Research in Accounting Regulation最新文献

This study utilizes a nationwide random selection of 111 lenders in a 2 × 2 between-subjects experiment to determine whether the level of an auditor's economic dependence on a client and type of auditor rotation affect lenders’ independence and reliability perceptions and decisions to lend money to a potential borrower. Previous literature shows that financial statement users use client importance as a measure of audit quality when revenue streams are not equal across clients. This can negatively affect perceptions of independence and financial statement reliability. As United States regulators look for ways to improve audit quality under the current partner rotation mandate, this study explores whether an audited entity that voluntarily adopts a policy of firm rotation can mitigate the negative effects of the auditor's dependence on the client. Findings suggest that lenders view clients of economically dependent auditors (CEDA) as less independent from its auditor and perceive its financials as less reliable than clients without a dependent auditor (non-CEDA). Lenders are less likely to grant a loan to CEDA. However, under firm rotation, there is not only an increase in lenders’ perceptions of reliability of CEDA financials, but also no difference in perceptions of reliability of CEDA and non-CEDA financials.

The dynamics of IFRS are a significant influence on regulators and accounting standard setters in many countries. Many previous studies on accounting standard setting have focused on comment letter submissions and analyzed the relationship between lobbying behavior and lobbyists’ attributes (e.g., Larson, 2008). However, how and to what extent each actor can participate effectively in the IASB's standard-setting process has not been thoroughly studied. This case study deals with this issue and contributes to the literature by introducing the theoretical perspective of norm entrepreneur actions during accounting standard setting. It investigates a case involving the modification of an IFRS exposure draft that did not reflect Japanese opinions. This study identifies two factors that appear to be crucial in relation to the IASB's final decision: the actions of Japanese norm entrepreneurs and their analogical persuasion.

During the 1990s and early 2000s, developing nations in all parts of the world experienced financial crisis. Studies have documented, both theoretically and empirically, that authorities’ guarantee that insolvent financial institutions would be “bailed out” increased the incentives of banks, especially large institutions, to take on excessive loan risk. However, little research has been conducted on how the possibility of being “bailed out” impacts banks’ decisions regarding the understatement of loan loss reserves (i.e. the tendency to conceal loan risk). We argue that the Mexican financial crisis of the 1990s represents a rich setting to investigate the link between “bailout assistance” and banks’ accounting for loan loss reserves. The analysis of loan trends for the entire financial system shows that Mexican banks fully reserved non-performing loans not in 1997, when new accounting standards took effect, but rather in 1999–2001, after the largest institutions had been sold to foreign banks and international bailout assistance had been exhausted. Also, the results show that in the period preceding their sale to foreign institutions, “Too Big To Fail” (TBTF) banks used bailout assistance to directly manage their reserves. By contrast smaller banks used non-bailout sources of capital to reserve non-performing consumer loans, and directly swapped non-performing commercial loans for bailout assistance. Thus, while both TBTF and smaller banks utilized bailout assistance, the bailout funds only affected loan loss reserve levels in the case of TBTF banks.

This study examines how the adoption of International Financial Reporting Standard (IFRS) 8, Operating Segments, changed the entity-wide geographic segment reporting by European, Australian and New Zealand blue chip companies. The focus is on the revised requirements that companies disclose revenues for the country of domicile and other material countries. Specifically, it investigates the materiality level companies use to determine material countries and whether the revised requirements result in a finer set of geographic information than previously disclosed under International Accounting Standard (IAS) 14R.

The study finds a significant decrease in the number of companies reporting only broad geographic regions and a significant increase in the number of companies reporting country specific segments and a mix of countries and regions after the adoption of IFRS 8. The increase in companies reporting country specific and mixed segments indicates that the requirement to disclose material countries under IFRS 8 resulted in a significant number of companies reporting disaggregated revenues at the individual country level. To the extent country specific information is more useful, financial analysts and the International Accounting Standards Board (IASB) should welcome this result.

All three fineness measures increase significantly with the adoption of IFRS 8. These results indicate that the adoption of IFRS 8 did improve the fineness of the geographic disclosures provided by companies and suggests that the geographic data provided under IFRS 8 is less aggregated than the disclosures under IAS 14R.

With globalization the economic operations between entities become more complicated. Therefore, financial accounting of these economic operations and their presentation in financial statements also are increasingly complex. Thus international financial accounting standards and implementation which are subsequently applied by entities need to be suitable to the newest requirements of business. Thus researchers and practitioners should study international financial reporting standards to address such improvements. The paper explores ways to improve IFRS 3 Business Combinations (2008). It considers the revision of the definition of outputs and clarification of “merger of equals” and “joint arrangements” definitions.

The current accounting regulations are silent about the order of financial statements reported in SEC filings, although some SEC regulations deal with reporting requirements for the SEC filings of public entities (i.e., S-K), and formats and content of financial reports (i.e., S-X). We investigate the order of financial statements reported in 10-K filings and identify factors associated with such order based on a manually collected sample of S&P 500 entities. We find that more than half of entities report an income statement in the beginning, while a large number of entities still report a balance sheet as the first financial statement. We also document that larger entities and entities with more investment in tangible assets and R&D are more likely to list an income statement first. On the other hand, entities with larger shareholders’ equity (relative to total assets) tend to report a balance sheet in the beginning. However, profitability does not appear to be related to the order of financial statements. Findings of this study should be of interest to academia, financial statement users and policy makers.

This study examines whether having accounting experts on audit committees can mitigate the upward bias of expected rates of return (ERR) on pension plan assets documented in prior research. ERRs are found to be lower in firms with accounting expertise on their audit committees. These results are robust after controlling for variables from extant governance and pension research, and they suggest that audit committee accounting experts can help deter managers from setting higher ERRs on pension assets. While extant studies find that opportunistic setting of pension assumptions can be controlled through regulation, this paper provides new evidence on the influence of audit committee accounting experts on critical pension estimates. This newfound governance effect is different from and incremental to the regulation effect previously documented in the pension accounting literature.

Since 2002, the Environmental Protection Agency has enacted federal regulations aimed at reducing pollution caused by diesel engines. This study provides an empirical examination of the effect of EPA regulations on the financial performance of firms in the trucking industry. The findings are relevant to regulators, practitioners, and academics because it addresses the impact of environmental regulations as well as the financial accounting standards process.