Structural VAR models for Malaysian monetary policy analysis during the pre- and post-1997 Asian crisis periods

This article conducts an in-depth investigation into building a Structural Vector Autoregression (SVAR) model and analysing the Malaysian monetary policy. Considerable attention is paid to: (i) the selection of foreign, policy and target variables; (ii) establish identifying restrictions and improve the estimates of impulse response functions; (iii) assess the importance of intermediate channels in transmitting monetary policy mechanism; and (iv) the way in which the 1997 Asian financial crisis affected the working of monetary policy. Malaysia is an interesting small open economy to study because, following this crisis, the government imposed capital and exchange rate control measures. The overall results suggest that the crisis and the subsequent major shift in the exchange rate regime have significantly affected the Malaysian ‘Black Box’. In the pre-crisis period, domestic variables appear to be more vulnerable to foreign monetary shocks. Further, the exchange rate played a significant role in transmitting the interest rate shocks, whereas credit and asset prices helped to propagate the money shock. In the post-crisis period however, asset prices play a more domineering role in intensifying the effects of both interest rate and money shocks on output, and the economy was insulated from foreign shocks.     

FLYPAPER EFFECT INCORPORATING SPATIAL INTERDEPENDENCE

This paper examines the decentralization process in the state of Maharashtra. Among the states in India, Maharashtra's efforts at decentralization are regarded as a success story. Using cross‐section data for 243 urban local governments, the paper examines the flypaper effect, that is, the expenditure stimulus of grants from the state government to the urban governments. The significance of spatial factors has been highlighted in the study. The models have been estimated using spatial econometric techniques. Most of the estimated models show the presence of the flypaper effect.     

Impacts of Additional Guidance Provided on International Financial Reporting Standards on the Judgments of Accountants

This pioneering study examines the impact of the provision of additional guidance on International Financial Reporting Standards (IFRS) as a “decision aid” on the accuracy of judgments of the accountants. To extend the prior research on accounting judgment and decision-making, we also examine the interactive effects of task complexity and additional guidance on the judgments of accountants. The results provide evidence that those accountants who are provided with decision aid in the form of additional guidance on IFRS make more accurate judgments than accountants who are not provided with such guidance. Furthermore, the study provides evidence that this additional guidance improves the judgments of accountants when they undertake tasks which they find complex. The results indicate that additional guidance on IFRS needs to be provided and suggests that accountants should exploit any guidance which is currently provided in IFRS and by the International Financial Reporting Standards Interpretations Committee.     

Impact of Globalisation on Employment in Nigeria

This study analyses the effect of globalisation on employment in Nigeria considering the economic, political and social aspects of globalisation using annual time series data for the period 1970 - 2013. The study uses ARDL bounds testing to examine the short-run and long-run effects. The findings indicate that in the short-run, the economic and social aspects of globalisation are beneficial as they induce an increase in employment rate, although both the two aspects of globalisation have only marginal effect in the short-run, while the political integration shows no effect in the short-run. However, in the long-run, all the three aspects of economic, political and social integration show substantial beneficial impact as they all induce a significant increase in the employment rate.     

Growth performance of Indian states

This article is concerned with evaluating the growth performance of states in the Indian Federation. This was sought to be done by estimating growth equations for a group of 19 states in India as well as sub-groups of these states during the period from 1981–1982 to 2004–2005. It has been found that, systematically, the contribution of educational attainment (social sector capital) to the growth process is larger than the contribution of physical capital. An important concern in the article is whether growth regressions estimated for a large group of 19 states can be replicated for smaller sub-groups. The problem of parameter heterogeneity is investigated, and the results of this study show that there is considerable parameter heterogeneity in the growth equations across groups. Rates of convergence estimated in this article also vary from extremely low levels (in the absence of the education variable) to more than 10% (in the presence of the education variable). The results of this study thus point to the great importance of education in improving the growth performance of Indian states.     

Confirmation bias in accounting judgments: the case for International Financial Reporting Standards for small and medium-sized enterprises

We conduct an experiment that investigates confirmation bias in the reporting judgments of accountants when applying International Financial Reporting Standards (IFRS) for small and medium-sized enterprises (SMEs). The results indicate that accountants’ judgments are biased towards the recognition and measurement principles of full IFRS when applying IFRS for SMEs. The results also suggest that confirmation bias in judgments can be mitigated by increasing accountants’ awareness of justification requirements and by using appropriate decision aids. These results are likely to be of interest to the 70-plus countries that have adopted the SME standard and countries that continue to contemplate its adoption.     

Sounding the alarm: Impact of political instability on growth and fiscal health of the Indian economy

A noticeable change evident in the Indian political scenario since the eighties has been a sharp rise in the frequency with which governments have been ousted out of power. This augurs well for Indian democracy as it reflects a ‘political awakening’. Such changes in government, after an election reflect ‘orderly’: transfer of power and are inherent to the democratic form of governance. However, a close scrutiny of the political scenario at the state government level shows that there have been very frequent changes in government between elections. A high frequency of changes in government could be expected to result in frequent reversals or modifications in policy decisions and have a destabilizing effect on the economy. The present study is an empirical exercise undertaken at the level of state governments. It makes a first attempt to examine the impact of political instability on growth and on the fiscal health of the Indian economy. Received: September 25, 2000/Accepted: January 11, 2002 RID="*" ID="*" Sincere thanks to Professors Ajit Karnik and Abhay Pethe for their comments and suggestions. I would also like to thank the two anonymous referees for their insightful comments and suggestions, which have been of great help. The usual disclaimer applies.     

IASB's independence in the due process: an examination of interest groups’ influence on the development of IFRS 9

This mixed-method study examines whether and how the International Accounting Standards Board (IASB) was influenced by interest groups during the development of the expected credit loss (ECL) model for IFRS 9 Financial Instruments. Content analysis of 327 comment letters revealed that the IASB was influenced. However, Fisher's exact test and chi-square goodness-of-fit test showed that, to a greater extent, the influence was not significant. Furthermore, qualitative analyses of the arguments put forward by interest groups showed that as a result of interest groups’ inputs, accounting requirements for the ECL model were made more operational, less complex and potentially productive of more comparable financial information.     

Judgment and Decision‐Making Research in Auditing and Accounting: Future Research Implications of Person,Task, and Environment Perspective

The discipline of accounting and auditing has increasingly recognized judgment and decision making (JDM) as highly important attributes in the profession because individuals such as managers, auditors, financial analysts, accountants, and standard setters make pivotal judgments and decisions. Many studies undertaken in this domain of research also substantiate the significance of JDM in accounting and auditing. This study evaluates all the papers published in 10 accounting journals among the leading ones from 1980 to 2010 that fall within the domain of JDM research. The categorization of the studies reviewed in this paper is based on Bonner's ( 1999 ) three major determinants of JDM: Person, Task, and Environment variables. The review highlights the progress in the literature over the past three decades and also identifies the methodological limitations of previous research. The identified limitations will be useful for improving the research method of future JDM studies in accounting and auditing. The review also draws inferences on how JDM research in auditing, which is well established, could usefully guide future JDM research in financial accounting.