nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2021‒07‒12
six papers chosen by

  1. The Effect of Earnings Management and Signaling on Loss Loan Provision: The Role of Bank Capitalization By Jasman
  2. Qualitative information disclosure: Is mandating additional tax information disclosure always useful? By Bilicka, Katarzyna; Casi-Eberhard, Elisa; Seregni, Carol; Stage, Barbara M. B.
  3. "Do Public Account Financial Statements Matter? Evidence from Japanese Municipalities" By Shun-ichiro Bessho; Haruaki Hirota
  4. Does Finland Need R&D Tax Incentives? By Koski, Heli; Fornaro, Paolo
  5. Measuring the income of French farms: A 15-year comparative analysis of indicators from Rica and MSA By Laurent Piet; Vincent Chatellier; Nathalie Delame; Philippe Jeanneaux; Cathie Laroche-Dupraz; Aude Ridier; Patrick Veysset
  6. The opening of the ANAFI application source code concerning financial review of local communities: further transparency and an upgraded potential By Xavier Bailly; André Pezziardi

  1. By: Jasman (Universitas Trisaksi, Indonesia Author-2-Name: Etty Murwaningsari Author-2-Workplace-Name: Faculty of Economics and Business, Universitas Trisakti, Indonesia Author-3-Name: Sekar Mayangsari Author-3-Workplace-Name: Faculty of Economics and Business, Universitas Trisakti, Indonesia Author-4-Name: Susi Dwi Mulyani Author-4-Workplace-Name: Faculty of Economics and Business, Universitas Trisakti, 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 - Loan loss provision is an accrual for the banking industry, and therefore has a significant effect on bank accounting earnings and capital requirements. Previous studies showed inconsistent results for the relationship between earnings management, signaling, and loan loss provision. The difference in the results is thought to be caused by bank capitalization. Therefore, this study aims to investigate the role of bank capitalization on the effect of earnings management and signaling on loan loss provision. Methodology – The sample consists of 86 conventional banks in Indonesia for the period of 2015-2019. Furthermore, this study used panel data analysis of multiple regression. Findings – The results showed earnings management has no effect on loan loss provision. In contrast, signaling has a positive and significant effect. Although bank capitalization is not proven to weaken the effect of earnings management on loan loss provision, it strengthens the positive effect of signaling on loan loss provision. Novelty – This study proves that bank capitalization has an important role in moderating signaling impact on loan loss provision but not for the effect of earnings management. This is due to the potential for earnings management in banks is relatively low because banks are highly regulated entities and with regulated governance mechanisms limit the managers' discretionary accounting decisions. Type of Paper - Empirical"
    Keywords: Bank Capitalization, Earnings Management, Signaling
    JEL: G23 G32
    Date: 2021–06–30
  2. By: Bilicka, Katarzyna; Casi-Eberhard, Elisa; Seregni, Carol; Stage, Barbara M. B.
    Abstract: Firms are facing progressively more stringent tax disclosure requirements. In this paper, we examine whether increased qualitative tax transparency leads to intended outcomes using, as an exogenous shock, the 2016 UK reform that mandated the disclosure of a tax strategy for firms above a certain size threshold. We find that firms that have to publish a separate tax strategy report significantly increase their voluntary tax disclosure in the annual reports, but we show no widespread effect on tax avoidance, measured by changes in effective tax rates. We document two mechanisms through which mandating a tax strategy report affects overall tax disclosure. First, we find large changes in disclosure for firms facing high public scrutiny. Second, firms with higher quality of tax strategy reports increase the qualitative discussion of their tax affairs in their annual reports by larger amounts, while firms with lower quality reports show increases in tax avoidance. Our results demonstrate the difficulty of generating a standard that effectively incentivizes desirable behavior when the disclosure mandate is asking for purely qualitative information.
    Keywords: Tax Transparency,Tax Aggressiveness,Profit Shifting,Regulatory Requirements
    JEL: M41 M48 H26 H20
    Date: 2021
  3. By: Shun-ichiro Bessho (Faculty of Economics, The University of Tokyo); Haruaki Hirota (Faculty of Economics, Musashi University)
    Abstract: Many governments are introducing business-like accounting systems. This paperexamines the fiscal effects of compiling business-like financial statements on theexpenditures of local governments, exploiting a quasi-experimental environment inJapan. Using the variation in deadlines for compiling new statements given by thecentral government, we found that business-like financial statements might triggerthe local government to reconstruct their expenditures. While the reconstructiondiffers among localities, the social assistance expenses that are not nationally stan-dardized and subsidized decreased in common.
    Date: 2021–07
  4. By: Koski, Heli; Fornaro, Paolo
    Abstract: Abstract In OECD countries, tax subsidies are widely used to increase incentives for companies to invest in research and development. Recent international research suggests that R&D tax support increases both R&D investment and patent applications. However, it is unclear what kind of R&D tax scheme provides the best incentives for companies to invest in research and development and generate innovation. There are considerable differences between the countries’ R&D tax relief schemes, not only in terms of the amount of tax relief but also in terms of the characteristics of the tax support scheme. Typically, a company can make a tax deduction from income tax based on the total volume of R&D costs underlying the relief. Our empirical analysis among 35 OECD countries during 2000–2018 indicates that the generosity of the R&D tax subsidies positively relates to the R&D investment intensity of the corporate sector. Our study further suggests that the R&D intensity and the number of patent applications filed with the USPTO are higher in the countries that use either the incremental R&D tax scheme or the hybrid scheme involving incremental and volume-based R&D tax deduction possibilities.
    Keywords: R&D tax incentives, R&D investments, Innovation policy, Patents
    JEL: K34 L5 O3 O31
    Date: 2021–06–30
  5. By: Laurent Piet; Vincent Chatellier; Nathalie Delame; Philippe Jeanneaux; Cathie Laroche-Dupraz; Aude Ridier; Patrick Veysset
    Abstract: This article presents an analysis of the indicators used to measure farm income in France. While the chart of accounts defines the precise method of calculation of various intermediate management balances (including the gross added value, the gross operating surplus and the farm income), the statistical sources used to discuss the question of the level of 'income' of French farmers are diverse and the indicators used are not always homogeneous. This sometimes results in a fragility in the public expression on “farmers' income”. By matching two distinct sources of information over fifteen years (2003 to 2017), namely the Farm Accounting Data Network (Rica) produced by the Ministry of Agriculture and the database for self-employed contributors (COTNS) of the Caisse Centrale de la Mutualité Sociale Agricole (MSA), this article compares the level of several of these indicators. The matching was carried out using the SIRET number of the farms and methodological work was carried out so that the scope of the farms is common to both databases. It is thus highlighted that the 'agricultural profit' (from the MSA) is, on average, one third lower than the current result before tax (from the Rica), and that the amount of private withdrawals is weakly correlated to the accounting result or agricultural profit. Finally, a more specific analysis of ‘low incomes’ shows that, while the frequency of occurrence of such events obviously depends on the threshold chosen, the years 2009 and 2016 were particularly bad and cannot be considered representative of the average situation observed over the entire studied period.
    Keywords: Farm Management
    Date: 2021–06–30
  6. By: Xavier Bailly (UMR ART-Dev - Acteurs, Ressources et Territoires dans le Développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - UPVD - Université de Perpignan Via Domitia - UPVM - Université Paul-Valéry - Montpellier 3 - UM - Université de Montpellier - CNRS - Centre National de la Recherche Scientifique, CRC Occitanie - Chambre régionale des comptes Occitanie); André Pezziardi (CRC Occitanie - Chambre régionale des comptes Occitanie)
    Abstract: Financial courts are now indulging in an effort to show transparency when accomplishing their duties towards citizens. They rallied in this way during the hackathon dedicated to financial reviews of local communities which was held last 24th and 25 th at the French Senate. The financial courts' challenge was based upon the opening of the source code of its ANAFI application concerning financial surveys of local townships. Its availability for the civil society, including academics, ought to enable it to be broadened through inclusion of their needs and concerns, and therefore improve its legitimacy.
    Abstract: Les juridictions financières sont engagées dans un effort de transparence dans l'exercice de leurs compétences vis-à-vis des citoyens. Elles se sont mobilisées dans ce sens lors du hackathon dédié aux analyses financières des collectivités locales qui s'est tenu les 24 et 25 janvier derniers au Sénat. Le défi porté par les juridictions financières était fondé sur l'ouverture du code source de son applicatif ANAFI sur l'analyse financière des communes. Sa mise à la disposition de la société civile, parmi lesquels les universitaires, devrait permettre son enrichissement par une prise en compte de leurs besoins ou de leurs préoccupations, et accroître ainsi sa légitimité.
    Keywords: local finances,regional audit chamber,digital transformation,transparency,open data,finances locales,chambre régionale des comptes,transformation numérique,transparence
    Date: 2020–09

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