Research in Accounting Regulation最新文献

As Bangladesh is going through socio-economic and political changes, this paper investigates the disclosures required by ‘Bangladesh Accounting Standards’ or ‘International Financial Reporting Standards’, as adopted/adapted in Bangladesh and whether affiliation with Big-4 accounting firms leads to better compliance with disclosure requirements. We analyze the financial statements of 26 banks on liquidity, concentrations of assets, liabilities and off-balance-sheet items, related-party transactions, and unconsolidated entities. Our results indicate that banks are not ensuring essential compliance with all disclosure items in national standards. Banks audited by Big-4 affiliates display better compliance in financial statements than those audited by non-affiliates, with some exceptions. Our research provided evidence that, in contrast to general understanding and expectation, Big-4 associates in developing country may not absolutely outperform local firms. We also find systematic non-compliance with provisions of standards that would be useful for inferring group membership despite compliance with other disclosure provisions.

Both financial and corporate social responsibility (CSR) reporting are bound by global constraints. A common trait among the reporting systems is a growing movement toward comparability and accountability. Global pressures initially motivated the push toward stand-alone CSR reporting and now toward integrated reporting. Integrated reports (IR) include financial, economic, governance, and social information in one report. In the United States, integrated reporting is voluntary and only a small number of companies have issued IRs to date. This report provides a history of CSR reporting and then examines whether the non-financial economic, governance and social indicators identified in prior literature as being of interest to retail investors (Cohen et al. 2011) are disclosed in the pioneering U.S. IRs. Descriptive results indicate the initial IRs cover predominately indicators of economic and social performance with little focus on governance. Further analysis indicates that the IRs examined do not, as a rule, provide the information most highly desired by investors (i.e. market share, executive compensation, and product safety). This study provides a baseline for companies preparing IRs and for regulators (i.e. SEC, FASB) in the context of determining future disclosure regulations.

Regulators have voiced concerns regarding the impact of auditor provided non-audit services (NAS) on auditor independence, and by extension, audit quality. This study considers whether the provision of various levels of (NAS) influences the auditor's propensity to issue material weakness opinions (MWO). The results indicate that audit clients that purchase zero NAS, and clients that purchase NAS less than Sarbanes-Oxley's benchmark of NAS fees less than 5% of total fees, are more likely to receive a MWO than clients with a NAS at higher levels.

Accounting Standards Update (ASU) 2011–05 eliminates the option to present other comprehensive income (OCI) in the statement of changes in stockholders’ equity. This study empirically investigates whether this mandatory change of OCI presentation format achieves FASB's stated objective of improving the transparency of financial reporting. First, ASU 2011–05 is found to greatly reduce the continuity of OCI from one period to the next. As OCI items are transitory in nature, the increased OCI volatility makes firms’ inherent risk more transparent to investors. Second, ASU 2011–05 is found to significantly increase the ability of net income to influence stock prices. As OCI and net income are intertwined, the more salient presentation of OCI enables investors to better interpret earnings. Supporting FASB's position that OCI items need to be more prominently displayed, these findings suggest that the new standard improves transparency and usefulness of the reported OCI information.

This note explores how the financial reporting environment for listed companies is a common good put at risk by participants with incentives to extract benefits at the cost of the investing public. Disclosure of misleading financial information confers economic gain for a few but pollutes the environment and reduces its usefulness for all. After showing how a variant of the prisoner's dilemma may explain Enron-era scandals, the note discusses how U.S. government intervention was the only practical solution to repair damage to the financial reporting Commons. The implication of this note is that government involvement in financial reporting is here to stay.

Standard setters and regulators face an ever-present concern over the discretionary influence firms have in financial reporting. For information to have enhanced relevance, some level of discretion in financial reporting is often necessary. Prior work suggests that firms may be opportunistic in exercising choice and influence where discretion is available to advantageously affect reported results. This study examines if aggressive firms take the opportunity afforded by the wide discretion in Level 3 valuations under the original Accounting Standards Codification (ASC) 820 standard to manipulate financial reporting. Minimal evidence is found to support an association between Level 3 valuations and other metrics reflecting earnings management. The findings may be driven by the high-level, and typically limited, disclosures that firms are required to make under the originally promulgated ASC 820. This primary finding suggests that FASB's move to increase the disclosures required under the standard was warranted.

The state and local government accounting profession continues to contend with issues surrounding self-governance, funding for the profession's standard setting body, federal regulation and states' rights. Fiscal conditions, bankruptcies and struggling pension funds bring to question whether self-governance has been effective in the state and local government sector. Federal regulation has impacted the government accounting sector but to a much lesser extent than in the private sector. With new discussion by lawmakers in Washington regarding the appropriate levels of regulation, particularly surrounding the financial markets; more change could be on the horizon. This paper assesses the proper balance between self-governance and regulation in the government sector and how current considerations by policymakers could impact the profession.