nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2019‒12‒09
eight papers chosen by
Alexander Harin
Modern University for the Humanities

  1. Analisis Penyusunan dan Pelaksanaan Program Audit Laporan Keberlanjutan Perusahaan (Studi pada Perusahaan dalam Industri Minyak dan Gas di Indonesia) By Kurniawan, Putu Sukma
  2. The Disclosure of Non-GAAP Performance Measures and the Adoption of IFRS: Evidence from Japanese Firms' Experience By Yuta Shibasaki; Chikara Toyokura
  3. Investment Expensing, Investment and Public Finances By Määttänen, Niku
  4. Ring-fencing digital corporations: Investor reaction to the European Commission's digital tax proposals By Klein, Daniel; Ludwig, Christopher A.; Spengel, Christoph
  5. The Lock-In Effect and the Corporate Payout Puzzle By Chris Mitchell
  6. Reputation Effects in Repeated Audits, with Application to Insurance Fraud Deterrence By Reda Aboutajdine; Pierre Picard
  7. Corporate Scandals and Regulation By Luzi Hail; Ahmed Tahoun; Clare Wang

  1. By: Kurniawan, Putu Sukma (Universitas Pendidikan Ganesha)
    Abstract: This article aims to provide an understanding of the preparation and implementation of the audit program on the company's sustainability report. The audit on the sustainability report aims to provide confidence that the information presented in the sustainability report is correct and in accordance with GRI G4. Guidelines for the preparation and implementation of the audit program on sustainability reports are based on AA 1000 Assurance Standard (AA1000AS) and AA 1000 AccountAbility Principles (AA1000APS) guidelines. The object of research is the company's sustainability report, especially the sustainability report of companies engaged in the oil and gas industry. The research method uses descriptive methodology and literature review research design. The result of the research resulted a model of audit implementation on company sustainability report. The results of this study are expected to provide an understanding of the company's sustainability report audit and support the sustainability reporting process in Indonesia. Keywords: audit; AA1000AS; AA1000APS; GRI G4; sustainability report; oil and gas industry
    Date: 2018–04–10
  2. By: Yuta Shibasaki (Researcher, Institute for Monetary and Economic Studies, Bank of Japan (E-mail:; Chikara Toyokura (Director, Head of Accounting Studies Group, Institute for Monetary and Economic Studies, Bank of Japan (E-mail:
    Abstract: We investigate whether and how Japanese firms' non-GAAP disclosure practices change when they adopt International Financial Reporting Standards (IFRS). We find that the likelihood that firms disclose non-GAAP performance measures outside financial statements increases after they have adopted IFRS. This is consistent with the view that the proliferation of non-GAAP performance measures is, in part, attributable to the nature of the current IFRS presentation requirements for financial statements. We also show that the exclusion of non- recurring items to arrive at non-GAAP performance measures becomes more common only after firms have adopted IFRS. This finding indicates that many managers regard separating out unusual or infrequently occurring items as important. The practice corresponds to financial statement users' calls for such separation. We also show how the proposed introduction of several subtotals in statements of financial performance by the International Accounting Standards Board (IASB) under the Primary Financial Statements project will improve the comparability and usefulness of financial statements of Japanese firms that have adopted IFRS. These results provide important empirical evidence at a time when the IASB is developing new presentation requirements for statements of financial performance.
    Keywords: Non-GAAP performance measures, IFRS, Primary Financial Statements project
    JEL: M41
    Date: 2019–11
  3. By: Määttänen, Niku
    Abstract: Abstract At present, businesses in Finland can deduct the cost of many investment goods from taxable income only gradually over several years. Higher expensing limits would allow them to deduct investments costs faster, while full expensing would allow them to deduct the cost of investment goods in full in the year they are purchased. In this report, I explain how investment expensing rules affect the profitability of investment and the neutrality of the corporate taxation and discuss how higher expensing limits or a move to full expensing would likely affect investment and public finances in Finland. The current relatively low corporate tax rate, low interest rates, and the special tax treatment of dividends from non-listed companies reduce the likely impact of higher expensing limits on aggregate investment. However, the risks to public finances would be small as well. From the point of view of tax neutrality, a permanent move to full expensing should be combined with the elimination of interest deduction for investment loans.
    Keywords: Capital expensing, Investment, Corporate taxation
    JEL: H25
    Date: 2019–12–02
  4. By: Klein, Daniel; Ludwig, Christopher A.; Spengel, Christoph
    Abstract: We study the effect of digital tax measures on firm value. By employing an event study methodology, we analyze investor reaction to the European Commission's proposals on the taxation of digital corporations. Examining the stock returns of potentially affected corporations surrounding the draft directives' release, we find a significant abnormal capital market reaction of -0.692 percentage points. The investor reaction is more pronounced for firms that engage more actively in tax avoidance, have a higher profit shifting potential, and for those with higher exposure to the EU. The market value of digital and innovative corporations decreased by at least 52 billion euro in excess of the regular market movement during the event window. Overall, our study reveals that expectations about ringfencing digital tax measures impact firm values.
    Keywords: digital taxation,corporate tax,digital economy,event study
    JEL: H25 H26 K34 G14
    Date: 2019
  5. By: Chris Mitchell
    Abstract: Taxes on capital gains are deferred until realization, whereas dividend taxes are levied upon accrual. This often makes dividends tax-disadvantaged relative to share repurchases, which leads to the payout puzzle: why do firms pay dividends? This paper develops a model of corporate payout policy to demonstrate that tax deferment can also provide a partial solution to the payout puzzle: if shareholders demand repurchase premiums when selling equity back to a firm - as compensation for accelerated realizations - then dividend payments can become tax-efficient. This mechanism is appealing because it jointly explains a number of payout regularities without appealing to asymmetric information, incomplete contracting, repurchase constraints, and/or shareholder irrationality.
    Date: 2019–12
  6. By: Reda Aboutajdine (X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique, CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE ParisTech - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique); Pierre Picard (X-DEP-ECO - Département d'Économie de l'École Polytechnique - X - École polytechnique, CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE ParisTech - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique)
    Abstract: In principal-agent problems, the repetition of interactions in a dynamic setting may alter the equilibrium outcomes. In insurance fraud, the frequency of auditor-auditee interactions is higher when there is collusion between policyholders and service providers (e.g., car repairers, health care providers...). The same service provider usually handles claims filed by many policyholders affiliated to the same insurer, and thus the insurer-service provider interactions are repeated with reputation effects. We analyze this issue in a repeated game where the insurer may potentially face a dishonest service provider who colludes with policyholders. The insurer has beliefs about the type (honest or dishonest) of the service provider and she may verify the truthfulness of the claim through costly audits. The reputation of the service provider corresponds to these beliefs and changes over time, and misbehaving deteriorates this reputation. In the end, it may lead to a breach of contract and thus represents a threat that may deter from defrauding. We show that, at early periods, the insurer audits agents who would not be monitored in a static setting because their reputation is good enough. Corresponding dishonest agents who slipped under the radar and have an initially good reputation do not defraud systematically at early periods, as opposed to the instantaneous game. In addition, auditing efforts for medium reputations are lower as dishonest agents want to preserve the possibility of defrauding later. Both aspects corresponds to a reputation-based deterrence mechanism, where the fear of deteriorating one's reputation acts as a discipline device for dishonest service providers.
    Keywords: Deterrence,Learning,Insurance fraud,Optimal auditing,Reputation
    Date: 2019–11–20
  7. By: Luzi Hail (The Wharton School, University of Pennsylvania); Ahmed Tahoun (London Business School); Clare Wang (Tippie College of Business, University of Iowa)
    Abstract: Are regulatory interventions delayed reactions to market failures or can regulators proactively pre-empt corporate misbehavior? From a public interest view, we would expect `effective` regulation to ex ante mitigate agency conflicts between corporate insiders and outsiders, and prevent corporate misbehavior from occurring or quickly rectify transgressions. However, regulators are also self-interested and may be captured, uninformed, or ideological, and become less effective as a result. In this registered report, we develop a historical time series of corporate (accounting) scandals and (accounting) regulations for a panel of 26 countries from 1800 to 2015. An analysis of the lead-lag relations at both the global and individual country level yields the following insights: (i) Corporate scandals are an antecedent to regulation over long stretches of time, suggesting that regulators are typically less flexible and informed than firms. (ii) Regulation is positively related to the incidence of future scandals, suggesting that regulators are not fully effective, that explicit rules are required to identify scandalous corporate actions, or that new regulations have unintended consequences. (iii) There exist systematic differences in these lead-lag relations across countries and over time suggesting that the effectiveness of regulation is shaped by fundamental country characteristics like market development and legal tradition.
    Keywords: Accounting fraud, Corporate scandals, Capital market regulation, Economics of regulation, Law and finance, International accounting
    JEL: F30 G18 G38 K22 L51 M48 N20
    Date: 2017–12
  8. By: Kurniawan, Putu Sukma (Universitas Pendidikan Ganesha)
    Abstract: This study discusses the factors that affect the company's capability to perform integrated reporting. The independent variables in this study are the profitability of the company, company size, managerial ownership, institutional ownership, and the stakeholder pressure with the dependent variable is the company’s capability in performing integrated reporting. This research used company that competed on Indonesia Sustainability Reporting Award and the companies listed on the SRI KEHATI stock index with the observation period during 2014-2016. The analysis used in testing the hypothesis is multiple linear regression analysis. Results show that company’s size and stakeholder’s pressure have a high connection with the company’s capability in performing integrated reporting. Keywords : integrated reporting; company’s profitability; company size; managerial ownership; institutional ownership; stakeholder’s pressure; company’s capability in performing integrated reporting
    Date: 2018–08–30

This nep-acc issue is ©2019 by Alexander Harin. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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.