Template-Type: ReDIF-Article 1.0 Author-Name: Abdullah Al-Maghzom Author-Name: Khaled Hussainey Author-Name: Doaa Aly Title: VALUE RELEVANCE OF VOLUNTARY RISK DISCLOSURE LEVELS: EVIDENCE FROM SAUDI BANKS Abstract: This study seeks to examine whether the levels of voluntary risk disclosure in Saudi listed banks are valuerelevant or not. The sample of this investigation consists of all banks listed on the Saudi Stock Market Exchange (Tadawul). All data was collected from the annual reports of the sample banks from 2009 to 2013 using manual content analysis. Other variables were collected using DataStream and Bloomberg. Ordinary least squares regressions analysis was used. The findings of the multivariate analysis demonstrated that there is no association between the levels of voluntary risk disclosure and firm value as measured by the market to book value at the end of the year (MTBV). But, the results generate from the accounting based measure (ROA) show that there is a positively significant association between the levels of voluntary risk disclosure and firm value. This study contributes to the literature on general accounting disclosure and in particular advances and contributes to the literature on risk disclosure in developing economies. It also contributes to the understanding of the role of accounting information in relation to the market valuation of a firm. The empirical findings of this study have several implications for banks’ investors, regulatory bodies and any other interested group as they report the importance of corporate risk disclosure and its economic consequences. This can be used to increase the value relevance in the banking sector. This study also informs regulators about the current level of risk disclosure in all Saudi listed banks.To the best of the researcher’s knowledge, no prior research has been conducted on the relationship between firm value and levels of risk disclosure in general nor especially in emerging markets, such as Saudi Arabia, the focus of this study Classification-JEL: M4, M49 Keywords: Banks, Saudi Arabia, Risk Disclosure, Economic Consequences, Firm Value Journal: Accounting & Taxation Pages: 1-25 Volume: 8 Issue: 1 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v8n1-2016/AT-V8N1-2016-1.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:8:y:2016:i:1:p:1-25 Template-Type: ReDIF-Article 1.0 Author-Name: Silvia Bressan Title: TAXATION AND LEVERAGE INSIDE BANK HOLDING COMPANIES Abstract: This paper examines the effect of leverage on the corporate taxes paid by United States Bank Holding Companies. We find that, Bank Holding Companies reduce their tax burden when debt is raised from subsidiaries. However, taxes do not significantly change when debt is raised from the parent firm. Our view is that, the more favorable fiscal treatment of corporate debt against equity, gives an incentive to Bank Holding Companies towards the tax consolidation of subsidiaries. In this way they take advantage of the tax shield of the affiliates. The empirical results indicate that, the funding structure of the group plays a role on taxation. The results are important for the understanding of tax avoidance inside large banking institutions Classification-JEL: G21, G32 Keywords: Bank Holding Companies, Taxation, Leverage Journal: Accounting & Taxation Pages: 27-37 Volume: 8 Issue: 1 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v8n1-2016/AT-V8N1-2016-2.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:8:y:2016:i:1:p:27-37 Template-Type: ReDIF-Article 1.0 Author-Name: Xudong Li Title: THE IMPACT OF THE SARBANES-OXLEY ACT ON EARNINGS MANAGEMENT USING CLASSIFICATION SHIFTING EVIDENCE FROM CORE EARNINGS AND SPECIAL ITEMS Abstract: This paper examines whether the passage of the Sarbanes-Oxley Act (thereafter, SOX) curbs firms’ earnings management behavior through shifting core expenses to special items. The passage of SOX could be an effective deterrent to misclassification activities as it aims to prevent accounting fraud and limit management misbehavior, imposing significant legal liabilities and stiffer penalties on managers for aggressive financial reporting. Alternatively, because classification shifting does not affect reported net income, thereby is less likely to be detected and associated with lower litigation risk, it is likely to be used as a substitute for accruals-based earnings management and therefore experiences an increasing trend in the post-SOX period. Using a sample period from 1988 to 2010, I find evidence consistent with the deterrent effect, that is, the magnitude of unexpected core earnings declines and firms shift fewer core expenses to special items after the passage of the SOX of 2002. My study adds to the literature on the impact of SOX on earnings management by finding that SOX is effective in curbing classification shifting between core earnings and special items, a form of earnings management that misrepresents components of earnings but has no effect on the bottom line income Classification-JEL: M4 Keywords: Classification Shifting; Core Earnings; Special Items Journal: Accounting & Taxation Pages: 39-48 Volume: 8 Issue: 1 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v8n1-2016/AT-V8N1-2016-3.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:8:y:2016:i:1:p:39-48 Template-Type: ReDIF-Article 1.0 Author-Name: Albert D. Spalding Author-Name: Nancy W. Spalding Title: SUBSTANTIAL AUTHORITY UPDATE: TAX PENALTY AVOIDANCE BY GOOD FAITH REFERENCE TO JUDICIAL, ADMINISTRATIVE AND LEGISLATIVE AUTHORITIES Abstract: Internal Revenue Code (IRC) 6662(b) authorizes the Internal Revenue Service (IRS) to impose a penalty if an underpayment of income tax by a taxpayer exceeds a computational threshold called a substantial understatement. An understatement is reduced, however, by the portion attributable to an item for which the taxpayer had substantial authority. Substantial authority is defined in Treasury Regulation §1,66624(d)(2), but taxpayers are required to recognize and take into account the relative weight of various authorities such as regulations, revenue rulings, legislative histories, court cases and IRS pronouncements. Alternatively, taxpayers may make a reasonable cause argument for the waiver of underpayment penalties, claiming that they made a good faith effort to comply with the IRC requirements. We examine the manner and extent to which courts have been willing to waive penalties based on substantial authority cited by taxpayers. We also analyze cases in which taxpayers have claimed reasonable cause. We draw conclusions about judicial responses to these two penalty avoidance arguments Classification-JEL: H26, K34, M48 Keywords: Preparer Penalties, Substantial Authority, Taxation, Tax Penalties, Accuracy-Related Penalty Journal: Accounting & Taxation Pages: 49-58 Volume: 8 Issue: 1 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v8n1-2016/AT-V8N1-2016-4.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:8:y:2016:i:1:p:49-58 Template-Type: ReDIF-Article 1.0 Author-Name: Carmen B. Ríos-Figueroa Title: AN EXAMINATION OF THE IMPACT OF CULTURE ON IFRS RISK DISCLOSURES FOR FIRMS THAT CROSS- LIST IN THE U.S. Abstract: Accounting disclosures is an important factor in the decision making process of users of financial statements. Differences in cultural values across countries may result in different opinions regarding the adequacy or extent of the disclosures on the financial statements. The objective of this study is to examine the effect of culture on IFRS 7 risk disclosures in firms that cross-list in the United States. This paper extends the current literature in the area of culture and IFRS risk disclosure requirements. The study sample consists of 62 international firms that trade in the New York Stock Exchange. A cross country analysis related to IFRS 7 disclosure level of financial risk was prepared for each firm. Using Hofstede (1983) and Gray’s theory (1988), each company and country was divided by cultural area and by a level of secrecy and conservatism scale. A level of risk disclosures was created for each company after considering the extension of the IFRS 7 disclosures in their annual reports. The results suggest that culture (secrecy and conservatism) do not have a significant impact in IFRS 7 disclosure levels. However, other economic and political factors seem to influence risk disclosures in financial statements Classification-JEL: F2, M16, M40, M41 Keywords: Culture, IFRS 7, Risk Disclosures, Secrecy, Conservatism Journal: Accounting & Taxation Pages: 59-67 Volume: 8 Issue: 1 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v8n1-2016/AT-V8N1-2016-5.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:8:y:2016:i:1:p:59-67 Template-Type: ReDIF-Article 1.0 Author-Name: Ushad Subadar Agathee Author-Name: Mootooganagen Ramen Title: SOCIAL AND ENVIRONMENTAL ACCOUNTING: EVIDENCE FROM THE STOCK EXCHANGE OF MAURITIUS Abstract: This paper looks at the social and environmental disclosure in Mauritius. In particular, the listed companies of Mauritius were targeted to assess their views for and against the social and environmental practices. Using a sample of 30 listed companies, the results suggest that there are listed companies in Mauritius which are engaged in some of the elements of social and environmental accounting (SEA) practices such as disclosing issues, ensuring transparency, complying with corporate governance. However, there are still areas of improvement such as proper education and wellbeing of the citizen, training, employment of handicapped person with adequate equipment amongst others which need to be addressed. Classification-JEL: M40, M49 Keywords: Accounting, Social Accounting, Environmental Accounting, SEM Journal: Accounting & Taxation Pages: 69-76 Volume: 8 Issue: 1 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v8n1-2016/AT-V8N1-2016-6.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:8:y:2016:i:1:p:69-76 Template-Type: ReDIF-Article 1.0 Author-Name: Peg Horan Author-Name: Thomas Horan Title: A REVIEW OF HOBBY AND BUSINESS LOSS RULES: EVIDENCE FROM RECENT DEVELOPMENTS Abstract: When we think of a hobby, we think of something that is engaged in for recreational or pleasure purposes such as painting, writing, coaching, golfing, horse farming, film producing, developing athletic abilities to win say an Olympic Metal, working on arts and crafts, creating music, opening a bed and breakfast or a country estate, to name a few. These recreational activities are expensive to pursue but may also have a money making aspect as well. On the other hand, strictly speaking a business is an economic activity engaged primarily to generate a profit. One can see where a hobby could be pursued for pleasure and profit. Also one could see where there could be a tax motivation to deduct the losses from a hobby operation by having it categorized as a business to offset other taxable income. So how to distinguish? Or rather, where is the line drawn in the sand that distinguishes between a hobby and a business is here explored as the lines may be blurred from the interpretation of the Internal Revenue Service and from Tax Court Case tried. Also, from the literature review, what is the unofficial interpretation that seems to emerge Classification-JEL: K34 Keywords: Hobby Loss, Business Loss, Income Tax Deductible Journal: Accounting & Taxation Pages: 77-86 Volume: 8 Issue: 1 Year: 2016 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v8n1-2016/AT-V8N1-2016-7.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:8:y:2016:i:1:p:77-86