|
on Accounting and Auditing |
|
Issue of 2022‒03‒14
six papers chosen by |
| By: | Johari, Razana Juhaida; Alam, Md. Mahmudul (Universiti Utara Malaysia); Said, Jamaliah |
| Abstract: | Purpose - The primary role of auditors is to offer fiduciary services to the society and users of the financial reporting. With this role, users placed their trust and dependent on the ability and judgment made by the auditors during their auditing works. However, recent financial scandals involving high profile companies frustrated the public’s expectations, particularly in Malaysia. It is claimed that auditors are not having ethical sensitivity while executing their task in mitigating the fraudulent financial reporting. Therefore, this study aims to examine the influences of ethical orientation, locus of control and firm’s ethical culture on the auditors’ ethical sensitivity in Malaysia. Methodology/approach - This study collected primary data based on a questionnaire survey among audit firms in Klang Valley area and registered with Malaysian Institutes of Accountants. Findings - The results showed ethical sensitivity has a significant negative relationship with relativism and some cases have a significant positive relationship with idealism. Moreover, it found a significant positive relationship between ethical sensitivity and ethical culture. Originality/value – This paper provides benefit to the audit firms, professional bodies, policy makers, and academia in understanding the factors that might increase the sensitivity of auditors in dealing with ethical issues that could lead to fraudulent financial reporting in the company. |
| Date: | 2021–11–30 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:uypba&r= |
| By: | Natee Amornsiripanitch; Zeqiong Huang; David Kwon; Jinjie Lin |
| Abstract: | When investors have limited attention, does the way in which net income is measured matter for firm value and firms’ resource allocation decisions? This paper uses the Accounting Standards Update (ASU) 2016-01, which requires public firms to incorporate changes in unrealized gains and losses (UGL) on equity securities into net income, to answer this question. We build a model with risk-averse investors who can be attentive or inattentive and managers who choose how much to invest in financial assets to maximize firms’ stock prices. The model predicts that, with inattentive investors, stock prices react more to changes in UGL from equity securities under the new regime and, under certain conditions, investors assign larger price discounts. Managers respond to such discounts by cutting financial asset holdings. We use insurance company data to test these predictions. Prices of stocks with low analyst coverage react more to changes in UGL from equity securities, highlighting the role of investor inattention. Using a difference-in-differences approach, we find that by 2020, publicly traded insurance companies cut investments in public stocks by $23 billion. |
| Keywords: | Net income components; investor inattention; ASU 2016-01; capital allocation decisions |
| JEL: | G11 G14 G22 G30 M4 M41 |
| Date: | 2022–02–14 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:93704&r= |
| By: | Kodjo Adandohoin (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique); Jean-Francois Brun (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne) |
| Abstract: | This paper investigates second wave tax transition (transfer of tax pressure from border taxation towards domestic taxation) concerns in developing countries. It essentially focuses on the compensation effects of incomes and property taxes over international trade tax revenue losses in developing countries. Using a generalized method of moment estimator, we come to the evidence that, incomes and property taxes are poor instruments to balance trade tax revenue losses of trade liberalization in these countries. However, a mediating effect of financial development in the compensation nexus driven by corporate income taxes was found. We explain this result by the fact that the use of financial sector generates paper trails to government in order to enforce and raise corporate income taxes. Financial development may progressively crowd‐out informal sector and leads to business formalization. Surprising, we do not find any mediating effect of financial development in the compensation patterns with personal income taxes. Nevertheless, some heterogeneities were discovered. Financial development mediates the compensation patterns of personal income taxes in Latin American countries, while the effect holds on corporate income taxes in African countries. We conclude the paper by highlighting the important role of financial development in second generation tax transition concerns over developing countries. |
| Keywords: | Income taxes,Property tax,Developing countries |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:cdiwps:hal-03053683&r= |
| By: | , Muhajrajasfar@gmail.com Muhajra Jasfar |
| Abstract: | Financial statements are reports that show the company's financial condition at this time or in a certain period. The company's financial statements need to be analyzed in order to obtain the development of the company's financial condition, including through financial ratio analysis and comparative analysis of financial statements. |
| Date: | 2021–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:eq4nk&r= |
| By: | Huston, Simon (Coventry University) |
| Abstract: | Every year the global financial system sends trillions of dollars to finance environmental destruction, but the climate crisis forces change. Notwithstanding vested interests and the unrecognised paradox of adopting environmental business strategies, the implementation of sustainability accounting and reporting (SAR) is imperative to catalyse economic transition away from fossil-fuel and plastic configurations to more sustainable ones. The research proceeded sequentially. First, it scanned the backdrop to the SAR problem and identified key associated institutions and a corpus of recent literature. An initial review to disentangle its conflicting threads generated three themes of ‘climate crisis’ and ‘conservative’ or more ‘radical’ SAR reform paradigms. Iteratively harnessing this thematic lens, the investigation re-examined the SAR literature corpus. It detected fragmented SAR responses to the climate crisis. Accordingly, the research reformulated its first theme to ‘dystopic climate crisis fragmentation’ but only refined the other two conservative or radical themes to take account of materiality and the split between Anglo-Saxon (IFRS, SSAB) or global and continental institutions (UN, EU, GRI). Conservatives defend incremental standard improvements but retain a single materiality investor-focus. Radicals seek to implement double materiality with a broader spectrum of stakeholders in mind. Both approaches have theoretical as well as pragmatic advantages and disadvantages, so the SAR contention rumbles on. Whilst the standard setting landscape is evolving, division, paradox and contention remain. Given vested interests in the destructive status quo, it would be naïve to expect a harmonious SAR Ithaca to emerge anytime soon. Yet the challenges impel urgent action. |
| Date: | 2022–01–02 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:gykxe&r= |
| By: | Xu, Jack |
| Abstract: | Nearly half a century after Merton’s 1974 paper, the basic framework of modeling a company’s default risk in terms of one-dimensional variable, the total asset value, with fixed debt level has remain unchanged among the work by academic and quantitative modeling community. Under such simplification, the model is unable to correctly defined the state of default, which is a state of negative cash. But more importantly, Merton’s one-dimensional model cannot incorporate the fundamental principle of balanced balance sheet, and thus unable to generate the rich dynamics followed by a company’s multi-dimensional financial state. This article presents an example of 2-dimensional balance sheet that is still analytically solvable to demonstrate the multi-dimensional kinematics of a company’s financial state, and the much more nontrivial default dynamics as a result. The idealized example is for demonstrate purpose only, but the methodology has been extended to higher-dimensional balance sheet to model actual companies and forecast default with computerizable numerical and simulative algorithms. |
| Keywords: | Default, Models, Balance Sheet, Multi-Dimensional, Dynamics |
| JEL: | C32 C61 |
| Date: | 2022–02–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:112022&r= |