nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2023‒05‒29
six papers chosen by

  2. Does the adoption of Ind AS affect the performance of firms in India? By M N, Nikhil; Chakraborty, Suman; B M, Lithin; Lobo, Lumen Shawn
  3. Enforcing Mandatory Reporting on Private Firms: The Role of Banks By Miguel Duro; Germán López-Espinosa; Sergio Mayordomo; Gaizka Ormazabal; María Rodríguez-Moreno
  4. Balance Sheet Policies in an Evolving Economy: Some Modelling Advances and Illustrative Simulations By Hess T. Chung; Etienne Gagnon; James Hebden; Kyungmin Kim; Bernd Schlusche; Eric Till; James Trevino; Diego Vilán
  5. Does Voluntary Non-earnings Disclosure Substitute for Redacted Proprietary Contract Information? By Barth, Mary E.; Landsman, Wayne R.; Tian, Xiaoli (Shaolee); Yu, Miaomiao
  6. Intangible Capital as a Production Factor. Firm-level Evidence from Austrian Microdata By Klaus Friesenbichler; Agnes Kügler; Julia Schieber-Knöbl

  1. By: Quick, Reiner; Toledano, D. Sánchez; Toledano, J. S.
    Date: 2023–01–25
  2. By: M N, Nikhil; Chakraborty, Suman; B M, Lithin; Lobo, Lumen Shawn
    Abstract: The increasing prevalence of IFRS adoption has resulted in enhanced transparency, accounting quality, and comparability of financial information among firms, especially in emerging markets worldwide, including India. Nonetheless, the question of whether the adoption of IFRS has led to improved firm performance persists. To address this question, this study examines the impact of transitioning from India’s GAAP-based accounting standards to IFRS-converged standards (Ind AS) on non-financial firms’ performance from 2013 to 2022. The empirical findings reveal that the convergence of Indian accounting standards with IFRS significantly improves firm performance, as demonstrated by a positive coefficient of 0.0166 for Ind AS in the fixed-effect model. The study also validates the original empirical findings using the return on equity (ROE) measure of firm performance, which yielded a coefficient of 0.0197, further confirming that the adoption of Ind AS leads to an increase in the performance of Indian firms. These results contribute new insights to the existing IFRS literature and have implications for policymakers and managers.
    Keywords: emerging market, firm profitability, fixed effect model, IFRS convergence, Nifty 500, panel data, return on assets
    JEL: C33 G32 M41 M48
    Date: 2023–03–15
  3. By: Miguel Duro (IESE Business School); Germán López-Espinosa (School of Economics - Universidad de Navarra and IESE Business School); Sergio Mayordomo (Banco de España); Gaizka Ormazabal (IESE Business School, CEPR and ECGI); María Rodríguez-Moreno (Banco de España)
    Abstract: This paper studies firm-level factors shaping the enforcement of financial reporting regulation on private firms and proposes bank lending as a particularly important one. Our tests are based on a rare combination of data sets, which allows us to construct unique measures of misreporting, notably in the form of underreporting of debt. We observe that private firms with bank debt are more likely to file mandatory financial reports and less likely to file information with irregularities. While we also find evidence that the need for bank financing can induce firms to misreport, this concern is mitigated by additional findings suggesting that banks detect reporting issues within private firms’ financial statements. Critically, we observe that firms with reporting issues obtain significantly less credit, especially when the bank has had previous exposure to debt misreporting and when the bank verifies debt information using the public credit registry. In short, our paper documents important firm-level determinants of private firms’ misreporting and highlights that banks play a significant role in the enforcement of mandatory financial reporting on these firms.
    Keywords: enforcement of financial reporting, private firms, debt underreporting, financial distress, public credit registries
    JEL: G21 M41
    Date: 2022–11
  4. By: Hess T. Chung; Etienne Gagnon; James Hebden; Kyungmin Kim; Bernd Schlusche; Eric Till; James Trevino; Diego Vilán
    Abstract: Once considered "unconventional, " balance sheet policies have become an integral part of the toolkit of many central banks. Increased reliance on balance sheet policies reflects in part a decline in the neutral level of interest rates, which limits central banks' ability to cut their policy rates to support the economy during downturns, and many observers expect that neutral level to remain low relative to its historical average in the coming decades.
    Date: 2023–02–03
  5. By: Barth, Mary E. (Stanford U); Landsman, Wayne R. (U of North Carolina at Chapel Hill); Tian, Xiaoli (Shaolee) (Georgetown U); Yu, Miaomiao (Louisiana State U)
    Abstract: This study finds that voluntary non-earnings disclosures substitute for redacted proprietary contract information. When firms redact contract information, they provide more voluntary disclosures and have higher information uncertainty and asymmetry. Although firms provide both voluntary non-earnings and earnings disclosures when they redact contract information, only non-earnings disclosures in Forms 8-K mitigate the higher information uncertainty and asymmetry associated with redaction. These findings suggest earnings disclosures may not be specific enough to substitute for redacted contract information and contrast with the presumption in related research that firms provide earnings disclosures to substitute for withheld proprietary information. Our inferences particularly apply to research and development and license contracts, which are more likely to contain proprietary information that also is relevant to investors. Taken together, our study's evidence can be informative to the SEC in its consideration of the effects of reducing mandatory disclosure on information available to investors.
    JEL: D8 M41 M48
    Date: 2022–09
  6. By: Klaus Friesenbichler; Agnes Kügler; Julia Schieber-Knöbl (Statistics Austria)
    Abstract: We examine the role of intangible capital as a production factor using Austrian firm-level register data. Descriptive statistics show that intangible investment has increased over time. The intensive and extensive margins of firms' investments are highly skewed. They differ across sectors. A series of sample splits show that the components of intangible capital play different roles as inputs in the production function. Software and especially licenses are important for SMEs and exporters. Research and development play an important role in production in all specifications. For firms that continuously invest in intangible capital, all components of intangible capital gain importance in the production functions. These patterns differ from those found in previous studies and have implications for the strategic orientation of industrial and innovation policy.
    Keywords: Intangible capital, R&D, Firm level productivity, Investment, Production function, Austria
    Date: 2023–05–10

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