Template-Type: ReDIF-Article 1.0 Author-Name: Ravi JaiN Author-Name: Dev Prasad Title: COUNTRY VERSUS INDUSTRY EFFECT ON BOARD STRUCTURES Abstract: We examine the board structures of US and Indian firms in two industries. We examine three aspects of board structures: board size, board independence, and board leadership. The two industries selected for analysis are information technology and capital goods. While Indian information technology firms have close ties to the American economy, capital goods firms have a domestic focus. Thus, we are able to analyze differences in board structures of firms in two countries and two industries, one of which is closely related and the other relatively unrelated. We do not find any significant differences in board size and board leadership for US and Indian firms in either industry. However, we find that US boards are more independent than Indian firms, both for information technology firms and capital goods firms. These findings are more supportive of the country effect than for the industry effect on board structures. Classification-JEL: F23; G34; N20 Keywords: Board of Directors, Corporate Governance, and Board Composition. Journal: Accounting & Taxation Pages: 1-9 Volume: 4 Issue: 1 Year: 2012 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v4n1-2012/AT-V4N1-2012-1.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:4:y:2012:i:1:p:1-9 Template-Type: ReDIF-Article 1.0 Author-Name: Margaret (Peg) Horan Title: ARE BUYBACKS INCREASING EPS? Abstract: Trends indicate that treasury shares or buyback shares are gaining new momentum and intensity and maybe effecting reported earnings per share. This study was undertaken by evaluating the buyback activity of the Standard and Poor’s 500, for the period of 2005-2008 to the Hribar et al (2004 and revised 2006) study of buybacks for their period of 1988-2001. Their study reflected that buybacks were not dominant due to their tri-model of low number of share being repurchased, the high number of companies experiencing a loss and high P/E multiples.. This study experienced greater frequency and intensity of buybacks, due to a reversal in the three conditions being a larger number of shares purchased,) lower incident of losses and lower P/E multiples. The findings are that buybacks are more frequent, more intense, and are having an increased accretive effect on EPS. As a solution proposed here is a new EPS model that reports EPS in segments; those from operations and those from buybacks when the effect is $.01 or more. This new EPS model is responsive to the changing financial landscape and is deserving of attention at this time of international accounting assessment. Classification-JEL: M41, G35 Keywords: Buybacks, Treasury Shares, Stock Repurchases, Earnings Per Share, Journal: Accounting & Taxation Pages: 11-24 Volume: 4 Issue: 1 Year: 2012 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v4n1-2012/AT-V4N1-2012-2.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:4:y:2012:i:1:p:11-24 Template-Type: ReDIF-Article 1.0 Author-Name: Liz Washington Arnold Author-Name: Peter Harris Title: AN EMPIRICAL ANALYSIS OF MARKET REACTION TO CORPORATE ACCOUNTING MALFEASANCE Abstract: This study examines corporate accounting malfeasance from an exploratory and empirical perspective for 100 companies to determine if there is an association between the Jenkins recommendations and SOX requirements and to determine if there are any differences between the internal and external monitoring characteristics of malfeasance and non-malfeasance companies. The exploratory perspective discusses the types of corporate malfeasance and gives an accounting and market dollar impact ($140 and $857 billion respectively) of 100 companies with publicly announced malfeasance and supports previous studies findings that revenue was the most common area of corporate malfeasance and theft was the least. The empirical study examined internal (corporate governance) and external (auditor and financial analysis) monitoring characteristics by matching the malfeasance companies with non-malfeasance companies. This empirical study did not find any significant differences in the monitoring characteristics of the companies even though these characteristics were chosen based on an examination of recommendations/requirements for business reporting for SOX and several accounting committees over the years. Previous studies indicated a difference.The research contributes to contemporary accounting literature by providing a dollar measurement of the accounting and related market impact for malfeasance companies and a systematic investigation testing monitoring characteristics between malfeasance and non-malfeasance companies. Classification-JEL: M4, M40, M41, M48, M49 Keywords: Accounting Restatements, Accounting Malfeasance, Corporate Malfeasance, SOX, Jenkins Report, Jenkins Recommendations. Journal: Accounting & Taxation Pages: 25-42 Volume: 4 Issue: 1 Year: 2012 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v4n1-2012/AT-V4N1-2012-3.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:4:y:2012:i:1:p:25-42 Template-Type: ReDIF-Article 1.0 Author-Name: Karen C. Castro-González Title: PORTRAIT OF A COMPANY: DEFINED BENEFIT PENSION PLAN SPONSORS Abstract: This study describes firms that sponsor defined benefit pension plans (DBPP) based on firm specific characteristics, financial and operating performance. Firms are classified into portfolios based on their funding levels and described accordingly. The results suggest that firms in the most underfunded portfolio are on average smaller and value firms, with negative stock returns, poor financial and operating performance, lower profitability, invest smaller amounts in advertising, research and development and capital assets and are more indebted with higher probabilities of bankruptcy. The opposite is seen for the least and overfunded firms. The portrayal of these characteristics can help regulators in the effective identification of firms that may confront funding problems before it is too late. The detection of risk behavior or tendencies in terms of firm characteristics can help regulators in establishing policies to decelerate and improve pension plan funding levels and to protect the public interest. Classification-JEL: G11, G23, M48 Keywords: Defined benefit, pension plans, pension management, pension regulation Journal: Accounting & Taxation Pages: 43-52 Volume: 4 Issue: 1 Year: 2012 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v4n1-2012/AT-V4N1-2012-4.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:4:y:2012:i:1:p:43-52 Template-Type: ReDIF-Article 1.0 Author-Name: Robert W. McGee, Author-Name: Arsen M. Djatej, Author-Name: Robert H. S. Sarikas, Title: THE ETHICS OF TAX EVASION: A SURVEY OF HISPANIC OPINION Abstract: The present paper is an empirical study, the goal of which is to determine the strength of various arguments that have been used to justify tax evasion and to determine whether results differ based on certain demographic variables. A survey instrument was constructed using a seven-point Likert and distributed to 316 business students at a university in South Texas. The 18 arguments were ranked in terms of strength, from strongest to weakest. Comparisons were also made according to gender, age, and academic major to determine if the viewpoints for these demographics were significantly different. Academic major was the only demographic variable where significant differences in opinion were found. For some of the 18 arguments justifying tax evasion, accounting students were significantly more averse to tax evasion than were business and economics majors. Some arguments justifying tax evasion were stronger than others. The strongest arguments for evading taxes were in cases where the government engaged in human rights abuses. Other strong arguments were in cases where the tax system was perceived as unfair, where tax rates were too high, where government officials were corrupt or where tax funds were not spent wisely. Classification-JEL: H26; J1; J14, J15, J16, K34, M4 Keywords: tax evasion, Hispanic, gender, age, major, demographic Journal: Accounting & Taxation Pages: 53-74 Volume: 4 Issue: 1 Year: 2012 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v4n1-2012/AT-V4N1-2012-5.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:4:y:2012:i:1:p:53-74 Template-Type: ReDIF-Article 1.0 Author-Name: Lingyan Cao Author-Name: Zheng-Feng Guo Title: A COMPARISON OF GRADIENT ESTIMATION TECHNIQUES FOR EUROPEAN CALL OPTIONS Abstract: Assuming the underlying assets follow a Variance-Gamma (VG) process, we consider the problem of estimating gradients of a European call option by Monte Carlo simulation methods. In this paper, we compare indirect methods (finite difference techniques such as forward differences) and two direct methods, infinitesimal perturbation analysis (IPA) and likelihood ratio (LR) method. We conduct simulation experiments to evaluate the efficiency of different estimators and discuss the advantage and disadvantage of each method. Classification-JEL: G13, G15, G17 Keywords: Greeks, IPA, LR, Variance-Gamma Journal: Accounting & Taxation Pages: 75-81 Volume: 4 Issue: 1 Year: 2012 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v4n1-2012/AT-V4N1-2012-6.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:4:y:2012:i:1:p:75-81 Template-Type: ReDIF-Article 1.0 Author-Name: Antonella Silvestri Author-Name: Stefania Veltri Title: A TEST OF THE OHLSON MODEL ON THE ITALIAN STOCK EXCHANGE Abstract: This article belongs to the current in research literature, which is concerned with value relevance. Its main aim is to test the impact of the current and future accounting variables on the firm’s market value, by analyzing these relations with reference to the financial sector of the Italian Stock Exchange. To pursue this objective we carried out a multiple linear regression analysis, within a model inspired by the Ohlson model (1995). The model employed verified the research hypotheses for following (subsequent) stages by testing at first the impact of the current accounting variables, then of the future ones on the firm’s market value. The results of the analysis show that the relation between the accounting variables (current and future) and the market price, after controlling for market risk, is fully proved on the Italian market, meaning that investors price accounting data in their firm’s evaluation process. The article contributes to expand the number of empirical research studies on the value relevance of accounting variables, by analyzing this theme on a Stock Exchange market not yet explored from this perspective. The main originality of the article consists in its being one of the first research studies to test the validity of the Ohlson model (1995) in its original version on the Italian market. Classification-JEL: G14, G21, G22, M41 Keywords: Value relevance, Ohlson model, analysts’ forecasts, financial sector. Journal: Accounting & Taxation Pages: 83-94 Volume: 4 Issue: 1 Year: 2012 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v4n1-2012/AT-V4N1-2012-7.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:4:y:2012:i:1:p:83-94 Template-Type: ReDIF-Article 1.0 Author-Name: Carlos Omar Trejo-Pech Author-Name: Magdy Noguera Author-Name: Angel Samaniego-Alcantar Author-Name: Richard N. Weldon Title: THE RELATIONSHIP BETWEEN ACCRUALS, EARNINGS, AND CASH FLOWS: EVIDENCE FROM LATIN AMERICA Abstract: The relationships between earnings, accruals, and cash flows for selected Latin American countries (Mexico, Chile, and Argentina) are investigated in this study from 1990 to 2009. We find a negative relationship between accruals and cash flow across decile portfolios. More importantly, firms reporting the highest level of accruals, have the worst level of cash flows, but not the worst level of earnings. This relationship is of economic importance given that investors are very oriented towards firms yielding high earnings and might fail to realize that earnings are not always accompanied by strong levels of cash flows. Results are disaggregated by years and countries, and compared to previous results for U.S. firms. Classification-JEL: G3, M4. Keywords: Finance; Earnings and Cash; Financial Accounting; Latin American Public Firms. Journal: Accounting & Taxation Pages: 95-107 Volume: 4 Issue: 1 Year: 2012 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v4n1-2012/AT-V4N1-2012-8.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:4:y:2012:i:1:p:95-107 Template-Type: ReDIF-Article 1.0 Author-Name: Deborah K. Jones Author-Name: Albert D. Spalding, Jr. Title: FINDING THE OUTER LIMITS OF IRS ACCOUNTING DISCRETION: THE KOLLMAN CASE Abstract: The statutory language of the Internal Revenue Code gives cognizance to the methods of accounting used by taxpayers for their financial reporting. The 1979 U.S. Supreme Court opinion of Thor Power acceded to the Internal Revenue Service a significant amount of discretion in its attempt to require taxpayers to change and adapt their accounting methods to its satisfaction. In particular, the Commissioner of Internal Revenue’s seemingly absolute authority to prohibit lower of cost or market inventory valuation was upheld. Until the recent Tax Court decision in the case of United States v. Kollman, in fact, there were few guidelines that helped to delineate the outer limits of the IRS’s discretion in demanding taxpayer adherence to its preferred tax accounting methods. This paper considers how the parameters for a taxpayers’ ability to challenge this discretion have been significantly clarified, if not changed, by the Kollman case. We discuss the clear reflection of income doctrine as it has evolved over time and examine the impact of recent judicial decisions – especially Kollman – on this standard and consider whether or not there is need for revision on the law in this area. We conclude that the Commissioner’s authority to arbitrarily require specific methods of accounting is in fact limited, and that the Kollman case serves as a helpful marker of the outer limits of such authority. Classification-JEL: M4, M40, M41 Keywords: Tax accounting, lower of cost or market, inventory valuation, tax administration Journal: Accounting & Taxation Pages: 109-122 Volume: 4 Issue: 1 Year: 2012 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v4n1-2012/AT-V4N1-2012-9.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:4:y:2012:i:1:p:109-122