Template-Type: ReDIF-Article 1.0 Author-Name: Hunter M. Brooks Author-Name: Xiaoxiao Song Title: ANALYSTS’ IFRS KNOWLEDGE, FORECAST ERROR, AND SEC’S ELIMINATION OF THE 20-F RECONCILIATION Abstract: Foreign private issues (FPI) with trading shares in the United States needed to reconcile their annual financial reports (20-F) to the U.S. Generally Accepted Accounting Principles (GAAP) if they prepare the statements with International Financial Reporting Standards (IFRS). However, in November 2007, the SEC eliminated the 20-F reconciliation requirement. Prior studies have investigated the consequences of removing the reconciliation from country-level as well as firm-level characteristics, and have found mixed results. In this paper, we test the effect of the elimination on analyst forecast error based on analystindividual characteristics. Specifically, we examine whether the effect varies with analysts’ knowledge of IFRS. If there is any information loss from removing the reconciliation, the negative impact would be stronger for analysts without IFRS expertise. Therefore, these analysts’ forecast error might become larger after the elimination, relative to before the elimination. We test our conjecture with a set of hand-collected data of analysts who follow foreign IFRS filers from 2005 to 2009. Results suggest that, in general, there is no significant change in terms of analysts’ forecast error before and after eliminating the reconciliation. However, for analysts who do not have knowledge of IFRS, their forecast error significantly increased in the post-elimination period, while this change is not observed in analysts with IFRS knowledge. Our results not only provide supporting evidence to prior studies and the SEC’s Final Rule (2007), but also highlight the importance of analysts’ individual characteristics on their forecast properties. Classification-JEL: F23, F37, G28 Keywords: IFRS, 20-F Reconciliation Elimination, Analyst Forecast Properties Journal: Accounting & Taxation Pages: 1-14 Volume: 13 Issue: 1 Year: 2021 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v13n1-2021/AT-V13N1-2021-1.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:13:y:2021:i:1:p:1-14 Template-Type: ReDIF-Article 1.0 Author-Name: Herman Manakyan Author-Name: Ani Mathers Title: IMPACT OF THE 2017 TAX CUTS AND JOBS ACT ON FOREIGN CASH HOLDINGS OF U.S. MULTINATIONAL CORPORATIONS Abstract: U.S. Multinational Corporations (MNCs) generate significant amounts of income in foreign countries through their international affiliates and subsidiaries. Prior to 2018, this income was subject to U.S. taxation only when repatriated to the U.S., creating an incentive for those firms to retain these earnings in their foreign subsidiaries and leading to the accumulation of large amounts of cash held by U.S. corporations outside of the U.S. The Tax Cuts and Jobs Act (TCJA), which was signed into law by President Trump on December 22, 2017, changed the corporate taxation of U.S. MNCs to a territorial system and created an immediate tax liability for U.S. MNCs’ deemed repatriation of their past foreign earnings. A primary objective of the change in the corporate tax structure was to encourage repatriation of accumulated foreign cash, as well as to eliminate the incentives to accumulate cash in foreign jurisdictions. This study examines the impact of the tax law changes on cash transactions and cash holdings of U.S. MNCs. Our results indicate a major policy goal of TCJA was largely accomplished, resulting in U.S. MNCs repatriating significant amounts of accumulated foreign cash, as well as reducing the future retention of earnings in foreign jurisdictions. Classification-JEL: G14, G38, H25 Keywords: Multinational Corporations, Tax Cut and Jobs Act, Foreign Cash, Trapped Cash Journal: Accounting & Taxation Pages: 15-30 Volume: 13 Issue: 1 Year: 2021 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v13n1-2021/AT-V13N1-2021-2.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:13:y:2021:i:1:p:15-30 Template-Type: ReDIF-Article 1.0 Author-Name: Shuoheng Niu Author-Name: Hong Fan Author-Name: Liqiang Chen Author-Name: Qi Liu Title: THE ASSOCIATION BETWEEN TAX AGGRESSIVENESS AND ENVIRONMENTAL PROTECTION IN CHINESE PUBLIC FIRMS Abstract: This study was motivated by a lack of understanding about whether firms trade off different components of corporate social responsibility (CSR) because CSR activities may compete with each other for investments. By investigating all public Chinese firms from 2010 to 2017, we found that firms exhibiting lower degrees of tax aggressiveness participated more in environmental protection activities. Our results suggest that good firms tend to perform well in different aspects of CSR. Additionally, we found that the relationship between tax aggressiveness and environmental protection activities is more pronounced in firms with politically connected management or board members, firms with a higher percentage of independent directors, and firms receiving fewer government bursaries. Classification-JEL: M4, H2 Keywords: Tax Aggressiveness, Environmental Protection, Corporate Social Responsibility, China Journal: Accounting & Taxation Pages: 31-43 Volume: 13 Issue: 1 Year: 2021 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v13n1-2021/AT-V13N1-2021-3.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:13:y:2021:i:1:p:31-43 Template-Type: ReDIF-Article 1.0 Author-Name: Elizabeth Johnson Author-Name: Matthew Petersen Author-Name: Joshua Sloan Author-Name: Adrian Valencia Title: THE INTEREST, KNOWLEDGE, AND USAGE OF ARTIFICIAL INTELLIGENCE IN ACCOUNTING: EVIDENCE FROM ACCOUNTING PROFESSIONALS Abstract: Artificial intelligence, along with other recent advancements in technology, has revolutionized business processes around the world. The purpose of this paper is to determine if artificial intelligence has become a popular tool utilized by corporations and/or accounting firms around the Southwest Florida region. Given that artificial intelligence will significantly impact the accounting world, it is important to understand how professionals perceive this rapidly emerging technology. To understand how artificial intelligence is utilized, we survey thirty-four professionals holding accounting positions ranging from staff accountants to partners. We find that a majority of accountants surveyed were at least somewhat interested and at least somewhat familiar with the use of artificial intelligence in accounting. However, the majority of accountants surveyed did not previously use artificial intelligence in their company and a limited number of accountants are currently using artificial intelligence to complete an accounting process and/or task. Regression analysis shows that professionals that have previously tried implementing artificial intelligence and that believe artificial intelligence will be used in accounting in the future are more likely to be interested in implementing artificial intelligence. Additionally, when analyzing the results from partners-only, we find very similar results as the average accountant, they also believe that artificial intelligence will be used in accounting in the future which provides a promising outlook for coming changes in the accounting profession. Classification-JEL: M41, M49 Keywords: Accounting, Artificial Intelligence Journal: Accounting & Taxation Pages: 45-58 Volume: 13 Issue: 1 Year: 2021 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v13n1-2021/AT-V13N1-2021-4.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:13:y:2021:i:1:p:45-58 Template-Type: ReDIF-Article 1.0 Author-Name: Daniel Acheampong Title: IMPACT OF CULTURE ON INTERNATIONAL FINANCIAL REPORT STANDARDS ASSESSMENT OF FAIR VALUES MEASUREMENT Abstract: The paper reviews the cultural impact on implementing the fair values measurement (IFRS 13) enacted by the International Accounting Standard Board. The paper used mixed-methods to analyze the postimplementation responses of 67 respondents to determine the cultural impact of accounting pronouncement implementation. The paper adopted the Globe Project's cultural attributes and categorized the responses under distinct regional groupings. The study identified the patterns from the answers to the eight openended questions and traced them to the cultural traits. The ranking of the cultural traits shows similarities among some regional groupings and differs among some groupings. Among the ten groupings ranked under the eight unique clusters, there was no single cluster with a consistent ranking among all the regional groupings. A one-sample t-test was employed to test the significant difference between the coded responses' overall mean and each unique cluster. The t-test shows no statistically significant difference between the individual clusters and the coded responses' overall mean. The t-test results suggest no evidence to support a cultural impact on implementing the fair values measurement based on the responses from the postimplementation survey from the responding countries Classification-JEL: M4 Keywords: Culture, Fair Value Measurement, Exit Price, IFRS 13, Harmonization, Cultural Attributes, Power Distance, Uncertainty Avoidance, Humane Orientation, Institutional Collectivism, In-Group Collectivism, Assertiveness, Gender Egalitarianism, Future Orientation, Performance Orientation Journal: Accounting & Taxation Pages: 59-73 Volume: 13 Issue: 1 Year: 2021 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v13n1-2021/AT-V13N1-2021-5.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:13:y:2021:i:1:p:59-73 Template-Type: ReDIF-Article 1.0 Author-Name: Micah Frankel Author-Name: John Tan Title: STRATEGIES AND EVIDENCE FOR DEDUCTION OF BUSINESS EXPENSES UNDER INTERNAL REVENUE CODE SECTION 168(K), 179, AND 274 Abstract: The Tax Cuts and Jobs Act (TCJA) of 2017 amended the Internal Revenue Code of 1986. TCJA (2017) increased the annual maximum amount of immediate expense of Section 179 to one million dollars, and the phase-out threshold to two and a half million dollars. TCJA (2017) amended Section 168(k) to allow a 100 percent additional first-year depreciation deduction for qualified property acquired and placed in service after September 27, 2017, and before January 1, 2023. The Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020, now allows taxpayers to also elect additional first-year depreciation deduction for qualified improvement property. Through statistical analyzes of IRS Corporation Depreciation Data from 2010 to 2016, this paper adds value to the literature by informing readers the popularity of Section 179 and 168(k) in which sectors of businesses. The tax code change itself has implications on actual tax liabilities for businesses. Businesses can change their practices, for example avoiding newly disallowed entertainment expenses, to account for the change in the tax code. This paper further contributes to the literature by (1) providing a summary of the latest details of Section 168(k), 179 and 274, (2) suggesting proactive tax strategies in terms of business expenses deduction to mitigate a taxpayer’s potential Federal corporation income tax liabilities, (3) demonstrating the application of Section 168(k), 179 and 274 through real-life numerical case examples. Classification-JEL: M4 Keywords: Depreciation, Entertainment, Internal Revenue Code, Section 168(k), Section 179, Section 274, The Tax Cuts and Jobs Act Journal: Accounting & Taxation Pages: 75-96 Volume: 13 Issue: 1 Year: 2021 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v13n1-2021/AT-V13N1-2021-6.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:13:y:2021:i:1:p:75-96 Template-Type: ReDIF-Article 1.0 Author-Name: Susanne Leitner-Hanetseder Author-Name: Josef Arminger Author-Name: Christa Hangl Title: IMPACT OF SOFTWARE EXPENSES ON FINANCIAL STATEMENTS AND CAPITAL RATIOS IN THE FINANCIAL SECTOR EMPIRICAL: EVIDENCE FROM GERMANY AND AUSTRIA Abstract: In a world of digital technologies, software solutions become increasingly important for financial institutions and the amount of expenses for intangible assets are increasing. However, expenses for digital financial technologies are capitalized only if the requirements of the International Financial Reporting Standards (IFRS) are met. Even if the expenses for digital financial technologies are capitalized, for calculating Key Performance Indicators (KPIs) under the Capital Requirements Regulation (575/2013) (CRR), the capitalized intangible assets must be deducted from Common Equity Tier 1 (CET1) capital as a prudential filter. This deduction leads to a reduction of capital ratios and therefore to a disadvantage for financial institutions with investments in software solutions. In June 2019, the European Parliament amended regulations of CRR so that in the future capitalized software as intangible assets will not be deducted from the CET1 capital. This paper examines the impact of this amendment on the capital ratios of German and Austrian firms classified as other-systemically important institutions (O-SIIs). The paper shows the growing relevance of software capitalization in the financial sector. However, based on the 2018 data, the impact of the amendment on capital ratios is not material for German and Austrian financial institutions. Classification-JEL: G21, G38, M41, M48 Keywords: Intangible Assets, Software, Digitalization, Capital Ratio, CRR, IFRS Journal: Accounting & Taxation Pages: 97-108 Volume: 13 Issue: 1 Year: 2021 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v13n1-2021/AT-V13N1-2021-7.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:13:y:2021:i:1:p:97-108 Template-Type: ReDIF-Article 1.0 Author-Name: Fengyun Wu Title: THE DIFFERENTIAL IMPACT OF PRIVATE AND PUBLIC DEBT ON ACCOUNTING CONSERVATISM Abstract: The private and public debt markets differ in monitoring functions and covenant features. This paper empirically examines whether these differences impact accounting conservatism. Using a sample drawn from Loan Pricing Corporation’s Dealscan, I find that firms report more conservatively in the years following the issuance of private debt than the years before. I also find that firms report more conservatively following initial public debt offerings (bond IPOs). However, there is no change in the degree of conservatism around seasoned bond offerings. I interpret the results as reflecting differences in monitoring functions of the private and public debt markets. The direct monitoring by private debt holders and the external monitoring including regulatory scrutiny in the context of bond IPOs are effective in enforcing accounting conservatism. The limited monitoring in the case of seasoned bonds fails to do so. Classification-JEL: M41, M42 Keywords: Accounting Conservatism, Monitoring Function of Debt, Private Debt, Public Debt Journal: Accounting & Taxation Pages: 109-119 Volume: 13 Issue: 1 Year: 2021 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v13n1-2021/AT-V13N1-2021-8.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:13:y:2021:i:1:p:109-119 Template-Type: ReDIF-Article 1.0 Author-Name: Salahudeen Saeed Title: INCOME TAX ADMINISTRATION IN GHANA: PERCEIVED IMPLEMENTATION CHALLENGES Abstract: In recent times, the focus of tax research has shifted from income tax compliance to Value Added Tax compliance. Meanwhile, the legislature on some occasions subject persons to what it calls income tax by reference to sums which do not represent income in any accounting or economic sense, or even in respect of sums which the person concerned has not received. This makes income tax administration challenging than in the case of value Added Tas This paper therefore seeks to gain an understanding of similarities and differences in the overall quantitative assessment and qualitative content of personal income tax and corporate income tax, from the perspectives of income taxpayers. For this purpose, the author examined a total of 259 Ghanaian income taxpayers; 174 personal income taxpayers and 85 corporate income taxpayers. Moreover, the author measured knowledge, attitudes and emotional reactions of personal income taxpayers and corporate income taxpayers towards income taxation. The results indicated that overall, income tax was negatively evaluated by both taxpayers. However, corporate income taxpayers occasioned a larger number of negative attitudes towards income tax, had more knowledge on income tax obligations, and conveyed more negative emotions than personal income taxpayers. The paper argues that findings from personal income tax research cannot be directly adapted to the context of corporate income tax Classification-JEL: H21, H30 Keywords: Income Tax, Personal Income Tax, Corporate Income, Ghana Journal: Accounting & Taxation Pages: 121-130 Volume: 13 Issue: 1 Year: 2021 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v13n1-2021/AT-V13N1-2021-9.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:13:y:2021:i:1:p:121-130