Accounting regulations,enforcement, and stock price crash risk: Global evidence in the banking industry

This study uses the banking industry as a unique testing setting to examine the impact of accounting and enforcement regulations on stock price crash risk. We find that stocks are less likely to crash in countries with stricter accounting regulations and enforcement standards. More importantly, we provide evidence that the impact of accounting regulations is more significant in countries with stricter enforcement standards, suggesting that enforcement mechanisms and accounting regulations are complementary. We find that the main channels for accounting regulations and enforcement standards to affect stock price crash risk are regulations that strengthen information disclosure and improve the effects of direct supervision and external auditors. Our findings are robust after we include more control variables, employ regional regulatory developments as instrumental variables, conduct change regressions, use alternative measures of enforcement, and estimate in various subsamples. Our study has policy implications for how to design accounting regulations and enforcement mechanisms in a more effective manner.     

Accounting standards and value relevance of financial statements: An international analysis

Using 17,743 firm-year observations of industrial companies in 21 countries from 1991 to 1997, this paper finds that the use of accrual accounting (versus cash accounting) negatively affects the value relevance of financial statements in countries with weak shareholder protection. This negative effect, however, does not exist in countries with strong shareholder protection. These findings are consistent with the belief that shareholder protection improves the effectiveness of accrual accounting, and suggest the importance of considering shareholder protection when formulating accounting policies related to accruals.     

Goodwill Accounting in Selected Countries and the Harmonization of International Accounting Standards

Economic and financial markets interpenetrate and national economies are increasingly interdependent. This results in a growing need for comparability of accounting procedures internationally. Accounting for goodwill illustrates this phenomenon. By specifying the recommended asset treatment for purchased, positive goodwill, and the five-year amortization period, IASC has taken a significant step towards harmonization of goodwill accounting. As noted in the article, however, the implications for consolidated income may be quite drastic. This is especially so with respect to the implications of the revised IAS 22 (following IAS ED 32) for potential leveraged corporate buy-outs.     

Examining the differences between United States Generally Accepted Accounting Principles (U.S. GAAP) and International Accounting Standards (IAS): implications for the harmonization of accounting standards

Current trends indicate continued movement towards the harmonization of accounting standards, but not without difficulty and concern. At times, the political and financial market pressure, push the movement in opposite directions. The paper discusses the conceptual framework used in establishing Global Generally Accepted Accounting Principles (GAAP) (International Accounting Standards, IAS) and U.S. GAAP. Numerous transactional examples are illustrated under both Global GAAP and U.S. GAAP treatment. Several country specific references are presented demonstrating the difficulty in achieving harmonization. Implications for harmonization of accounting standards include arguments “for” and “against” Global GAAP.     

Corporate Lobbying on Accounting Standards: Methods, Timing and Perceived Effectiveness

There is a long-standing concern in the literature about the potential importance of non-observable forms of lobbying that may be used by corporate managers to influence accounting standard setting bodies. To date, however, no study has documented their nature or their volume. This study provides such evidence in the context of the U.K.'s Accounting Standards Board (ASB) standard setting process for the period 1991–96. It also provides evidence with respect to the timing at which lobbying activity takes place and its perceived effectiveness by corporate managers. The findings suggest that companies use a variety of lobbying methods, including appeals to their auditors and private meetings with ASB members and staff. Importantly, however, the use of these methods is significantly associated with the use of comment letters; companies which submit comment letters are much more likely to use other methods than companies which do not. Other findings suggest that more companies lobby during the stages of the ASB process at which public consultation takes place (e.g., exposure period of a discussion paper) than at the earlier stages of the process (e.g., agenda formation) which are considered in the literature as the stages at which lobbying can be most effective. With respect to the perceived effectiveness of lobbying, companies which lobbied the ASB considered lobbying to be more effective than companies which did not.     

International Accounting Standards: An Alternative Rationale

International aspects of financial reporting have begun to receive an increasing amount of attention by a range of organizations. There is a need then, to appraise critically the performance and the underlying rationale of those agencies responsible for influencing international practices. Identification and appraisal of the rationale underlying the existence of those agencies is a necessary step in determining their potential for achieving the objectives which they have been set. This paper examines the rationale behind one of these agencies, the International Accounting Standards Committee (IASC, 1977). Unlike many others, the paper does not attempt to explain why we should have an organization such as the IASC and the standards it produces. Rather, it represents an attempt to explain why we do have an organization such as the IASC. To that end, an alternative rationale is suggested for the output of the IASC, based on theories of professional selfinterest, agency, and property rights. It is argued that that rationale is likely to have significantly greater explanatory power in respect of the present output produced by the IASC than those traditionally presented.     

Cross-border regulatory enforcement and corporate voluntary disclosure

In this study, we find that foreign firms cross-listed in the US issue significantly more and better-quality management earnings forecasts after their home countries sign the Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (MMoU), a nonbinding arrangement established by the International Organization of Securities Commissions to enhance the cross-border enforcement of securities laws. Specifically, we find that after the MMoU, relative to their domestic counterparts in the US, foreign firms cross-listed in the US are not only more likely to issue management earnings forecasts but also issue them more frequently. They also tend to issue better-quality earnings forecasts, as measured by lower surprise, higher precision, greater timeliness, more disaggregation, lower optimism and fewer errors. We find that the observed effects of the MMoU signing are stronger for cross-listed firms from countries with weaker institutional environments, resulting in greater enforcement concerns after the MMoU, and for firms with less foreign institutional ownership before the MMoU. Collectively, our findings support the conjecture that after a US-listed foreign firm's home country enters the MMoU, the firm has more incentives to engage in voluntary disclosure due to greater concerns about regulatory enforcement and increased information demand from investors.     

Public Choice and Accounting Standard Setting in New Zealand: An Exploratory Study

Recent studies in accounting regulation have used either the capture argument or the pluralistic notion to describe the enactment of accounting regulations. This paper explores the nature of the impact of public choice in accounting standard setting in New Zealand using the pluralistic notion. To provide an insight into the standard-setting process, this paper involves an examination of the establishment, withdrawal and re-establishment of New Zealand's most controversial standard after current cost accounting — the standard on investment property accounting (SSAP 17). The investigation considers the nature of public choice in the agenda entrance, demand and supply factors influencing standard setting in New Zealand. The results indicate that the New Zealand accounting standard-setting process is pluralistic in a limited way. Like most other English-speaking countries, the scope of participation for certain groups has been institutionalized on the supply side by way of membership of standard-setting committees of the New Zealand Society of Accountants. On the demand side, however, consumers of accounting have been provided with only limited scope for participating in the formal process of standard setting. Nevertheless, other means (i.e., exogenous and informal ones) may be used to influence the process. Overall, from both the demand and supply perspectives of regulation, the Big-8 accounting firms (as they were previously known) followed by the preparers of financial statements, seem to have greater participatory capacity in the New Zealand standard-setting process.     

Country-level Accounting Enforcement and IPO Underpricing

Using a sample of up to 2,503 initial public offerings (IPOs) in 32 countries from 2011–2017, we predict and find that higher levels of country-level accounting enforcement are associated with lower levels of IPO underpricing. IPOs in countries with a relatively low accounting enforcement score (second quintile) exhibit a mean underpricing of 19%, whereas the mean underpricing amounts to just 9% in countries with a relatively high score (fourth quintile). The results remain qualitatively the same when we employ a multi-level model or a difference-in-difference design. In countries that substantially strengthened their accounting enforcement in the 2003–2009 period, the level of IPO underpricing decreased significantly. We show that accounting enforcement matters for the cost of going public.     

Acceptance of Accounting Standards

When financial statements are audited, a client and auditor may disagree about an accounting disclosure. While the disclosure of such a disagreement may increase the information content of a statement it may also be socially undesirable in that it signals a difference in views about the state of the reporting enterprise. This in turn may increase agency costs and introduce uncertainty about the state of the firm. In this paper we focus on public policy implications concerning auditor-client disagreements and examine the ex ante probability that such cases will occur. We find that accounting standards that allow two accounting options may be optimal in reducing frequency of disagreements among auditors and between standard-setters and their constituencies, and possibly also between clients and their auditors. The New Zealand model of compliance with accounting standards may be preferable to that practiced in the US.     

The Equity Accounting Saga in Australia: Cyclical Standard Setting

Equity accounting in Australia has had a long, chequered history. This article examines that history by reference to a succession of six Exposure Drafts, one Statement of Accounting Practice and two Standards issued between 1968 and 1995. We adapt Nobes' (1991, 1992a. 1992b) cycle model of regulation to explain variation in 'standardization' across these documents. Nobes defined 'standardization' to mean the restriction of choice in accounting methods but we modify the concept to allow for measurement rule 'improvements' and changes in required disclosure levels. Nobes' cycle model has four stages: a starting point of varied practice: energy inputs, often crises, drawing attention to the issue at hand: forces opposing and forces in favour of standardization. A cycle- like pattern of variation in standardization emerges in the present context. Potential shortcomings of the cycle model are addressed, including Skerratt and Whittington's (1992) criticisms of Nobes' cycle model. The article extends the literature with respect to a cyclical explanation of the standard setting process. The cycle pattern evident here reflects a slow and incomplete resolution of various conceptual and legal difficulties in regulating equity accounting in Australia.     

Cultural differences and judgment in financial reporting standards

This instructional resource provides you with the opportunity to explore how cultural differences can impact financial reporting outcomes through the judgments accountants make when interpreting and applying accounting standards. It is intended to draw your attention and awareness to culture’s impact on financial reporting judgments since financial reporting is becoming increasingly international in scope. The instructional resource begins by discussing financial reporting standards and cultural differences and then moves into presenting three accounting scenarios. The three scenarios (lease classification, contingent liability, and revenue recognition) examine how applying accounting standards requires judgment and how cultural differences can influence accountants’ judgments and the resulting financial reporting outcomes. In each scenario, you have the opportunity to identify and consider how different cultural dimensions could impact cross-cultural financial reporting outcomes. The instructional resource content allows you to consider the challenges in using and applying a uniform set of global accounting standards that require judgment across cultures.     

The impact of the new Accounting Standards for Business Enterprises (ASBE) on financial results of mainland Chinese listed companies

Effective 1st January 2007, 38 new Accounting Standards for Business Enterprises (ASBE) had become applicable to listed companies in mainland China. Research based on these latest standards will help us understand the current accounting harmonisation process in China. Previous studies, though rather scarce, had compared financial statements of companies simultaneously being listed on the mainland and Hong Kong. However, the very recent impact of the new ASBE has not been taken into account. Therefore, the present study focuses on domestic Chinese companies after implementation of the new ASBE. The financial figures of each item reported under the old Chinese Accounting Rules and Regulations and the new ASBE were collected in pairs and were analysed. Except for the test results on total assets and shareholders' equity, the other results revealed no significant differences between the paired figures of net assets per share, operating revenue, profit before tax, net profit, net profit after extraordinary gains and losses, basic earnings per share, net cash flow from operating activities and the per share value.     

The impact of tax enforcement on corporate investment efficiency: evidence from the tax administration information system

Information technology is essential in tax enforcement. This study found that stronger tax enforcement after the tax administration information system reform improved corporate investment efficiency by reducing excessive investment expenditures. The effect is more significant under higher local government fiscal pressure, poorer external information environments, weaker external corporate governance, and stronger tax avoidance motivation. The main mechanism is based on the quality of the accounting information. This study enriches the literature on the economic consequences of tax enforcement and adds investment efficiency as an influential factor, which provides implications for international governments to use information technology to strengthen tax enforcement.     

Agenda formation and accounting standards setting: lessons from the standards setters

There are many studies on lobbying of accounting standards, but the technical agenda of regulators is taken as ‘given’ and why a particular topic was admitted to the agenda is not investigated. Agenda formation is important as control of the agenda determines which topics get regulated and the form of the regulatory response. A few studies have explored agenda formation across regulatory institutions but are largely silent on the role of individual decision makers and technical staff. However, the standards setters have sought to explain their agenda processes. This paper reviews statements by the members of accounting standards setting agencies about their experiences of agenda formation. It identifies insights gained from standard setters and makes some suggestions for future research.     

《企业所得税法》与《企业会计准则》的主要差异

《中华人民共和国企业所得税法》(以下简称《企业所得税法》)与《企业会计准则》(以下简称"会计准则")在目标、原则、核算结果等方面的不同,导致《企业所得税法》与会计准则存在差异。这些差异具体表现在收入确认、资产减值准备的处理、公允价值的使用、政府补助、非货币性交易、借款费用、长期股权投资等方面。这些差异应该在纳税申报时根据《企业所得税法》的规定进行调整。     

Politics, Processes and the Future of Australian Accounting Standards

The perspective of public interest and interest group theories of regulation is adopted to consider the future of Australian accounting standards following major reforms proposed by the Australian Commonwealth government as part of its 1997 Corporate Law Economic Reform Program (CLERP). Interest groups in the Australian environment are identified. Their lobbying had influenced the initial proposals; and their reactions when the CLERP proposals were published resulted in substantial modifications to the CLERP proposals, which had initially recommendedthat International Accounting Standards (IASs) be adopted as national standards from 1 January 1999.
The role of accounting standards and the structure of standard setting are explored. The political nature of standard setting is illustrated through a review of the CLERP proposals, submissions of various interest groups and the government's responses to them. The central arguments are that key assumptions underlying the CLERP proposals are flawed, and that the CLERP proposals could not achieve the outcomes desired of them.
It seems inevitable, however, that international standards eventually will supplant domestic standards. In the longer term, Australian standard setters seem destined to have a diminished role in the international standard setting arena.     

《企业所得税法》与《企业会计准则》的基础性差异分析

本文从适用范围、基本假设、会计基础等方面,对《中华人民共和国企业所得税法》与《企业会计准则——基本准则》的基础性差异进行了较为全面的分析。认识与把握这些差异,对于贯彻实施《企业所得税法》,正确履行税款征收与缴纳、纳税申报、纳税调整和加强企业所得税管理都具有一定的理论与实践意义。     

From Accounting to “Forecounting”*

Using Ross Skinner's 1995 CA Magazine article, “Judgment in Jeopardy", as a stepping stone, we revisit the meaning of professional judgment in accounting in light of developments in standard setting, financial markets, and business operations that have taken place over the past two decades. We argue that it is time to change the view that accountants' professional judgment is the application of accounting‐based knowledge and experience in the selection of an appropriate accounting method. Accountants now face a standard‐setting context that emphasizes the estimation of future cash flows as well as new business and financial realities. This context implies that, in exercising their professional judgment to choose between forecast alternatives, accountants must rely on knowledge and experience from other disciplines (even though this is not well integrated into accounting). Hence, accounting must evolve from its traditional stewardship role to the new role of “forecount‐ing” (the estimation of future cash flows). The implications as well as the challenges of that evolution are discussed.