nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2022‒03‒07
five papers chosen by

  1. Frequent audits and honest audits By Jacopo Bizzotto; Alessandro De Chiara
  2. Profit-shifting behaviour of emerging multinationals from India By Khanindra Ch. Das
  3. A New Era of Midnight Mergers: Antitrust Risk and Investor Disclosures By John M. Barrios; Thomas G. Wollmann
  4. Predicting The Level Of Falsification Of Financial Statements In Russian Manufacturing Enterprises In 2012–2019 By Ksenia Ladygina

  1. By: Jacopo Bizzotto (Oslo Business School, Oslo Metropolitan University); Alessandro De Chiara (Universitat de Barcelona, BEAT)
    Abstract: A regulator hires an auditor to inspect a firm. Audits serve two purposes: to detect violations and to motivate the firm to invest in compliance. Auditor and firm can collude to hide violations. Honest audits require sufficient monetary incentives for the auditor, and more frequent audits call for larger incentives. We link the optimal audit frequency to the budget constraint faced by the regulator, and to the firm's bargaining power in the collusive agreement. We show that (i) the optimal audit frequency need not be monotonic in the regulator's budget size, (ii) tolerating collusion can foster ex-ante investment, and (iii) a regulator that enjoys more flexibility in designing the auditor's compensation scheme might be less willing to deter corruption.
    Keywords: Auditing, corruption, information design, regulation.
    JEL: D73 K42 L51
    Date: 2022
  2. By: Khanindra Ch. Das
    Abstract: This paper examines the profit-shifting behaviour of emerging multinational firms from India. It is found that the before-tax profitability of subsidiaries differs according to whether they were established directly or via an Offshore Financial Centre (OFC). The impact of the corporate tax rate on profitability is examined using a fixed-effects model for the period 2010-19. In the case of subsidiaries established via OFCs, a negative relationship between corporate tax rate and profitability is found, indicating profit-shifting behaviour.
    Keywords: Corporate tax, Multinational firms, Offshore financial centres, Profit shifting, Panel data, Tax havens
    Date: 2022
  3. By: John M. Barrios; Thomas G. Wollmann
    Abstract: Antitrust authorities search public documents to discover anticompetitive mergers. Thus, investor disclosures may alert them to deals that would otherwise escape scrutiny, creating disincentives for managers to divulge transactions. We study this behavior in publicly traded US companies. First, we estimate a regression discontinuity that exploits mandatory disclosure thresholds stipulated by securities law. We find that releasing information to investors poses antitrust risk. Second, we present a method for measuring undisclosed merger activity that relies on financial accounting reporting requirements. We find that undisclosed mergers total $2.3 trillion between 2002 and 2016.
    JEL: G3 G34 L0 L4 L40 M4
    Date: 2022–01
  4. By: Ksenia Ladygina (National Research University Higher School of Economics)
    Abstract: This paper considers the falsification of financial reports at Russian manufacturing enterprises in the period from 2012 to 2019. The factors are associated with the heterogeneity of estimates of falsified financial statements. We investigate the evolution of such reporting during the period under review. Two main lines of behavior of companies in relation to falsified corporate reporting are identified: either a consistently "honest" strategy, which is characteristic of no more than 30–50% of the enterprises, or situational behavior, when an enterprise provides either reliable or questionable data in certain years depending on their circumstances. For large and medium-sized manufacturing enterprises, the quality of the reporting provided has generally improved in the sanctions period of 2015–2019 compared to the pre-sanction period. Based on econometric calculations, we demonstrate that the main factors associated with the provision of inaccurate reporting are the size of the enterprise, and the growth rate of accounts receivable in previous years.
    Keywords: level of reporting falsification, sanctions, crisis, Beneish model, Roxas model, Russian companies
    JEL: F14 F51 L6 L25
  5. By: NURFADILA, RISKY; Saldina, Iswatul; anjarsari, novita
    Abstract: Abstrac The accounting system is a tool used to organize or collect, collect, and conduct information regarding all company transactions, where employees, company activities, materials and machines can be integrated in such a way that supervision can be carried out. This study aims to find out how to analyze information systems and internal control of raw material supplies at the Ledokan Coffee shop in Binangun Blitar. The data used are qualitative data in the form of some basic analysis from field interviews. The results showed that the Ledokan Coffee Shop has good supply chain management capabilities as evidenced by the existence of suppliers who have long-term cooperative relationships with them. Keywords: Accounting Information System, Inventory, Internal Contro Abstrak Sistem akuntansi adalah alat yang digunakan untuk mengatur atau mengumpulkan, mengumpulkan, dan melakukan informasi mengenai semua transaksi perusahaan, di mana karyawan, kegiatan perusahaan, bahan dan mesin dapat diintegrasikan sedemikian rupa sehingga pengawasan dapat dilakukan.Penelitian ini bertujuan untuk mengetahui bagaimana menganalisis system informasi dan pengendalian internal persedian bahan baku pada kedai Kopi Ledokan di Binangun Blitar. Data yang digunakan adalah data kualitatif berupa beberapa analisis yang mendasar dari wawancara dilapangan. Hasil penelitian menunjukkan bahwa Kedai Kopi Ledokan memiliki kemampuan supply chain management yang baik yang dibuktikan dengan adanya pemasok yang memiliki hubungan kerjasama jangka panjang dengan mereka. Kata kunci: Sistem Informasi Akuntansi, Persediaan, Pengendalian Internal
    Date: 2022–01–12

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