Enhancing competitiveness is a priority for nations seeking to promote economic growth. One of the critical drivers of a nation's sustainable competitiveness is financial system development. However, whether joining a currency union has a positive impact on a country's financial system development requires further investigation. This study evaluates the impact of euro adoption on Slovakia's financial system development using a synthetic control method with lasso regularization methodology. A comprehensive index that captures the depth, access, and efficiency of financial institutions and markets is used to measure financial system development. Based on a donor pool composed of non-euro OECD countries, the analysis constructs a synthetic counterfactual of Slovakia's financial system development had it not adopted the euro in 2009. This enables a comparison between real and synthetic Slovakia. The results show that Slovakia's transition to the common currency contributed positively to the development of its financial system. The findings show that from 2010 -2021, Slovakia realized a 19 percent increase in its financial system development relative to the counterfactual after adopting the euro. Robustness checks using a different donor pool and alternative specification with additional covariates produce varied, but still positive, effects confirming the study's main findings.

Sales surprise (SS) is a significant factor in a firm’s inventory turnover (ITO). In order to estimate SS, it is necessary to select an appropriate approach of sales forecasting. The current study’s main purpose is to examine the effects of SS on ITO. The data was gained from the Albertina database from 2017 to 2021, for two sectors: manufacturing and construction. The Czech firms’ panel data was used to estimate sales forecasts by four different methods: (i) sales linear forecast (SLF), (ii) sales change (SCH), (iii) sales growth (SG), and (iv) sales forecast random walk (SRW). The two most accurate methods were chosen to calculate SS: sales surprise linear forecast (SSLF) and sales surprise random walk (SSRW). After estimating four different regression models by employing the fixed-effect panel model, the results show that SSRW is positively correlated with ITO. The sales surprise linear forecast (SSLF) is found to be insignificant. Capital intensity (CI) has a positive impact on ITO; on the other hand, the relationship between gross margin (GMN) and ITO is negative. This is the first research in which SS is measured by four different techniques, and then the two most accurate techniques are used to examine the effects of SS on ITO. Therefore, the findings of the current research will be fruitful for managers, academics, policymakers, and directors of firms to estimate SS using different techniques and to understand the effects of SS on ITO. Hence, the research will be useful to the firms’ management in many contexts.

This study examines the impact of taxes on the incentive to work under flat and progressive tax systems. Of particular interest are the changes from progressive-to-flat and flat-to-progressive tax conditions. To measure the impact of taxes on the incentive to work under both scenarios, we relate hours worked with the effective marginal tax rates. Using national accounts data and the Prescott's (2004) labor market model, Slovakian work hours were examined at points in time around the adoption of a flat tax system in 2004 and a progressive tax system in 2013. In Slovakia, there was a transition from a progressive to a flat tax system in 2004, followed by a reversion back to a progressive tax system in 2013. Theoretically, the incentive to work increases when a progressive tax structure is replaced with a flat tax, while the incentive to work decreases in the opposite case. However, the findings show that when Slovakia replaced its progressive tax with a flat one, the actual hours worked decreased, contrary to predictions. When the flat tax was abandoned in favor of a progressive tax structure, hours worked also decreased, but less than when the flat tax was introduced, and significantly less than predicted by the model.

Previous research on the relation between wealth and life satisfaction has found conflicting results. The current study aims to bring a “wave formation” framework to the subjective well-being literature to understand the features of non-linearity in the income-life satisfaction association. The study compares individuals’ life satisfaction at various wealth levels, moving their way up or down through the income stratum. We hypothesize that when someone with increasing income reaches the top of one stratum their satisfaction is high, but when they move from the top of one stratum to the bottom of the next their satisfaction declines, leading to a wave pattern. Using a cross-sectional design for the dataset of 1654 respondents in Azerbaijan, we apply the Ordered Logit method to identify the income borders of ups-and-downs in the “wave." Threshold levels for each wave element are then calculated separately for males and females after controlling for a set of individual-specific factors. Empirical results support the hypothesis, with life satisfaction following a wave formation. The research findings have implications for policymakers and future research.

This paper examines the relationship between life satisfaction (measured as the self-reported satisfaction of each individual with their past life and goal achievements) and tax morale (measured as the likelihood of an individual’s intrinsic motivation to pay taxes). Using a large-scale survey dataset from Azerbaijan, it is documented that life satisfaction is positively associated with tax morale. Life satisfaction plays a significant role in increasing tax compliance practices. It is also important to note that there is a positive mediating effect of life satisfaction on tax morale through financial satisfaction and institutional trust. In line with our hypotheses, the results of a series of analyses remain robust to different models. These results imply that a higher level of life satisfaction may increase the proportion of individuals who report the highest tax morale in Azerbaijan. Our findings have policy implications for Azerbaijan and other governments aiming to alleviate high levels of tax evasion.

This paper examines the effectiveness of implementing carbon taxes to reduce carbon dioxide emissions from transport. Using the system Generalized Method of Moments estimator, we utilize cross-country analysis for the first time to study the impact of carbon taxes on the composition of petrol versus diesel passenger cars sold in 17 countries over the period 2013–2017. The results suggest that increasing carbon taxes affects consumer behavior, causing a significant shift from petrol to diesel fuel vehicles, controlling for factors such as the price of passenger cars, fuel price, interest rates, income level, population density, inflation, and vehicle stock.

The automotive industry plays a key role in the European economy. In this paper, we determine which macro and socio-economic indicators have significant predictive power on car registrations - a proxy to automotive sector performance - across European countries. Contrary to the current literature which mainly focuses on long-term forecasting, we built our models on the highly seasonal monthly data of a medium-term period to make short-term forecasts. Our approach utilises predictors identified by the literature review. Presented models are built on the Vector Autoregressive models and are accompanied by formal tests, such as the Granger causality test. We have found mixed evidence about the importance of selected predictors as no general patterns were identified. We have found that the most useful predictor is the total number of registrations from the strongest export partner and past registration figures in the analysed country. Car registrations are virtually inelastic to the change of public transportation costs, fuel prices and short-term interest rates offered to households in most of the analysed countries. We have received mixed results about household sentiment across countries. Countries with a higher level of GDP are more sensitive to the changes in unemployment.

This study examines how tax progressivity affects entrepreneurial dynamics in 18 countries. The results show that increased downside progressivity has a positive influence on the transition rate from nascent entrepreneurship to established business ownership. In addition, only downside progressivity calculated using marginal tax rates is related to the transition ratio, implying that it is marginal tax rates, and not average tax rates, that are used in the entrepreneurial decision-making process. This paper contributes to our understanding of entrepreneurial dynamics and the effect of tax progressivity on the transition from nascent entrepreneurship to established business ownership.

This paper considers the importance of the automobile industry in the global economic environment and sheds additional insight on the forecasting of passenger car sales. The study uses data from the automotive sectors in 38 countries, which account for more than 80% of passenger cars in use worldwide for testing the accuracy of a general framework that uses income and other country specific factors to forecast passenger cars sales for short- and mid-term periods. The results indicate that this framework can be applied to a wide range markets, but its performance is primarily influenced by income levels in these markets. Tested and discussed are not only income as the main predictor of sales, but also the effects of other factors such as vehicle ownership level on passenger car sales projections. Income is shown to play both a determining role and a moderating role that affects other variables' impact on passenger car sales.

How to cite this paper: Dehning, B., Sinha, C., & Sinha, P. (2017). Change in earnings quality surrounding ERP implementation. Corporate Ownership & Control, 15(1), 8-17. http://doi.org/10.22495/cocv15i1art1 Copyright © 2017 by Virtus Interpress All rights reserved The Creative Commons AttributionNonCommercial 4.0 International License (CC BY-NC 4.0) will be activated starting from September, 2018 followed by transfer of the copyright to

Using country-level data from 2000-2013, we test the relationship between life satisfaction (measured as how people evaluate their life as a whole rather than their current feelings) and the motivation to work (measured as aggregate hours of work). Our hypothesis is that even after controlling for average labor income tax rates in countries with high and low average hours worked, there is a significant negative association between the motivation to work and life satisfaction. The main findings of this paper are that the increase in the motivation to work per employee comes at the expense of life satisfaction, and differences in average tax rates on labor income cannot account for differences in time allocation. Once life satisfaction is included, the hypotheses of previous neoclassical economic studies are almost irrelevant in determining the response of market hours to higher average tax rates on labor income. In line with our assumption, we find a negative relationship between life satisfaction and the motivation to work in the cross-country examinations. In countries with the highest hours worked (Hungary, Estonia), wealth is generally preferred to leisure and in countries with the lowest hours worked (France, Germany), leisure is preferred to wealth.

This research investigates the effects of income taxation on the motivation to work by employing a survey method for the Azerbaijan population. The two research questions of interest are, if subjects consider income taxes when deciding how many hours to work and how subjects would react to a hypothetical 5% income tax rate increase. Also examined are the responses to these questions between subjects with different socio-economic characteristics. Examining cross-sectional data of 326 respondents reveals that income taxes do not influence Azerbaijan labour market participants’ motivation to work, regardless of their socio-economic characteristics. Empirical results indicate that reactions to hypothetical income tax rate increases show that the strength of response differs significantly across gender, age, marital status, field of employment, and income level. However, there are no significant results for differences in gender and after-tax wages. Our study contributes to the labour supply literature with the theory that after an income tax is imposed, both the average price and the average utility of leisure is greater for high wage earners than low wage earners.

Enterprise Resource Planning (ERP) systems have become widely adopted by companies to fulfil various purposes. ERP systems make information flow more transparent and timelier. From a capital markets perspective, an interesting question is whether the implementation of ERP systems reduces earnings management. One argument is that it will not make any difference for managers who are intent on managing earnings. In this case, managers will find ways to circumvent the constraints imposed by the new system. It may also be argued that ERP makes it easier for the auditors to detect earnings management, thus dissuading any intent on the part of managers to indulge in earnings management. Another argument is that ERP systems will provide managers with the information necessary to anticipate potential problems earlier in the period, allowing them to make operating adjustments, thereby reducing the need for earnings management through accounting accruals. We examine the question of changes in earnings management brought about by ERP system implementation using an alternate measure of earnings management and earnings quality – a firm’s likelihood of a GAAP violation. Our findings are that the probability of a GAAP violation decreases significantly after the implementation of ERP systems, but less for larger firms, and more for high growth firms

Risk has always been the concern of managers and shareholders as a part of decision-making processes. Managers tend to control unsystematic risk mostly while trying to minimize the exposure to systematic (market) risk. The paper aims to assess the risk level and risk-return tradeoffs for the companies operating in Czech automotive industry. A diversification formula and calculation of returns using return-on-equity were employed on the yearly basis from 2005 till 2014. The returns and risk calculations were conducted on the portfolio of auto manufacturers, followed by the portfolio of auto suppliers, while the third one was performed for suppliers and manufacturers taken together. The results of the study show that the average correlation coefficient tends to decrease when we move from manufacturers to suppliers, while increasing when we join manufacturers and suppliers in one portfolio. The highest diversification benefit has been reached in the portfolio of auto suppliers. The highest risk is manifested for the portfolio of manufacturers, while the lowest – in the portfolio of auto suppliers. Risk level declined when we joined manufacturers and suppliers in comparison with risk of manufacturers alone. However, the lowest risk and the highest risk-return tradeoff were achieved in the portfolio of suppliers.

This paper analyses the impact of public expenditures and tax revenues on non‑oil economic growth in Azerbaijan for the period of 2000Q1‑2015Q2 by employing OLS, ARDL, FMOLS, DOLS, CCR and Granger Causality techniques. Different cointegration methods result in consistent results. In this study, there is strong evidence of significant long‑run positive contributions from public expenditures to non‑oil sector output. Results also show that tax revenues significantly slow down non‑oil economic growth in the long run. Granger Causality analysis finds the existence of a bidirectional short‑run association between non‑oil GDP and public expenditures, while tax revenues Granger Cause both variables. The research findings should be useful for Azerbaijan fiscal policy makers to consider now and in the future. Current plans in Azerbaijan for both public expenditure cuts and tax revenue increases are likely to cause contraction in the Azerbaijan’s non‑oil sector GDP.

The continuingconvergence of U.S. GAAP with International Accounting Standards has broughtinto question the future use of the LIFO inventory method in the U.S. Since theFinancial Accounting Standards Board (2010) has stipulated that earnings shouldaid investors and creditors in their quest to forecast future cash flows to theenterprise, this research examines whether FIFO earnings or LIFO earnings ispreferable, for this purpose, as an aid to ex ante operating cash flow itself,over a three-year forecast horizon. We conclude that ex ante operating cashflows are quite useful in forecasting operating cash flows across industries forup to three years-ahead.We find differingresults with respect to the incremental predictive content of LIFO versus FIFO earnings,depending on industry and the forecast horizon. For the Manufacturing industry andthe Services industry, LIFO earnings is superior to FIFO earnings forforecasting operating cash flows across the entire three year forecast horizon.In contrast, for the Retail Trade industry and the Finance, Insurance, and RealEstate industry, FIFO earnings is preferable for all three forecasts ofoperating cash flows.For firms in the Transportation,Communications, Electric, Gas, and Sanitary Services industry and in the WholesaleTrade industry, mixed results are observed. Insufficient LIFO data areavailable for evaluations of the Agriculture, Forestry, and Fishing industry,the Mining industry, the Construction industry, and the Public Administrationindustry.

ABSTRACT This study examines the cross-sectional financial performance among firms from the global information and communication technology (ICT) sector over the period 1998–2007. Using a pooled linear regression, the results show that U.S.-based ICT companies are on average underperforming the rest of the world after controlling for firm-specific variables known to affect firm financial performance. The results also show that characteristics of the firm's host country explain a statistically significant portion of the variation in firm performance, incremental to firm-level characteristics. More specifically, firms located in countries with attractive tax environments and high-government subsidies outperform their competitors in countries with less attractive tax environments and subsidies. Firms in financial markets that provide ICT firms with relatively favorable cost of capital underperform those in markets with a cost of capital less conducive to business development, which may suggest the cost of capital attracts new market competition that reduces overall profit. Countries with the best performing ICT firms are those with the highest industry focus, where a few industries dominate rather than an even distribution of firms across a broad range of industries. The findings have important implications for policymakers, business strategists, and investors.

ABSTRACT We use meta-analysis techniques to examine research choices that affect findings with respect to the return on IT investment. Recent research has established that IT investment is substantially related to firm financial performance. We find, however, that the relationship between IT investment and performance varies, depending on how both financial performance and IT investment are measured. Despite criticism of accounting measures as indicators of IT payoff, we find that the relationship is often stronger in studies that employ accounting measures rather than market measures of firm performance. This difference is driven by research that focuses on the process-level impacts of IT investment. Furthermore, the relationship is also stronger when IT investment is measured as IT strategy or spending, rather than IT capability. We discuss the practical implications of the results of our meta-analysis and suggest new directions for future theory development and research.

While information systems outsourcing has been on the rise in recent years, empirical evidence about whether IS outsourcing is value creating for shareholders is limited. Little is known about what factors influence the relation between information systems outsourcing and firm value. This study examines the effect of information systems outsourcing announcements on firm value by analyzing whether equity market reactions are associated with the management's strategic intent for outsourcing and firm characteristics of the outsourcing firm. After examining 103 IS outsourcing announcements made during the period from 1996 to 2003, results suggest that value is created for firms outsourcing with short-term operational intent rather than for longer term strategic reasons. In addition, the increase in firm value from an IS outsourcing announcement is positively associated with the firm's operating asset efficiency and the firm being in a service industry.