This study tests the agency cost hypothesis in the context of geographic earnings disclosures. The agency cost hypothesis predicts that managers, when not monitored by shareholders, make ...self-maximizing decisions that may not necessarily be in the best interest of shareholders. These decisions include aggressively growing the firm, which reduces profitability and destroys firm value. Geographic earnings disclosures provide an interesting context to examine this issue. Beginning with Statement of Financial Accounting Standards No. 131 (SFAS 131), most U.S. multinational firms are no longer required to disclose earnings by geographic area (e.g., net income in Mexico or net income in East Asia) . Such nondisclosure potentially reduces the ability of shareholders to monitor managers' decisions related to foreign operations. Using a sample of U.S. multinationals with substantial foreign operations, we find that nondisclosing firms, relative to firms that continue to disclose geographic earnings, experience greater expansion of foreign sales, produce lower foreign profit margins, and have lower firm value in the post-SFAS 131 period. Our conclusions are strengthened by the fact that these differences do not exist in the pre-SFAS 131 period and do not relate to domestic operations. We find differences in the predicted direction only for foreign operations and only after adoption of SFAS131. Our results are robust to the inclusion of an extensive set of control variables related to alternative corporate governance mechanisms, operating performance, and the firm's information environment. Overall, the results are consistent with the agency cost hypothesis and the important role of financial disclosures in monitoring managers.
Discussion to date has focused on whether business-style accrual accounting fits the public sector, rather than analysing which alternative options of accrual accounting best serve the needs of ...public sector stakeholders. This paper looks at what the primary users of government accounting information actually need and describes a new analytical approach that can be used to assess the existing public sector financial accounting standards. The author then presents the most suitable conceptual framework for the public sector. The paper argues that the income statement first approach is better than the balance sheet approach for the public sector.
This paper argues that academics, politicians, and the media have six commonly held but misguided beliefs about corporate governance. While
Armstrong et al. (2010) discuss some of these ...misconceptions, a wider recognition that these beliefs are actually “myths” is important. They include: (1) a common definition of “corporate governance” exists; (2) a useful distinction is “internal” versus “external” governance mechanisms; (3) outside directors perform two separable roles: to advise and monitor managers; (4) research has identified “good” and “bad” governance practices; (5) a “good” governance index can be constructed; and (6) corporate governance “best practices” can be deduced from peer data.
How Big Data Will Change Accounting Warren, J Donald; Moffitt, Kevin C; Byrnes, Paul
Accounting horizons,
06/2015, Letnik:
29, Številka:
2
Journal Article
Recenzirano
Big Data will have increasingly important implications for accounting, even as new types of data become accessible. The video, audio, and textual information made available via Big Data can provide ...for improved managerial accounting, financial accounting, and financial reporting practices. In managerial accounting, Big Data will contribute to the development and evolution of effective management control systems and budgeting processes. In financial accounting, Big Data will improve the quality and relevance of accounting information, thereby enhancing transparency and stakeholder decision making. In reporting, Big Data can assist with the creation and refinement of accounting standards, helping to ensure that the accounting profession will continue to provide useful information as the dynamic, real-time, global economy evolves.
SYNOPSIS Successful standard-setting outcomes require some level of acceptance by diverse stakeholder groups. This study examines the evolution of FASB due process institutions since Enron, which ...have the potential to engender stakeholder acceptance. The prior literature on accounting standard-setting outcomes often focuses on the effects of individuals, organizations, or established due process institutions. Our study highlights the critical role played by recent due process institutions such as enhanced advisory groups, transition resource groups, field tests, and post-implementation reviews in contemporary standard-setting activity. Advisory groups, in particular, shift the balance of power within standard-setting to give a stronger voice to specific stakeholders (e.g., investors, not-for-profits, and private companies) and sometimes provide a recruiting network for future FASB members. We highlight the growing importance of these due process institutions for effective standard-setting outcomes, as well as implications for future academic research. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: M41; M48.
This study aimed to determine the effectiveness of conservation-based teaching materials of financial accounting that have been developed. This research was a Research and Development. The research ...flow scheme was adapted from Borg & Gall's development research. The population of this study was all students of cooperative education, class of 2019, totaling 120 students. The research sample consisted of 60 students who were divided into the control class and the experimental class. The sampling technique used simple random sampling. Data collection techniques used observation, interviews, questionnaires, document analysis and student test results. The data analysis technique used paired sample T-test. Testing of teaching materials was carried out on cooperative education students who took financial accounting courses. The results showed that there was a significant difference between the mean value of learning outcomes before and after treatment. It can be concluded that conservation-based teaching materials of financial accounting can effectively improve student learning outcomes.
Public firms provide a large amount of information through their disclosures. In addition, information intermediaries publicly analyze, discuss, and disseminate these disclosures. Thus, greater ...public firm presence in an industry should reduce uncertainty in that industry. Following the theoretical prediction of investment under uncertainty, we hypothesize and find that private firms are more responsive to their investment opportunities when they operate in industries with greater public firm presence. Further, we find that the effect of public firm presence is greater in industries with better information quality and in industries characterized by a greater degree of investment irreversibility. Our results suggest that public firms generate positive externalities by reducing industry uncertainty and facilitating more efficient private firm investment.
•As ‘imaginary’ a boundary is what effects the closure of an autonomous entity.•As ‘sentience’ a boundary is only a space of forgotten relation and dependence.•Financial accounting is key in ...producing the ‘imaginary’ of the corporation and self.•But thereby renders vulnerable sentient humans peripheral to corporate interests.•Reconceiving agency with the work of Butler, Merleau-Ponty, Levinas and Irigaray.
This paper pursues the thought that the divide between ‘core’ and ‘periphery’ that Gendron and Rodrigue observe in the field of accounting research, is no more than a reflection or symptom of the more consequential divide that financial accounting enacts between the corporate entity and its social and natural environment. Through a distinction the paper develops between what are termed the corporate imaginary and human sentience, it contrasts two very different notions of the nature of boundaries. As ‘imaginary’ financial accounting plays a key role in the constitution of the corporation as an entity, indifferent to what lies beyond the corporate boundary save for that which accounting makes play upon its own economic interests. Accounting is also key in making a reality of the economic imaginary of the self; the atomistic conception of the individual as a self-interested and opportunistic ‘individual’. In an attempt to illustrate the ‘meconnaisance’ or misrecognition involved in such imaginaries the paper draws on the phenomenology of Merleau-Ponty, Levinas and Irigaray as these inform Butler’s recent explorations of human sentience. Each recalls us to the different dimensions of our material embodiment in the world as humans, and with this the nature of boundaries only as space of forgotten relation, exchange and dependence in which we are always acted upon as we act. The paper concludes by suggesting that both ‘core’ and ‘peripheral’ accounting researchers now share the urgent task of finding ways to refashion the limited and purely economic ‘sensibility’ that financial accounting affords the corporate entity, in order to make it responsive to the needs of sentient humans.
The article deals with constructing an asset accounting process and an algorithm for recognizing an object as an asset. The main approaches to the reflection of cryptocurrency in financial accounting ...are analyzed. The study showed that International Financial Reporting Standards (IFRS) still lack specific clarifications on the correctness of accounting and recognition of cryptocurrencies. Cryptocurrencies are suggested to be recognized as, intangible assets on the one hand, and as inventories, on the other. The research shows that before starting the process of accounting for any asset, it is necessary to determine, whether such a resource meets the definition of an asset. The article proves that cryptocurrency is an asset. However, attaching cryptocurrency to a certain group of assets turns out to be rather problematic. The main approaches to doing it are analyzed. Speaking formally, cryptocurrency is considered to be cash or cash equivalents. Cash and cryptocurrencies have been compared, and the main distinguishing features of these two assets have been considered. The conclusion is made that cryptocurrency should be evaluated at fair value, indicating the date of evaluation to fix actual market conditions. The measure of cryptocurrency when reflected in the financial reporting is the US dollar or its equivalent in the national currency as at the balance sheet date. The research has shown that depending on the type of the enterprise activity, cryptocurrency should be determined in the financial reporting, or the «balance sheet», as «intangible assets» (line code 1000), and the primary value of such an asset corresponds to line 1001, or inventories (line code 1100). Also, if the company’s accounting policy states that cryptocurrency is a financial investment, it should be reflected in line 1160.
We examine the empirical association between corporate social responsibility (CSR) and tax avoidance. Our findings suggest that firms with excessive irresponsible CSR activities have a higher ...likelihood of engaging in tax-sheltering activities and greater discretionary/permanent book-tax differences. Moreover, at the onset of FASB Interpretation No. 48, these firms have more uncertain tax positions; also, these firms' initial tax positions are likely supported by weaker facts and circumstances as indicated by their larger post-FIN 48 settlements with tax authorities and their higher likelihood of a net decrease in the overall level of uncertain tax positions after FIN 48. Collectively, these results suggest that firms with excessive irresponsible CSR activities are more aggressive in avoiding taxes, lending credence to the idea that corporate culture affects tax avoidance.
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