In this study, we examine the role of temporal framing in the context of tax audit risk. Using construal-level theory, we propose that compared with an every-year frame (e.g., 1.5 million returns are audited every year), framing audit risk in an everyday frame (e.g., 4,000 returns are audited every day) will make audit risk seem more likely and thus increase taxpayer compliance. We test whether perceived fairness of the tax system, an individual difference variable related to tax compliance, moderates the effect of temporal framing on behavioral intentions. The results show that communicating risk in a day frame rather than a year frame increases compliance for taxpayers who perceive the tax system as unfair but not for taxpayers who perceive the tax system as fair. Increasing compliance among taxpayers who perceive the tax system as unfair is crucial, as they are less likely to be compliant. Thus, framing audit risk can assist in increasing taxpayer compliance.

This chapter examines the effect of mutual monitoring and the personality trait of need for achievement on subordinates’ budgetary-slack creation in a team-based environment. Experimental results show that the creation of budgetary slack is lower when mutual monitoring is present than when it is absent. The results also show that a two-way interaction between mutual monitoring and the personality trait of need for achievement affects subordinates’ budgetary-slack creation.

The Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) have been working for 13 years on a significantly different, converged standard for revenue recognition. The new standard was finally approved by both boards in 2014, and was to be effective for calendar-year companies beginning in 2017. On July 9, 2015, mounting concerns from preparers resulted in a one-year delay in implementation. An important consideration to examine is what are the major indirect effects that may result from the adoption of the new revenue recognition standard? We discuss such effects on earnings quality, deferred taxes, management compensation, and on industry-specific reporting. Earnings quality may be reduced because the new standard will increase deferred tax balances, and provide executives with increased opportunity to manage earnings. Alternatively, the consistency in generally accepted accounting practices (GAAP), and comparability of revenue recognition practices across industries with similar transactions may improve earnings quality. The likely cumulative effect on earnings quality is not yet determinable. Second, management may have more opportunity to manipulate earnings through judgments and estimates, and accelerate earnings-based compensation. Thus, the standard may impact management compensation. Finally, we discuss industries that are likely to be the most impacted from the new standard. (c) 2016 Wiley Periodicals, Inc.

This study examines the effects of board independence and CEO duality on firm performance. We analyze data for the NASDAQ-100 firms over the period 2010-2014. Three measurements of board independence are used: (1) proportion of independent directors, (2) committee overlap, and (3) board interlock. We use an alternative and more appropriate definition of committee overlap and board interlock that only considers independent-director committee overlaps and interlocks. Our method includes the use of a treatment effect approach to control for endogenous issues that have likely caused mixed results in prior research. Several significant results are found from this study. First, independent-director committee overlaps are shown to have a significantly positive relationship with firm performance. Secondly, board interlocks of independent directors are also found to be positively associated with firm performance. Lastly, we find a negative relationship between CEO duality and firm performance. The relevance of these results is discussed from corporate governance policy and academic research perspectives.

We evaluate the level of convergence of Chinese accounting standards (PRC GAAP) with International Financial Reporting Standards (IFRS) since the establishment of the “new PRC GAAP” in 2007. Further, wet examine the value relevance of accounting measures under PRC GAAP as compared with IFRS. The tests use data from dual-listed companies on both mainland China’s A-share exchange (using PRC GAAP) and Hong Kong’s H-share exchange using IFRS. The results indicate that adoption of the new PRC GAAP eliminated significant differences between the two accounting standards. Further, the value relevance of accounting information under PRC GAAP increases through the sample years. The value relevance of PRC GAAP became higher than IFRS for the last two years, implying that current PRC GAAP incorporates the traits of IFRS and Chinese accounting practices that are most useful in Chinese stock markets.

Research in the field of corporate social responsibility (CSR) has grown exponentially in the last few decades. Nevertheless, significant debate remains about the relationship between CSR performance and corporate financial performance (CFP). This is particularly true for the case of Chinese state-owned enterprises (SOEs). The purpose of the current study is to empirically test the relationship between CSR and CFP. We use data for 66 Chinese SOEs listed on the Shanghai and Shenzhen stock exchanges. The results are interesting in that they are not consistent with similar studies using US and other Western market data. We find a significant negative relationship between CSR performance and CFP. The results are discussed in light of the preferential government treatment afforded to Chinese SOEs, and social welfare requirements imposed on such entities. Implications for Chinese policy-makers are discussed.

This study examines the relationship between Chinese renminbi (RMB) exchange rates and Chinese stock prices over the full study period of 20 July 2001 to 21 July 2011. The study also investigates the relationship between the exchange rate and ten industry-specific indices. Also examined is the effect of two specific events on the ‘exchange rate/stock price’ relationship: (1) the easing of exchange rate controls, and (2) the 2008 start of the global financial crisis. A long-run cointegration relationship is found during the full study period between exchange rates and the Shanghai A-share prices, and for nine of ten industry indices. Granger causality in one direction (i.e., from exchange rates to stock prices, or vice versa) or both directions is found for four of the industry-specific indices. Interestingly, both a long-run cointegration relationship and Granger causality are only found during the most volatile period of managed exchanged rates before the global financial crisis. Implications for Chinese monetary policy makers and global investors are provided.

ABSTACTThis paper analyzes the 5-year daily closing prices of copper futures contract data from the London Metals Exchange (LME), Shanghai Futures Exchange (SHFE), and the New York Mercantile Exchange's Commodity Exchange division (COMEX) markets. The analysis provides a broad view of the international copper futures markets price linkage and information transmission mechanism. The study's methodology includes cointegration tests and a vector error correction model (VECM), followed by tests for Granger causality.The results indicate a strong correlation across markets. The three markets maintained a long-term equilibrium relationship with few arbitrage opportunities. Efficient cross-market information flow is identified. Each market impacts foreign returns with lagged information. The LME and COMEX markets positively influenced each other while their impact on the SHFE market was reversed in direction. The most significant integration is between the SHFE and LME (in both directions). Lastly, a significant bidirectional Granger cause is demonstrated across the three markets. The results suggest that the three primary world copper markets can be regarded as one continuous trading market with the same level of market efficiency. The information transmission mechanism is efficient and effective. Several practical economic applications are suggested that can assist investors and Chinese policy makers.Key Words: Copper futures, price linkage, information transmission(ProQuest: ... denotes formulae omitted.)INTRODUCTIONChina is currently the world's largest consumer of copper due to its massive infrastructure demand. China accounted for nearly half of the world's total copper consumption in 2010 (China Iron and Steel Association (CIS A), 2010), and is expected to have a 15% percent growth in copper consumption by 2015. Although China is the world's biggest copper user, it is not the biggest copper market maker. Copper price is greatly influenced by other world counterparts, particularly in the copper futures market. There are three primary markets for copper futures trading. The London metal exchange (LME) is currently the largest copper futures market. The Shanghai Metal Exchange (SHFE) and New York Mercantile Exchange's Commodity Exchange (COMEX) follow.The emerging SHFE copper futures market has recently surpassed the COMEX to become the world's second largest market (Fung et al., 2010). For China to position itself in copper trading and strengthen its global influence in copper futures pricing, it is essential for them to understand the cross-market interaction and price linkage between the three major copper markets. A significant body of recent research has focused on this topic (e.g., Fung et al., 2010; Li & Zhang, 2009; Lein & Yang, 2009).Li and Zhang (2009) found a strong connection in the price discovery process linkage between the LME and SHFE copper futures markets, with the LME market having a larger impact on its SHFE counterpart. Fung et al. (2010) examined the COMEX and SHFE aluminum and copper future markets price linkage and information transmission efficiency and discovered the same level of information transmission efficiency in both markets. A similar study by Lein and Yang (2009) confirms international copper futures markets integration as well as the price transmission mechanism playing a vital role in return and volatility during the last half of 2005.This study provides a broad and integrated view of the global copper futures market. There are a number of reasons for studying cross market price linkage and transmission mechanism for copper futures market. First, correlations between the world's copper futures markets affects the volatility of portfolios, and therefore, understanding such relationships can assist investors and portfolio managers in formulating better trading and asset allocation strategies. Second, information transmission mechanisms reveal the level of market efficiency, which allows investors to discover arbitrage opportunities, if any, between markets. …

The U. S. Public Oversight Board’s Panel on Audit Effectiveness suggests that both audit effectiveness and efficiency may benefit from greater consideration being given to auditors’ risk assessments. The association between several independent variables (e.g., tolerance-for-ambiguity, field dependence/independence, and industry stability) and auditors’ perceived risk assessments is examined in an experimental setting. Six hypotheses suggested from a review of the literature are tested. The results indicate that industry stability and (to a lesser extent) tolerance-for-ambiguity (TFA) each have a main effect on auditors’ perceived risk assessments. Further, these two variables are found to have a moderately significant interactive effect on such assessments. The level of industry stability (stable or unstable) is found to affect the risk assessments of low-TFA subjects more than high-TFA subjects. Implications of these results for the audit process are provided.

This study examines possible influences on the level of collaboration in published research by the most productive authors of accounting literature. Understanding the collaboration tendencies of these authors should benefit early-career-stage accounting faculty. Seven factors are examined for the publications of 93 of the most productive accounting authors. These productive authors are found to include fewer coauthors on their publications early in their careers. The number of coauthors increases through their first 16 to 17 years and then decreases through the remainder of their careers. The results also indicate that productive accounting researchers include a greater number of coauthors on more recently published articles and on longer articles. Fewer coauthors are included when a productive author is affiliated with a "top-10" university or on articles published in highly ranked accounting journals. Lastly, the results show that prolific authors seek out coauthorship throughout their careers and usually include one or more coauthors on their publications. Implications from these results and specific suggestions for accounting faculty are discussed.

The objective of this paper is to examine the relationship between the implementation of the Sarbanes-Oxley (SOX) legislation and Enterprise Resource Planning (ERP) systems, and to investigate the impact that the passage of this legislation has had on the decision for companies to adopt ERP technology. The legislation itself is discussed, along with an analysis of ERP systems, including their components, their advantages and disadvantages, and the critical factors and crucial components which must be present for the successful deployment of such systems. This paper explores the contributory effect of SOX on ERP adoption. The authors concluded that SOX merely accelerated an inevitable process. The best managers will always find and use the best tools to maximize benefits to their organizations. The requirements of Sarbanes-Oxley forced companies to rethink their processes and technology, and therefore may have provided the final incentive for companies to commit to ERP.

This study investigates the empirical association between managers information advantages and disclosure quality choice in the context of management earnings forecasts (MEF). The main hypothesis is that the quality of information available to managers is associated with cross-sectional differences in firm characteristics, and that managers information advantages determine four classes of forecast pattern: no disclosure, qualitative disclosure (open-ended interval estimate or general impression), range (close-interval estimate) forecasts and point estimate. Prior works were extended through utilization of a multi-level forecast precision model, and through comparison of selected firm characteristics in forecast years with non-forecast years. The major findings of this study are as follows. First, the results support the notion that managers are likely to select low-level disclosure precision as the magnitude of earnings volatility increases. Second, the findings indicate that the proportion of outside owne...

Historically, there have been many disputes in the area of corporate financial reporting. However, one of the primary issues of disagreement between practitioners, regulators, and theoreticians is that of valuation of financial statement components. The latest twist in the evolution of valuation is the push for (and against) the use of a fair value approach. The purpose of this paper is to examine the history and evolution of how the most critical elements of an entity’s financial statements are valued. We provide a history of valuation of financial statement components, and identify the issues involved. Further, we examine the criticisms of actions taken by the regulatory bodies in their efforts to standardize and advance accounting practices. Particularly, we focus on the evolution of fair value measurements. Arguments both for and against the implementation of fair value accounting are provided.

One of the current costing practices of interest used in Germany today is called Grenzplankostentechnung (GPK). GPK can be roughly translated as “flexible standard costing.” GPK is a unique method of costing that allows for more accurate allocation of costs to products and services provided by a company. Under GPK, only one output measure is allowed to be identified with each cost center. As a result, cost centers tend to be small and often include only a few employees. A GPK company must accurately determine each cost center’s quantity of their single chosen output measure. This is in contrast to activity-based costing that typically requires tracking the level of many cost drivers. Some U.S. companies question the ability of GPK to provide benefits that will exceed its cost. GPK is expensive to put into action, and it is expensive to maintain. The biggest upfront adaptation often required in any new implementation is how managers use information. GPK and RCA are quite different from prevailing U.S. approaches, so the adaptation is significant. Management of U.S. companies is not satisfied with the information provided by their management accounting systems. The representatives from the Institute of Cost and Management Accountants of Bangladesh (ICMAB) or a research team of Centre for Socio-economic Research of ASA University should visit the local companies to explore the manner in which they can use GPK and should pinpoint future GPK research opportunities.

All business faculty should be interested in the circumstances under which the most productive academic authors publish their work. This is because success in publishing connects closely with universities' decisions on tenure and promotion and with opportunities for merit-based pay increases and alternative employment. The purpose of the present study was to examine the characteristics of published articles by the most productive authors of accounting literature with particular attention to levels of collaboration. The results indicate that prolific authors of accounting literature become more productive and produce longer articles by working with others. However, such prolific authors appear to decrease the number of coauthors on their higher quality publications, possibly to increase the quality of their reputation. From these findings, the present authors derive implications for faculty and provide concluding comments. Copyright (C) 2008 Heldref Publications

Size effect studies generally suggest that a return premium exists for small firms. While the size effect has mostly disappeared in recent years in mature markets (e.g., US and UK), it remains mostly strong in developing markets. The purpose of this paper is to examine the relationship between firm size and excess stock returns in the Chinese stock markets, and to examine this effect in both a bull and bear market. No studies have previously examined these relationships in the Chinese markets. The results of the study indicate that a size effect exists in the Chinese stock markets over the 6-year period from 1998 to 2003. We find small firms have significantly greater excess returns than large firms. Moreover, small firms are found to have a stronger reaction to the direction of the market than large firms. Small firms have significantly greater positive excess returns than large firms during the bull market. However, small firms have significantly greater negative returns (using total market value), or no significant difference in returns (using float market value) during the bear market period.

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