Template-Type: ReDIF-Article 1.0 Author-Name: Sean Valentine Author-Name: Gary Fleischman Author-Name: Connie R. Bateman Title: AN EXPLORATORY STUDY OF PROFESSIONAL ETHICAL STANDARDS, POSITIVE BUDGETING ORIENTATION, AND THE MEDIATING ROLE OF CORPORATE ETHICAL VALUES Abstract: The purpose of this exploratory study was to empirically assess interrelationships between professional ethical standards, corporate ethical values, and the concept of positive budgeting orientation. It was believed that perceived ethical values would fully or partially mediate the proposed positive relationship between perceived professional ethics and positive budgeting in companies. Survey data were gathered from experienced managers, some of which were members of the Institute of Management Accountants, and students in MBA and Executive MBA programs located in the Mountain West and Midwestern regions of the United States. Overall, 290 surveys of managers who worked in a variety of business occupations were assessed. The findings showed a strong positive association between professional ethical standards and corporate ethical values, as well as between ethical values and a positive budgeting orientation. In the presence of these relationships, the professional ethical standards and positive budgeting orientation variables were unrelated, indicating that perceived ethical values functioned as a full mediator. The findings implied that ethical environments in both professions and organizations can be used to enhance positive budgetary practices. Classification-JEL: M14, M41 Keywords: Professional Ethics, Positive Budgeting, Corporate Ethical Values Journal: Accounting & Taxation Pages: 1-20 Volume: 7 Issue: 1 Year: 2015 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v7n1-2015/AT-V7N1-2015-1.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:7:y:2015:i:1:p:1-20 Template-Type: ReDIF-Article 1.0 Author-Name: Renee Weiss Author-Name: John Shon Title: VOLUNTARY FAIR VALUE DISCLOSURES BY BANK HOLDING COMPANIES: THE ROLE OF SEC DEAR CFO LETTERS Abstract: The SEC’s Division of Corporate Finance sent Dear CFO letters to certain registrants in 2008 requesting voluntary disclosures to improve transparency of Level 3 fair value measures and valuation of financial instruments in inactive or illiquid markets. We expect these bank holding companies were among the companies that the Division of Corporate Finance targeted. We consider the discussion points from the Dear CFO letters to identify the disclosures to analyze in this study. We find that disclosures about valuation techniques and the use of broker quotes or prices from pricing services are associated with increased information asymmetry and disclosures about the use of market indices or illiquidity adjustments are associated with decreased information asymmetry. When interacted with Level 3 assets, disclosures about changes in valuation techniques intensify the positive relation between Level 3 assets and information asymmetry and disclosures about asset-backed securities mitigate the positive relation between Level 3 assets and information asymmetry. Our study provides insight about the types of disclosures that impacted information asymmetries during the financial crisis. However, this setting of uncertainty and use of a small sample size may limit the ability to generalize these inferences to other time periods or other financial firms. Classification-JEL: G21, M41 Keywords: Voluntary Disclosure, Fair Value Accounting, Information Asymmetry Journal: Accounting & Taxation Pages: 21-37 Volume: 7 Issue: 1 Year: 2015 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v7n1-2015/AT-V7N1-2015-2.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:7:y:2015:i:1:p:21-37 Template-Type: ReDIF-Article 1.0 Author-Name: Abdullah Mohammed Alzharani Author-Name: Abdullah Mohammed Alzharani Title: AN EMPIRICAL INVESTIGATION OF AUDIT COMMITTEE EFFECTIVENESS AND RISK MANAGEMENT: EVIDENCE FROM SAUDI ARABIA Abstract: This study examines the association between audit committee characteristics and the combination of risk management and audit committee activities by industrial Saudi listed firms. Since none of the sample firms has established a stand-alone risk management committee and the functions of monitoring and controlling risk activities are closer to the audit committee than board of directors, this study expects that audit committees with non-executive independent members, more members on the audit committee, financially expert audit committee members and diligence are more likely to combine the risk management and audit committee activities. The study utilizes a cross-sectional analysis of 102 firm-year observations during the 2007-2011 period. A pooled logistic regression analysis is used to estimate the associations proposed in the hypotheses. The study finds that only audit committee size is positively related to the combination of risk management and audit committee activities. This result suggests that the size of the audit committee do indeed proxy for its effectiveness in enhancing the quality of internal control and, thus, monitoring risk management activities. The result of this study contributes to the existing theory and empirical evidence of how the effectiveness of audit committee is related to monitoring and controlling risk management activities. This study offers policy-makers additional evidence to be used for setting up and/or enacting regulations in Saudi Arabia. Classification-JEL: M40, M42 Keywords: Audit Committee Effectiveness, Risk Management, Saudi Arabia Journal: Accounting & Taxation Pages: 39-49 Volume: 7 Issue: 1 Year: 2015 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v7n1-2015/AT-V7N1-2015-3.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:7:y:2015:i:1:p:39-49 Template-Type: ReDIF-Article 1.0 Author-Name: Irene Kim Title: DIRECTORS’ AND OFFICERS’ INSURANCE AND OPPORTUNISM IN ACCOUNTING CHOICE Abstract: In this paper, the focus is on how excessive directors’ and officers’ liability insurance coverage is associated with risk-taking behavior in financial reporting. This study examines the implications of two alternative hypotheses. The opportunism hypothesis predicts that the covered executive is overly buffered from recourse via securities litigation, which leads to aggressive accounting choices. The alternative hypothesis is the economic insurance hypothesis which predicts that firms will over-invest in directors’ and officers’ liability insurance coverage independent of their aptitude for accounting manipulation because of the managers’ risk aversion. Aggressive accounting is measured using regulatory accounting enforcement actions and earnings restatements. I find evidence consistent with the opportunism hypothesis in both the enforcement action and restatement setting, suggesting that officers rely on excessive insurance in making financial reporting decisions. The findings have implications for managerial private information and its impact on financial reporting decisions. Classification-JEL: M41, K3 Keywords: Earnings Quality, Litigation, Insurance Journal: Accounting & Taxation Pages: 51-65 Volume: 7 Issue: 1 Year: 2015 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v7n1-2015/AT-V7N1-2015-4.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:7:y:2015:i:1:p:51-65 Template-Type: ReDIF-Article 1.0 Author-Name: Fany Inasius Title: TAX COMPLIANCE OF SMALL AND MEDIUM ENTERPRISES: EVIDENCE FROM INDONESIA Abstract: It has been argued that regulatory requirements on business, especially those on SMEs can be a constraint on their growth. Indonesian Small and Medium Enterprises (SMEs) play a significant role in the national economy. This paper measures the tax compliance rate of particular individual retailers known as individual taxpayers on SMEs with annual income ranging from IDR 600 millions up to IDR 4.8billion (around USD 400,000 with the exchange rate at the time when the research was undertaken) in Indonesia. Four tax compliance variables were examined namely the perception of tax rate, the referral group, the probability of being audited and the tax knowledge. From 319 respondents, who are individual retailers, the result shows the income tax rate is negatively correlated to tax compliance while probability of being audited, referral group, and tax knowledge are positively correlated by taxcompliance. Tax knowledge, however, has a more significant impact on individual tax compliance Classification-JEL: H20 Keywords: Tax Compliance, SMEs, Individual Taxpayers, Retailers Journal: Accounting & Taxation Pages: 67-73 Volume: 7 Issue: 1 Year: 2015 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v7n1-2015/AT-V7N1-2015-5.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:7:y:2015:i:1:p:67-73 Template-Type: ReDIF-Article 1.0 Author-Name: Nirosh Kuruppu Author-Name: Peter Oyelere Author-Name: Hamdan Al Jabri Title: INTERNET FINANCIAL REPORTING AND DISCLOSURE PRACTICES OF PUBLICLY TRADED CORPORATIONS: EVIDENCE FROM SRI LANKA Abstract: Although Internet Financial Reporting (IFR) has become standard practice rather than the exception in most Western countries, empirical evidence of the phenomenon is only just emerging in developing economies. This paper examines the use of the internet as a medium for the voluntary communication of financial information by publicly traded companies on the Colombo Stock Exchange (CSE) in Sri Lanka. The 244 companies listed on the CSE were analysed by its 20 industry sectors. The results indicate that IFR is still at a nascent stage in Sri Lanka and there are considerable opportunities and challenges for all stakeholder parties. While 59 percent of companies maintain websites, only 63 of these (about 43%) use their websites to communicate financial information. This indicates that companies in Sri Lanka do not fully garner the benefits of engaging in IFR. However, the online annual reports of the latter IFR companies were found to be highly accessible, with 87 percent of the websites enabling users to locate information in three mouse clicks or less. Industry affiliation is found to be an important factor in determining the intensity of IFR practices as revealed by the statistically significant Pearson Chi-square test and the Likelihood ratio. It was also found that although a variety of reporting formats are utilised for engaging in IFR, PDF is the most widespread format with 92 percent of CSE listed companies using this medium. Classification-JEL: M4 Keywords: Internet Financial Reporting, Voluntary Disclosure, Electronic Financial Reporting, Financial Report Accessibility, Corporate Communication, Sri Lanka Journal: Accounting & Taxation Pages: 75-91 Volume: 7 Issue: 1 Year: 2015 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v7n1-2015/AT-V7N1-2015-6.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:7:y:2015:i:1:p:75-91 Template-Type: ReDIF-Article 1.0 Author-Name:Damy Colon Author-Name: Dirk Swagerman Title: ENHANCED RELATIONSHIP PARTICIPATION INCENTIVES FOR (DUTCH) MULTINATIONAL ORGANIZATIONS Abstract: This paper deals with enhanced relationship participation in an international context. The purpose of this study has been to offer insight into the essentials for implementing a Tax Control Framework (TCF) and identify organizations’ incentives to participate in an enhanced relationship. First, the common guidelines for implementing a TCF are described. Second, we investigate organizations’ incentives to participate in an enhanced relationship on the basis of a survey conducted among the tax directors of the largest Dutch multinational organizations quoted on the Dutch stock exchange. Our analysis identifies two important incentives for organizations to participate in an enhanced relationship. Classification-JEL: H20, H25, K34 Keywords: Controlling, Corporate Governance, Enhanced Relationship, Tax, OECD, Internal Control Journal: Accounting & Taxation Pages: 93-101 Volume: 7 Issue: 1 Year: 2015 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v7n1-2015/AT-V7N1-2015-7.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:7:y:2015:i:2:p:93-101 Template-Type: ReDIF-Article 1.0 Author-Name: Guglielmo D’Amico Author-Name: Giuseppe Di Biase Author-Name: Raimondo Manca Title: MEASURING INCOME INEQUALITY: AN APPLICATION OF THE POPULATION DYNAMIC THEIL'S ENTROPY Abstract: In this paper we use the index we call Population Dynamic Theil's Entropy to analyze as the income inequality varies on time. The index may consider both the inequality among the classes in which we assign the individuals and the inequality within each class. This inequality measure working in a dynamic way allows to forecast inequality in time. Besides it may capture not only changes in the wealth but also changes in the population composition. The earned results are relevant for adopting a social and economic policy of wealth distribution. We fulfilled the model with statistics from the Organization for Economic Cooperation and Development and we applied it to Mexico, Portugal and Spain. We picked up economic data about population, means and medians of the equivalised net income for the three countries. The data refer to years from 2004 to 2011. Classification-JEL: E64, E27 Keywords: Income Distribution, Population Dynamic Theil's Entropy, Markov Chains Journal: Accounting & Taxation Pages: 103-114 Volume: 7 Issue: 1 Year: 2015 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v7n1-2015/AT-V7N1-2015-8.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:7:y:2015:i:1:p:103-114