Purpose: Technology has significantly impacted the efficiency of conducting business, among them, the digitalization of tax functions, which has led to the creation of operational efficiencies in terms of filing tax returns. The purpose of this research is to evaluate the effect of online tax system on tax compliance in Kitui County's SMEs. Specifically, the study focused on effect of online tax filling and online taxpayer registration on tax compliance in Kitui County. Methodology: This research was hinged on theory of Technological Acceptance Model, Diffusion of Innovation Theory and Theory of planned behavior. A descriptive research design was used in this study. The owners of the 442 small and medium businesses in Kitui County was the study's unit of analysis. A sample population of 206 is determined using the stratified proportionate random sampling technique. Self-administered questionnaires were used to collect primary data. The Statistical Package for Social Sciences was used to examine the data (SPSS Version 25.0). For all quantitative variables, descriptive statistics such as frequencies, percentages, average score, and standard deviation was computed after data cleaning, which includes checking for entry mistakes. The information was presented in tables and graphs. The relationships between the independent and dependent variables were established using multiple regression analysis. Findings: The study concluded that a unit increase in online tax registration leads to 0.807 increase in tax compliance by small and medium enterprises in Kitui County. The study revealed that a unit change in online tax filing leads to 0.731 change in tax compliance by small and medium enterprises in Kitui County. Unique Contribution to Theory, Practice and Policy: The study concludes that the KRA officials in Kitui county should conduct awareness programs among SMEs regarding the importance of online tax registration. The study informs policy as it seeks to help Kenya Revenue Authority in using effective measures to mobilize and motivate small tax payers to register online for turnover tax, value added tax among other taxes in order to increase tax compliance.
目的:技术极大地影响了开展业务的效率，其中，税务职能的数字化，导致在申报纳税方面创造了运营效率。本研究的目的是评估网上税收系统对基图伊县中小企业税收合规的影响。具体而言，研究重点是基图伊县网上纳税申报和网上纳税人登记对税收合规的影响。方法:本研究以技术接受模型理论、创新扩散理论和计划行为理论为基础。本研究采用描述性研究设计。基图伊县442家中小企业的所有者是该研究的分析单位。使用分层比例随机抽样技术确定206个样本总体。采用自填问卷收集原始数据。使用社会科学统计软件包(SPSS Version 25.0)对数据进行检验。对于所有定量变量，在数据清理后计算描述性统计数据，如频率、百分比、平均分和标准偏差，其中包括检查输入错误。这些信息以表格和图表的形式呈现。采用多元回归分析建立了自变量与因变量之间的关系。研究发现:基图伊县中小企业网上税务登记每增加一个单位，纳税合规性提高0.807个单位。研究发现，网络纳税申报单位的变化导致基图伊县中小企业纳税合规变化0.731。对理论、实践和政策的独特贡献:研究得出结论，基图伊县的税务局官员应该在中小企业中开展关于网上税务登记重要性的意识项目。该研究旨在帮助肯尼亚税务局采取有效措施，动员和激励小额纳税人在网上登记流转税、增值税和其他税种，以提高税收合规性，从而为政策提供信息。
{"title":"Online Tax System and Tax Compliance by Small and Medium Enterprises: Case of Kitui County in Kenya","authors":"Alex Kyalo Mwangangi, F. Memba","doi":"10.47941/jacc.1070","DOIUrl":"https://doi.org/10.47941/jacc.1070","url":null,"abstract":"Purpose: Technology has significantly impacted the efficiency of conducting business, among them, the digitalization of tax functions, which has led to the creation of operational efficiencies in terms of filing tax returns. The purpose of this research is to evaluate the effect of online tax system on tax compliance in Kitui County's SMEs. Specifically, the study focused on effect of online tax filling and online taxpayer registration on tax compliance in Kitui County. \u0000Methodology: This research was hinged on theory of Technological Acceptance Model, Diffusion of Innovation Theory and Theory of planned behavior. A descriptive research design was used in this study. The owners of the 442 small and medium businesses in Kitui County was the study's unit of analysis. A sample population of 206 is determined using the stratified proportionate random sampling technique. Self-administered questionnaires were used to collect primary data. The Statistical Package for Social Sciences was used to examine the data (SPSS Version 25.0). For all quantitative variables, descriptive statistics such as frequencies, percentages, average score, and standard deviation was computed after data cleaning, which includes checking for entry mistakes. The information was presented in tables and graphs. The relationships between the independent and dependent variables were established using multiple regression analysis. \u0000Findings: The study concluded that a unit increase in online tax registration leads to 0.807 increase in tax compliance by small and medium enterprises in Kitui County. The study revealed that a unit change in online tax filing leads to 0.731 change in tax compliance by small and medium enterprises in Kitui County. \u0000Unique Contribution to Theory, Practice and Policy: The study concludes that the KRA officials in Kitui county should conduct awareness programs among SMEs regarding the importance of online tax registration. The study informs policy as it seeks to help Kenya Revenue Authority in using effective measures to mobilize and motivate small tax payers to register online for turnover tax, value added tax among other taxes in order to increase tax compliance.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":"3 1","pages":""},"PeriodicalIF":2.0,"publicationDate":"2022-10-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90595087","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 : 2022-09-28DOI: 10.1142/s1094406022990013
{"title":"Author Index Volume 57 (2022)","authors":"","doi":"10.1142/s1094406022990013","DOIUrl":"https://doi.org/10.1142/s1094406022990013","url":null,"abstract":"","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2022-09-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42433681","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 : 2022-08-30DOI: 10.1142/s1094406022500147
Danping Li, Zhifeng Yang, Keyuan Zhang, Min Zhang
Synopsis The research problem This study investigates whether auditors who participate in philanthropic activities (hereafter “philanthropic auditors”) have stronger incentives to deliver high-quality audits than the auditors who do not participate. Motivation Prior studies call for research that examines the difference in audit quality across individual auditors. In recent years, regulators in developed markets, such as the United States and the European Union, have also promulgated new regulations requiring audit firms or public companies to disclose the names of engagement partners. Another growing body of literature examines the effect of economic agents’ personal traits on their decisions and/or firm policies and practices. By examining the impact of individual auditors’ unobservable personal traits on audit quality, measured through their philanthropic actions, we link and contribute to both streams of the above literature. The test hypotheses We test a null hypothesis in this study: individual auditors’ philanthropic activity is not related to their audit quality. Target population Stakeholders of high-quality auditing including accounting regulators, audit firm partners, and company managers. Adopted methodology Ordinary least squares (OLS) regressions and archival data. Analyses In a sample of more than 19,000 Chinese firm-years from 2008 to 2017, we identified 9.40% of the observations were signed by at least one auditor who contributes either money or time to a charitable activity. We used two measures of audit quality: the propensity to issue modified audit opinions (MAOs) and unsigned abnormal discretionary accruals. Findings First, we find that philanthropic auditors are significantly more likely to issue MAOs than are their non-philanthropic counterparts. Second, they are more likely to issue MAOs to distressed companies but not to financially healthy companies. The higher propensity of philanthropic auditors to issue MAOs indicates higher audit quality rather than a higher level of audit conservatism. Third, financial statements audited by philanthropic auditors contain significantly lower discretionary accruals (DACC). Fourth, to mitigate the concern that endogeneity drives our findings, we implement the propensity score matching (PSM) approach and the client fixed effects model. Our finding that philanthropic auditors provide higher-quality audit services than other auditors holds. Fifth, the main results are robust to the inclusion of other individual auditor characteristics, such as gender, educational background, and political affiliation, and to several proxies for individual auditors’ wealth.
{"title":"Do Philanthropic Auditors Provide Higher-Quality Audit Services? Evidence From China","authors":"Danping Li, Zhifeng Yang, Keyuan Zhang, Min Zhang","doi":"10.1142/s1094406022500147","DOIUrl":"https://doi.org/10.1142/s1094406022500147","url":null,"abstract":"Synopsis The research problem This study investigates whether auditors who participate in philanthropic activities (hereafter “philanthropic auditors”) have stronger incentives to deliver high-quality audits than the auditors who do not participate. Motivation Prior studies call for research that examines the difference in audit quality across individual auditors. In recent years, regulators in developed markets, such as the United States and the European Union, have also promulgated new regulations requiring audit firms or public companies to disclose the names of engagement partners. Another growing body of literature examines the effect of economic agents’ personal traits on their decisions and/or firm policies and practices. By examining the impact of individual auditors’ unobservable personal traits on audit quality, measured through their philanthropic actions, we link and contribute to both streams of the above literature. The test hypotheses We test a null hypothesis in this study: individual auditors’ philanthropic activity is not related to their audit quality. Target population Stakeholders of high-quality auditing including accounting regulators, audit firm partners, and company managers. Adopted methodology Ordinary least squares (OLS) regressions and archival data. Analyses In a sample of more than 19,000 Chinese firm-years from 2008 to 2017, we identified 9.40% of the observations were signed by at least one auditor who contributes either money or time to a charitable activity. We used two measures of audit quality: the propensity to issue modified audit opinions (MAOs) and unsigned abnormal discretionary accruals. Findings First, we find that philanthropic auditors are significantly more likely to issue MAOs than are their non-philanthropic counterparts. Second, they are more likely to issue MAOs to distressed companies but not to financially healthy companies. The higher propensity of philanthropic auditors to issue MAOs indicates higher audit quality rather than a higher level of audit conservatism. Third, financial statements audited by philanthropic auditors contain significantly lower discretionary accruals (DACC). Fourth, to mitigate the concern that endogeneity drives our findings, we implement the propensity score matching (PSM) approach and the client fixed effects model. Our finding that philanthropic auditors provide higher-quality audit services than other auditors holds. Fifth, the main results are robust to the inclusion of other individual auditor characteristics, such as gender, educational background, and political affiliation, and to several proxies for individual auditors’ wealth.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2022-08-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49302305","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 : 2022-08-19DOI: 10.1142/s1094406022500172
Beatriz Cuadrado-Ballesteros, Marco Bisogno, Giovanni Vaia
Synopsis The research problem We investigated the association between public-sector accounting reforms and efficiency at a central-government level, assessing efficiency through a global perspective. Motivation The effects of financial management reforms on efficiency have rarely been investigated. We contribute to the academic debate concerning both public-sector accounting reforms (implementation of international accounting standards and accrual-accounting systems) and governmental efficiency, merging two streams of literature that have not been investigated thoroughly. The test hypotheses [Formula: see text]: Countries that have implemented IPSAS are more efficient. [Formula: see text]: Countries that have implemented accrual-accounting systems are more efficient. Target population We used a sample of 22 European countries in the period 2010–2018. Adopted methodology We adopted a two-step approach: first, we created several efficiency indicators using different techniques; second, we implemented a model to test our hypotheses. Analyses Data Envelopment Analysis (DEA) technique, DEA with application of the bootstrap technique, and Order-m model Findings Accrual accounting was positively associated with efficiency while findings did not totally support an association with IPSAS.
{"title":"Public-Sector Accounting Reforms and Governmental Efficiency: A Two-Stage Approach","authors":"Beatriz Cuadrado-Ballesteros, Marco Bisogno, Giovanni Vaia","doi":"10.1142/s1094406022500172","DOIUrl":"https://doi.org/10.1142/s1094406022500172","url":null,"abstract":"Synopsis The research problem We investigated the association between public-sector accounting reforms and efficiency at a central-government level, assessing efficiency through a global perspective. Motivation The effects of financial management reforms on efficiency have rarely been investigated. We contribute to the academic debate concerning both public-sector accounting reforms (implementation of international accounting standards and accrual-accounting systems) and governmental efficiency, merging two streams of literature that have not been investigated thoroughly. The test hypotheses [Formula: see text]: Countries that have implemented IPSAS are more efficient. [Formula: see text]: Countries that have implemented accrual-accounting systems are more efficient. Target population We used a sample of 22 European countries in the period 2010–2018. Adopted methodology We adopted a two-step approach: first, we created several efficiency indicators using different techniques; second, we implemented a model to test our hypotheses. Analyses Data Envelopment Analysis (DEA) technique, DEA with application of the bootstrap technique, and Order-m model Findings Accrual accounting was positively associated with efficiency while findings did not totally support an association with IPSAS.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2022-08-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46272644","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 : 2022-08-17DOI: 10.1142/s1094406022500159
Masoud Azizkhani, Heibatollah Sami, K. Amirkhani, G. Monroe
Synopsis The research problem Adding to the literature on audit market competition, this study examined how increasing competition affects audit pricing and audit quality in an emerging market where regulatory policies have resulted in increased competition (less market concentration) in the audit market, and Big 4 auditors are banned. The test hypotheses H[Formula: see text]: Audit market concentration (competition) is positively (negatively) associated with audit fees. H[Formula: see text]: Audit market competition is associated with audit quality. Target population Various stakeholders including regulators, auditors, firm managers, and users of financial reports. Adopted methodology Multivariate analysis using ordinary least squares and logit regressions. Analyses Using the Herfindahl index to measure competition in the audit market at the national level, we used a sample of listed firms from the emerging Iranian audit market, which is characterized by increase in audit market competition as a result of a regulatory change and a lack of market concentration because the audit market does not include Big 4 audit firms or any dominant local audit firms to examine the impact of competition on audit pricing and audit quality. Findings We found that higher (lower) levels of audit market competition measured using the Herfindahl index are associated with lower (higher) audit fees and higher (lower) levels of abnormal accruals. These results suggest that increased competition in audit markets in developing economies generates audit fee pressure, which negatively affects audit quality.
{"title":"Competition Effects on Audit Quality and Pricing in a Non-Big 4 Market","authors":"Masoud Azizkhani, Heibatollah Sami, K. Amirkhani, G. Monroe","doi":"10.1142/s1094406022500159","DOIUrl":"https://doi.org/10.1142/s1094406022500159","url":null,"abstract":"Synopsis The research problem Adding to the literature on audit market competition, this study examined how increasing competition affects audit pricing and audit quality in an emerging market where regulatory policies have resulted in increased competition (less market concentration) in the audit market, and Big 4 auditors are banned. The test hypotheses H[Formula: see text]: Audit market concentration (competition) is positively (negatively) associated with audit fees. H[Formula: see text]: Audit market competition is associated with audit quality. Target population Various stakeholders including regulators, auditors, firm managers, and users of financial reports. Adopted methodology Multivariate analysis using ordinary least squares and logit regressions. Analyses Using the Herfindahl index to measure competition in the audit market at the national level, we used a sample of listed firms from the emerging Iranian audit market, which is characterized by increase in audit market competition as a result of a regulatory change and a lack of market concentration because the audit market does not include Big 4 audit firms or any dominant local audit firms to examine the impact of competition on audit pricing and audit quality. Findings We found that higher (lower) levels of audit market competition measured using the Herfindahl index are associated with lower (higher) audit fees and higher (lower) levels of abnormal accruals. These results suggest that increased competition in audit markets in developing economies generates audit fee pressure, which negatively affects audit quality.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":"123 44","pages":""},"PeriodicalIF":2.0,"publicationDate":"2022-08-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41250841","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 : 2022-08-17DOI: 10.1142/s1094406022500184
Edilene Santana Santos, R. Schiozer, V. Ponte
Synopsis The research problem We investigate whether cross-listing in the United States is associated with a reduction in disclosure deficiencies about related party transactions (RPTs) related to the legal traditions of firms’ countries of origin. Motivation The extant literature shows that there is a disclosure disparity associated to the firms’ legal origin (civil or common law) and the countries’ institutions (regulation, enforcement, and market scrutiny). The literature has not examined whether cross-listing in the United States mitigates (or eliminates) the disclosure gap for firms from civil law countries and countries with worse institutions. We focus on RPTs because the US Securities and Exchange Commission has put particular emphasis on regulation of this type of disclosure. Hypotheses H1: Among domestically listed firms, those from countries with common law tradition present superior level of RPT disclosure than firms from countries with a civil law tradition. H2: Cross-listed firms have a superior level of RPT disclosure compared to domestically listed firms from the same country. H3: Among cross-listed firms, those from countries with common law tradition present a superior level of RPT disclosure than firms from countries with a civil law tradition. Target population Firms from countries that have adopted international financial reporting standards (IFRS). We sample firms from the G20 countries that have adopted IFRS because of their representativeness in the world economy. Adopted methodology Ordinary least squares (OLS) regressions with firm and industry-year fixed effects. Two-stage least squares (instrumental variables) regressions to tackle endogeneity issues. Analyses We manually collected data from the financial reports of 531 firms from the G20 countries that have adopted IFRS to compute indices of compliance with disclosures required by IAS 24. We performed double-difference regressions, comparing firms across their legal origin (common law versus civil law), and cross-listing status (cross-listed in the United States versus domestically listed only). In addition, we studied the institutional channels that drive the disclosure gap between common and civil law firms. Findings For domestically listed firms, we found that firms from the common law tradition have RPT disclosure levels superior to those of firms from the civil law tradition. We found that the level of RPT disclosure is associated with countries’ regulatory quality, rule of law, and control of corruption. However, we did not find any differences in the level of RPT disclosure among firms cross-listed in the United States that can be associated with firms’ legal origin or with other home-country institutional features. Our results suggest that the regulatory enforcement and scrutiny of capital markets imposed by the US market compensate for home-country institutional deficiencies and eliminate differences in firms’ RPT disclosures across legal origins.
{"title":"Disclosure of Related Party Transactions Under IFRS: Does Cross-Listing Reduce the Legal Origin Disclosure Gap?","authors":"Edilene Santana Santos, R. Schiozer, V. Ponte","doi":"10.1142/s1094406022500184","DOIUrl":"https://doi.org/10.1142/s1094406022500184","url":null,"abstract":"Synopsis The research problem We investigate whether cross-listing in the United States is associated with a reduction in disclosure deficiencies about related party transactions (RPTs) related to the legal traditions of firms’ countries of origin. Motivation The extant literature shows that there is a disclosure disparity associated to the firms’ legal origin (civil or common law) and the countries’ institutions (regulation, enforcement, and market scrutiny). The literature has not examined whether cross-listing in the United States mitigates (or eliminates) the disclosure gap for firms from civil law countries and countries with worse institutions. We focus on RPTs because the US Securities and Exchange Commission has put particular emphasis on regulation of this type of disclosure. Hypotheses H1: Among domestically listed firms, those from countries with common law tradition present superior level of RPT disclosure than firms from countries with a civil law tradition. H2: Cross-listed firms have a superior level of RPT disclosure compared to domestically listed firms from the same country. H3: Among cross-listed firms, those from countries with common law tradition present a superior level of RPT disclosure than firms from countries with a civil law tradition. Target population Firms from countries that have adopted international financial reporting standards (IFRS). We sample firms from the G20 countries that have adopted IFRS because of their representativeness in the world economy. Adopted methodology Ordinary least squares (OLS) regressions with firm and industry-year fixed effects. Two-stage least squares (instrumental variables) regressions to tackle endogeneity issues. Analyses We manually collected data from the financial reports of 531 firms from the G20 countries that have adopted IFRS to compute indices of compliance with disclosures required by IAS 24. We performed double-difference regressions, comparing firms across their legal origin (common law versus civil law), and cross-listing status (cross-listed in the United States versus domestically listed only). In addition, we studied the institutional channels that drive the disclosure gap between common and civil law firms. Findings For domestically listed firms, we found that firms from the common law tradition have RPT disclosure levels superior to those of firms from the civil law tradition. We found that the level of RPT disclosure is associated with countries’ regulatory quality, rule of law, and control of corruption. However, we did not find any differences in the level of RPT disclosure among firms cross-listed in the United States that can be associated with firms’ legal origin or with other home-country institutional features. Our results suggest that the regulatory enforcement and scrutiny of capital markets imposed by the US market compensate for home-country institutional deficiencies and eliminate differences in firms’ RPT disclosures across legal origins.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2022-08-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47339216","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 : 2022-07-21DOI: 10.1142/s1094406022500135
Rong-Ruey Duh, F. Gul, A. Hsu
Synopsis The research problem Adding to the literature in auditing, this study examines whether there is an association between the religious beliefs of audit partners and audit quality in Taiwan. Motivation Previous studies have found that firms headquartered in areas with strong religious social norms are associated with higher audit quality. However, prior studies measured religiosity in terms of whether the audit practice offices were in more religious metropolitan statistical areas. No work had examined whether the religious beliefs of the individual auditors affect auditor decision making. In addition, prior studies using US data were mainly confined to one group who are, in the main, Christians. We examined this issue in Taiwan where the auditors come from three main religious groups: Christian, Buddhist, and Taoist. This setting provides another cultural environment for understanding the links between religiosity and financial reporting issues. The test hypotheses [Formula: see text]: Audit engagement partners with a religious belief are associated with higher audit quality. [Formula: see text]: The positive association between auditors’ religion and audit quality is more pronounced for auditors with industry specialization than auditors without specialization. Target population Various stakeholders include investors, auditors, financial analysts, and users of financial reports. Adopted methodology Ordinary least squares (OLS) regression and logistics regression. Analyses We conducted the study in Taiwan where audit partners are required to sign audit reports. We obtained data on the religious beliefs of auditors by distributing a questionnaire to individual auditors in the Big 4 in Taiwan. We used four measures of audit quality: (a) discretionary accruals, (b) accrual estimation errors, (c) the probability of a client meeting an earnings benchmark, and (d) the propensity to issue modified audit opinions. We tested whether there is a positive association between auditors’ religious beliefs and audit quality. Findings Our study finds that firms with an audit partner who professes a religion are associated with higher audit quality. However, unlike evidence from the United States, we do not find that auditors in an area with strong religious social norms exhibit better audit quality than auditors in less religious areas when the audit partner’s religious belief is controlled in the analysis. The results suggest that auditor quality is more affected by auditor’s personal characteristics than the social norms. We also find that the positive association between auditors with industry specialization and audit quality is stronger when the auditor has religious beliefs. The results suggest that ethics and competence are complements to each other.
{"title":"Auditors’ Religious Beliefs and Audit Quality: Some Evidence from Taiwan","authors":"Rong-Ruey Duh, F. Gul, A. Hsu","doi":"10.1142/s1094406022500135","DOIUrl":"https://doi.org/10.1142/s1094406022500135","url":null,"abstract":"Synopsis The research problem Adding to the literature in auditing, this study examines whether there is an association between the religious beliefs of audit partners and audit quality in Taiwan. Motivation Previous studies have found that firms headquartered in areas with strong religious social norms are associated with higher audit quality. However, prior studies measured religiosity in terms of whether the audit practice offices were in more religious metropolitan statistical areas. No work had examined whether the religious beliefs of the individual auditors affect auditor decision making. In addition, prior studies using US data were mainly confined to one group who are, in the main, Christians. We examined this issue in Taiwan where the auditors come from three main religious groups: Christian, Buddhist, and Taoist. This setting provides another cultural environment for understanding the links between religiosity and financial reporting issues. The test hypotheses [Formula: see text]: Audit engagement partners with a religious belief are associated with higher audit quality. [Formula: see text]: The positive association between auditors’ religion and audit quality is more pronounced for auditors with industry specialization than auditors without specialization. Target population Various stakeholders include investors, auditors, financial analysts, and users of financial reports. Adopted methodology Ordinary least squares (OLS) regression and logistics regression. Analyses We conducted the study in Taiwan where audit partners are required to sign audit reports. We obtained data on the religious beliefs of auditors by distributing a questionnaire to individual auditors in the Big 4 in Taiwan. We used four measures of audit quality: (a) discretionary accruals, (b) accrual estimation errors, (c) the probability of a client meeting an earnings benchmark, and (d) the propensity to issue modified audit opinions. We tested whether there is a positive association between auditors’ religious beliefs and audit quality. Findings Our study finds that firms with an audit partner who professes a religion are associated with higher audit quality. However, unlike evidence from the United States, we do not find that auditors in an area with strong religious social norms exhibit better audit quality than auditors in less religious areas when the audit partner’s religious belief is controlled in the analysis. The results suggest that auditor quality is more affected by auditor’s personal characteristics than the social norms. We also find that the positive association between auditors with industry specialization and audit quality is stronger when the auditor has religious beliefs. The results suggest that ethics and competence are complements to each other.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2022-07-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46644584","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 : 2022-07-21DOI: 10.1142/s1094406022500111
Andrew M. Collins
Synopsis The research problem I examine whether and how presenting a return measure (e.g., return on assets) on the face of the income statement influences non-professional investors’ judgments of a company as a potential investment. Motivation Accounting research suggests investors focus on bottom-line earnings to the exclusion of other financial information. To evaluate a firm’s economic performance, valuation models suggest investors should assess not only income, but also the resources employed by the firm to generate the income. Value is created when companies earn a sufficient return on resources employed in the business. Therefore, positive and/or growing accounting earnings do not necessarily indicate a firm is performing well. Return measures, such as return on assets, are ways to measure a company’s return on its economic resources. The test hypotheses H[Formula: see text]: Reporting a return measure on the face of the income statement affects nonprofessional investors’ perceptions of investment attractiveness, and it does so by priming investors to evaluate the return on resources that the company earns. H[Formula: see text]: Reporting a return measure on the face of the income statement affects nonprofessional investors’ perceptions of balance sheet relevance and acquisition of balance sheet information. Target population Standard setters, financial statement preparers, and accounting researchers. Adopted methodology In an experiment, participants viewed an abbreviated annual report of a hypothetical company and provided judgments about the firm as a potential investment. I manipulated whether a return measure was reported on the income statement. I also manipulated the level of return; while net income and earnings per share were the same in all conditions, I manipulated balance sheet amounts such that return on assets was relatively high or low. Analyses Analyses included analysis of variance (ANOVA), analysis of covariance (ANCOVA), and conditional process analysis. Dependent measures included participants’ judgments about the company as a potential investment, perceived efficiency and effectiveness of the company’s management, perceived relevance of balance sheet information, and recall of financial statement information. Findings Results supported my first prediction — reporting a return measure on the income statement affected non-professional investors’ perceptions of the company as a potential investment; further, these judgments were driven by perceptions of managerial efficiency and effectiveness in earning a return on the company’s resources. Results did not support my second prediction that reporting a return measure on the face of the income statement influences non-professional investors’ perception of balance sheet relevance or affects acquisition of balance sheet information.
{"title":"Return Measures as a Link Between Financial Statements","authors":"Andrew M. Collins","doi":"10.1142/s1094406022500111","DOIUrl":"https://doi.org/10.1142/s1094406022500111","url":null,"abstract":"Synopsis The research problem I examine whether and how presenting a return measure (e.g., return on assets) on the face of the income statement influences non-professional investors’ judgments of a company as a potential investment. Motivation Accounting research suggests investors focus on bottom-line earnings to the exclusion of other financial information. To evaluate a firm’s economic performance, valuation models suggest investors should assess not only income, but also the resources employed by the firm to generate the income. Value is created when companies earn a sufficient return on resources employed in the business. Therefore, positive and/or growing accounting earnings do not necessarily indicate a firm is performing well. Return measures, such as return on assets, are ways to measure a company’s return on its economic resources. The test hypotheses H[Formula: see text]: Reporting a return measure on the face of the income statement affects nonprofessional investors’ perceptions of investment attractiveness, and it does so by priming investors to evaluate the return on resources that the company earns. H[Formula: see text]: Reporting a return measure on the face of the income statement affects nonprofessional investors’ perceptions of balance sheet relevance and acquisition of balance sheet information. Target population Standard setters, financial statement preparers, and accounting researchers. Adopted methodology In an experiment, participants viewed an abbreviated annual report of a hypothetical company and provided judgments about the firm as a potential investment. I manipulated whether a return measure was reported on the income statement. I also manipulated the level of return; while net income and earnings per share were the same in all conditions, I manipulated balance sheet amounts such that return on assets was relatively high or low. Analyses Analyses included analysis of variance (ANOVA), analysis of covariance (ANCOVA), and conditional process analysis. Dependent measures included participants’ judgments about the company as a potential investment, perceived efficiency and effectiveness of the company’s management, perceived relevance of balance sheet information, and recall of financial statement information. Findings Results supported my first prediction — reporting a return measure on the income statement affected non-professional investors’ perceptions of the company as a potential investment; further, these judgments were driven by perceptions of managerial efficiency and effectiveness in earning a return on the company’s resources. Results did not support my second prediction that reporting a return measure on the face of the income statement influences non-professional investors’ perception of balance sheet relevance or affects acquisition of balance sheet information.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2022-07-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49089580","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}
Purpose: This paper aims at examining factors that have an impact on internal audit effectiveness in the public sector. The objective of this study was to device a model that can be used in the public sector to enhance a sound internal auditing system that will boost financial accountability and quality audit work. The study focused on three independent variables such as management support for internal audit activity, organizational independence on the internal audit work, and the adequate of competent internal audit staff. Methodology: In order to achieve this, a quantitative survey research design was chosen as the research paradigm underpinning the study using structured questionnaires as data collection tool to a sample of 172 respondents comprising of internal auditors and users of internal audit services who were systematically randomly sampled. Results: The study findings revealed that both management support and organizational independence were low and that internal audit office of the sampled ministries and parastatals had low technical staff proficiency which limited its capacity to provide effective service. In line with the findings, the study recommended that: (i) the management should appreciate the role of IA by providing the necessary resources and trainings. (ii) Government should ensure that the independence of IA is guaranteed for them to work without fear or interference. (iii) Government should recruit and retain Internal Audit candidates based on their qualifications, experience, training attained and certification by the IIA. The research is limited with the issue of generalizability on other settings; therefore, a similar study can be conducted in the private sector using a mixed method approach.
{"title":"THE EFFECTIVENESS OF INTERNAL AUDITING IN THE PUBLIC SECTOR IN ZAMBIA","authors":"Olivia Mwanza, Benjamin Kaira","doi":"10.47941/jacc.924","DOIUrl":"https://doi.org/10.47941/jacc.924","url":null,"abstract":"Purpose: This paper aims at examining factors that have an impact on internal audit effectiveness in the public sector. The objective of this study was to device a model that can be used in the public sector to enhance a sound internal auditing system that will boost financial accountability and quality audit work. The study focused on three independent variables such as management support for internal audit activity, organizational independence on the internal audit work, and the adequate of competent internal audit staff. \u0000Methodology: In order to achieve this, a quantitative survey research design was chosen as the research paradigm underpinning the study using structured questionnaires as data collection tool to a sample of 172 respondents comprising of internal auditors and users of internal audit services who were systematically randomly sampled. \u0000Results: The study findings revealed that both management support and organizational independence were low and that internal audit office of the sampled ministries and parastatals had low technical staff proficiency which limited its capacity to provide effective service. In line with the findings, the study recommended that: (i) the management should appreciate the role of IA by providing the necessary resources and trainings. (ii) Government should ensure that the independence of IA is guaranteed for them to work without fear or interference. (iii) Government should recruit and retain Internal Audit candidates based on their qualifications, experience, training attained and certification by the IIA. The research is limited with the issue of generalizability on other settings; therefore, a similar study can be conducted in the private sector using a mixed method approach.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":"8 1","pages":""},"PeriodicalIF":2.0,"publicationDate":"2022-07-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84405771","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 : 2022-07-06DOI: 10.1142/s1094406022500123
Tao Chen
Synopsis The research problem Adding to the literature on investor protection, this study investigates whether nationwide institutional features may explain cross-country variation in post-disclosure disagreement. Motivation Previous research has revealed that the release of financial statements aggravates investor disagreement rather than attenuating it. However, most studies only obtain empirical evidence in the context of the United States; no work has examined this research question in an international setting. Another motivation for this paper is the attempt to understand the contradiction in the literature, which emphasizes micro-level determinants. By contrast, minimal attention has been paid to the macro-level institutional factors of a country’s information environment, which presumably prompts investors to shape heterogeneous beliefs. The test hypotheses H1: Countries with greater corporate transparency are associated with a lower level of post-disclosure investor disagreement. H2: Countries with stronger legal protection are associated with a lower level of post-disclosure investor disagreement. Target population Various stakeholders include firm managers, financial analysts, regulatory watchdogs, and users of earnings reports. Adopted methodology Ordinary Least Squares (OLS) Regressions Analyses Gao et al. ( 2012 ) to measure investor disagreement while we quantify corporate transparency (legal protection) by extracting the first principal component of nine countrywide characteristics pertinent to disclosure requirements (legal systems). Using a global sample from 38 countries, we perform a cross-sectional regression of post-disclosure disagreement on two proxies for investor protection after accounting for firm-specific control variables. Findings We find clear evidence of post-disclosure disagreement in all countries. Next, we document a negative relationship between corporate transparency (legal protection) and post-disclosure disagreement. Additional tests confirm that both better disclosures and strong regulations enhance information precision, accelerate information dissemination, and reduce informed trading, thus leading to a lower level of post-disclosure disagreement.
{"title":"Investor Protection and Post-Disclosure Disagreement: International Evidence","authors":"Tao Chen","doi":"10.1142/s1094406022500123","DOIUrl":"https://doi.org/10.1142/s1094406022500123","url":null,"abstract":"Synopsis The research problem Adding to the literature on investor protection, this study investigates whether nationwide institutional features may explain cross-country variation in post-disclosure disagreement. Motivation Previous research has revealed that the release of financial statements aggravates investor disagreement rather than attenuating it. However, most studies only obtain empirical evidence in the context of the United States; no work has examined this research question in an international setting. Another motivation for this paper is the attempt to understand the contradiction in the literature, which emphasizes micro-level determinants. By contrast, minimal attention has been paid to the macro-level institutional factors of a country’s information environment, which presumably prompts investors to shape heterogeneous beliefs. The test hypotheses H1: Countries with greater corporate transparency are associated with a lower level of post-disclosure investor disagreement. H2: Countries with stronger legal protection are associated with a lower level of post-disclosure investor disagreement. Target population Various stakeholders include firm managers, financial analysts, regulatory watchdogs, and users of earnings reports. Adopted methodology Ordinary Least Squares (OLS) Regressions Analyses Gao et al. ( 2012 ) to measure investor disagreement while we quantify corporate transparency (legal protection) by extracting the first principal component of nine countrywide characteristics pertinent to disclosure requirements (legal systems). Using a global sample from 38 countries, we perform a cross-sectional regression of post-disclosure disagreement on two proxies for investor protection after accounting for firm-specific control variables. Findings We find clear evidence of post-disclosure disagreement in all countries. Next, we document a negative relationship between corporate transparency (legal protection) and post-disclosure disagreement. Additional tests confirm that both better disclosures and strong regulations enhance information precision, accelerate information dissemination, and reduce informed trading, thus leading to a lower level of post-disclosure disagreement.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2022-07-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42269612","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}
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