Determinants of Financial Ratio Disclosure Patterns of Australian Listed Extractive Companies

We investigate the disclosure patterns of Financial Ratios (FRDs) within the annual reports of 111 Australian listed resource companies over the period 2002 to 2006. Disclosure of financial ratio information increased over this period with a significant increase in disclosures recorded in the first full‐year annual report prepared following adoption of IFRS. The results of logistic regression analysis demonstrate that income tax and firm size are factors that are significantly associated with financial ratio disclosures. This study contributes to an understanding of the extent, trends and rationale behind resource firms’ financial ratio disclosure practices in Australia.     

Tax enforcement and corporate financial irregularities: Evidence from China

This paper examines whether and how tax enforcement affects corporate financial irregularities in China, utilizing the merger of the State Tax Bureau (STB) and Local Tax Bureaus (LTB) in 2018 as a quasi-natural experiment. Our findings show that stricter tax enforcement significantly reduces corporate financial irregularities, especially for firms with lower tax compliance, poorer internal governance, laxer external supervision, and lower economic status. Furthermore, the mechanism tests demonstrate that stricter tax enforcement forces firms to reduce tax avoidance and tax reporting irregularities. These findings are consistent with the effective supervision channel. Our findings suggest that stricter tax enforcement can improve the quality of corporate information disclosure, and providing useful insights for alleviating information asymmetry and improving information environment in the Chinese capital market.     

有效预警上市公司违规的递延所得税异动指标和人工智能模型

2000-2017年,3434家A股上市公司样本中的47.79%至少有一次违规记录,每年平均有17%的公司违规,而监管机构平均需要2.7年查证并通告违规行为。我们用当年数据构建递延所得税异动指标,可有效预判违规,并发现监管机构未能识别这一指标的警示作用,实际激励了违规公司通过操纵递延所得税提高财务指标以规避稽查。进一步构建决策树模型,对违规事件实现样本外精准判别。本文揭示了A股公司大面积违规而稽查过程冗长迟缓这一重要现象,并分析了违规机制,指出了所得税数据在稽查违规中可以发挥的预警作用,为监管者和投资者提供有效预警上市公司违规行为的新指标和方法。     

有效预警上市公司违规的递延所得税异动指标和人工智能模型

2000-2017年,3434家A股上市公司样本中的47.79%至少有一次违规记录,每年平均有17%的公司违规,而监管机构平均需要2.7年查证并通告违规行为。我们用当年数据构建递延所得税异动指标,可有效预判违规,并发现监管机构未能识别这一指标的警示作用,实际激励了违规公司通过操纵递延所得税提高财务指标以规避稽查。进一步构建决策树模型,对违规事件实现样本外精准判别。本文揭示了A股公司大面积违规而稽查过程冗长迟缓这一重要现象,并分析了违规机制,指出了所得税数据在稽查违规中可以发挥的预警作用,为监管者和投资者提供有效预警上市公司违规行为的新指标和方法。     

Perceived international environmental factors and corporate voluntary disclosure practices: An empirical study

Drawing upon the contingency theory of organisations, we identify a set of perceived international environmental factors and examine how these factors influence a company's voluntary disclosure levels. The perceived international environmental factors identified are (a) intensity of global competition, (b) international socio-political institutions, (c) international accounting standards, and (d) international financial institutions. Based on data collected from 100 Egyptian non-financial listed companies, the results of multiple regression analysis indicate that the level of a company's voluntary disclosure is positively and significantly associated with its perceived influence of (a) international socio-political institutions (such as the United Nations, the European Union, the Association of South East Asian Nations, the World Trade Organization, and the Organization for Economic Co-operation and Development), (b) international accounting standards, and (c) international financial institutions (such as the World Bank and the International Monetary Fund). Contrary to our expectations, our findings reveal no significant association between voluntary disclosure level and perceived intensity of global competition. Our study contributes to the international accounting disclosure field by providing evidence from Egypt that perceived international environmental factors may influence the type and level of accounting disclosures by organisations. These findings are also applicable to other emerging countries.     

IRS Attention

We study how public and private disclosure requirements interact to influence both tax regulator enforcement and firm disclosure. To capture IRS enforcement activities, we introduce a novel data set of IRS acquisition of firms’ public financial disclosures, which we label IRS attention. We examine the implementation of two new disclosure requirements that potentially alter IRS attention: FIN 48, which increased public tax disclosure requirements, and Schedule UTP, which increased private tax disclosure. We find that IRS attention increased following FIN 48 but subsequently decreased following Schedule UTP, consistent with public and private disclosure interacting to influence tax enforcement. We next examine how private tax disclosure requirements under Schedule UTP affected firms’ public disclosure responses. We find that, following Schedule UTP, firms significantly increased the quantity and altered the content of their tax‐related disclosures, consistent with lower tax‐related proprietary costs of disclosure. Our results suggest that changes in SEC disclosure requirements altered the IRS's behavior with regard to public information acquisition, and, relatedly, changes in IRS private disclosure requirements appear to change firms’ public disclosure behavior.     

Derivatives use and financial instrument disclosure in the extractives industry

This article documents the use and disclosure of derivatives in the Australian extractives industry. We find that derivatives are used by 23 per cent of our sample, with mitigation of commodity risk and foreign exchange risk being the most common purposes for which derivatives are used. The most common types of derivatives used in the sector for hedging purposes are forward rate agreements and options. Results indicate that derivative use is positively associated with financial risk and firm size. We also examine the relation between firm characteristics and the extent of financial instrument disclosure, using a disclosure index based on the additional requirements in IFRS 7 Financial Instruments: Disclosures. Empirical results reveal that large firms with higher leverage, which use derivatives, and are audited by a Big 4 auditor provide more extensive disclosure of financial instruments.     

Barbados Spirits Inc.

This case focuses on the audit of a subsidiary in Barbados of a Multi‐National Entity (“MNE”), a distiller in Toronto. The MNE is a large and important international client to the accounting firm. The firm provides both tax advisory and audit services to the MNE. The MNE, following advice of the accounting firm, has utilized an offshore related party to structure transactions that avoid taxes in Barbados. These related party transactions are a detriment to the interests of critical users of the financial statements, namely the minority shareholders and the tax authorities of Barbados. The auditor is now faced with evaluating the adequacy of the related party note disclosure and the completeness of the income tax provision. Independence issues of a self‐interest threat (importance of the client) and self‐review threat (evaluating the adequacy of the income tax provision based on tax advice provided by the firm) are explored.     

Financial leverage clienteles: Theory and evidence

This paper examines the hypothesis that investors will sort themselves out into tax-induced ‘financial leverage clienteless’ in which the common stocks of highly levered firms will be held by individuals with low personal tax rates, while the shares of firms with little or no leverage will be held by individuals with high personal tax rates. Although the idea of financial leverage clienteless has appeared in the literature before, the immediate motivation for this investigation is a recent paper by Merton Miller. In that paper he argues that under the current U.S. tax structure, personal taxes will offset corporate taxes such that in equilibrium the value of any individual firm will be independent of its use of debt financing. We extend his analysis to show specifically the way in which financial leverage clienteles would come about in his assumed tax environment. We then conduct some direct empirical tests of the leverage clientele hypothesis. These tests can also be viewed as indirect tests of Miller's new proposition on the irrelevance of capital structures. The results of the tests are mixed: The relationship between corporate leverage policies and investors' tax rates is statistically significant, but its magnitude is less than would be predicted by the theory.     

Capital Controls as Taxation Policy

This paper studies the public finance implications ofcontrols on international financial capital flows, proposinga model of controls as distortionary taxation. The model formalizesa capital controls rule that conforms real-world stylized factsand is sustainable in the long-run. Capital controls are shownto distort agents' optimal intratemporal portfolio decisionsand intertemporal consumption decisions, affecting the dynamicsof financial and real variables. We use the model to analyzethe feasible set of tax instruments—in terms of level andmix—available to the government and the complex relationshipsbetween expenditures and taxes mediated by the foreign sector.     

Fiscal incentives, corporate structure and financial aspects of treasury management operations

This paper presents evidence that tax policy affects corporate structure and intra-group financial flows, using a data base of Irish registered firms. How MNC's corporate structure and financial flows react to tax policy is complex. Fiscal incentives play a key role in Irish industrial policy. The paper examines certain financial characteristics of financial subsidiaries (those managing group treasury functions) in Ireland. These characteristics are a tax haven connection, high ratios of revenues to pre-tax profits (in some cases greater than 100%), high intra-group borrowing or lending, large gross assets (in excess of €500 million) and low or zero employment. While these firms pay corporation tax in Ireland (at reduced rates), there is considerable loss to other exchequers. The paper concludes that such tax haven type activities are unlikely to remain a viable part of future industrial policy in Ireland.     

THE VOLUNTARY PRESENTATION OF VALUE ADDED STATEMENTS IN AUSTRALIA: A POLITICAL COST PERSPECTIVE

This paper explores corporate management's incentive to voluntarily disclose Value Added Statements in their yearly financial reports. Adopting a political cost perspective, hypotheses relating Value Added Statement disclosure to labour intensity, corporate tax payments, rate of return, size and industry volatility are developed. Using a sample of Australian publicly listed companies, the results of our empirical testing support the hypotheses that the decision to voluntarily disclose Value Added Statements is related to a company's size (in terms of both market concentration and profitability), a proportional measure of tax payments and the industry to which it belongs. Labour intensity and rate of return were found to be unrelated to the voluntarily disclosure of Value Added Statements.     

Ownership concentration, voluntary disclosures and information asymmetry in New Zealand

This paper investigates the impact of different classes of ownership concentration on information asymmetry conditional upon corporate voluntary disclosures in New Zealand. The current paper attempts to extend this stream of research by incorporating three mutually exclusive ownership structures and considering the interactive relationship between such ownership structures and corporate voluntary disclosures. Results reveal that ownership concentration in general is significantly positively associated with bid-ask spreads (proxy for information asymmetry) observed around annual report release dates. This finding supports the adverse selection hypothesis and importantly this effect is found to be most pronounced for financial institutions and management-controlled ownership categories. When voluntary disclosure is taken into account, the findings demonstrate that disclosures significantly attenuate information asymmetry risk associated with ownership concentration. This effect is particularly pronounced for firms with management-controlled ownership structures. The findings highlight the importance of corporate disclosures under concentrated ownership structures especially management-controlled ownership structures in reducing information asymmetry and enhancing market efficiency in New Zealand.     

Dissemination of information for investors at corporate Web sites

We extend the limited prior research on Internet financial reporting by providing insights into dissemination of two types of financial information at corporate Web sites. One type consists of reports that already have been filed with the SEC (i.e. required filings). The second type is all other (voluntary) information for investors. In doing so we investigate whether Web-based dissemination of both types of data can be explained by theories of incentives to voluntarily disclose information via more traditional means such as meetings or conference calls with analysts. We use regression analysis to test hypotheses that link the variation in the information disseminated through corporate Web sites to factors thought to influence voluntary disclosure of financial information. Presence of required items is significantly associated only with size and a proxy for information asymmetry, while voluntary information item disclosure is associated with variables proxying for size, information asymmetry, demand for external capital, and companies’ traditional disclosure reputations. Our results confirm that incentives motivating initial voluntary disclosure also explain the subsequent dissemination of voluntary material.     

Corporate social responsibility and tax aggressiveness: An empirical analysis

This study examines the association between corporate social responsibility (CSR) and corporate tax aggressiveness. Based on a sample of 408 publicly listed Australian corporations for the 2008/2009 financial year, our regression results show that the higher the level of CSR disclosure of a corporation, the lower is the level of corporate tax aggressiveness. We find a negative and statistically significant association between CSR disclosure and tax aggressiveness which holds across a number of different regression model specifications, thus more socially responsible corporations are likely to be less tax aggressive in nature. Finally, the regression results from our additional analysis indicate that the social investment commitment and corporate and CSR strategy (including the ethics and business conduct) of a corporation are important elements of CSR activities that have a negative impact on tax aggressiveness.     

International Corporate Tax Avoidance Practices: Evidence from Australian Firms

This paper examines the international corporate tax avoidance practices of publicly listed Australian firms. Based on a hand-collected sample of 203 publicly listed Australian firms over the 2006–2009 period (812 firm-years), our regression results indicate that there are several practices Australian firms use to aggressively reduce their tax liabilities. Specifically, we find that thin capitalization, transfer pricing, income shifting, multinationality, and tax haven utilization are significantly associated with tax avoidance. In fact, based on the magnitude and significance levels of the regression coefficients in our study, thin capitalization and transfer pricing represent the primary drivers of tax avoidance, whereas income shifting and tax haven utilization are less important. Finally, our additional regression results show that tax havens are likely to be used together with thin capitalization and transfer pricing to maximize international tax avoidance opportunities via the increased complexity of transactions carried out through tax havens.     

慈善组织财务信息披露质量的影响因素与后果研究

本文调查并实证检验了慈善组织财务信息披露质量的影响因素及后果。基金会财务信息披露质量受组织复杂性和管理效率的影响,但影响公募和非公募基金会财务信息披露质量的因素存在差异。成立年限长、管理效率高、非教育助学类的公募基金会财务信息披露质量更高,收入来源分散和管理效率较高的非公募基金会财务信息披露质量更高。而且,基金会财务信息披露质量与后期捐赠收入显著正相关。本文研究证明了财务信息披露质量的确能影响捐赠者的捐赠决策,加强慈善组织财务信息披露监管显得非常必要。     

Corporate social responsibility disclosure and the cost of equity capital: The roles of stakeholder orientation and financial transparency

We examine the benefits associated with corporate social responsibility (CSR) disclosure in an international setting covering 31 countries. Using variables such as the legal status of labor protection, CSR disclosure requirements, and public awareness of and attitudes toward CSR issues, we divide countries into more and less stakeholder-oriented groups. We find a negative association between CSR disclosure and the cost of equity capital; this relationship is more pronounced in stakeholder-oriented countries. We also find evidence that financial and CSR disclosures act as substitutes for each other in reducing the cost of equity capital. This study furthers our understanding of CSR disclosure and its consequences.     

Voluntary disclosures of intangibles information by U.S.-listed Asian companies

This paper provides evidence on the voluntary disclosure of intangibles information for U.S.-listed Asian companies. The paper examines the following issues: (1) the effect of firm size, ownership concentration, proportion of foreign revenue, and leverage on voluntary disclosures of intangibles information by U.S.-listed Asian companies; and (2) the use of international standards, and the effect of domestic and global culture on those disclosures. Results indicate that larger firms, firms with greater ownership dispersion, and firms with lower leverage provide more voluntary disclosure of intangibles information. The paper also documents that companies from countries that are more individualistic provide more voluntary disclosure of intangibles information than companies from countries that are collectivist. Therefore, it appears that domestic culture does affect the voluntary disclosure of intangibles information in the U.S. This paper uses the index developed for Portuguese companies by Oliveira, Rodrigues, and Craig (2006), to measure voluntary disclosures of intangibles information thereby providing external validity to their instrument.     

金融风险的信息质量特征与我国金融会计制度改革

本文着眼于巴塞尔新资本协议第三次征求意见稿提出的金融风险监管和信息披露框架,以我国金融会计制度的国际化协调为切入点,分析了信用风险、市场风险和操作风险等金融风险的构成要素,指出现有监管信息系统和会计体系存在的问题.同时,本文还评价了我国新<金融企业会计制度>等规范对金融风险的披露和监管特征,分析了新制度对银行类上市公司所产生的影响,并提出了建立以风险计量会计披露为核心的监管体系的构想.本文最后对协同新巴塞尔协议的监管原则,建立完整的银行业信息披露框架,形成动态信息披露机制提出了一些建议.