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on Accounting and Auditing |
| By: | Amra Gadžo (University of Tuzla); Mirza Suljić (UNTZ - Univerity of Tuzla); Adisa Jusufović (University of Tuzla); Slađana Filipović (University of Tuzla); Erna Suljić (Tuzla - Public Elementary School "Simin Han", Sarajac 4, 75207 Tuzla) |
| Abstract: | The study aims to assess the capability of various data mining techniques in detecting inaccurate financial statements of government-owned enterprises operating in the Federation of Bosnia and Herzegovina (FBiH). Inaccurate financial statements indicate potential financial fraud. Prediction models of four classification algorithms (J48, KNN, MLP, and BayesNet) were examined using a dataset comprising 200 audited financial statements from government-owned enterprises under the supervision of the Audit Office of the Institutions in the Federation of Bosnia and Herzegovina. The results obtained through data mining analysis reveal that a dataset encompassing seven balance sheet items provides the most comprehensive depiction of financial statement quality. These seven attributes are: opening entry of accounts receivable, profit (loss) at the end of the period, operating assets at the end of the period, accounts receivable at the end of the period, opening entry of operating assets, short term financial investments at the end of the period, and opening entry of short-term financial investments. By employing these seven attributes, the MLP algorithm was implemented to construct the most precise predictive model, achieving a 76% accurate classification rate for financial statements. Leveraging the identified attributes, a mathematical model could potentially be formulated to effectively predict financial statements of government-owned enterprises in FBiH. This, in turn, could considerably facilitate the process of selecting GOEs for inclusion in the annual work plan of state auditors. Presently, due to resource constraints, government-owned enterprises in FBiH do not undergo regular annual scrutiny by state auditors, with only 10 to 15 such enterprises being subject to audits each year. The results of this research can also be beneficial to both the public and the Financial Intelligence Agency in the FBiH. The paper contributes to filling the gap in the literature regarding the applied methodology, particularly in the part concerning the attributes used in the research. |
| Keywords: | data mining financial statement frauds government-owned enterprises prediction of financial statements accuracy, data mining, financial statement frauds, government-owned enterprises, prediction of financial statements accuracy |
| Date: | 2025–02–04 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04929522 |
| By: | Dinerstein, Marcos; Patino Pena, Fausto Andres |
| Abstract: | This paper quantifies the impact of effective corporate tax rates on aggregate total factor productivity. Using Chilean manufacturing data, the paper documents a large dispersion in the effective tax rate faced by firms and a mass of firms facing a 0 percent tax rate. These empirical patterns are incorporated into a standard monopolistic competition model with corporate tax rates. The paper’s quantitative findings show that the TFP gains between the economy implied by the Chilean tax code of 1998–2007 and a hypothetical economy without effective corporate tax rate inefficiencies are between 4 and 11 percent. The paper considers counterfactual policies in which all firms face the same tax rate and finds a monotonically decreasing relationship between the level of the tax rate and total factor productivity. |
| Date: | 2023–04–06 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10394 |
| By: | Othman Gaga (Faculty of Economics and Management of settat, Hassan First University of Settat, Morocco); Said Karam (Faculty of Economics and Management of Settat Hassan First University of Settat); Nasredine Fathelkhir (Faculty of Economics and Management of Settat Hassan First University of Settat) |
| Abstract: | This study examines the role of financial reporting quality as a corporate governance mechanism in the Moroccan context. Drawing on Shleifer and Vishny's (1997) definition of corporate governance, which emphasizes investor protection, the research focuses on the agency relationship between creditors and firms. In a setting where ownership concentration reduces the traditional conflict between managers and shareholders, creditor protection becomes a key concern. This paper investigates conditional conservatism, particularly the timely recognition of losses, as a mechanism to mitigate information asymmetry and limit opportunistic behavior. Empirically, we test this hypothesis using an econometric model applied to a sample of 38 listed firms over the 2012–2021 period. The results indicate an asymmetric recognition of economic losses, while economic gains are not significantly reflected in accounting earnings. These findings confirm the adoption of a prudence-based accounting approach that aligns with creditor expectations. The study underscores the importance of financial reporting quality in corporate governance in Morocco and opens new avenues for future research on the institutional factors influencing this asymmetry. |
| Abstract: | Cet article analyse le rôle de la qualité du reporting financier comme mécanisme de gouvernance dans le contexte marocain. En s'appuyant sur la définition de la gouvernance de Shleifer et Vishny (1997), qui met l'accent sur la protection des investisseurs, l'étude s'intéresse particulièrement à la relation d'agence entre les créanciers et l'entreprise. Dans un contexte où la concentration de la propriété réduit le conflit traditionnel entre dirigeants et actionnaires, la protection des créanciers devient un enjeu central. L'article explore ainsi le conservatisme conditionnel, et plus précisément la reconnaissance opportune des pertes, comme mécanisme permettant de réduire l'asymétrie d'information et de limiter les comportements opportunistes. Sur le plan empirique, nous testons cette hypothèse à travers un modèle économétrique appliqué à un échantillon de 38 entreprises cotées sur la période 2012-2021. Les résultats révèlent une reconnaissance asymétrique des pertes économiques, tandis que les gains économiques ne sont pas significativement intégrés dans le résultat comptable. Ces résultats corroborent l'existence d'une stratégie de prudence comptable, alignée avec les attentes des créanciers. L'étude met ainsi en évidence l'importance de la qualité du reporting financier dans la gouvernance des entreprises marocaines et ouvre des perspectives de recherche sur les déterminants institutionnels de cette asymétrie. |
| Keywords: | Corporate Governance, Conditional Conservatism, Financial Reporting Quality, Timely Loss Recognition, Information asymmetry, Gouvernance d’entreprise, Conservatisme conditionnel, Qualité du reporting financier, Reconnaissance opportune des pertes, Asymétrie d’information |
| Date: | 2025–02–25 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04968743 |
| By: | Kastoryano, Stephen (University of Reading) |
| Abstract: | This paper reveals how tax complexity, in the form of loopholes and assets overlapping different sections of tax returns, contributes to tax avoidance and evasion. Using administrative data from the Netherlands, it shows how an auditing announcement in 2005 triggered large increases in declared assets and properties, predominantly held by the wealthiest segments of society, in unexpected sections of the tax returns. It further takes advantage of a one-year reduction in the dividend tax rate, which coincided with another auditing announcement in 2007, to more specifically assess strategic spontaneous declarations and shifting among shareholders, particularly those with substantial company holdings. The results highlight taxpayer contingency plans and opportunistic behaviour when declaring previously hidden wealth. They also emphasize how the ambiguity of certain assets' classifications can be coopted to strategically shift wealth in response to new tax policies. |
| Keywords: | tax complexity, tax evasion, tax avoidance, auditing announcements |
| JEL: | H26 H83 K34 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17722 |
| By: | Keen, Michael; Liu, Li; Pallan, Hayley Marie |
| Abstract: | This paper articulates and, using newly-assembled data, explores how international taxation affects aggregate tangible cross-border investment. Spillovers from statutory tax rates abroad seem: As sizable as effects from the host’s rate; larger than previous consensus values (attributed to a systematic bias from FDI data); and consistent with ‘implicit’ profit shifting through real investment (rather than ‘paper’ profit shifting). Contrary to much policy discussion, the results also imply that: Host countries’ marginal effective tax rates have at best a weak effect on real investment; those elsewhere have none; and, applied to the prospective global minimum tax, inward tangible investment in most sample countries will increase. |
| Date: | 2023–05–01 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10427 |
| By: | Giulia Aliprandi (EU Tax - EU Tax Observatory, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement) |
| Abstract: | The Australian government is implementing a new public Country-by-Country Reporting (CbCR) regime to enhance tax transparency for large multinational enterprises. This note analyzes the key aspects of the Australian Public CbCR legislation, how it compares to other reporting standards, its potential impact, and blind spots. The analysis reveals that while the Australian Public CbCR legislation aligns with global trends and initiatives, there are mismatches in the requirements implemented across different countries, which may leave gaps in transparency. To maximize effectiveness, there is a need to align with the best global transparency practices and avoid creating new loopholes. The note estimates that approximately 50% of large US companies and a significant portion of multinationals from countries like China, Japan, and Germany will potentially have to disclose information on their tax haven presence. However, some key tax havens are missing from the draft list of countries required for disaggregated reporting. Australia should not rely on the EU CbCR directive to improve transparency on European tax havens but include them in the list of countries to be disclosed. |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:halshs-04940979 |
| By: | Shiqi Wang; Zhibo Zhang; Libing Fang; Cam-Tu Nguyen; Wenzhon Li |
| Abstract: | Corporate fraud detection aims to automatically recognize companies that conduct wrongful activities such as fraudulent financial statements or illegal insider trading. Previous learning-based methods fail to effectively integrate rich interactions in the company network. To close this gap, we collect 18-year financial records in China to form three graph datasets with fraud labels. We analyze the characteristics of the financial graphs, highlighting two pronounced issues: (1) information overload: the dominance of (noisy) non-company nodes over company nodes hinders the message-passing process in Graph Convolution Networks (GCN); and (2) hidden fraud: there exists a large percentage of possible undetected violations in the collected data. The hidden fraud problem will introduce noisy labels in the training dataset and compromise fraud detection results. To handle such challenges, we propose a novel graph-based method, namely, Knowledge-enhanced GCN with Robust Two-stage Learning (${\rm KeGCN}_{R}$), which leverages Knowledge Graph Embeddings to mitigate the information overload and effectively learns rich representations. The proposed model adopts a two-stage learning method to enhance robustness against hidden frauds. Extensive experimental results not only confirm the importance of interactions but also show the superiority of ${\rm KeGCN}_{R}$ over a number of strong baselines in terms of fraud detection effectiveness and robustness. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.19305 |