International Journal of Economics and Accounting (14 papers in press)
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.
The association between accounting information and share prices in developing countries: does corruption matter?
by Michael Deterding, Marius Gros
Abstract: The extant value relevance literature documents that the association between accounting information and share prices differs from country to country. Numerous studies attempt to explain the observed differences and identify their determinants, such as the system of corporate governance, the level of shareholder protection, or differences in accounting standards. To date, there is no paper that explicitly addresses the influence of a countrys state of development and the level of corruption on the value relevance of accounting information. We fill this gap, as our analysis indicates that accounting information is more value relevant in less developed countries and in countries with high levels of corruption. We argue that in developing countries with high levels of corruption, capital market participants rely in particular on accounting information to compensate for a lack of reliable alternative information sources.
Keywords: value relevance; state of development; corruption; developing countries.
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.
Analogue valuation of micro companies belonging to the retail sector in Mexico using key financial indicators
by Edgar Mauricio Flores Sánchez, Axel Rodríguez Batres, Javier Antonio Flores Delgado, Joaquin Bernardo Varela Espidio
Abstract: The micro companies are economic units of great importance for the social and economic development of any country or region, specifically in Mexico, the micro companies focused on the retail sector stand out due to the number of units and the jobs they provide. The valuation of companies offers a variety of tools to determine the value of these organisations for various purposes, specifically analogical valuation allows working in environments of scarcity of information in order to provide relevant conclusions about the value of the companies analysed. The multiple linear regression method was used to determine the value of the selected microenterprises as a dependent variable with respect to a series of independent variables obtained from key financial information contained in the financial statements of the companies belonging to the sample. The results allowed us to identify the variables that determine to a greater extent the value of microenterprises in retail trade in Mexico, providing an alternative method which contributes to an improvement in the business decision making of all the interested groups.
Keywords: valuation; linear regression; micro companies; retail.
Corporate social responsibility as an element of good corporate governance - a chronology of its historical and contemporary development
by Carolin Althoff
Abstract: Despite many years of dedicated debates on the concepts of corporate social responsibility (CSR) and corporate governance, the question of whether CSR can now be regarded as part of good corporate governance due to underlying changes has not yet been adequately answered. This paper addresses this question by providing a systematic historical literature overview of the concept of CSR before considering it in the context of corporate governance. In this regard, the concept of corporate governance is outlined, and the theoretical basis and corresponding definitions are presented, followed by a comparison of the two concepts. A critical appraisal, predominantly from a European perspective, situates the concepts within the current context and identifies possible problem areas and/or particular challenges that could lead to a new characterisation of CSR as part of good corporate governance.
Keywords: corporate social responsibility; CSR; corporate governance; stakeholder theory; stakeholder value; shareholder value; literature overview.
Nippon economic thinking during the Meiji restoration
by Marius-Ioan Mihuț
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.
Assessing internal audit function and public sector performance in Nigeria
by Ayobami Oladejo, Chijioke Nwachukwu
Abstract: The growing size and complexity of the public sector in recent years call for a robust internal audit function. This study shed light on the link between internal audit function and public sector performance. The paper uses surveys conducted on 30 local government areas and ministry of finance in Osun State in Nigeria. We used correlation and regression to analyse the association between internal audit function and public sector performance. Data from 93 participants suggest that the quality of manpower and service dimension of internal audit function enhance public sector performance. Quality of audit delivery has a negative and significant impact on public sector performance. Robustness of audit has an insignificant negative relationship with public sector performance. Furthermore, quality of manpower and service increase public sector effectiveness, efficiency and quality of service.
Keywords: internal audit; public sector; robustness of audit; performance; manpower; Nigeria.
Special Issue on: Research in Romanian Studies Economic Development, Tax Evasion, Accounting and Management
Fiscal evasion in Romania: a theoretical and practical approach
by Gabriel Raita, Marius-Ioan Mihut
Abstract: The main objective of this research is to analyse the factors that influence or cause the occurrence of tax evasion in Romania. The phenomenon of tax evasion has grown in Romania due to the diversification and complexity of trade under imperfect legislation, which represents favourable circumstances, and adverse effects place their mark on the national economy (Moraru et al., 2005). The study is based on a questionnaire applied to Romanian accountants on how they perceive the factors considered to be determinant or not of tax evasion in Romania. The results show that in Romania, high taxes and the low intensity of fiscal pressure have a direct
impact on tax evasion, causing it to grow. As proposed measures to reduce tax evasion, it is advisable to strengthen the legislative apparatus, to reduce taxes,
to increase the involvement of the authorities.
Keywords: tax evasion; Romania; accounting experts; accounting; questionnaire.
Estimating volatility using GARCH models on the Romanian stock market
by Dragos Paun, Ioan-Alin Nistor, Eva Dezsi
Abstract: This paper aims to analyse the volatility of the Romanian market by employing GARCH models in order to assess the characteristics of the stock market. We investigate the presence of leverage effects and volatility clustering, mean-reversion, by employing symmetric and asymmetric models. The evolution of the volatility of a market is a good indicator of the uncertainty of the trading environment, and we wish to assess the state of the Romanian stock market in the light of the current economic and market conditions. We consider this to be important as the risk and return related to the stock market can be an indicator to the general view of the Romanian economy. The empirical investigation was conducted on the principal indexes from the Romanian stock exchange, from the day each index was listed until April 2017. The results indicate that on the Romanian market a strong persistence is
observable for all the indexes, but, with the exception of BET and BET-FI, no
asymmetric effects could be detected. Our results indicate that the Romanian market is mainly characterised by low and very low volatility, with short periods of spikes in high volatility.
Keywords: Romanian stock market; volatility; GARCH models.
Human capital reporting in Romania: practical considerations
by Nicoleta Maria Ienciu
Abstract: The main goal of this study is to investigate the level of human capital reporting, using the human capital reporting frame suggested by Sveiby (1997) as a point of reference. In order to attain this goal, we conducted a research using content analysis of annual reports of companies from Romania listed on the Bucharest Stock Exchange as research method. Following the analysis provided, for the period before the implementation of European Directive 2014/95/EU regarding disclosure of non-financial information, we observe that companies from Romania provide a quite small amount of information on human capital. The data often provided is related to the
employees professional experience, to their knowledge and to their moral values. The aspects related to the employees talent and education are lightly treated by companies, given that these aspects are rarely to be found among the companies reporting preferences.
Keywords: human capital; reporting; Romanian context; listed companies; Romania.
Special Issue on: Economics, Accounting and Management Research in Japan
Do Managers Mimic Rivals Forecast Revisions? Evidence from 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.
Overconfident CEOs, decentralisation, and tax aggressiveness: evidence from Japan
by Takehide Ishiguro, Akihiro Yamada
Abstract: This study investigates the relationship between chief executive officers (CEO) overconfidence and tax avoidance and the process through which the influence of CEOs overconfidence propagates to subsidiaries and affiliates. To estimate CEOs overconfidence, this study focuses on Japanese management forecasts, which are disclosed by most companies in Japan. This approach allows mitigating sample selection bias. The studys results indicate that: 1) companies with overconfident CEOs engage in more aggressive tax avoidance; 2) the influence of CEOs overconfidence is more pronounced in parent companies directly operated by CEOs. These trends are more pronounced when CEOs are overconfident regarding specific information and are also observed when the analysis accounts for factors related to corporate governance. The studys findings suggest that the nature of manager has a
substantial impact on corporate tax planning, and such impact is more likely to
spread in organisations closer to the CEO.
Keywords: tax avoidance; tax aggressiveness; overconfidence; weighting effects; optimism; decentralisation; corporate governance; subsidiaries; parent companies; Japan.
The application of deep learning to predict corporate growth
by Sumitaka Ushio, Nobuhisa Yamamoto
Abstract: This study examines the use of deep learning to predict corporate growth. An algorithmic model is constructed to identify growing (as well as non-growing) companies based on a snapshot (single year) of financial data without a time series. The binary classification model predicts whether sales will increase in the following year for 353 retail companies in the Tokyo Stock Exchange 33 sector category in Japan, by utilising all available items in their balance sheets and profit/loss statements (308 numerical values) as well as the size of the companies. As a result, the model achieves 74.79% classification accuracy. The area under the curve (AUC) of the model is 0.75, which shows moderate accuracy of prediction regardless of its cut-off point. This study also debates the methodological significance of applying deep learning to accounting research in comparison with traditional (frequentism) statistics.
Keywords: deep learning; growth prediction; accounting research; artificial intelligence; AI; algorithmic modelling.