Accounting and Finance Conference

Selected Paper Submission for Oral Presentation at AF 2018

PAPER TITLE (as at 23 February 2018)

Huang, Feng, and Mandry (2017) examine audit pricing and financial reporting quality in initial audit engagements from the perspective of audit market pricing strategies and indicate that richer audit firms in the U.S. are inclined to adopt a prestige pricing strategy in the initial audit engagement while poorer audit firms tend to use a penetration pricing strategy.[1] That is, richer audit firms are more likely to charge an initial fee premium for new clients, while poorer audit firms are more likely to provide an initial fee discount to new clients. Using the same method as in Huang et al. (2017), it is found that in Taiwan, audit firm leaders at the national level tend to provide higher discounts than non-leaders to compete for greater market shares of new clients. Likewise, audit firm leaders at the city level also provide audit fee discounts for initial engagements. Both use a penetration pricing strategy. The less intense law enforcement and high competition in Taiwan may explain the discrepancy.

Using a new approach in the literature based on portfolio theory, this article shows that the directive did have an impact on the quality of the NYSE EURONEXT market and the equity investors’ ability to reach their investment Objectives. In fact, the results show that the MiFID participated in improving investors’ anticipations which materializes in an overall higher capability to track their respective benchmarks. These results confirm previous research finding an increased market quality due to the implementation of the directive.

The relationship between ownership structure (private vs State-owned) and company performance has been deeply analyzed by scholars and practitioners. Prior studies found mixed results about this topic; some scholars demonstrated that private firms perform better than State-Owned Enterprises and others came to opposite or undefined results. Further, during the global financial crisis, this topic gained relevance. To the best of our knowledge, Italian framework suffers of a lack of these studies. Furthermore, no studies classify private and State-owned firms on the basis of the decision tree approach. The main aim of this paper is thus to classify private Italian listed companies and State-owned Italian listed companies by using a decision tree classification approach. To do so, we performed a decision tree classification analysis on a sample of 18 State-owned listed firms and 212 private listed firms. Empirical results show that the most relevant financial values that stakeholders can rely in order to classify private and State-owned Italian listed firms are total debt, net sales and total assets.

This study constructs a tail risk network to present the overallsystemic risk ofChinese financial institutions. By employing the Least Absolute Shrinkage and Selection Operator(LASSO)method of high-dimensional models, our results show that a firm’s idiosyncratic risk can be affected by its connectedness with other institutions. The risk spillover effect from other companies is the main driving factorof firm-specific risk.Moreover, we rank the systemic risk contributionand further investigate its determinants in a forward-looking way. Based on the results of our study, regulators could potentially detect those firms that are most threatening to the stability of system.

There have been a number some studies which have contributed to the Audit Expectations Gap (AEG) literature, and the existence of the research area is recognized internationally and remains as one of the important areas in auditing & accounting. Most of the studies have sought to identify whether an expectation gap exists and what the contributing factors are, see Porter (1993), Fazdly and Ahmad (2004), and Dixon et al. (2006). Facilitated learning into auditor independence carries a significant contribution to this subject, see Sweeney (1997), Lin and Chen (2004) and Alleyne et al. (2006). Most of the studies conducted have found that users possess little understanding of the financial statements and the role of auditors. This situation has not improved over time. However, the expectations for the role of the auditors have increased due to some reasons, notably including significant corporate collapses, (Monroe & Woodcliffe 1994). Also, companies need to incorporate Corporate Social Responsibility (CSR) because their behavior may become the subject of bias reviews, (APCO Worldwide 2004). Previous studies have argued that different stakeholder groups have different expectations and organizations are reluctant to provide sensitive information to stakeholders. Over time, an expectations gap has grown significantly, and auditors have been criticised reflecting a loss of confidence in their work.

The advent of global corporate collapses has led to questions being asked about the actual role of the auditor and further questions as to their exact responsibilities. The expectations gap impacts negatively on investor’s confidence. Previous research has primarily focused on examining the audit expectations gap and specific issues such as fraud, Hassink et al, (2009) reasons for the existence of the audit expectation gap, Monroe & Woodcliffe (1994), and explaining the theory and practice of a typical audit process, De Martinis & Burrowes, (1996), Turner, Beeler & Daniels, (2004).
Several studies have confirmed the existence of the gap in the US, the UK, and other developed countries, as user groups and the public have continuously criticised auditors for not doing enough to detect and report frauds in organizations. In addition to the examination of fraud detection and reporting as part of my research, I will also incorporate and provide a significant amount of understanding into the different characteristics of audit reports in different countries and those who use them – this being the cultural feature to my Ph.D contribution.

In my research, I will use the UK, Singapore and, China. These countries contain differences in their accounting policies, for example, Singapore carries greater state intervention of corporate governance. In October 2014, Singapore’s parliament passed over 200 amendments to the Companies Act, and in April 2015, the Accounting and Regulatory Authority announced numerous legislative changes. Corporate governance influences the audit disclosure practices for example, and the accounting rules can thus be open to interpretation leading to wider expectations gap. The interpretation aspect of this audit procedure forms part of the Audit expectation gap in the literature I wish to explore as I believe that this a significant area in which the widening expectations gap exists. Further and more importantly with regards to my research question, these countries have adopted different accounting systems, and it is with this in mind that I am able to examine their cultural differences.

This paper constructs the endogenous DSGE model which includes the real estate department, in addition, this paper examines the dynamic response of economic and financial variables in the face of different exogenous impact under different real estate price stickiness. The results show that technological advances can push up house prices in a way that increase the return on investment and reduce systemic financial risks; the impact of falling housing prices and the financial sector can increase risk premiums and financial risks; tight monetary policy shocks can significantly reduce housing prices and ease macroeconomic conditions fluctuation. Moreover, there are differences in the degree of response between financial variables and macroeconomic variables to exogenous-shocks at different real estate price stickiness, variables often deviate smaller from the steady state under high price stickiness. The paper reaches policy which has a significant policy revelation on effective measure of monetary policy and a new round of real estate market’s regulations.

This research study try to find relationship between the performance of top 100 companies (BRR Complying companies portfolio) those are complying with BRR as it was made mandatory by SEBI, vis a vis Nifty 50 (Blue chip companies portfolio) and NSE 500 companies (Market portfolio) with the help of three ratios Sharpe Ratio, TreynorRatio and Jensen’s Alpha.

This research study also try to find any change in the performance of these portfolios during the period BRR was not implemented and post BRR implemented period. The prices of stock of all these companies taken and percentage return has been found taking the lag of a month and a week as monthly returns and weekly returns respectively. This study found that there is significant differences among the BRR Complying companies portfolio, Blue chip companies portfolio and Market portfolio. BRR Complying companies portfolio outperform the other two portfolio almost throughout.

This research study also try to find performance of different industries among the BRR Complying companies portfolio and segregated these 100 companies into six sectors. It was found that FMCG sector is the most successful among all the sectors, the second most successful sector is IT, Entertainment and Consultancy followed by Banking and Finance, Oil, Coal and Power sector, Health and FMCG and Miscellaneous Sector.

This study also found that there is significant differences even in intra BRR Complying companies during the period BRR was not implemented and period post BRR implemented also sector-wise study found similar results.

decommissioning costs of oil and gas assets meet the description of asset and provisions under IAS 37. Therefore, accounting for, and disclosures of, provisions for decommissioning oil and gas installations are accounted for in accordance with IAS 16 and IAS 37. Hence, these costs are recognized at the point of an asset installation as part of that asset’s historical cost and as a provision in the balance sheet. However, given the long time span between the asset installation point and decommissioning that asset accounting for decommissioning costs is subject to significant complexity and subjective judgments. Due to their sizes decommissioning costs of oil and gas installations have material cash flow effects. Given the magnitude of decommissioning costs, disclosures of provisions are critical for stakeholders to understand the impact on future cash flows. This study investigates compliance with the reporting requirements of international accounting standards (IASs) regarding provisions for decommissioning costs; it extends to uncover perceptions of stakeholders on reporting practices. Using both secondary and primary data and utilizing a content analysis approach, we conclude that while there are sufficient accounting standards to regulate provisions of decommissioning costs of oil and gas installations there is a lack of compliance with disclosure requirements of IASs. Oil and gas companies tend to disclose the minimum amount of information about provisions for decommissioning costs. We find that stakeholders perceive the information provided by the companies as inadequate and require them to provide more detailed and meaningful information. Our findings have imperative policy implications for improving the quality of information availed to stakeholders.

The effect of inadequate and inaccurate reporting requirements distort free market and result in poor U.S government, industries and corporate policy and strategic decisions which will prove unsustainable
This subject is made even more compelling given the effect of US governmental, industries and corporate strategies and policies on our social, economic and environmental systems.

The Cambridge Dictionary defines Unsustainable as: “Something that is unsustainable cannot continue at the same rate.”

Definition of unsustainable adjective from the Cambridge Advanced Learner’s Dictionary & Thesaurus Cambridge University Press

Continuation of these unsustainable strategies and distortion of free market principles can be seen in inaccurate assignment of cost, weakening in the transactional linkage between cost / price and resulting price ambiguities, misallocation of resources and market inefficiencies.

In recent years, the scale of intellectual property rights financing has gradually expanded, and how commercial banks can predict risks objectively and accurately is especially important. To further study the risk-alert of intellectual property rights financing, this paper, from the perspective of commercial banks and based on the characteristics of Innovative Small and Medium-Sized Enterprises (SMEs), obtained 84 innovative SMEs data through Field research of Science and Technology Finance department of Tianjin Commercial Bank. The author measured the importance of indicators by the Gini descent method selected 14 indicators that most affected the financing risk out of the 54
indicators, and then used the random forest to establish an innovative SMEs intellectual property right financing risk-alert model, compared with the neural network and particle swarm optimization support vector machine accuracy and found that the stability and accuracy of random forest model are higher than the other two models.

An increasing number of Indian brands are engaging in feminine advertising or femvertising with an underlying commercial aim of engaging more prospects, especially the female audience. The purpose of the study is to find out if there is any relationship between femvertising and brand equity in the Indian context. A survey among customers of two well-known Indian brands engaged in femvertising is the basis of the study. The questionnaire includes a multi-dimensional brand equity scale which is used to assess constructs of brand awareness, perceived quality and brand loyalty. A separate construct of femvertising is measured using 6 variables. The reliability of the questionnaire is established using Cronbach’s alpha. The study is useful in helping companies assess the effects of adopting femvertising as a marketing strategy, and to indicate how it impacts brand equity by affecting brand awareness, perceived quality and brand loyalty. The results show that femvertising has significantly increased the brand awareness and brand loyalty of these brands, and has a positive effect on perceived quality, all of which in turn increases the overall brand equity.

Based on first set of Ind AS compliant financial statements released by Indian companies in Phase I of the IFRS convergence process, this research study aims at examining whether financial performance and financial position of an entity are significantly impacted because of IFRS convergence, and whether such impact is size dependent. Based on a sample of 100 Ind AS compliant listed companies, paired samples t-test and Wilcoxon Signed Ranked test are applied to compare means of iGAAP equity and Ind AS equity on the date of transition, i.e. 1 April 2015 and on the comparative period reporting date, i.e. 31 March 2016. Ind AS total comprehensive income is compared to iGAAP profit for the comparative period i.e. 2015-16. Results show that Ind AS adjustments to equity have significant impact but total comprehensive income as per Ind AS is not significantly different from iGAAP profit. Applying multiple regression analysis, it is found that size of the company is relevant in explaining change in equity caused by IFRS convergence.

Currently, 120 countries in the world require or permit use of IFRS. Academic research shows that IFRS-based financial statements have enhanced transparency and comparability and result in lower cost of capital and greater cross-border capital flows. Although the FASB-IASB convergence project has yielded some notable successes, the process has stalled in recent years as the SEC refuses to require or permit domestic companies to use IFRS. There exists a robust demand for IFRS in the United States. Though there are some obstacles in the path of IFRS adoption, the key to any meaningful progress lies in the political arena.

Investors’ behavior of selling winners early and holding losers (disposition effect) is based on the framing of reference points. Based on the studies which found the salience of historical prices as anchors and reference points, we test the association between disposition effect and anchoring by examining abnormal trading volumes and historical prices in Indian stock markets using market level data. Except for familiar and highly liquid stocks (Nifty50 index stocks) this study found a significantly high percentage of winning days association with abnormal trading volumes than that of losing days. This study provides the evidence of disposition effect in Indian stock markets.

We examine whether politically connected firms in China are more likely to appoint a low-quality auditor at the firm level and individual level than non-connected firms. First, at the audit firm level, we find that the propensity of retaining lower-quality audit firms, as measured by non-Top 10 audit firms, is greater for connected firms than for non-connected firms. Second, at the individual level, we find that connected firms are more likely to appoint the signing auditors sanctioned by regulatory agencies or the Chinese Institute of Certified Public Accountants. Additional analyses indicate that connected firms are more likely to retain both non-Top 10 audit firms and individual sanctioned auditors than non-connected firms. Third, connected firms with non-Top 10 audit firms (or sanctioned signing auditors) exhibit aggressive earnings management behaviors and are less likely to receive a modified audit opinion than non-connected firms with Top 10 audit firms (or non-sanctioned auditors). Our findings are in sharp contrast to those in prior studies based on a sample of observations outside China.

This paper sheds light on how accounting information quality influences the pricing effects of investor sentiment with a further investigation of asymmetry. After controlling for firms’ characteristics, we examine two micro-mechanisms by modified residual income model and two market transmission channels proposed for China’s stock market. The results show that earnings transparency mitigate sentiment-related mispricing in stock valuation, especially for firms with high valuation difficulty. To be specific, accounting information quality affects investor behaviors through the micro-mechanisms including expected earnings growth and required rate of return; Changes in institutional ownership and analyst rating can also serve as market transmission channels. Our findings inspire asset pricing, investment decisions, regulatory policies and information disclosure as well.

Traditionally, Coase’s bargaining theory is used to explain the adoption of the CSR model by nonfinancial firms. According to this approach, researchers view firms producing negative externalities and the community as two antagonizing agents with diametrically opposing interests. Given a minimum availability of social capital and through the Coasean bargaining process, firms adopt the social responsibility principle and share part of their profits with the community. Although these models contribute to the advancement of the literature, they do fail to explain the voluntary adoption of the CSR model by financial and nonfinancial firms. The objective of this paper is to extend the understanding of the current trend towards the voluntary adoption of the CSR model by financial and nonfinancial firms. It adapts the Williamson’s conceptual network framework to the context where firms prefer a non-regulated to a regulated environment. By introducing regulation as a constraint variable that government could introduce whenever the industry does not perform according to set standards, firms have the incentive to voluntarily adopt the CSR model in order to avoid regulation (or to have a light-handed regulation). In that sense, networks can be viewed as a means for granting a “social license” to firms who adopt the CSR principle.

Using a panel of 291,241 Chinese firms from 1998 to 2007, this study investigates the extent to which industry competition affects firms’ innovation activities in China. We find that firm-level innovation is negatively related to industry competition. The negative relation is stronger in higher external finance dependence (EFD) industries. Further evidence shows that the enhanced negative effect in higher EFD industries is more pronounced for financially constrained firms than financially healthier counterparts. Specifically, competition represents a more inhibiting effect on innovation activities in higher EFD industries for private firms, small firms, young firms, firms with low capacity to pay interest, firms without political affiliation, firms without state shares, firms with high growth opportunities, and firms located in central and western regions. Our results are robust to the use of various specifications and estimation methods.

The paper investigated the nature and the prevalence of real activity manipulations among quoted companies in Nigeria. The scope of the study is from the year 2000 to 2014, and it covers 71 quoted firms in Nigeria. We extracted data on the relevant variables from the published annual reports of the firms. Three types of real activity manipulations were examined in this study which includes; abnormal cash flow, abnormal discretionary expenditure and abnormal production cost. Three models were formulated representing each of the three types of real activity manipulations, and the Pooled Mean Group form of panel data analysis is applied. The result shows that manipulations of cash flow are the dominant nature of real activity manipulations among quoted firms in Nigeria and it is the abnormal cash flow that is the most prevalent among the sampled 71 companies as a form of real activity manipulations. Therefore, audit committee and other relevant agencies are advised to give more attention to the cash flow analysis of these companies to curtail the rising trend of real activity manipulations among quoted companies in Nigeria

We identify the stock exchanges that dominate liquidity demand and liquidity supply during stressful and normal periods. In particular, we collected financial data (stored in microseconds) from the Securities Information Processor (SIP) which consolidates trading data from 14 exchanges and dozens of alternative trading facilities including dark pools. We used big data framework such as Hadoop and Spark to analyze these (high frequency) financial data to find the anomalies in data pattern and exchange dominance. We applied statistical and data mining techniques for analysis and observed that stock exchanges which dominate on typical days are not equally active on the flash crash day. Other anomalies in multimarket data pattern between normal and the flash crash days are found via heat map analysis.

We provide evidence on the impact of loan covenants on audit delays and audit fees. We find that for most covenants, firms with that a particular covenant have longer audit delays than firms without that covenant. On average, auditors of firms with at least one loan covenant take two more days than the auditors of the firms with no loan covenant at all. We observe that adding one more loan covenant will delay the audit report by at least one day. We also found that adding one more loan covenant increases audit fee by 0.7 percent.

There can little doubt that would be residents, their relatives and those acting on their behalf, would like to be able to choose which aged care facility best meets the financial and care positions of their relatives and loved ones. There is equally no doubt that those who run such aged care facilities are in the best position to provide such information. But, the analysis which has preceded above indicates that they generally have failed to do so. The Models and Frameworks presented in this paper were developed to address this lack of adequate and consistent disclosure in the Australian RAC Sector. The results show that the sector itself is suffering Alzheimer’s disease, with a lack of transparency, accountability and general disclosure.

In June 2017 Science magazine published a multi authored1 article entitled “Estimating economic damage from climate change in the United States”. It is an extensive article that produces among other things a forecast of economic costs from rising sea surface temperatures – i.e. a measurable component of climate change. Included in the estimated costs are the direct effects on coastal cities of rising sea waters, higher temperatures on crop yields and the direct effect on energy as well as the indirect effects on mortality, violent crime, labor, productivity and property damage. The study is wide-ranging and results in important depictions of losses by coastal county (see reproduced figure below) and a fitted prediction of costs-to-come (as an impact on US GDP) as a quadratic function of further changes in temperatures.

Auditor assurance service play a role in reducing asymmetric information, especially during going-public process. Using the IPO data over a four-year period around SOX, we examine whether audit quality, measured by auditor reputation and independence, mitigates asymmetric information problem in a special setting of the enactment of SOX. Our results show that auditor independence has a negative effect on the IPO underpricing both before and after the SOX and that the significant reduction in IPO underpricing post SOX would be driven by auditor independence. We further find that auditor independence has a positive relation with IPO firm’s long-term performance and this effect is much stronger for firms going public after SOX. Finally, our evidence supports the notion that underpricing is mainly caused by asymmetric information problem; we observe that a firm’s IPO underpricing is positively associated with its post IPO beta and that SOX and auditor independence have a direct, though moderate, effect on this relation.

The development of theoretical analysis of forest accounting cycle would help to establish forest accounting system in a scientific way. The main objective of the study is to make forest accounting cycle and to make a theoretical analysis of forest accounting system. The present study concludes that forest accounting does involve a lot of complicated issues hence systematic investigation of forest accounting cycle is inevitable. Forest accounting cycle deal with forest capital (Forest capital refers to elements of forest that produce values directly and indirectly to people such as stock of trees, animals, goods and services etc).

This study examines the relationship between RPTs and firm performance. By using Generalized Least Squares (GLS) fixed effect method on the data of 94 non-financial Indonesian listed firms from 2007 to 2013. This study finds that RPTs have a significantly positive relationship with firm performance. RPTs in the form of total size of RPTs, RPTs sales, RPTs purchases and RPTs entity, are found to have significant positive relationship with returns on assets (ROA). RPTs liabilities is found to have significant positive association with cash flow from operating activities (CFO), and RPTs person (individual or close family member) is found to have significant positive relationship with Tobin’s Q. However, this study also finds that RPTs lending has a negative effect on Tobin’s Q.

We evaluate the adoption process of CAATTs in the Directorate General of Taxation (DGT) of Indonesia from the perspective of institutional logics by examining the interplay between assumptions, values, and beliefs of actors of organization within the DGT. Results of this study are base based on secondary data analysis conducted by evaluating tax laws and regulations pertinent to the adoption of CAATTs in tax audit in DGT. Our findings suggest that the use of CAATTs for a tax audit is an outcome of social construction among actors of organization within DGT institution. This study is one of the few studies that have sought to research the utilization of institutional logics perspective in the adoption of CAATTs, particularly in a government institution. Moreover, this research contributes to helping DGT to build and implement a strategy to increase CAATTs acceptance rate within the institution. Examining the adoption of CAATTs in DGT is essential because CAATTs holds out the promise of improving audit efficiency and effectiveness; the provisions required by the DGT when assessing the compliance of taxpayers.

The true and fair opinion of an external auditor can be compared to the final judgment of a judge or a special medical doctor when it comes to the financial health of a company. Surprisingly, many renowned companies have gone bankrupt, hence, collapsing or folding up after such favorable reports from an external audit. This brings into question the role of external auditors on the performance and growth of businesses that rely on their opinion. An external auditor is an audit professional who performs an audit in accordance with specific laws or rules on the financial statement of a company, government entity, other legal entity or organization, and who is independent of the entity being audited. Users of these entities financial information such as investors, government agencies, and the general public rely on the external auditor to present an unbiased and independent audit report. An external auditor is an independent service provider whose impact can provide significant influence on the organisation being audited and its stakeholders. Even though they are not part of the organisation, they play a key role in developing internal controls. Auditors can comment on weaknesses in the accounting records, system and controls that they review in the audit. They provide a statistical analysis in the clarity and effectiveness of the accounting policies put in place by the company. They also help management become aware of evidence that may affect future audit. They can give advice to management through recommendations in their audit notes or discussions. A cornerstone of the difference between an internal auditor and an external auditor is company-wide independence. An external auditor must have independence. When reviewing a company’s financial statements, the external auditor should not have any close ties with the company. This means no stock, close relative with stock, management positions. This was put in place to ensure a total objective review in which influences will not affect the outcome of the audit. Internationally, the International Standards on Auditing (IAS) issued by the International Auditing and Assurance Standard Board (IAASB) is considered as the bench mark for audit process. Almost all jurisdictions require auditors to follow the ISA or a local variation of the ISA. Despite all of these checks by external auditors, some companies still file for insolvency after an unqualified opinion (meaning the company is clean) has been given. This work therefore finds answers to this and the impact auditors have on the performance and growth of public limited companies.

This study will be conducted on the local government in Indonesia who first received unqualified opinion. The capabilities of regency in Central Java who first gain unqualified opinion are at level 1 based on IACM Level. From the facts mentioned above, the question arises whether with the lowest level of capability (level 1), how can GISA (Government Internal Supervisory Apparatus) able to perform its functions optimally, even able to improve the quality of the local government financial statement. This research aims to know the role of GISA in increasing the quality of local government financial statements. The data collection of this study used a questionnaire. Sampling from this research is done by purposive sampling method that is taking samples based on certain characteristics or criteria. The criteria of respondents selected, they should be functional auditor officials, functional officers, and structural officers who perform supervisory functions The results of hypothesis testing showed only variable of follow up audit finding that has positive and significant influence to the quality of local government financial report. This variable effect for about 21,7% while others influence by other factors that do not include in this research.

This study examines the social and environmental auditing on sustainable development in Nigeria. The specific objectives are to: ascertain whether social and environmental auditing can be used to determine the perceptions of society toward the operations of business organizations in Nigerian economy; evaluate the effectiveness of social and environmental auditing system in investment appraisal of business organizations in Nigerian economy and determine the level of adoption of social and environmental auditing among business organizations in Nigeria. Three hypotheses were formulated in line with the objectives of the study. Survey research design was adopted. Data were obtained from questionnaires and analyzed with five point likert‟s scale and the three hypotheses formulated were tested using t-test statistical tool with aid of SPSS statistical package version 20.0. From the analysis, the study found that social and environmental auditing enhanced in determining the perception of society toward business organizations in Nigerian economy, also that the effectiveness of social and environmental auditing system aid investment appraisal in business organizations in Nigerian economy. Another finding is that the level of adoption of social and environmental auditing has influence operations of business organization in Nigerian economy. Based on the findings, the researcher recommends among other things that manufacturing companies should focus on those environmental friendly policies to enhance their competitiveness which would subsequently lead to high corporate performance; this will bring about good environmental sustenance

The results show that the most common mechanism used in the UK post-IFRS adoption is managerial guidance. This finding might indicate that analysts probably increase the chance of lowering their initial forecasts if managers attempt to guide them with such information. The interaction variable of stock recommendation that relates to managerial guidance shows a positive and significant relationship with the dependent variable. However, the interaction of sell recommendation is negatively correlated with analyst tendency to lower analyst forecasts. This result suggests that analysts are less likely to issue sell recommendations for firms that provide more guidance.

The purpose of this paper is to investigate the impact of IFRS adoption on stock price synchronicity in Nigeria. This research has been performed using a sample of 20 companies listed on the Nigeria Stock Exchange (NSE) from 2010 to 2015. The relationship between the explained variable and explanatory variables was observed. Univariate and multivariate techniques were used for the purpose of the study. Panel data estimates were also employed in the study. The results of the empirical tests were statistically significant at 0.05 level. The findings of the study revealed that IFRS adoption improves information environment through the capitalisation of firm-specific information into stock prices, thereby reducing stock price synchronicity in Nigeria.

I examine pre-crisis interest rate risk exposures of German non-financial companies by analyzing sensitivities indicating how profit and equity would have been affected by changes in interest rates. I find that companies with a management compensation structure that entails a bigger variable part tend to lock in a lower interest rate exposure. This finding suggests that risk-averse managers choose a lower risk exposure, the higher the variable portion of total compensation.

The purpose of this study is to examine the relationship between economic value added (EVA), refined economic value added (REVA), EVA momentum (EVAM) as proxy of value based measures and traditional performance measures, namely; return on assets (ROA), return on equity (ROE), return on sales (ROS) and earning per shares (EPS) with market value added (MVA). Very few studies in Malaysia attempted to focus on the importance of economic measurement tools like EVA, REVA, EVAM and MVA and their relationship. Thus this study makes an endeavor to fill this gap. Using a sample of 395 public listed companies in main board of Bursa Malaysia and using panel data with fixed effects during the period of 2002 to 2011. The findings of the study revealed that there are positive relationship between EVA and ROE with MVA. Furthermore, the results showed that there are negative relationships between REVA, ROS and EPS with MVA. Besides, there is no relation between EVAM and ROA with MVA. The negative relationship between REVA, ROS and EPS with MVA evidenced that the ability of using the capital by managers are adverse.

A. Background Surveillance of the financial market for detecting price manipulation has recently captured a lot of attention from the financial regulators across different exchange markets. The presence of price manipulation threatens the market efficiency which directly affects the health of the financial system. But the current Indian laws do not explicitly define the term Price manipulation, making it difficult to detect and hence tackle. The lack of research in the development of efficient and effective detection algorithm, in both academia and industry, pose a great challenge to the financial regulator. This paper studies the strategies used for some of the price manipulation cases and presents related empirical studies. Since price manipulation is market wide phenomenon we are treating price manipulation and market manipulation as synonymous. B. Objective This paper summarizes and further analyses different price manipulation strategies by examining the empirical studies in the existing literature as well as the reported manipulation cases. C. Methodology and Approach Indian Markets are considered as the emerging markets and the data taken from Nifty are likely to be highly fluctuating on ticking basis and is likely to be a non-stationary time series. Several tests are being done to test the authenticity of its stationarity such as the Augmented Dicky Fuller (ADF) Test. From the detection models perspective, the non-stationarity increases the difficulty of identifying the manipulation through the utilization of one uniform model. Here, a transformation is defined to transform the original data to a stationary domain while maintaining the desired features i.e to convert the time-varying financial trading data into pseudo-stationary time series, which may bring an alternative computationally efficient solution. This idea is also reflected in a time series analysis, such as the Auto-Regressive Integrated Moving Average (ARIMA) model which is usually applied in cases where the non-stationary feature of the data can be removed by an initial differencing step. The log-return is also considered to be a transformation from market data to price difference, which is not believed to be perfect time-invariant but has also been analyzed and concluded as stationary in a recent investigation. Inspired by the differencing step and log-return methods, a transformation can be done converting the order data to a consistent and comparable metric. On one hand, this procedure transforms the original data to pseudo-stationary; on the other hand, it enables the evaluation of analytic relationships amongst stocks despite the original unequal values of the ordered series.On the pseudo-stationary data, various classifiers including Decision Tree, SVM, Neural Network algorithm is applied to the detection of the price manipulation. The evaluation experiments conducted on top stocks from NSE (Nifty) showed a very improved performance due to deep learning architecture for effectively detecting the manipulation cases. [1]

Shanghai-Hong Kong Stock Connect Program connects the Shanghai Stock Exchange and the Hong Kong Stock Exchange by allowing investors in each market to trade authorized shares on the other market using their local brokers and clearing houses. We study the differential price impact of the Program on several groups of stocks on both Shanghai and Hong Kong Stock Exchange: A shares with/without corresponding H shares, H shares with/without corresponding A shares, and non-H Hong Kong shares. The study provides insights to why the prices for A shares and corresponding H shares do not converge after the Program. It confirms Merton (1987) investor base prediction in Chinese stock market but also shows that substituting effect of A- share for its corresponding H share adversely affects the latter’s price.

This paper makes an important contribution towards financial and accounting literature by providing significant evidence on the existence and extent of earnings management in relation to the corporate strategic choices practiced in companies of Pakistan. This study provides evidence that corporate diversification in Pakistan mitigates manipulation of earnings and companies operating under one industry exacerbates earnings management. It also provides evidence that the extent of earnings management differs between diversified and non-diversified companies’ due to heterogeneities in firm characteristics.

The aim of this study was to identify the competency of the external auditor’s skills in gathering and evaluating evidence under the use of cloud technology and large data. To achieve this objective, the researcher followed the analytical descriptive approach due to its relevance to the subject of the study. Distributed to the study sample of 61 auditing auditors for the audit profession. 51 valid questionnaires were retrieved and a program was used to test the hypotheses and analyze the results. SPSS Statistical Analysis The study has reached several results, the most important of which are: The external auditor has proficient skills to assist in the collection and evaluation of evidence through the use of cloud technology and large data. The study also showed that there is a statistically significant relationship between the external auditor (examining the accounting system, examining the internal control system, assessing the risks arising from working in the cloud environment, knowledge of international auditing standards, knowledge of large data, , And the proficiency of the external auditor’s skills to collect and evaluate evidence under the use of cloud technology, large data, and profane theory. The study concluded with several recommendations, the most important of which is the necessity of activating specialized training programs and courses in the field of computer and information technology on an ongoing basis to improve the performance of the auditors in line with the continuous developments in the environment of the cloud systems and the large data. Cloud and cloud data systems audit, by classifying existing audit firms and offices based on the technical capabilities of the Office staff and determining the extent to which they can test such systems. The study also recommended that the use of computer-aided auditing methods be extended to the effect of reducing the time, effort and cost of audits, and the advantages of achieving the accuracy and speed of collection and evaluation of evidence. Finally, professional auditors should follow the standards and international IT audit data and follow the guidelines to be able to audit cloud systems ,big data and grounded theory by optimizing the theory.

In this paper, we develop a corporate accessibility measure for listed firms based on their responses to our attempts to communicate with them (via telephone, e-mail, and online discussion forum), and examine whether the provision of corporate accessibility is a signal for the incidence of agency problems. We find robust evidence that non-accessible firms are associated with more agency problems, manifested in greater tunneling of corporate resources through inter-corporate loans and related-party transactions, greater consumption of slack, more earnings management, and higher probability of committing corporate fraud. Furthermore, we find that non-accessible firms are more likely to conduct value-destroying acquisitions and have a lower marginal value for holding cash than accessible firms. We also find that non-accessible firms underperform accessible firms in both firm valuation and operating performance. Overall, our results suggest that corporate accessibility is a value-relevant signal for informing investors of the severity of agency problems among publicly listed firms.

Studies have shown that information not only may induce investor herding behavior but also institutional and individual investors may exhibit different information attention and herding. In this paper, we argue that internet is one of the information resources for investors who lack of information required to make investment decision, since Google search is a free information resource for retail investors, in a country with high internet usage, retail investors obtain identical information from Google search, leading to herding behavior. Empirical results confirm that Google Search Volume Index can be a proxy for the information attention of uninformed individual investors, and the measure of ASVI (abnormal search volume index) shows that individual investors become more attentive to the information and hence exhibit more herding behavior. Empirical evidence also shows that reaching the limit generates an information-grabbing effect which further enhances the impact of information attention on individual investor herding behavior. Further, in general, small cap firms generate more intensive herding by individual investors. In addition, we explore the asymmetric impact of ASVI on herding behavior for bull and bear markets, and confirm that the individual investor buy herding phenomenon is stronger in bull markets, especially for small capitalization firms. But in bear markets, with greater price deterioration for large cap firms, we detect herding behavior on both the buy and sell sides.

After decades of continuous controversy since the inception of FASB 13, involving the Off- Balance Sheet treatment of most leases, there has finally been a major change in Lease Accounting effective for the periods ending after December 15, 2018.The changes will be dramatic, and will require the capitalization of all non-cancellable leases whose terms are greater than one year in duration. The liability created by the lease contract will now become a balance sheet debt item, and will most likely have a major negative impact on a firm’s debt ratios and covenant agreements. Consequently, this change will greatly affect the way entities’ conduct business in the future. It will also have a major effect on financial statement presentations. This case study focuses on the differences in the treatment of leases between the current lease pronouncements and the upcoming new lease rules under US GAAP, and the impact of these differences on financial statements and selected financial ratios. Students will take GAAP financial statements under the present lease requirements and prepare a balance sheet, cash flow statement and income statement reflecting the new lease rules. This case study is suitable for use at both the undergraduate and graduate levels. It may be used in an Intermediate Accounting II, Accounting Theory, Financial Statement Analysis or an International Accounting class, as well as an Investment Finance course. The case can be offered as an individual case study or as a group project.

This paper investigates whether corporate governance does have any impact on dividend measures in Australian listed firms. Building on extant literature and using panel data approach, the study examines 206 ASX listed firms for the period 2005 to 2011 to measure the effects of governance (board, audit, and ownership) on dividend (dividend payout and dividend yield) variables. Our panel regression analyses reveal significantly positive (negative) impact of board size, board independence, institutional ownership and Big-4 audit firm (CEO duality and managerial ownership). However, with the dividend yield, only managerial ownership (foreign ownership) has a significantly positive (negative) impact. These results may imply that corporate governance and dividend payout are complementary in reducing agency costs in Australian listed firms.

One of the challenges and problems which the professional training system of each society comes up against is the training of qualified accountants. This urges researchers to undertake a study on educational needs of accounting students and professors. Therefore, the main purpose of this study is to scrutinize the educational needs and priorities of accounting students in Iran. On these grounds, the skills and attribute which are prerequisite to students are divided into five major categories including personal, communicative, analytical, appreciative and routine accounting skills. Afterwards, they are surveyed among Iranian university faculties based on AHP. Following the ideas obtained from the sample faculties, the findings point up the routine accounting skills, followed by analytical, personal, appreciative and communicative skills. Undoubtedly, such skills are usually considered as prerequisite for accounting. The results of this study not only fill the gap between education and practice, but also help policymakers make better educational policies to train qualified students, prepare human resources and promote professional experience.

The purpose of this research is to examine the existence of investors’ herding behavior in Thailand and whether their collective trading behaviors destabilize the countries’ stock markets. This study shows that the herding behavior is present in all sectors in Thailand, namely consumer discretionary, consumer staples, energy, finance, healthcare, industrial, infotech, materials, and utilities. The two sectors that exhibit the least herding magnitude are the utilities and energy. The Industrial and healthcare sectors show the largest herding magnitude. There is no evidence of the herding activities for securities in the telecommunication sector. Examining the herding activities when the overall Thai equity market experiences an extreme movement of negative or positive returns which is determined as the biggest negative returns and positive returns at the 1% of the lower and upper tail of the market return distribution shows strong herding activities among investors in Thailand. Portfolios of stock in utilities and healthcare exhibit the strongest herding activities in response to a significant move in the market. However, half of the ten sectors also exhibit the presence of herding behavior under the normal tranquil periods. These five sectors are consumer discretionary, healthcare, industrial, financial, and materials. It is interesting to note that the magnitude of herding behavior of these five sectors is much smaller during periods of the normal market movement than the extreme market, suggesting that herding activities are more pronounced when overall market moves in the extreme negative or positive direction. The Wald Tests of equal herding activities between the normal and extreme market movement also confirm the finding of asymmetric herding behavior of investors during the extreme market movement than the normal periods. Further test of herding activities of each sector during the bullish and bearish market indicates that investors herd when overall market went up and down in consumer discretionary, energy, health care, and financial sectors. The larger magnitude of coefficient in up market points to possible stronger herding activities during the bullish market for consumer discretionary, healthcare, and financial sectors. Investors in the consumer staples and infotech sectors tend to herd only when the market experienced a downturn. There was no evidence of herding activities of the market participants in utilities, communications, industrials, and materials sectors in either bearish or bullish periods.

Nonlinear behavior in economic series has been a renewed interest among academicians and policymakers. Economists have long suggested that business cycle tends to exhibit asymmetry where the expansion appears to be more prolonged, persistent, with less volatility than the contraction periods. Many studies have examined whether economic times series behave asymmetrically over the business cycle. One of the macroeconomic time series that show strong support of asymmetry hypothesis is unemployment rates. This purpose of this research is to examine whether unemployment rates in 56 countries exhibit a non-linear asymmetric cyclical behavior with a sharp increase during contractions, but gradual declines during expansions. The change in unemployment rates is modeled as a two-state second-order Markov Chain test, a technique developed by Neftci (1984). The results show that eight out of fifty-six countries exhibit a symmetric pattern in unemployment rates. These eight countries are Belarus, Brazil, Ecuvador, Greece, Japan, Kazakhstan, Morocco, and Norway. The behavior of unemployment rates in these countries does not change based on the different stage in the business cycle. Of the remaining countries that show evidence of asymmetric behavior pattern, twenty-four countries (42.86% of total countries investigated) exhibit the presence of a cyclical asymmetry in unemployment that conforms to a sharp rise in unemployment during economic contractions but prolonged decline in unemployment during economic expansions. These countries are Argentina, Australia, Belarus, Chile, China, Columbia, Denmark, Finland, Germany, Greece, Hong Kong, Indonesia, Italy, Latvia, Macao, Morocco, Peru, Poland, Russia, Slovakia, South Africa, Spain, Switzerland, and Thailand. The asymmetric properties revealed will provide insights for regional economists and policy makers for theoretical modeling of labor markets as well as guidance for designing appropriate forecasting models for each country’s unemployment.

In recent decades, there have been a lot of efforts to improve the measurement models of human resource accounting. However, these models have failed to catch on in practice. This paper reviews human resource accounting valuation models to identify the restrictions on the use of these models. It provides implications for human resource researchers to improve the application of human resource accounting models.

The paper aims at analyzing the relationship between the level of integration of ERP system and perceived information quality, by identifying both direct and indirect effects. In the latter model, the relationship is affected by the presence of the features of information flow. In order to test the research model, a PLS-SEM analysis was applied to a survey in the Italian setting. Empirical results demonstrated that the level of integration of ERP system positively affects the latent variable (features of information flow). Furthermore, results show that features of information flow positively affect the perceived quality of information. Finally, empirical results demonstrated that the level of integration of ERP systems is able to positively and indirectly affect the information quality perceived by respondents. This effect is possible through the features of information flow. Managers can benefit from this study, since they can exploit the optimal level of integration of their ERP systems in order to enhance the information quality within the firm.

The paper aims at analyzing the relationship between the level of integration of ERP system and perceived information quality, by identifying both direct and indirect effects. In the latter model, the relationship is affected by the presence of the features of information flow. To test the research model, a PLS-SEM analysis was applied to a survey in the Italian setting. Empirical results demonstrated that the level of integration of ERP system positively affects the latent variable (features of information flow). Furthermore, results show that features of information flow positively affect the perceived quality of information. Finally, empirical results demonstrated that the level of integration of ERP systems are able to positively and indirectly affect the information quality perceived by respondents. This effect is possible through the features of information flow. Managers can benefit from this study since they can exploit the optimal level of integration of their ERP systems to enhance the information quality within the firm.

Stock prices behave very differently with respect to their sensitivity to market risk (beta) when markets are open for trading versus when they are closed. The capital asset pricing model (CAPM) performs poorly overall as beta is weakly related to 24-hour returns. This is driven entirely by trading-day returns, i.e., open-to-close returns are negatively related to beta in the cross section. The CAPM holds overnight when the market is closed. The CAPM holds overnight for the U.S. and internationally for: beta-sorted portfolios, 10 industry and 25 book-to-market portfolios, cash-flow and discount-rate beta-sorted portfolios, and individual stocks. These results are consistent with transitory beta-related price effects at the open and the close.