International Journal of Economics and Accounting
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International Journal of Economics and Accounting (15 papers in press)
Abstract: This leximetric study covers trends in a broad range of disclosure and enforcement activities in Brazil, Russia, India, China and South Africa (BRICS) countries from 1991 to 2017. Using institutional theory, we find increasing similarities between the five countries, explained by isomorphism. We also distinguish a pattern between the countries' use of disclosure and enforcement regulation. Disclosure leads enforcement, and enforcement remains less intense and more varied. Institutional rigidities and associated costs serve as an explanation.
Keywords: BRICS; accounting regulation; disclosure; enforcement; emerging economies; institutional change patterns.
Does Accounting Quality Impact the Cost of Capital? An Empirical Study on the German Capital Market
by Martin Knipp, Jochen Zimmermann
Abstract: In this paper we examine whether the accounting quality has an impact on the cost of capital of listed German firms from 1995 to 2014. The accounting quality is approximated by the amount of earnings management executed by the firms management. Earnings management is operationalised by measures according to Leuz et al. (2003) and the cost of capital is estimated by the capital asset pricing model (CAPM). By using fixed-effects regressions and variance analyses on portfolios referring the research area of accounting quality and the cost of capital, we find that firms with high accounting quality and a low level of earnings management have averagely significant lower cost of capital than firms with low accounting quality and a high level of earnings management.
Keywords: accounting quality; disclosure quality; earnings management; cost of capital.
Nippon economic thinking during the Meiji restoration
by Marius-Ioan Mihut
Abstract: The main objective pursued within the research is presenting the Shogunate period from the perspective of economic thinking, how the economical components were approached and analysed during the Shogunate period, to emphasise the importance of this period on Japanese economic thinking overall. The aspects presented showed that the vast majority of the ideas expressed by the representatives of this period indicated that during the Shogunate a series of values were founded, such as long work, restraint, acceptance of the hierarchy, acceptance of the authority, high savings, endless ambition, awareness of the group's power, caring for the subjects good. All these, combined with the critical economic doctrines, through their Nipponisation, led to the strengthening of the Nippon economic doctrine.
Keywords: economic thinking; Shogunate; Japan; theories; doctrines.
Application of travel cost method to estimate tourism recreational value of Assam State Zoo cum Botanical Garden, Guwahati, Assam, India
by Ajay Kumar, Kamal Deka, Dinesh Kumar Meena
Abstract: Assam State Zoo cum Botanical Garden spreads across 175 hectares and attracts more than 0.50 million domestic tourists every year. Travel cost data for quantification of economic value of recreational services of zoo was collected through direct interview of 324 visitors. Different socio-economic characteristics of tourists that influence individual consumer surplus were also recorded. Results show that average consumer surplus per tourist per visit accruing to domestic tourists was 672 and total annual recreational value of the zoo was 364.69 million (US$5.21 million) which is almost 20 times to the total revenue (18.49 million) earned by the zoo in a year. This clearly shows that revenue collected through entry fee is not reflecting the true economic value of recreational services of the zoo. The results of the study provide enough explanation for enhanced investment from government in the zoo to ensure continued flow of essential ecosystem service.
Keywords: recreational value; travel cost method; TCM; consumer surplus; whole experience demand curve; India.
Fraud prevention and detection in a blockchain technology environment: challenges posed to forensic accountants
by Musbaudeen Titilope Oladejo, Lisa Jack
Abstract: This paper set out to explore the challenges posed by blockchain to forensic accountants in the prevention and detection of fraud. Blockchain will create a decentralised environment where transactions and data have no third-party control. This technology is capable of disrupting accounting and audit because it is capable of automating financial records and audit processes. The fraud analysis in a digital environment is complex and the evolution of new technologies or innovations such as blockchain, artificial intelligence, and robotics have added to these challenges. The framework for analysis adopted is a qualitative study using the library research methodology. The findings portray that blockchain technology is not 100% flawless, impenetrable to malicious attacks and hacking. The results of the study found that technology will affect the core functions of accountants, but the overall effects on the roles of forensic accountants and auditors are still unknown.
Keywords: blockchain; fraud; fraud prevention and detection; data mining; forensic accounting skills; audit; digital age.
Challenges and lessons from conducting audit research using social media
by Ahmed Saadeh, Jackie Allen
Abstract: Social media play an increasingly important role as both a means of communication and a source of information. Furthermore, social media provide a variety of time and cost-efficient, as well as participant-friendly, communication and networking channels, which expand the research repertoire in terms of recruitment and conducting interviews. The purpose of this paper is to broaden researchers understanding of the potential of using social media to facilitate qualitative research, and to guide them in the selection and use of social media channels considering the contextual differences. This paper adopts a qualitative methodology aimed at reflecting on the researchers experience of recruiting participants and conducting interviews using social media. The paper is the first of its kind to explore the potential of incorporating social media is a tool in qualitative research while considering contextual and cultural factors.
Keywords: social media; qualitative research; accounting research; culture; context; reflexivity; recruitment; data collection.
Key audit matters and their implications for the audit environment
by Vida Botes, Mary Low, Aleena Sutton
Abstract: This paper sets out to investigate how the new auditing standard ISA 701: key audit matters addresses issues historically presented by audit reports. The extensive literature around audit reporting highlights that past reforms resulted in a lack of success and the continued existence of the audit expectation gap. Increased auditor liability is one of the major concerns raised by practitioners with the new standard expanding the audit report to include key audit matters. Through a qualitative content analysis examination of the most recent audit reports of the top 100 listed companies on the NZX, ASX and FTSE, key audit matters were identified. The results of the study found that goodwill and intangibles, revenue recognition and taxation were the most common key audit matters. Overall, the results of these findings suggest that these key audit matters may go a long way to addressing the audit expectation gap and issues presented by audit reports.
Keywords: audit expectation gap; auditing standard; key audit matters; KAMs; audit reports.
Audit professional scepticism and the classics: does pyrrhonism serve the practitioner?
by Karen A. Van Peursem
Abstract: This analysis draws on an ancient philosophy to offer how audit regulatory discourse and judicial interpretation come to represent, or fail to represent, the mindset of the philosophical skeptic. Ancient teachings of Pyrrho of Elis, Sextus Empiricus and their modernist peers are brought to bear on concepts formed around what it means to be a skeptic. International auditing standards, ethical codes, personal interviews and a lengthy New Zealand legal judgement reveal professional understandings. Professional discourses are found to be a reductionist form of the skeptical mindset whereby philosophical intent gives way to narrowly-defined and risk-directed interpretations. There is an economy to the professional-sceptic recognising an end-point to enquiry and a less reflexive form of critique. Conclusions reached thus question the authenticity and depth of professional interpretations. Implications for practice offer that a greater commitment to a free-form improvisational enquiry with less dogma-inspiring structures would more closely represent the sceptical pursuit.
Keywords: professional skepticism; philosophy; audit practice; auditing standards; skepticism.
A structured approach to the governance of ethics using the five lines of assurance model
by Vida Botes, Umesh Sharma, Ronald Botes, Mandeep Singh
Abstract: Across the globe, the corporate world has once again been shaken by the Steinhoff Corporate Scandal, which affected millions of people as the Steinhoff Corporation operated in various countries, including Germany, the Netherlands, Australia, New Zealand, and South Africa. Once again, the media and the public questioned the absence of organisational ethics. The growth and influence of the multi-billion-dollar organisation has drawn increased media coverage and exposed the lack of business ethics within organisations. This paper reviews the key roles and responsibilities of specific stakeholders in relation to ethical conduct. It deliberates on a combined assurance effort and offers the structure for a comprehensive implementation of organisational ethics. The paper is a multi-disciplined literature study and argues that scant attention has been paid to the development of a framework to facilitate an ethical culture. The paper uses the five lines of assurance framework to illustrate the distinct roles of the various internal and external role players to provide a structured approach to the governance of ethics.
Keywords: organisational ethics; assurance framework; governance; stakeholders.
Harmonisation, a road to the public sector accounting modernisation?
by Marius-Ioan Mihut, Andrei-Razvan Crisan
Abstract: In the last decades, the globalisation had a substantial influence on the accounting field. Thus, the accounting harmonisation has gained more and more ground, including in the public sector. In this context, the purpose of the paper is to identify the steps taken for public sector accounting modernisation, through the accounting harmonisation process, analysed both at the European and international level. The investigation leads to the conclusion that the European Public Sector Accounting Standards (EPSAS) represent just a project for the moment, but, at the international level, there are some countries that apply International Public Sector Accounting Standards (IPSAS) to a different extent.
Keywords: harmonisation; public sector; International Public Sector Accounting Standards; IPSAS; European Public Sector Accounting Standards; EPSAS; modernisation.
Determinants of CSR disclosure level in Islamic banks: evidence from the Gulf Cooperation Council countries
by Sana Ben Ghodbane, Said Boubchir
Abstract: This study focuses on the analysis of CSR disclosure in the annual reports and websites of the 38 Islamic banks operating in GCC countries during 2014. Our objective is twofold: first, to assess the level and practices of CSR disclosure. Then, analyse the determinants of the decisions of such disclosure. The results of the content analysis show that the level of CSR disclosure in Islamic banks is still below average. Corporate governance is the main theme of this disclosure. Regarding the determinants, the results of the multiple regression analysis indicate that the independence of the board of directors, the characteristics of the SSB, the power of the investment account holders and the importance of the Islamic society in the country are the key factors determining CSR disclosure level in the annual reports and websites of Islamic banks in GCC countries.
Keywords: CSR disclosure; Islamic bank; content analysis; governance; AAOIFI.
Identification of factors affecting financial performance of gems and jewellery and zari industries in Howrah district, West Bengal
by Palash Bandyopadhyay
Abstract: This paper tries to find out the factors that are influential for financial performance and employability in the district of Howrah, West Bengal, India. Use of zari embroidery is found to be very essential material for dresses since past several centuries. Jewellery work has also a long heritage in India. Both these industries play an important role in Indian economy and employability in India. These industries can be well traced in Howrah district of West Bengal because this district has a long reputation in terms of supplying skilled workers. The research has been conducted by collecting primary data from the personnel engaged in these industries from different blocks of Howrah district through questionnaire and interview method. The data so collected are being analysed by using different statistical tools, namely, frequency analysis, chi-square test, and factor analysis. It is found that 'business volume increase employability', 'cash sales' and 'production volume' are the important factors for financial performance of these industries. Governments have to take initiative to create demand which will lead to increase in production volume and provide easy capital as the sales are made on credit.
Keywords: zari; gems and jewellery; demographics; financial performance; West Bengal; India.
Tax incentives and economic growth in Nigeria: a paradox?
by Barine Michael Nwidobie
Abstract: This study aims to ascertain whether tax incentives in Nigeria have in reality contributed to her economic growth or the purported growth from the granting of tax incentives is a paradox. Analysis of secondary data on identified tax incentives and real GDP values for the period 2000 to 2017 using the OLS shows that tax incentives granted by Nigeria has no influence on Nigeria's real GDP as the incentives were static throughout the study period. A Satterthwaite Welch t-test, the Welch F-test and the ANOVA F analysis of real GDP showed that there exists a statistical difference between real GDP 19 years before the introduction of varied tax incentives in 2000 and 19 years after, but the difference is not attributed to the introduction of varied the static tax incentives regime. Therefore, the purported growth in real GDP in Nigeria from tax incentives is a paradox.
Keywords: economic growth; fiscal incentives; foreign direct investment; investment inflows; gross domestic product; GDP; tax incentives.
Special Issue on: Economics, Accounting and Management Research in Japan
by Akihiro Yamada
Abstract: When managers face uncertain business environments or enter a compensation contract that ties their firm to others behaviours, their management forecast disclosure may be affected by the behaviours of others. This study examines management earnings forecast revisions in Japan from the standpoint of herding behaviour theory. The results reveal the following. (1) Management earnings forecast revisions follow the mean values of preceding forecast revisions issued by firms in the same industry. (2) Mimicking behaviours are weaker when the number of days from the management earnings forecast release to the closing date decreases or when the mean value of rivals forecast revisions is negative. (3) Bold management earnings forecast revisions (i.e. that deviate significantly from the mean value of rivals forecast revisions) lead to improved forecast accuracy. The results suggest that analysts, policymakers, and investors should consider herding behaviours when they use management forecasts to make predictions.
Keywords: management forecasts; forecast guidance; forecast revisions; forecast accuracy; forecast errors; herding behaviour; asymmetric herding; Japan.
Relationships among earnings quality, bank monitoring, and cost of bank loans: evidence from Japan
by Yusuke Takasu
Abstract: Earnings quality is frequently used as a proxy for information risk in accounting contexts. Following previous literature, I analyse the relationship between earnings quality and the cost of bank loans in Japan. I hypothesise and test how bank monitoring affects the relationship between earnings quality and the cost of loans. I find that total earnings quality, innate earnings quality generated from economic fundamentals, and discretionary earnings quality driven by managerial discretion over accounting affect the cost of bank loans. Additionally, I find that bank monitoring mitigates the effect of discretionary earnings quality on loan pricing. Empirical results support my predictions grounded in information risk and previous banking literature. Introducing bank monitoring to my research confirms and extends the previous literature.
Keywords: earnings quality; accruals quality; bank monitoring; information risk; cost of bank loans; Japan.