nep-acc New Economics Papers
on Accounting and Auditing
Issue of 2023‒06‒19
nine papers chosen by

  1. Pengaruh Audit terhadap Perusahaan Manufaktur Indonesia By santoso, natalie aylwen
  2. Accounting comparability and the accuracy of management earnings forecasts in Japan By Wenjun Kuang
  3. Accounting statement analysis at industry level. A gentle introduction to the compositional approach By Germ\`a Coenders; N\'uria Arimany Serrat
  5. Retained Earnings and Foreign Portfolio Ownership: Implications for the Current Account Debate By Stefan Goldbach; Philipp Harms; Axel Joachem; Volker Nitsch; Alfons J. Weichenrieder
  6. Towards a design-based approach to accounting research By Leuz, Christian
  7. Do Women Receive Worse Financial Advice? An Audit Study in Hong Kong, China By Bhattacharya, Utpal; Kumar, Amit; Visaria, Sujata; Zhao, Jing
  8. Las “ías†, entes de control y fiscalía en cifras: politización e inefectividad en la gestión pública entre múltiples capas de control By Erick Behar-Villegas; Pablo Sanabria-Pulido; Paul J. Hasselbrinck-Macias
  9. Does Combating Corruption Reduce Clientelism? By Gustavo J. Bobonis; Paul Gertler; Marco Gonzalez-Navarro; Simeon Nichter

  1. By: santoso, natalie aylwen
    Abstract: Catatan terkait dengan review artikel tentang pengaruh audit
    Date: 2023–05–09
  2. By: Wenjun Kuang (Graduate School of Economics, Osaka University)
    Abstract: This study examines the influence of accounting comparability on management earnings forecast accuracy. Using the Japanese setting, where management earnings forecasts are effectively mandated and accounting comparability could be more exogenous than in other countries, I find a positive relationship between accounting comparability and management earnings forecast accuracy. This indicates that comparable financial information could improve the accuracy of management earnings forecasts. I also provide evidence that the positive relationship between accounting comparability and management earnings forecast accuracy is more pronounced when subject firms have higher institutional ownership and peer firms have higher accounting (i.e., accrual) quality. My results suggest that accounting comparability increases the disclosure quality of management earnings forecasts by enhancing investors’ monitoring of managerial behaviours and facilitating managerial learning from peer firms. Additional analyses show that the positive effect of accounting comparability on management forecast accuracy becomes strengthened after the 2008 quarterly reporting regulation in Japan. However, there is no evidence showing that International Financial Reporting Standards (IFRS) adoption increases the positive effect of comparability. Overall, this study enriches the literature on determinants of the accuracy of management earnings forecasts and highlights the positive consequences of accounting comparability in the Japanese capital market.
    Keywords: Accounting comparability; Management earnings forecast; Monitoring effect; Learning effect.
    JEL: M41 M48
    Date: 2023–05
  3. By: Germ\`a Coenders (University of Girona); N\'uria Arimany Serrat (University of Vic - Central University of Catalonia)
    Abstract: Compositional data are contemporarily defined as positive vectors, the ratios among whose elements are of interest to the researcher. Financial statement analysis by means of accounting ratios fulfils this definition to the letter. Compositional data analysis solves the major problems in statistical analysis of standard financial ratios at industry level, such as skewness, non-normality, non-linearity and dependence of the results on the choice of which accounting figure goes to the numerator and to the denominator of the ratio. In spite of this, compositional applications to financial statement analysis are still rare. In this article, we present some transformations within compositional data analysis that are particularly useful for financial statement analysis. We show how to compute industry or sub-industry means of standard financial ratios from a compositional perspective. We show how to visualise firms in an industry with a compositional biplot, to classify them with compositional cluster analysis and to relate financial and non-financial indicators with compositional regression models. We show an application to the accounting statements of Spanish wineries using DuPont analysis, and a step-by-step tutorial to the compositional freeware CoDaPack.
    Date: 2023–05
  4. By: Putrajaya, Bertrando Matthew Lielien
    Abstract: Tujuan penelitian ini adalah untuk menguji kualitas audit terhadap earning management perusahaan, sehingga auditor memiliki peranan penting bagi suatu perusahaan untuk mengontrol dan membuat keputusan dalam membuat laporan keuangan. Kondisi laporan finansial suatu perusahaan ada di tangan auditor untuk melanjut proseskan diberikan kepada investor. Temuan yang menarik adalah bahwa penelitian ini menemukan bahwa pilihan auditor akan berkontribusi dalam bidang akuntansi dan keuangan.
    Date: 2023–05–09
  5. By: Stefan Goldbach (Deutsche Bundesbank); Philipp Harms (Johannes Gutenberg University Mainz); Axel Joachem (Deutsche Bundesbank); Volker Nitsch (TU Darmstadt); Alfons J. Weichenrieder (TU Darmstadt)
    Abstract: In some countries, a sizable fraction of savings is derived from corporate savings. Although larger, traded corporations are often co-owned by foreign portfolio investors, current international accounting standards allocate all corporate savings to the host country. This paper suggests a framework to correct for this misleading attribution and applies this concept to Germany. For the years 2012 to 2020, our corrections retrospectively reduce German savings and consequently the German current account surplus by, on average, €11.5bn annually. This amounts to approximately five percent of Germany’s average official current account surplus (€226.6bn) across these years.
    Keywords: current account; balance of payments; corporate savings; retained earnings, foreign portfolio investment; Germany
    JEL: F32 E21
    Date: 2023–05–08
  6. By: Leuz, Christian
    Abstract: Armstrong et al. (2022) review the empirical methods used in the accounting literature to draw causal inferences. They document a growing number of studies using quasi-experimental methods and provide a critical perspective on this trend as well as the use of these methods in the accounting literature. In this discussion, I complement their review by broadening the perspective. I argue for a design-based approach to accounting research that shifts attention from methods to the entire research design. I also discuss why studies that aim to draw causal inferences are important, how these studies fit into the scientific process, and why assessing the strength of the research design is important when evaluating studies and aggregating research findings.
    Keywords: Endogeneity, Causal inferences, Research design, Empirical methods, Natural experiments, Accounting research
    JEL: C4 D8 M4
    Date: 2023
  7. By: Bhattacharya, Utpal (Department of Finance, Hong Kong University of Science and Technology); Kumar, Amit (Department of Finance, Singapore Management University); Visaria, Sujata (Department of Economics, Hong Kong University of Science and Technology); Zhao, Jing (Hong Kong Polytechnic University)
    Abstract: We arranged for trained undercover men and women to pose as potential clients and visit all 65 local financial advisory firms in Hong Kong, China. At financial planning firms, but not at securities firms, women were more likely than men to receive advice to buy only individual or only local securities. Female clients who signaled that they were highly confident, highly risk tolerant, or had a domestic outlook, were especially likely to receive suboptimal advice. Our theoretical model explains these patterns as the result of statistical discrimination interacting with advisors’ incentives. Taste-based discrimination is unlikely to explain the results.
    Keywords: audit study; gender; financial advice; securities firm; financial planner; risk tolerance; confidence; geographic outlook
    JEL: D14 D91 G11 G24 G41
    Date: 2023–06–01
  8. By: Erick Behar-Villegas; Pablo Sanabria-Pulido; Paul J. Hasselbrinck-Macias
    Abstract: Los entes de control y fiscalía, informalmente conocidos por el acrónimo de “ías†(Procuraduría, Contralorías, Personerías, Fiscalías, etc.) forman una densa red de instituciones a nivel territorial y nacional, cuyos presupuestos agregados no se habían documentado hasta el momento. El presente trabajo explica brevemente las funciones de estas entidades y cuantifica sus presupuestos. Para el 2020, estos sumaron cerca del 0.77% del Producto Interno Bruto de Colombia. Entre el 2019 y el 2021, el presupuesto agregado aumentó 22.2%, jalonado especialmente por los entes de control y fiscalía del orden nacional. En un comparativo realizado con entidades parcialmente equivalentes en México, Alemania y Estados Unidos, se resalta que en Colombia hay, no solo más entidades, sino también una multiplicidad de capas de funciones. Estas implican riesgos considerables en una democracia, como lo son la politización de entidades que deben ser independientes, el escaso conocimiento de la opinión pública sobre las funciones de estos entes, la existencia de incentivos perversos, la captura de rentas vía procesos sancionatorios cuyo inicio y fin se concentra en una sola entidad y los dudosos y sesgados resultados de su gestión, que a su vez pueden estar atados a los mismos incentivos perversos inherentes a sus arreglos institucionales. ****** Control & Audit agencies, also known informally as watchdog agencies or ‘ías’ in Colombia, span a complex network of institutions of local or national order. Hitherto, the aggregation of their budgets had not been undertaken. This work fills this gap by documenting and aggregating their budgets, along with an explanation of the institutional missions. For 2020, for example, the aggregated budget of Colombian watchdog agencies accounted for 0.77% of GDP. Between 2019 and 2021, the aggregate budget increased by 22.2%, explained especially by the weight of the main national control and audit agencies. Using a comparison with similar institutional networks of Mexico, Germany and the United States, this work highlights that Colombia not only has a proportionally larger group of agencies, but also a multiplicity of ‘control layers of institutional missions’. The latter implies considerable risks for a democracy, i.e. political influences in would-be independent institutions, lack of knowledge about these institutions on the side of the public, the existence of perverse incentives, rent seeking that arises in biased control & sanction mechanisms that happen within single institutions, affecting the nature of checks and balances, along with the underlying results of the mission. These may be tied to perverse incentives inherent to the current institutional arrangements.
    Keywords: Entes de control, captura de rentas, órganos de control, contraloría, fiscalía, procuraduría, control fiscal, control disciplinario.
    Date: 2022–06–13
  9. By: Gustavo J. Bobonis; Paul Gertler; Marco Gonzalez-Navarro; Simeon Nichter
    Abstract: Does combating corruption reduce clientelism? We examine the impact of a prominent anti-corruption program on clientelism using a novel representative survey of rural Brazilians. Randomized audits reduce politicians’ provision of campaign handouts, decrease citizens’ demands for private goods, and reduce requests fulfilled by politicians. With regards to mechanisms, audits undermine clientelist relationships by reducing citizens’ interactions with politicians and their knowledge of incumbents. Furthermore, audits significantly deteriorate citizens’ perceptions of politician reciprocity in a hypothetical trust game. Results also offer novel insights into audits’ dynamic effects: they have more pronounced effects in the short run, especially during electoral periods.
    JEL: O10 P37
    Date: 2023–05

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.