Prepayment behavior is traditionally a significant component of the MBS pricing and hedging models. I introduce the following innovation in the prepayment behavior forecasting: (a) combine empirical and theoretical approach to the forecasting, simulating the rate path, while predicting the target rate with an empirical model (b) offer two methods for target interest rate forecasting including basic regression analysis with macro-variables and contemporary Natural Language Processing (NLP) based on Federal Open Market Committee (FOMC) announcements. I find that forecasting the mortgage rates with macro-variables is plausible in 1,3-,6-,9- and 12-month periods. I further establish methodology for the interest rate path and prepayment rates forecasting in falling rate environment and rising rate environment. Interestingly, results suggest high probability of loan fallout in the rising rate environment due to rate fluctuations along its path. The results also suggest that borrowers make interest rate-related prepayment decisions rather early in the period of the analysis.
The United States has a severe shortage of qualified accountants. This crisis did not arise overnight; moreover, convincing data is needed to motivate stakeholders to make necessary changes. One motivating factor is to showcase how professional license and an increase in accounting skills could increase employee compensation. Using human capital theory, this study examined the relationships among accounting skill sets, professional licenses, and current salaries. A quantitative design study was used to gather evidence from various accounting professionals across the state of Hawaii. With a sample size of 206, results from regression analysis indicated that a professional’s work experience, working hours, and licensures all positively related to salary. Further analysis disclosed that the state-level cost-of-living index has a significant relationship with accountant salaries. Nevertheless, Hawaii’s average accountant salary is much lower than the predicted value. The results suggest that accounting professionals should emphasize the importance of developing skills and obtaining licensure to support salary increases, especially in areas with a high cost of living.
This study examines audit pricing during the global financial crisis (GFC) to assess whether fee pressures affected the effort auditors exerted on debt accounts. Analyses are conducted using a sample of 22,704 firm-year observations and audit fee level regressions. The results show that on average there is no significant increase in leverage-related effort and fees during this period. However, additional analyses show that non-Big4 increased leverage-related audit effort and fees during the GFC, whereas Big4 did the opposite. Further tests show that the results are pronounced in settings of low fee pressure, and muted when there is significant fee pressure. The inferences are robust to including control variables previously shown to predict audit fees and to other regression specifications. Collectively, the findings contribute to understanding auditor behavior during the GFC and have implications for how audit firms allocate effort during recessionary periods.
This literature review examines how financial reporting quality affects U.S. banks’ credit allocation to small businesses, focusing on loan approval and interest rate setting in the post-2020 lending environment. It addresses the following research question: how does financial reporting quality affect bank credit approval and interest rates for small U.S. businesses? Synthesizing accounting and finance research, this review argues that higher financial reporting quality reduces lender uncertainty and monitoring costs, increasing approval likelihood and lowering loan pricing, effects that likely amplified under tightening in the U.S. since 2020 as banks reverted to stricter screening following pandemic-era interventions.
The study investigates how asset quality affects financial stability and long-term economic growth by comparing emerging and developed economies. It examines whether weak asset quality impacts these groups differently and identifies channels through which deteriorating bank assets constrain broader economic performance. To address endogeneity and capture time-lagged effects, the study analyzes data from 40 countries between 2014 and 2024 using panel analysis supported by a univariate time-series ARDL model. Asset quality is measured through indicators such as non-performing loan ratios, loan-loss allowances, and capital ratios, while financial stability is assessed using systemic risk indicators and resilience to economic stress. Findings show that poor asset quality significantly weakens financial stability in both emerging and developed economies, though the effects are more severe and persistent in emerging markets. This disparity is largely attributed to weaker regulatory frameworks, limited financial diversification, and greater exposure to external shocks. The study concludes that asset quality is a critical determinant of banking sector health and economic performance, highlighting the need for stronger macroprudential frameworks and institutional capacity to safeguard financial stability and support sustainable growth.
The purpose of this study is to draw inferences about lenders’ demand for lease accounting rules in light of decades-long debates regarding financial reporting for leases. I provide evidence that lenders adjust lease-related debt covenants following borrowers’ adoption of Statement of Financial Accounting Standards 13: Accounting for Leases (SFAS 13). Using a hand-collected sample of lending agreements, I find that lenders are significantly less likely to inhibit leasing activity via lease restrictions after SFAS 13 adoption. I also document that in the post-adoption period, lenders are significantly more likely to modify debt covenants to capitalize operating leases consistent with the argument that lease transactions evolved to fit bright-line thresholds. The findings suggest that lenders adapt debt covenant definitions to changes in accounting standards and that lenders adapt debt covenant definitions to changes in borrowers’ financial reporting incentives.
Ethiopia must rapidly modernize and transform its food systems to address population growth, a rising youth cohort, environmental degradation, climate change, and the increasing demand for diverse, nutrient-dense diets. The central challenge is how to transition from traditional, low-productivity agriculture to a dynamic rural economy that improves livelihoods at scale. International experience shows that no country has achieved such transformation without sustained public investment. Strategic public finance is essential to catalyze mechanization, technology adoption, irrigation expansion, input access, and rural enterprise development, while also de-risking agricultural investment. This study proposes four priority actions. First, establish a dedicated public agricultural bank focused on micro-credit for smallholders and rural enterprises. Second, develop a robust legal and regulatory framework for agricultural insurance that enables complementary roles for public and private actors. Third, create a specialized agro-finance coordination and implementation unit within the Ministry of Agriculture. Fourth, convene a multi-stakeholder platform to align financial institutions and sector actors. Well-designed credit and insurance systems will expand access to finance, reduce vulnerability, and accelerate structural transformation.
This paper explores the potential complementarity between foreign portfolio investment (FPI) and foreign direct investment (FDI) in the wake of the recent changes in the international business and investment landscape over the last decade. To account for endogeneity, a two-stage least square regression is used to analyze data from forty-five (45) countries spanning the period of 2010–2020. Preliminary results indicate that FDI outflow has significant predictive power in explaining FPI outflow and vice versa. However, FPI was found to have a greater explanatory power on FDI outflow. This paper contributes recent empirical evidence to the literature on the relationship between FPI and FDI using data from developed, emerging and frontier markets. The empirical findings of the paper have valuable policy implications.
This study examines the effects of the Jumpstart Our Business Startups (JOBS) Act of 2012 on initial public offering (IPO) underpricing and stock performance. When firms transition from private to public ownership, many rely on underwriters to reduce market risk, often resulting in underpricing defined as the difference between the IPO offering price and the first day closing price. The JOBS Act was enacted to expand capital access for smaller firms, yet prior research provides mixed evidence regarding its influence on underpricing. Using quantitative analyses, this study evaluates the Act’s market-wide impact and its effects across industries classified by Standard Industrial Classification (SIC) codes. Results indicate no significant differences in underpricing between pre- and post-JOBS Act periods overall, although one industry exhibited statistically significant changes. Analysis of variance comparisons across industries were not significant, suggesting limited industry-level variation. These findings provide clarification for economic theory related to IPO pricing and offer insight into potential public policy implications associated with the JOBS Act.
We examine whether U.S. stock market returns systematically vary with Democratic and Republican administrations. Our analysis covers commonly studied U.S. periods and expands to a historical and international context by incorporating data from 14 additional countries. While certain sub-periods in the U.S. exhibit higher returns under Democratic leadership, the overall effect is statistically insignificant and not consistently observed across countries. The findings suggest that the so-called “presidential puzzle” lacks robustness and generalizability. From both academic and practical investment standpoints, political party control does not provide reliable predictive power for overall stock market performance, indicating limited value for long-term investment strategy.
This paper examines how COVID-19 affects retirement preparation through employer-sponsored retirement plans, as well as the moderating role of COVID-19’s impact on various socioeconomic and demographic variables related to employee participation in and contributions to employer-sponsored retirement plans. Our results indicate that COVID-19 has a significant negative effect on participation rates; however, once employees participate, they tend to contribute more of their percent of pay to employer-sponsored retirement plans during and after COVID-19. The results are mixed in terms of the moderating effects of COVID-19 on the previously documented socioeconomic and demographic variables.
Artificial intelligence (AI) and machine learning have in the last few years reshaped business and knowledge-based professions. The auditing profession is no different. This study investigates AI’s background, uses, ethical issues, and future in attestation engagements. We begin by exploring its origins, development, and underlying technology, then examine its applications in the auditing process. We also highlight the critical challenges that AI faces, including ethical concerns, data biases, and safety issues. Finally, we discuss the integration of AI across the different stages of an audit examination and its impact on the engagement's effectiveness and efficiency. This study offers valuable insights to accounting practitioners, researchers, developers, and other stakeholders interested in the effect of AI on business processes and the attestation function.
This study features the redesign of an accounting college program using high-impact teaching practices (HIPs) to engage, attract, and retain students. This qualitative case study highlights HIPs’ activities since 2017, which include increasing industry involvement, embedding practitioner-led courses, creating orientations, and developing a course to better prepare certified public accountant (CPA) candidates. The results from this case study indicate positive impacts on program-level enrollment and retention for the public four-year institution. This study illustrates how the accounting program redesign favorably impacted the institution, its accounting program, and students and professionals in the community.
This study examines whether the rounding phenomenon of R&D expense varies by (1) stock exchange listing, (2) audit quality, (3) firm profitability, and (4) industry. It finds that (1) similar to the firms listed in the major U.S. stock market, firms listed in the OTC market also manipulate reported R&D expenses, and the extent of manipulation is more severe compared to the major stock exchanges; (2) although firms audited by the Big 4 auditors and non-Big 4 auditors both manipulate R&D expenses, the extent of manipulation is more severe in firms audited by non-Big 4 auditors; (3) profit firms are more likely to manipulate R&D expense, while loss firms are more likely to manipulate revenues; and (4) rounding manipulation of reported R&D expense is prevalent in some industries, but not in others. Results in this study have important practical implications for investors, practitioners, and regulators, as they highlight the importance of regulation, market oversight and corporate governance in mitigating firms’ rounding behavior.
The study is grounded in the fact that this crisis disrupted the banking system worldwide, causing several major financial institutions, such as commercial banks, mortgage firms, insurance agencies, and credit unions, to fail. The GFC had extensive effects on the global economy, causing widespread unemployment, home foreclosures, and significant changes in the financial markets. The crisis was the worst since the Great Depression of the 1930s. During the financial crisis between 2008 and 2009, the exchange rate depreciated across countries due to a lack of investor confidence. Some economic experts have stated that during the financial crisis, the exchange rate lost 40% of the overall currency value of individual countries. Large banks are better prepared to restrict loans to high-risk borrowers. Unfortunately, these measures did not apply to smaller banks and every nation. Following the GFC, central bank leaders worldwide implemented a zero-interest rate policy (ZIRP) for their most valuable customer accounts. This strategy generated more than $ 10.5 trillion. The strategy created artificial credit, which raises the question of whether it will help sustain economic prosperity in the future.
This study examines the readiness of accounting programs for the CPA Evolution Model Curriculum (EMC), specifically for modules covering technology and accounting analytics. A descriptive design was used to analyze course catalogs and programs from public schools in the NE region of the USA. The findings are mixed from Low to High coverage. Low coverage may reduce learning and preparedness for the CPA exam or for job opportunities and cause greater exertion in the learning/teaching process. The results of this study can help educators with revisions to accounting programs that better align with the CPA EMC and promote program competency.
Purpose – This study aims to examine and analyze the relationship between Green Accounting, Profitability and Environmental Performance on Sustainable Development Goals. Design/methodology/approach – This study uses quantitative data, with a sample of raw material companies listed on the Indonesia Stock Exchange (IDX) for the period 2022-2024. The analysis technique used to test the hypothesis is multiple regression analysis using e-views 9 software. Findings – The results of this study show that in the Green Accounting variable has a positive and statistically insignificant effect on Sustainable Development Goals, Profitability has a positive and statistically significant effect on Sustainable Development Goals, and Environmental Performance has a positive and statistically insignificant effect on Sustainable Development Goals. Research limitations/implications – This study has limitations related to the use of secondary data that depend on the completeness of corporate reports, resulting in a limited sample size. In addition, differences in variable measurement approaches and a relatively short observation period (2022–2024) restrict the ability to capture long-term trends. And future studies are recommended to incorporate additional variables related to SDG achievement, apply alternative measurement approaches, and extend the research scope to industries beyond the raw materials sector, such as financial services, infrastructure, and technology and telecommunications. JEL : M41, Q01, Q56
This systematic review synthesizes recent research about gamification in accounting education, where student disengagement and motivational obstacles frequently hinder learning. This analysis synthesizes empirical research demonstrating how gamified elements can improve student motivation, engagement, and, in numerous instances, learning results. Self-Determination Theory and Problem-Based Learning frameworks explain gamification's ability to meet students' demands for autonomy, competence, and relatedness within accounting contexts. Although most research indicates favorable effects on exam scores, problem-solving abilities, and enjoyment, conflicting results highlight the necessity for meticulous design and alignment with learning objectives. Additionally, resource limitations, technical obstacles, and student diversity present tangible impediments to the efficient implementation of gamification. This paper outlines the primary advantages of gamified accounting education, specifies circumstances in which gamification may not enhance performance, and offers suggestions to implement or improve game-based methodologies. This study identifies critical deficiencies, providing a framework to direct future research and improve the educational efficacy of gamification in accounting instruction.
This study examines the impact of related party transactions (RPTs) on the cost of capital among KOSPI and KOSDAQ-listed firms in South Korea. Using 14,277 firm-year observations from 2012 to 2020, we employ multivariate regression analysis to examine the relationship between RPT intensity and the weighted average cost of capital (WACC). We find a robust and positive association between RPT intensity and WACC, suggesting that capital markets perceive extensive intra-group transactions as a governance risk and a source of increased information asymmetry. This perception leads to a higher rate of returns by investors, thereby increasing the cost of both equity and debt financing. Our findings contribute to the literature on corporate governance and capital market efficiency by highlighting the role of RPTs as a key determinant of financing costs. These insights underscore the importance of implementing stronger disclosure requirements and enhancing monitoring mechanisms to mitigate potential agency problems arising from intra-group transactions in emerging markets.
This study examines the effectiveness of financial literacy event engagement by extending prior literature findings that indicate lower levels of financial literacy among non-white student populations. The authors created a campus-wide financial literacy fair, collaborating with the university's branding department to theme the event accordingly. At the fair, students were required to participate in a panel session, where they could ask industry experts questions about financial decisions, and then play financial-themed games led by their peers. Students earned tickets for prizes and free food by completing activities. Students could choose to opt in to having their demographic information accessed so the authors could analyze the demographics of the participants. Working with the institutional research office, the authors examined the demographics of student participants compared to the overall student population. The results suggest that incorporating fun into financial literacy event branding may attract populations in greater need of the content and resources provided.
