nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2018‒11‒12
eight papers chosen by

  1. Bank Earnings Smoothing During Mandatory IFRS adoption in Nigeria By Ozili, Peterson K; Outa, Erick R
  2. Internet Financial Reporting Of Public Institutions and E-Government as a Medium of Good Governance in Indonesia By Grace T. Pontoh
  3. The Procyclicality of Expected Credit Loss Provisions By Jorge Abad; Javier Suarez
  4. Taxation trends in the European Union: 2018 edition By European Commission
  5. Les déterminants des choix du premier emploi en audit : Une étude exploratoire des facteurs d’intention des étudiants français. By Nathalie Gonthier Besacier; Ingrid Bellettre
  6. Bank Balance Sheet Capacity and the Limits of Shadow Banks By Greg Buchak; Gregor Matvos; Tomasz Piskorski; Amit Seru
  7. Consumers as Tax Auditors By Naritomi, Joana
  8. The Effect of Integrating Reporting on Earnings Quality: A Study of Family Firms in Indonesia By Shanti

  1. By: Ozili, Peterson K; Outa, Erick R
    Abstract: We examine the extent of bank earnings smoothing during mandatory IFRS adoption in Nigeria, to determine whether mandatory IFRS adoption increased or decreased income smoothing among Nigerian banks. We find that the mandatory adoption of International Financial Reporting Standards (IFRS) is associated with lower earnings smoothing among Nigerian banks, which implies that Nigerian banks do not use loan loss provisions to smooth reported earnings during the mandatory IFRS adoption period. We find evidence for earnings smoothing via LLP during voluntary IFRS adoption. Earnings smoothing is not significantly associated with listed and non-listed Nigerian banks during voluntary and mandatory IFRS adoption. Overall, the findings indicate that mandatory IFRS adoption improves the informativeness and reliability of loan loss provisions estimate by discouraging Nigerian banks from influencing loan loss provisions for earnings smoothing purposes during the mandatory IFRS adoption. The findings of this paper are relevant to the debate on whether IFRS reporting improves the quality of financial reporting among firms in Nigeria. The implication of the study is that IFRS has higher accounting quality than local GAAP in Nigeria as it improves the quality and informativeness of accounting numbers (LLPs and earnings) reported by Nigerian banks during the period examined
    Keywords: Loan Loss Provisions, Discretionary Accruals, Income Smoothing, Earnings Management, Nigeria, Banks, IFRS.
    JEL: G2 G21 G28 M41 M42 M48
    Date: 2018
  2. By: Grace T. Pontoh (Faculty of Economics and Business of Hasanuddin University, 90245, Makassar, Indonesia Author-2-Name: Yohanis Rura Author-2-Workplace-Name: Faculty of Economics and Business of Hasanuddin University, 90245, Makassar, Indonesia Author-3-Name: Abdul Rahman Author-3-Workplace-Name: Faculty of Economics and Business of Hasanuddin University, 90245, Makassar, Indonesia Author-4-Name: Muhammad Achyar Ibrahim Author-4-Workplace-Name: Faculty of Economics and Business of Hasanuddin University, 90245, Makassar, Indonesia Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: Objective - Transparency of financial reporting can be achieved through various media including the internet and is an important factor of good governance. The use of internet in government has been regulated to encourage the government to build and develop websites to present information to the public. This research analyzes the factors that influence the government's internet financial reporting (IFR) through e-government. Methodology/Technique - The factors tested in this research are: size, leverage, capital expenditure, and audit opinion of the Republic Indonesia Audit Board (BPK). The population of this research is 25 ministries registered on the e-government ranking index (PeGI) between 2013 and 2015. Path analysis using the SPSS 21 application program is used. Findings - The results show that size, capital expenditure and audit opinion of BPK affected the use of IFR through e-government, whereas leverage did not affect the use of IFR through e-government. Novelty – These findings indicate that e-government is an important mediating factor in disclosing financial reports on the internet as a medium of good governance for public institutions in Indonesia.
    Keywords: Internet Financial Reporting; Size; Leverage; Capital Expenditure; Audit opinion; E- government.
    JEL: M40 M41 M49
    Date: 2018–09–30
  3. By: Jorge Abad (CEMFI, Centro de Estudios Monetarios y Financieros); Javier Suarez (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: The Great Recession has pushed accounting standards for banks' loan loss provisioning to shift from an incurred loss approach to an expected credit loss approach. IFRS 9 and the incoming update of US GAAP imply a more timely recognition of credit losses but also greater responsiveness to changes in aggregate conditions, which raises procyclicality concerns. This paper develops and calibrates a recursive ratings-migration model to assess the impact of different provisioning approaches on the cyclicality of banks' profits and regulatory capital. The model is used to analyze the effectiveness of potential policy responses to the procyclicality problem.
    Keywords: Credit loss allowances, expected credit losses, incurred losses, rating migrations, procyclicality.
    JEL: G21 G28 M41
    Date: 2018–08
  4. By: European Commission
    Abstract: This report contains a detailed statistical and economic analysis of the tax systems of the Member States of the European Union, plus Iceland and Norway, which are Members of the European Economic Area. The data are presented within a unified statistical framework (the ESA2010 harmonised system of national and regional accounts), which makes it possible to assess the heterogeneous national tax systems on a fully comparable basis.
    Keywords: European Union, taxation
    JEL: H23 H24 H25 H27 H71
    Date: 2018–07
  5. By: Nathalie Gonthier Besacier ((Axe de recherche : Finance) - CERAG - Centre d'études et de recherches appliquées à la gestion - CNRS - Centre National de la Recherche Scientifique - UPMF - Université Pierre Mendès France - Grenoble 2 - UGA - Université Grenoble Alpes); Ingrid Bellettre (LSMRC - Lille School Management Research Center - Université de Lille)
    Abstract: The goal of this paper is, through an exploratory methodology, to analyze the determinants of the first job intention in auditing and accounting fields. The theoretical framework of the planned behavior helps us to understand what are the factors influencing the first job intention and, further, the choice of a "Big" or Non-Big" firm.. Fifteen interviews of last year students in Master degree have been conducted to allow us, according to our qualitative methodology, to capture job intention determinants. These criteria are match to validate and/or complete existing literature on such matters.
    Abstract: L'objet de cette étude est d'analyser, dans une logique exploratoire, les facteurs qui influencent l'intention des jeunes diplômés à l'entrée dans la profession, et notamment ce qui différencie ceux qui choisissent de s'orienter vers les Big ou les Non Big. La théorie du comportement planifié, grâce à ses trois « dimensions » (attitude, normes sociales et degré de contrôle perçu), nous offre un cadre approprié afin de comprendre l'intention d'action, ici l'intention d'intégrer un cabinet. Le caractère exploratoire de notre recherche justifie l'emploi d'une méthodologie qualitative nous permettant de capter, auprès d'un échantillon de 15 étudiants en dernière année de Masters spécialisés dans les métiers concernés, une diversité et une richesse de motivations d'intention de comportement. Ces critères permettent de valider et/ou compléter les déterminants évoqués précédemment dans la littérature
    Keywords: first job intention,Big/ non-Big,audit,accounting,planned behavior theory,premier emploi,expertise,théorie du comportement planifié
    Date: 2017–05–30
  6. By: Greg Buchak; Gregor Matvos; Tomasz Piskorski; Amit Seru
    Abstract: We study which types of activities migrate to the shadow banking sector, why migration occurs in some sectors, and not others, and the quantitative importance of this migration. We explore this question in the $10 trillion US residential mortgage market, in which shadow banks account for more than half of new lending. Using micro data, we document a large degree of market segmentation in shadow bank penetration. They substitute for traditional—deposit taking—banks in easily securitized lending, but are limited from engaging in activities requiring on-balance sheet financing. Traditional banks adjust their financing and lending activities to balance sheet shocks, and behave more like shadow banks following negative shocks. Motivated by this evidence, we build a structural model. Banks and shadow banks compete for borrowers. Banks face regulatory constraints, but benefit from the ability to engage in balance sheet lending. Like shadow banks, banks can choose to access the securitization market. To evaluate distributional consequences, we model a rich demand system with income and house price differences across borrowers. The model is estimated using spatial pricing rules and bunching at the regulatory threshold for identification. We study the consequences of capital requirements, conforming credit limits, and unconventional monetary policy on lending volume and pricing, bank stability and the distribution of consumer surplus across rich and poor households. Our results suggest that a complete policy analysis of the credit market requires simultaneously analyzing the impact on banks and shadow banks, and accounting for their equilibrium interactions.
    JEL: G2 L5
    Date: 2018–10
  7. By: Naritomi, Joana
    Abstract: Access to third-party information trails is widely believed to be critical to the development of modern tax systems, but there is limited direct evidence of the effects of changes in information trails. This paper investigates the enforcement effect of an increased availability of third-party information, and sheds light on how governments can harness this information despite collusion opportunities. I exploit unique administrative data on firms and consumers from an anti-tax evasion program in Sao Paulo, Brazil (Nota Fiscal Paulista) that created monetary rewards for consumers to ensure that firms report final sales transactions, and establishes an online verification system that aids consumers in whistle-blowing firms. Using variation in intensity of exposure to the policy, I estimate that firms' reported revenue increased by at least 21% over four years. Heterogeneous effects across firms shed light on mechanisms: the results are consistent with fixed costs to conceal collusive deals and positive shifts in detection probability from whistle-blower threats. I also investigate the effect of whistle-blowers directly: firms report 7% more receipts and 3% more revenue after receiving the first consumer complaint. To study the role of the value of rewards in improving enforcement, I show evidence consistent with the possibility that lottery incentives amplify consumer responses due to behavioral biases, which would make it more costly for firms to try to match government incentives in a collusive deal. Finally, I find that although firms significantly adjusted reported expenses, there was an increase in tax revenue net of rewards of 9.3%.
    JEL: D83 H25 H26 K34 O17
    Date: 2018–10
  8. By: Shanti (Widya Mandala Catholic University, Dinoyo Street, 42-44, 60265, Surabaya, Indonesia Author-2-Name: Bambang Tjahjadi Author-2-Workplace-Name: Airlangga University, Airlangga Street 4-6, 60286, Surabaya, Indonesia Author-3-Name: I Made Narsa Author-3-Workplace-Name: Airlangga University, Airlangga Street 4-6, 60286, Surabaya, Indonesia Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: Objective - The implementation of integrated reporting (IR), which is a composite of financial and non-financial information, in one single report makes financial reporting more comprehensive and more transparent. Transparent information in IR gives annual reporting of family firms a higher earnings quality. Methodology/Technique - This research aims to examine the effect of IR on earnings quality of family firms in the mining industry on the Indonesian Stock Exchange between 2014 and 2017. Findings - The results of this study indicate that there is a positive and significant relationship between integrating reporting and earnings quality. These results confirm that firms that use integrated reporting tend to show higher earnings quality. The study also finds that larger sized companies and larger leverage amounts equals a higher volume of information disclosed. Novelty – The motivation of this research is to examine IR issues that are relatively new.
    Keywords: Earnings Quality; Family Firms; Financial Reporting; Indonesia; Integrated Reporting.
    JEL: M40 M41 M49
    Date: 2018–09–30

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.