target to create a memorandums by „one-size-fits-all“ approach. The modern regulation of banking groups is based on „comply-or-explain“ approach. Tools in corporate governance of banking groups include traditional and non-traditional techniques. Using of rating agencies by institutional investors is put on control by national regulators. The requirement for information disclosure is realize at quality new stage: the information user pays for preparation of an investment plan. A part of attempts for convergence of policies in corporate governance is separation of risk businesses in particular entities and decrease of complexity for corporate structures. The consequences for corporate governance of banking groups in Bulgaria are indirect. The presence of subsidiaries from EU banking groups and their big market share define the subordination of corporate governance practices. The process of cash privatization and sale of profit banks define the majority and privately-owned ownership of Bulgarian banks therefore their practices are not covered by the new EU policies for corporate governance. In contrast to public status of parent banks in Western Europe, most of Bulgarian subsidiaries have not obligations to comply international principles for corporate governance.
    Keywords: corporate governance, banking groups
    JEL: G3 G34
    Date: 2014

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