Joyce Chepkoech Getugi, C. Osoro, Allan S. N. Kihara
Purpose: The financial sector is being revolutionized as a direct result of technological progress, with banks and other financial institutions embracing new technologies to better serve their customers online. Technological developments in the financial sector are simplifying access to financial services. The study set out to dissect the effects of Fintech on Kenya's commercial banking sector. The general objective was to establish the effect of mobile banking on technical efficiency of commercial banks in Kenya. The study was anchored on Theory of Constraint-Induced Innovation. Methodology: The entire study relied on collecting empirical data and evaluating hypothesis in a positivist way. A causal-comparative research design was used in this research. The study targeted population of Seventeen Kenyan commercial banks from the first and second tiers. The analysis relied on secondary sources of information. The gathered quantitative data was analyzed using both descriptive and inferential statistics. Numbers, medians, and standard deviations were used to characterize the data, and frequency distributions were used to determine the sample size. Models for analyzing correlations and regressions are inferential statistics. STATA was used for the data analysis. Findings: The study established that mobile banking has a positive and significant effect on technical efficiency of commercial banks in Kenya. Unique contribution to theory, practice and policy: Commercial banks in Kenya are recommended to improve their mobile banking services in light of the study's findings.
{"title":"Mobile Banking and Technical Efficiency of Commercial Banks in Kenya","authors":"Joyce Chepkoech Getugi, C. Osoro, Allan S. N. Kihara","doi":"10.47941/jacc.1329","DOIUrl":"https://doi.org/10.47941/jacc.1329","url":null,"abstract":"Purpose: The financial sector is being revolutionized as a direct result of technological progress, with banks and other financial institutions embracing new technologies to better serve their customers online. Technological developments in the financial sector are simplifying access to financial services. The study set out to dissect the effects of Fintech on Kenya's commercial banking sector. The general objective was to establish the effect of mobile banking on technical efficiency of commercial banks in Kenya. The study was anchored on Theory of Constraint-Induced Innovation. \u0000Methodology: The entire study relied on collecting empirical data and evaluating hypothesis in a positivist way. A causal-comparative research design was used in this research. The study targeted population of Seventeen Kenyan commercial banks from the first and second tiers. The analysis relied on secondary sources of information. The gathered quantitative data was analyzed using both descriptive and inferential statistics. Numbers, medians, and standard deviations were used to characterize the data, and frequency distributions were used to determine the sample size. Models for analyzing correlations and regressions are inferential statistics. STATA was used for the data analysis. \u0000Findings: The study established that mobile banking has a positive and significant effect on technical efficiency of commercial banks in Kenya. \u0000Unique contribution to theory, practice and policy: Commercial banks in Kenya are recommended to improve their mobile banking services in light of the study's findings.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":"11 1","pages":""},"PeriodicalIF":2.0,"publicationDate":"2023-06-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85811427","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-03-11DOI: 10.1142/s109440602350004x
R. L. Cardoso, Rodrigo de Oliveira Leite, André Carlos Busanelli de Aquino
Synopsis Research problem We investigate whether accountants’ cognitive reflection ability affects how they assess the probabilistic numerical thresholds of the probabilistic expressions probable, remote, virtually certain, and reasonable certainty in the context of international financial reporting standards. Theoretical reasoning In the psychology literature, impulsivity is associated with aggressive behavior, and reflective individuals are more prone than impulsive individuals to access slow and effortful (Type 2) reasoning in order to overcome the initial response provided by fast and impulsive (Type 1) reasoning. Considering that accounting conservatism requires a higher degree of verification to recognize events that increase rather than decrease net assets, we argue that impulsivity is associated with aggressive accounting and reflectivity is associated with a conservative interpretation of probabilistic expressions. Test hypothesis Reflective accountants are more conservative than their impulsive peers when making numerical assessments of probabilistic expressions associated with accruing or disclosing an event. Target population Accounting professionals, including preparers, auditors, and tax analysts. Adopted methodology We collected data from 569 accounting professionals using a survey questionnaire, in partnership with the Brazilian Accountants Association (Conselho Federal de Contabilidade, or CFC), a federal agency with the mandate of guiding, regulating, and supervising the accounting profession in Brazil, to assess professionals’ cognitive reflection ability, collect their demographic characteristics, and evaluate their assignment of numerical values to probabilistic expressions. Analyses We employed [Formula: see text]-tests, median tests, and standard deviation tests; we also conducted several robustness tests that replicated our main results. Findings Our results confirm that reflective accountants are more conservative in their probability assessments than their impulsive peers. Our findings have three main implications. First, standard-setters could avoid the use of or develop guidance about terms with low communication efficiency. Second, analysts and standard-setters should consider that the comparability of accounting information across firms depends on the preparers’ cognitive reflection ability. Third, we present an additional explanation (accountants’ cognitive reflection ability) for accounting conservatism and differences in the interpretation of uncertainty expressions.
研究问题我们调查了在国际财务报告准则的背景下,会计师的认知反映能力是否会影响他们如何评估概率表达的概率数值阈值:可能的、遥远的、几乎确定的和合理的确定性。在心理学文献中,冲动性与攻击性行为有关,反思性个体比冲动性个体更倾向于进行缓慢而费力的(第2型)推理,以克服快速和冲动性(第1型)推理所提供的初始反应。考虑到会计稳健性需要更高程度的验证来识别增加而不是减少净资产的事件,我们认为冲动性与激进的会计有关,反射率与对概率表达式的保守解释有关。在对与应计或披露事件相关的概率表达式进行数值评估时,反思型会计师比冲动型会计师更为保守。目标人群:会计专业人士,包括编制人员、审计人员和税务分析师。采用的方法我们与巴西会计师协会(Conselho Federal de Contabilidade,简称CFC)合作,使用调查问卷收集了569名会计专业人员的数据,该协会是一个联邦机构,其任务是指导、规范和监督巴西的会计行业,以评估专业人员的认知反映能力,收集他们的人口统计学特征,并评估他们对概率表达式的数值分配。我们采用了[公式:见文本]-检验、中位数检验和标准差检验;我们还进行了几次稳健性测试,以重复我们的主要结果。我们的研究结果证实,反思型会计师在概率评估方面比冲动型会计师更为保守。我们的发现有三个主要含义。首先,标准制定者可以避免使用或制定关于沟通效率低的术语的指南。第二,分析师和准则制定者应该考虑到公司间会计信息的可比性取决于财务报表编制人的认知反映能力。第三,我们提出了会计稳健性和不确定性表达解释差异的额外解释(会计人员的认知反射能力)。
{"title":"Probable at First Glance, but Unlikely After Closer Look: The Role of Cognitive Reflection Ability on the Assessment of Probabilistic Expressions","authors":"R. L. Cardoso, Rodrigo de Oliveira Leite, André Carlos Busanelli de Aquino","doi":"10.1142/s109440602350004x","DOIUrl":"https://doi.org/10.1142/s109440602350004x","url":null,"abstract":"Synopsis Research problem We investigate whether accountants’ cognitive reflection ability affects how they assess the probabilistic numerical thresholds of the probabilistic expressions probable, remote, virtually certain, and reasonable certainty in the context of international financial reporting standards. Theoretical reasoning In the psychology literature, impulsivity is associated with aggressive behavior, and reflective individuals are more prone than impulsive individuals to access slow and effortful (Type 2) reasoning in order to overcome the initial response provided by fast and impulsive (Type 1) reasoning. Considering that accounting conservatism requires a higher degree of verification to recognize events that increase rather than decrease net assets, we argue that impulsivity is associated with aggressive accounting and reflectivity is associated with a conservative interpretation of probabilistic expressions. Test hypothesis Reflective accountants are more conservative than their impulsive peers when making numerical assessments of probabilistic expressions associated with accruing or disclosing an event. Target population Accounting professionals, including preparers, auditors, and tax analysts. Adopted methodology We collected data from 569 accounting professionals using a survey questionnaire, in partnership with the Brazilian Accountants Association (Conselho Federal de Contabilidade, or CFC), a federal agency with the mandate of guiding, regulating, and supervising the accounting profession in Brazil, to assess professionals’ cognitive reflection ability, collect their demographic characteristics, and evaluate their assignment of numerical values to probabilistic expressions. Analyses We employed [Formula: see text]-tests, median tests, and standard deviation tests; we also conducted several robustness tests that replicated our main results. Findings Our results confirm that reflective accountants are more conservative in their probability assessments than their impulsive peers. Our findings have three main implications. First, standard-setters could avoid the use of or develop guidance about terms with low communication efficiency. Second, analysts and standard-setters should consider that the comparability of accounting information across firms depends on the preparers’ cognitive reflection ability. Third, we present an additional explanation (accountants’ cognitive reflection ability) for accounting conservatism and differences in the interpretation of uncertainty expressions.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2023-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42203570","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-02-28DOI: 10.1142/s1094406023500099
J. Agana, Solomon George Zori, Anna Alon
Synopsis The research problem This paper sought to ascertain whether IFRS adoption approaches impact accounting quality. Specifically, as some countries utilize IFRS without modifications while others modify IFRS to suit their local context, we aimed to test whether these differences in IFRS adoption approaches have implications for accounting quality. Motivation Prior studies focused on the impact of IFRS adoption on accounting quality without considering the different approaches used by the adopting jurisdictions. Such differences affect the version of IFRS utilized at the country level. We refer to jurisdictions as adopters of IFRS when the IASB’s version of IFRS is utilized without modifications. In contrast, jurisdictions where the IFRS standards are modified at the national or regional level are called adapters. We also recognize the role of enforcement; thus, we first examined whether IFRS adoption and enforcement influence accounting quality. Second, we compared the accounting quality for adopters and adapters of the standards. The test hypotheses Our first hypothesis is that the quality of enforcement has a stronger effect on accounting quality than the adoption of IFRS. Second, adapters will have higher accounting quality than adopters of IFRS. Target population We focused on the reporting of companies in African countries. These jurisdictions have not been sufficiently examined in prior studies. Adopted methodology We use panel data estimation, specifically, random-effects model. Analyses We examined accounting quality for pre- and post-IFRS reporting based on 3946 firm-year observations from six African countries over 18 years. Our analysis of the adoption approach is based on 3736 firm-year observations for companies utilizing IFRS. Except for Egypt, which used a modified version of IFRS, other countries in our sample utilized the IASB’s version of IFRS. Using various standard metrics for accounting quality (earnings management, timely loss recognition, and value relevance), we ascertained whether adaption is associated with higher accounting quality compared to adoption. Findings The results indicate that IFRS adoption and enforcement proxy are not associated with accounting quality, but other institutional factors are. Adoption of the standards is less important for accounting quality than the existing institutions. With regard to the adoption approach used, adopters demonstrated higher accounting quality for accounting-based measures, less income smoothing, and more timely loss recognition than the adapters. The adopters also exhibited greater value relevance, which suggests that their reporting was better able to capture information that affects firm value. The adoption approaches may influence different dimensions of accounting quality, and the resulting differences are important for users, companies, and standard setters to consider.
{"title":"IFRS Adoption Approaches and Accounting Quality","authors":"J. Agana, Solomon George Zori, Anna Alon","doi":"10.1142/s1094406023500099","DOIUrl":"https://doi.org/10.1142/s1094406023500099","url":null,"abstract":"Synopsis The research problem This paper sought to ascertain whether IFRS adoption approaches impact accounting quality. Specifically, as some countries utilize IFRS without modifications while others modify IFRS to suit their local context, we aimed to test whether these differences in IFRS adoption approaches have implications for accounting quality. Motivation Prior studies focused on the impact of IFRS adoption on accounting quality without considering the different approaches used by the adopting jurisdictions. Such differences affect the version of IFRS utilized at the country level. We refer to jurisdictions as adopters of IFRS when the IASB’s version of IFRS is utilized without modifications. In contrast, jurisdictions where the IFRS standards are modified at the national or regional level are called adapters. We also recognize the role of enforcement; thus, we first examined whether IFRS adoption and enforcement influence accounting quality. Second, we compared the accounting quality for adopters and adapters of the standards. The test hypotheses Our first hypothesis is that the quality of enforcement has a stronger effect on accounting quality than the adoption of IFRS. Second, adapters will have higher accounting quality than adopters of IFRS. Target population We focused on the reporting of companies in African countries. These jurisdictions have not been sufficiently examined in prior studies. Adopted methodology We use panel data estimation, specifically, random-effects model. Analyses We examined accounting quality for pre- and post-IFRS reporting based on 3946 firm-year observations from six African countries over 18 years. Our analysis of the adoption approach is based on 3736 firm-year observations for companies utilizing IFRS. Except for Egypt, which used a modified version of IFRS, other countries in our sample utilized the IASB’s version of IFRS. Using various standard metrics for accounting quality (earnings management, timely loss recognition, and value relevance), we ascertained whether adaption is associated with higher accounting quality compared to adoption. Findings The results indicate that IFRS adoption and enforcement proxy are not associated with accounting quality, but other institutional factors are. Adoption of the standards is less important for accounting quality than the existing institutions. With regard to the adoption approach used, adopters demonstrated higher accounting quality for accounting-based measures, less income smoothing, and more timely loss recognition than the adapters. The adopters also exhibited greater value relevance, which suggests that their reporting was better able to capture information that affects firm value. The adoption approaches may influence different dimensions of accounting quality, and the resulting differences are important for users, companies, and standard setters to consider.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":"1 1","pages":""},"PeriodicalIF":2.0,"publicationDate":"2023-02-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41333095","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-02-21DOI: 10.1142/s1094406023500087
Samuel E. Fulgence, A. Boateng, Yan Wang, Frank O. Kwabi
Synopsis The research problem This study examines the effects of board size and board independence, as well as the interaction effect between board independence and CEOs/CFOs on corporate governance disclosure practices. Motivation Despite corporate governance (CG) reforms around the world, research evidence indicates that the levels of corporate governance disclosures (CGDs) in developing countries remain poor due to weak institutions and corporate governance systems. In particular, the corporate boards as a key mechanism of CG and the board nomination processes in East Africa remain largely opaque and dominated by majority shareholders, chief executive officers, and chief finance officers (CEOs/CFOs), giving rise to opportunistic behaviors that may be detrimental to firm value. The distinctive feature of the board nomination process/CG system in East Africa has implications for monitoring and corporate governance disclosure practices and compliance and calls for systematic research in this under-explored subject. Hypotheses H1: The association between board size and corporate governance disclosure will be positive. H2: The association between board independence and corporate governance disclosure will be positive. H3a: The presence of the CEO on the nomination/remuneration committee will negatively moderate the relationship between board independence and corporate governance disclosure. H3b: The presence of the CFO on the nomination/remuneration committee will negatively moderate the relationship between board independence and corporate governance disclosure. H3c: The presence of the CEO and CFO on the nomination/remuneration committee will negatively moderate the relationship between board independence and corporate governance disclosure. Target population Stakeholders including firm managers, practitioners, regulatory authorities, policymakers, and investors. Adopted methodology Ordinary least squares (OLS), fixed-effects model, and system generalized method of moments (GMM). Analyses Using a large and hand-collected dataset comprising 1000 firm-year observations from 2007 to 2017 in East Africa, this study develops a corporate governance disclosure index (CGDI) of East Africa consisting of 164 provisions. To test our hypotheses, this study adopts three analytical approaches, namely OLS and fixed-effects (FE) regressions and the two-stage system GMM to address the endogeneity concerns. Findings We find that large boards and independent directors are associated with greater disclosure of CG information. Our analysis suggests that CEO/CFO power negatively moderates the link between board independence and corporate governance disclosure, unlike those environments with stronger institutions and corporate governance systems. Thus, firms whose CEO and CFO are involved in remuneration or nomination committees disclose less CG information. The combined effect of the CEO and CFO on selection and remuneration committees and an independent board in redu
{"title":"Board Effect and the Moderating Role of CEOs/CFOs on Corporate Governance Disclosure: Evidence from East Africa","authors":"Samuel E. Fulgence, A. Boateng, Yan Wang, Frank O. Kwabi","doi":"10.1142/s1094406023500087","DOIUrl":"https://doi.org/10.1142/s1094406023500087","url":null,"abstract":"Synopsis The research problem This study examines the effects of board size and board independence, as well as the interaction effect between board independence and CEOs/CFOs on corporate governance disclosure practices. Motivation Despite corporate governance (CG) reforms around the world, research evidence indicates that the levels of corporate governance disclosures (CGDs) in developing countries remain poor due to weak institutions and corporate governance systems. In particular, the corporate boards as a key mechanism of CG and the board nomination processes in East Africa remain largely opaque and dominated by majority shareholders, chief executive officers, and chief finance officers (CEOs/CFOs), giving rise to opportunistic behaviors that may be detrimental to firm value. The distinctive feature of the board nomination process/CG system in East Africa has implications for monitoring and corporate governance disclosure practices and compliance and calls for systematic research in this under-explored subject. Hypotheses H1: The association between board size and corporate governance disclosure will be positive. H2: The association between board independence and corporate governance disclosure will be positive. H3a: The presence of the CEO on the nomination/remuneration committee will negatively moderate the relationship between board independence and corporate governance disclosure. H3b: The presence of the CFO on the nomination/remuneration committee will negatively moderate the relationship between board independence and corporate governance disclosure. H3c: The presence of the CEO and CFO on the nomination/remuneration committee will negatively moderate the relationship between board independence and corporate governance disclosure. Target population Stakeholders including firm managers, practitioners, regulatory authorities, policymakers, and investors. Adopted methodology Ordinary least squares (OLS), fixed-effects model, and system generalized method of moments (GMM). Analyses Using a large and hand-collected dataset comprising 1000 firm-year observations from 2007 to 2017 in East Africa, this study develops a corporate governance disclosure index (CGDI) of East Africa consisting of 164 provisions. To test our hypotheses, this study adopts three analytical approaches, namely OLS and fixed-effects (FE) regressions and the two-stage system GMM to address the endogeneity concerns. Findings We find that large boards and independent directors are associated with greater disclosure of CG information. Our analysis suggests that CEO/CFO power negatively moderates the link between board independence and corporate governance disclosure, unlike those environments with stronger institutions and corporate governance systems. Thus, firms whose CEO and CFO are involved in remuneration or nomination committees disclose less CG information. The combined effect of the CEO and CFO on selection and remuneration committees and an independent board in redu","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2023-02-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46191300","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-02-20DOI: 10.1142/s1094406023500075
Makoto Kuroki, Hiroki Natsuyoshi
The research problem This study investigates the relationship between the incentive of Japanese non-profit organizations to avoid losing their tax-exempt status and the extent of tax-motivated expense allocation. Motivation Prior studies have shown that for joint overhead expenses, organizations can lower their tax burden by transferring costs from non-taxable to taxable activities. However, tax authorities may also investigate non-profits that report excessive profits without incurring expenses for non-taxable activities and penalize them by depriving them of their tax-exempt status. This deprivation of tax exemptions specific to non-profit organizations causes serious problems for such organizations in terms of the economic impact of increased income taxes and the loss of social value from donors. In Japan, non-profit organizations are deprived of tax-exempt status if the ratio of expenses from taxable activities to total expenses (TaxExpRatio) exceeds a regulatory threshold of 50%. We estimated the tax-motivated expense allocation and non-taxable activities, defining the term TaxExpRatio before the allocation as TRBA. In addition, we assumed that a larger board of directors has a stronger incentive to protect the non-profit’s tax-exempt assets because individuals or organizations that provide resources to non-profits often become board members, who thus conduct stronger monitoring to avoid losing the tax-exempt status. The test hypotheses We hypothesized that when the TRBA exceeds the regulatory threshold, non-profits allocate less discretionary expense to taxable activities. We further posited that board size moderates the relationship between the TRBA exceeding the regulatory threshold and allocation of discretionary expenses to taxable activities. Target population We specifically considered the Japanese regulatory environment related to public-interest incorporated associations and foundations (PIIAs and PIIFs, referred to as Japanese non-profit organizations), which are tax-exempt organizations engaged in a wide range of public work. Adopted methodology We estimated the expense allocated from non-taxable to taxable activities in a non-profit organization based on Hofmann (2007) and Omer & Yetman (2007). We also estimated regressions using pooled cross-sectional and ordinary least squares (OLS) regression models. Analysis By using 12,027 firm-year observations (4,763 distinct non-profit organizations in Japan), we estimated the regression model for the incentive to avoid losing tax-exempt status in non-profit organizations. Findings We found that non-profits with TRBA over the regulatory threshold tend to allocate less expenses to taxable activities. In addition, the empirical results show that the relationship between TRBA over the regulatory threshold and allocated expenses to taxable activities is moderated by board size. This finding suggests that larger boards in non-profit organizations are more incentivized to reduce tax avoidance b
{"title":"Tax-Related Incentives and Expense Allocation in Non-Profit Organizations: Evidence from Japan","authors":"Makoto Kuroki, Hiroki Natsuyoshi","doi":"10.1142/s1094406023500075","DOIUrl":"https://doi.org/10.1142/s1094406023500075","url":null,"abstract":"The research problem This study investigates the relationship between the incentive of Japanese non-profit organizations to avoid losing their tax-exempt status and the extent of tax-motivated expense allocation. Motivation Prior studies have shown that for joint overhead expenses, organizations can lower their tax burden by transferring costs from non-taxable to taxable activities. However, tax authorities may also investigate non-profits that report excessive profits without incurring expenses for non-taxable activities and penalize them by depriving them of their tax-exempt status. This deprivation of tax exemptions specific to non-profit organizations causes serious problems for such organizations in terms of the economic impact of increased income taxes and the loss of social value from donors. In Japan, non-profit organizations are deprived of tax-exempt status if the ratio of expenses from taxable activities to total expenses (TaxExpRatio) exceeds a regulatory threshold of 50%. We estimated the tax-motivated expense allocation and non-taxable activities, defining the term TaxExpRatio before the allocation as TRBA. In addition, we assumed that a larger board of directors has a stronger incentive to protect the non-profit’s tax-exempt assets because individuals or organizations that provide resources to non-profits often become board members, who thus conduct stronger monitoring to avoid losing the tax-exempt status. The test hypotheses We hypothesized that when the TRBA exceeds the regulatory threshold, non-profits allocate less discretionary expense to taxable activities. We further posited that board size moderates the relationship between the TRBA exceeding the regulatory threshold and allocation of discretionary expenses to taxable activities. Target population We specifically considered the Japanese regulatory environment related to public-interest incorporated associations and foundations (PIIAs and PIIFs, referred to as Japanese non-profit organizations), which are tax-exempt organizations engaged in a wide range of public work. Adopted methodology We estimated the expense allocated from non-taxable to taxable activities in a non-profit organization based on Hofmann (2007) and Omer & Yetman (2007). We also estimated regressions using pooled cross-sectional and ordinary least squares (OLS) regression models. Analysis By using 12,027 firm-year observations (4,763 distinct non-profit organizations in Japan), we estimated the regression model for the incentive to avoid losing tax-exempt status in non-profit organizations. Findings We found that non-profits with TRBA over the regulatory threshold tend to allocate less expenses to taxable activities. In addition, the empirical results show that the relationship between TRBA over the regulatory threshold and allocated expenses to taxable activities is moderated by board size. This finding suggests that larger boards in non-profit organizations are more incentivized to reduce tax avoidance b","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2023-02-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48534553","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-02-07DOI: 10.1142/s1094406023500063
Hany Elbardan, Amr Kotb, M. Ishaque
Synopsis The research problem The extant audit market concentration (AMC) literature is quite scattered, which makes it challenging to comprehend the current state of knowledge and to highlight the areas that require further exploration. An improved understanding of AMC and its possible effects require a comprehensive review of the AMC literature, since no such review has yet been published. Therefore, our paper intends to: (a) synthesize the empirical work in the AMC literature; (b) determine the limitations in the ways AMC has been investigated; (c) identify avenues of inquiry that could guide future thinking on AMC; and (d) develop insights into how future AMC investigations can be further developed. Motivation The most noticeable developments in AMC occurred after the audit firm megamergers of the 1980s and 1990s and Andersen’s demise in 2002. This trend toward fewer and larger suppliers of auditing services has sparked intense debate about the costs and benefits of AMC. However, the literature provides mixed evidence on the determinants and consequences of AMC. Adopted methodology A structured literature review [Massaro, M., Dumay, J., & Guthrie, J. (2016). On the shoulders of giants: Undertaking a structured literature review. Accounting, Auditing and Accountability Journal, 29(5), 767–801. https://doi.org/10.1108/AAAJ-01-2015-1939 ] was employed to review the extant AMC literature. Analyses We analyzed 108 empirical papers published in 39 peer-reviewed quality accounting and auditing journals in the English language over a 55-year period (1967 to mid-2021). Findings The analysis suggests a consistent rise in AMC levels, leading to a tight oligopoly and, in rare cases, to a duopoly, across countries and over time. Studies of audit pricing and audit quality comprise the predominant part of the literature, and these report mixed findings as to whether AMC facilitates monopolistic pricing and allows audit-quality-threatening behaviors. This could be attributed to several factors, including the focus on short-term effects of AMC; substantial variations in how concentration was measured; and misguided use of proxies for audit competition and audit quality. The review identifies four key limitations that circumscribe our understanding of AMC: (a) the lack of investigation into the actual dynamic rivalry among audit firms; (b) great reliance on the positivistic approach and quantitative methods, and the lack of use of explicit theories aside from economic theories; (c) a focus on the audit of publicly listed companies in the United States, the U.K., and Australia; and thus; (d) the absence of key organizational settings and central regions in the AMC debate. To counter these limitations, this review puts forward possible future research avenues that can help to advance our understanding of AMC to address emerging challenges in the field.
{"title":"A Review of the Empirical Literature on Audit Market Concentration","authors":"Hany Elbardan, Amr Kotb, M. Ishaque","doi":"10.1142/s1094406023500063","DOIUrl":"https://doi.org/10.1142/s1094406023500063","url":null,"abstract":"Synopsis The research problem The extant audit market concentration (AMC) literature is quite scattered, which makes it challenging to comprehend the current state of knowledge and to highlight the areas that require further exploration. An improved understanding of AMC and its possible effects require a comprehensive review of the AMC literature, since no such review has yet been published. Therefore, our paper intends to: (a) synthesize the empirical work in the AMC literature; (b) determine the limitations in the ways AMC has been investigated; (c) identify avenues of inquiry that could guide future thinking on AMC; and (d) develop insights into how future AMC investigations can be further developed. Motivation The most noticeable developments in AMC occurred after the audit firm megamergers of the 1980s and 1990s and Andersen’s demise in 2002. This trend toward fewer and larger suppliers of auditing services has sparked intense debate about the costs and benefits of AMC. However, the literature provides mixed evidence on the determinants and consequences of AMC. Adopted methodology A structured literature review [Massaro, M., Dumay, J., & Guthrie, J. (2016). On the shoulders of giants: Undertaking a structured literature review. Accounting, Auditing and Accountability Journal, 29(5), 767–801. https://doi.org/10.1108/AAAJ-01-2015-1939 ] was employed to review the extant AMC literature. Analyses We analyzed 108 empirical papers published in 39 peer-reviewed quality accounting and auditing journals in the English language over a 55-year period (1967 to mid-2021). Findings The analysis suggests a consistent rise in AMC levels, leading to a tight oligopoly and, in rare cases, to a duopoly, across countries and over time. Studies of audit pricing and audit quality comprise the predominant part of the literature, and these report mixed findings as to whether AMC facilitates monopolistic pricing and allows audit-quality-threatening behaviors. This could be attributed to several factors, including the focus on short-term effects of AMC; substantial variations in how concentration was measured; and misguided use of proxies for audit competition and audit quality. The review identifies four key limitations that circumscribe our understanding of AMC: (a) the lack of investigation into the actual dynamic rivalry among audit firms; (b) great reliance on the positivistic approach and quantitative methods, and the lack of use of explicit theories aside from economic theories; (c) a focus on the audit of publicly listed companies in the United States, the U.K., and Australia; and thus; (d) the absence of key organizational settings and central regions in the AMC debate. To counter these limitations, this review puts forward possible future research avenues that can help to advance our understanding of AMC to address emerging challenges in the field.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2023-02-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45131637","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-01-20DOI: 10.1142/s1094406023500014
P. Shrestha, Bobae Choi, L. Luo
Synopsis The research problem This study examines the relationship between carbon management system quality and firm performance and investigates the mechanisms through which a carbon management system relates to firm performance. Motivation or theoretical reasoning Despite growing attention from academia and practice on carbon accounting in recent years, little is known about firms’ strategic implementation of carbon management systems and their impact on firms’ financial outcomes. Drawing on the resource-based view and institutional theory, this study argues that carbon management system implementation can create competitive advantages for firms through product differentiation and cost leadership. However, adopting quality management systems for carbon mitigation can be costly for firms. Additionally, not all firms would achieve such a differentiation advantage through a carbon management system. The test hypotheses H1: There is no relationship between the quality of a carbon management system and firm financial performance. H2: Carbon-intensive sectors have no moderating effect on the relationship between the quality of a carbon management system and firm financial performance. Target population Corporate managers and stakeholders including investors, international regulators, and standard settees. Adopted methodology Ordinary least square regressions. Analyses Corporate financial performance is measured by return on assets, calculated as earnings before extraordinary items divided by total assets at fiscal year-end. Our independent variable of interest is the quality measure of a carbon management system (QCMS). Following Tang and Luo ( 2014 ) and Luo and Tang ( 2016 ), QCMS is calculated as the average equal weighted sum of the standardized values from the 10 elements of a carbon management system. For additional tests, alternative performance measures (e.g., Tobin’s Q, return on equity, operating return on assets [ROA], and cash flow from operating activities to total assets) and disaggregated ROA components are employed as dependent variables. Findings We find that a firm’s carbon management system quality is positively associated with its financial performance. A better-quality carbon management system is especially associated with higher revenues, margins, and R&D expenditures. In addition, individual carbon management system components exhibit heterogeneous influences on financial performance. Specifically, the areas related to carbon disclosure and external carbon assurance have an incremental impact on financial performance. The positive association between a carbon management system and financial performance is stronger for firms operating in carbon-intensive sectors and firms with a higher level of carbon emissions. The carbon regulation affects the sensitivity of financial performance differently in intensive and non-intensive sectors in response to carbon management system quality.
{"title":"Carbon Management System Quality and Corporate Financial Performance","authors":"P. Shrestha, Bobae Choi, L. Luo","doi":"10.1142/s1094406023500014","DOIUrl":"https://doi.org/10.1142/s1094406023500014","url":null,"abstract":"Synopsis The research problem This study examines the relationship between carbon management system quality and firm performance and investigates the mechanisms through which a carbon management system relates to firm performance. Motivation or theoretical reasoning Despite growing attention from academia and practice on carbon accounting in recent years, little is known about firms’ strategic implementation of carbon management systems and their impact on firms’ financial outcomes. Drawing on the resource-based view and institutional theory, this study argues that carbon management system implementation can create competitive advantages for firms through product differentiation and cost leadership. However, adopting quality management systems for carbon mitigation can be costly for firms. Additionally, not all firms would achieve such a differentiation advantage through a carbon management system. The test hypotheses H1: There is no relationship between the quality of a carbon management system and firm financial performance. H2: Carbon-intensive sectors have no moderating effect on the relationship between the quality of a carbon management system and firm financial performance. Target population Corporate managers and stakeholders including investors, international regulators, and standard settees. Adopted methodology Ordinary least square regressions. Analyses Corporate financial performance is measured by return on assets, calculated as earnings before extraordinary items divided by total assets at fiscal year-end. Our independent variable of interest is the quality measure of a carbon management system (QCMS). Following Tang and Luo ( 2014 ) and Luo and Tang ( 2016 ), QCMS is calculated as the average equal weighted sum of the standardized values from the 10 elements of a carbon management system. For additional tests, alternative performance measures (e.g., Tobin’s Q, return on equity, operating return on assets [ROA], and cash flow from operating activities to total assets) and disaggregated ROA components are employed as dependent variables. Findings We find that a firm’s carbon management system quality is positively associated with its financial performance. A better-quality carbon management system is especially associated with higher revenues, margins, and R&D expenditures. In addition, individual carbon management system components exhibit heterogeneous influences on financial performance. Specifically, the areas related to carbon disclosure and external carbon assurance have an incremental impact on financial performance. The positive association between a carbon management system and financial performance is stronger for firms operating in carbon-intensive sectors and firms with a higher level of carbon emissions. The carbon regulation affects the sensitivity of financial performance differently in intensive and non-intensive sectors in response to carbon management system quality.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2023-01-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44646323","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-01-20DOI: 10.1142/s1094406023500038
Tao Chen
Synopsis The research problem This study investigates whether algorithmic trading matters to post-earnings-announcement drift (PEAD) across 41 countries. Motivation The increasing importance of algorithms has sparked interest in how computer-triggered trades affect the formation of securities prices. Thus, a large body of research has emerged to probe the instantaneous impact of algorithmic trading on price discovery; however, little work explores the role of algorithms in efficient pricing of low-frequency financial statements. In addition, the literature on PEAD always highlights firm-level drivers of this phenomenon, whereas its country-level institutional determinants remain silent. The test hypotheses H1: Earnings-announcement algorithmic trading does not impact PEAD. H2: Country-level investor protection does not impact the association between earnings-announcement algorithmic trading and PEAD. H3: Country-level information dissemination does not impact the association between earnings-announcement algorithmic trading and PEAD. H4: Country-level disclosure requirements do not impact the association between earnings-announcement algorithmic trading and PEAD. Target population Various stakeholders include market traders, firm managers, regulators, and scholars. Adopted methodology Ordinary Least Square (OLS) Regressions. Analyses We follow Saglam [( 2020 ) Financial Management, 49, 33–67] to measure algorithmic trading using the transaction-level data. Based on a global sample covering 41 markets, we estimate the regression of PEAD on four proxies for algorithmic trading after considering firm-specific controls and fixed effects of country and year. Findings We find a negative and significant association between earnings-announcement algorithmic activity and PEAD. The documented relation retains despite addressing the endogeneity problem. Further analyses indicate that algorithmic participation mitigates investor disagreement, alleviates trader distraction, and reduces market friction, thus facilitating efficient pricing of earnings information. Finally, the impact of algorithmic trading on PEAD is more prominent in countries with stronger investor protection, faster information dissemination, and stricter disclosure requirements.
{"title":"Algorithmic Trading and Post-Earnings-Announcement Drift: A Cross-Country Study","authors":"Tao Chen","doi":"10.1142/s1094406023500038","DOIUrl":"https://doi.org/10.1142/s1094406023500038","url":null,"abstract":"Synopsis The research problem This study investigates whether algorithmic trading matters to post-earnings-announcement drift (PEAD) across 41 countries. Motivation The increasing importance of algorithms has sparked interest in how computer-triggered trades affect the formation of securities prices. Thus, a large body of research has emerged to probe the instantaneous impact of algorithmic trading on price discovery; however, little work explores the role of algorithms in efficient pricing of low-frequency financial statements. In addition, the literature on PEAD always highlights firm-level drivers of this phenomenon, whereas its country-level institutional determinants remain silent. The test hypotheses H1: Earnings-announcement algorithmic trading does not impact PEAD. H2: Country-level investor protection does not impact the association between earnings-announcement algorithmic trading and PEAD. H3: Country-level information dissemination does not impact the association between earnings-announcement algorithmic trading and PEAD. H4: Country-level disclosure requirements do not impact the association between earnings-announcement algorithmic trading and PEAD. Target population Various stakeholders include market traders, firm managers, regulators, and scholars. Adopted methodology Ordinary Least Square (OLS) Regressions. Analyses We follow Saglam [( 2020 ) Financial Management, 49, 33–67] to measure algorithmic trading using the transaction-level data. Based on a global sample covering 41 markets, we estimate the regression of PEAD on four proxies for algorithmic trading after considering firm-specific controls and fixed effects of country and year. Findings We find a negative and significant association between earnings-announcement algorithmic activity and PEAD. The documented relation retains despite addressing the endogeneity problem. Further analyses indicate that algorithmic participation mitigates investor disagreement, alleviates trader distraction, and reduces market friction, thus facilitating efficient pricing of earnings information. Finally, the impact of algorithmic trading on PEAD is more prominent in countries with stronger investor protection, faster information dissemination, and stricter disclosure requirements.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2023-01-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46406824","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-01-20DOI: 10.1142/s1094406023500026
Yujia Cui, Jiwei Wang, Kangtao Ye
Synopsis The research problem This paper explores the association between postmaterialistic culture and corporate tax-avoidance behavior. Motivation Although corporate tax avoidance is prevalent, the degree of tax avoidance varies across countries. Previous studies have suggested that national culture is associated with the level of tax avoidance (e.g., corruption culture in [DeBacker, J., Heim, B. T., & Tran, A. (2015). Importing corruption culture from overseas: Evidence from corporate tax evasion in the United States. Journal of Financial Economics, 117(1), 122–138. https://doi.org/10.1016/j.jfineco.2012.11.009 ], and societal trust in [Kanagaretnam, K., Lee, J., Lim, C. Y., & Lobo, G. J. (2018). Societal trust and corporate tax avoidance. Review of Accounting Studies, 23(4), 1588–1628. https://doi.org/10.1007/s11142-018-9466-y ], among others). Unlike prior studies focusing on longstanding cultural factors, this paper examined the association between corporate tax avoidance and an important current culture trend, i.e., postmaterialistic culture. The test hypotheses There is no association between postmaterialistic culture and corporate tax avoidance. Target population Various stakeholders that care about corporate tax avoidance including the government, policymakers, investors, auditors, and firm managers. Adopted methodology Linear Probability Model and Ordinary Least Squares regressions. Analyses We examined the association between postmaterialistic culture and corporate tax-avoidance behavior. We used a proprietary dataset of China tax audits spanning the 2011–2014 period and tested the moderating effect of tax enforcement. We also examined the external validity of our results using a cross-country sample from 21 countries over the 1993–2014 period. Findings Using a proprietary dataset of China tax audits, we found that firms owned by investors from countries with higher postmaterialism values were less likely to engage in tax-avoidance behavior in China. In addition, we found some evidence that the negative association between postmaterialism and tax avoidance is more pronounced when tax enforcement is stronger, indicating that national culture and formal institutions act as complements. To check the external validity of our main results, we further used a cross-country sample from 21 countries over 22 years. The evidence from the cross-country sample was consistent with the findings obtained from the China tax audits setting.
本文探讨了后物质主义文化与企业避税行为之间的关系。虽然企业避税很普遍,但各国的避税程度各不相同。先前的研究表明,国家文化与避税水平有关(例如,DeBacker, J., Heim, b.t., & Tran, A.(2015)中的腐败文化。从海外引进腐败文化:来自美国企业逃税的证据。金融经济研究,2011(1),122-138。https://doi.org/10.1016/j.jfineco.2012.11.009],与社会信任[Kanagaretnam, K., Lee, J., Lim, C. Y., Lobo, G. J.](2018)。社会信任与企业避税。会计研究,23(4),1588-1628。https://doi.org/10.1007/s11142-018-9466-y]等)。与以往的研究关注长期文化因素不同,本文考察了企业避税与当前重要的文化趋势,即后物质主义文化之间的关系。检验假设后物质主义文化与企业避税之间没有关联。关注企业避税的各种利益相关者,包括政府、政策制定者、投资者、审计师和公司经理。采用线性概率模型和普通最小二乘回归。本研究考察了后物质主义文化与企业避税行为之间的关系。我们使用了2011-2014年期间中国税务审计的专有数据集,并测试了税收执法的调节作用。我们还使用1993-2014年期间来自21个国家的跨国样本检验了结果的外部有效性。利用中国税务审计的专有数据集,我们发现,在后物质主义价值观较高的国家的投资者所拥有的公司在中国从事避税行为的可能性较小。此外,我们发现一些证据表明,当税收执法更强时,后唯物主义与避税之间的负相关关系更为明显,这表明民族文化和正式制度是互补的。为了检验我们主要结果的外部有效性,我们进一步使用了来自21个国家22年的跨国样本。来自跨国样本的证据与来自中国税务审计环境的发现是一致的。
{"title":"Postmaterialism and Corporate Tax Avoidance","authors":"Yujia Cui, Jiwei Wang, Kangtao Ye","doi":"10.1142/s1094406023500026","DOIUrl":"https://doi.org/10.1142/s1094406023500026","url":null,"abstract":"Synopsis The research problem This paper explores the association between postmaterialistic culture and corporate tax-avoidance behavior. Motivation Although corporate tax avoidance is prevalent, the degree of tax avoidance varies across countries. Previous studies have suggested that national culture is associated with the level of tax avoidance (e.g., corruption culture in [DeBacker, J., Heim, B. T., & Tran, A. (2015). Importing corruption culture from overseas: Evidence from corporate tax evasion in the United States. Journal of Financial Economics, 117(1), 122–138. https://doi.org/10.1016/j.jfineco.2012.11.009 ], and societal trust in [Kanagaretnam, K., Lee, J., Lim, C. Y., & Lobo, G. J. (2018). Societal trust and corporate tax avoidance. Review of Accounting Studies, 23(4), 1588–1628. https://doi.org/10.1007/s11142-018-9466-y ], among others). Unlike prior studies focusing on longstanding cultural factors, this paper examined the association between corporate tax avoidance and an important current culture trend, i.e., postmaterialistic culture. The test hypotheses There is no association between postmaterialistic culture and corporate tax avoidance. Target population Various stakeholders that care about corporate tax avoidance including the government, policymakers, investors, auditors, and firm managers. Adopted methodology Linear Probability Model and Ordinary Least Squares regressions. Analyses We examined the association between postmaterialistic culture and corporate tax-avoidance behavior. We used a proprietary dataset of China tax audits spanning the 2011–2014 period and tested the moderating effect of tax enforcement. We also examined the external validity of our results using a cross-country sample from 21 countries over the 1993–2014 period. Findings Using a proprietary dataset of China tax audits, we found that firms owned by investors from countries with higher postmaterialism values were less likely to engage in tax-avoidance behavior in China. In addition, we found some evidence that the negative association between postmaterialism and tax avoidance is more pronounced when tax enforcement is stronger, indicating that national culture and formal institutions act as complements. To check the external validity of our main results, we further used a cross-country sample from 21 countries over 22 years. The evidence from the cross-country sample was consistent with the findings obtained from the China tax audits setting.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2023-01-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45733650","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}