Corporate Governance, CEO Compensation and accounting conservatism
Purpose:This study examines the moderating impact of corporate governance quality on the relation between CEO bonus compensation and accounting conservatism.
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Purpose:This study examines the moderating impact of corporate governance quality on the relation between CEO bonus compensation and accounting conservatism.
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This paper explores the significance of the true and fair view, as the main objective of financial reporting to which accounting principles are subordinated, and the relationship between it and all accounting principles, focusing on identifying their contribution to achieving the true and fair view and, simultaneously, the potential conflicts. To address this issue, several interpretations of the true and fair view objective were analyzed together with the way the requirements of each accounting principle contribute to the achievement of this objective. The paper highlights that the true and fair view recipe involves contributions such as aggregating values from different reporting periods, separately reflecting assets and liabilities to prevent hiding part of a company’s wealth or masking the risks that the company is facing, accurate, neutral and free from error/omission representation of transactions, establishing an acceptable materiality level that does not allow information to be over contracted or overcrowded with insignificant details, reflecting the economic substance of the transaction instead of the legal one, a realistic and balanced estimation of the risks and value losses, the presentation of past rights and obligations without being limited by their effective settlement date.
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In this article we present aspects regarding the development of the human resources budget, the calculation methods for the wage bill and the decisions related to the wage policy, alongside a series of examples, in order to convey a better understanding of the topic.
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In order to develop the present article, we selected a transport entity listed on the Bucharest Stock Exchange and financially diagnosed over three consecutive years, from 2018 to 2020, through structural ratios, creditworthiness indicators (liquidity and solvency) and, last but not least, financial balance indicators.
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The article discusses a series of conceptual and practical aspects regarding the taxation of the income obtained through practice of the lawyer profession. Taxpayers who obtained independent income from this profession have to establish through self-assessment the filling and payment obligations in the single tax return filled within the legal timeframe stated in the Fiscal Code. The lawyers registered with the Bar, licensed to practice the profession, have the obligation to contribute to their own pension and other social security rights system. The contribution obligation of the members of the National Social Security Fund for Lawyers becomes effective for each calendar month starting from the moment the basis for the calculation of the monthly contribution is established, this institution being responsible for the administration of the contribution receivables of the Bar members.
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In the present article, we aim to highlight the application conditions of the enforcement system, as well as the elements that are included in the basis for the calculation of the income tax compared to the elements considered for the tax revenue specific to micro-enterprises, so that there is no confusion regarding the correct determination of the taxes owed by enterprises. Also, we present the method of calculating the income tax, as well the advantages and disadvantages of the two types of taxation.
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In order to finance their activity, companies have the possibility to access European funds provided that they fulfil certain eligibility criteria specific to different financing programs, ensure administrative compliance, obtain an appropriate score in the technical-financial evaluation phase and fall into the budget allocated to the call for projects. Once the financing contract is signed, the implementation of the projects begins, which involves making expenses for the purchase of goods/services/works, as the case may be. The payments involved in carrying out such operations may be temporarily supported from the company’s own funds, until the money is received from the financer in a certain amount or, definitively, both from the company’s own funds and non-reimbursable funds. Thus, after signing the financing contracts, depending on the preference of the beneficiaries or the conditions imposed by a certain context, different financial mechanisms could intervene: pre-financing requests, payment requests and reimbursement requests. This paper aims to enable the understanding of professional accountants, but also other stakeholders, regarding the mechanisms through which the funds are transferred to beneficiaries in European funded projects.
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On July 15th 1921, the Official Journal of Romania witnessed the publication of the Law on the organization of the Body of Licensed and Expert Accountants. The longtime wish of higher school of business graduates thus became true, they established their first association in 1888. Since then, until the law was published, the regulation of the accountancy profession was the main topic of various discussions and attitudes, of several pleadings addressed to public authorities and debates held at the meetings of a multitude of institutes representing these graduates’ interests, grouped within the Union of Business Schools Graduates, subsequently the Body of Higher Schools of Business Graduates, which acquired legal personality in 1916. There were also other subjects, directly related to accountants’ activity, that drew the graduates’ attention, both before and after the law was published, such as: censors’ statute, accounting expertise, visas on trade registers; business education reform; the Body’s relations with authorities. A number of public figures linked their faith to asserting the accountancy profession, its regulation and the ongoing representation of its interests. We should mention here, among many other, Nicolae Butculescu, I. St. Rasidescu, Vasile M. Ioachim, Petru Draganescu-Brates, Grigore Trancu-Iasi, George Alesseanu, Spiridon Iacobescu, Alexandru Sorescu. An important activity of the Body was the organisation of congresses. They began taking place every two years, uninterruptedly, starting 1923 until 1939. The activity of the Body of Expert and Licensed Accountants was influenced by the political and social events of its time, especially since 1935. Beginning with 1940, its activity saw a significant decrease. On 13 March 1951, by the decree of the Presidium of the Great National Assembly of the People’s Republic of Romania, the Body was disbanded. The first legal acts regulating the accounting expertise activity in line with period-specific trends were published in 1957 and 1958. After 1989, the Romanian accountancy profession regained its statute and is represented by the two professional bodies, the Body of Expert and Licensed Accountants of Romania and the Chamber of Financial Auditors of Romania. These bodies, and along with them, Romanian professional accountants, joined the regional, European and international professional organizations.
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Through this paper, the authors want to mark the centenary of the accounting profession in our country (1921-2021). They aim to analyze the evolution of financial reporting, at the national level, in the last three decades, parallel to the natural development of the accounting profession and to bring into the spotlights: - how developments at the national level have kept pace with the ever-changing European and international financial reporting requirements; - the current challenges for the accounting profession in general and financial auditors, in particular, generated by the frequent and particularly complex changes of international standards in the field, changes generated precisely by the need to strengthen the quality of the information provided by financial reporting; - the natural steps to be taken to strengthen professional cooperation and collaboration within and in the interest of the accounting profession, to respond effectively to the expectations of all stakeholders in the development of financial reporting.
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The disclosure of KAMs contribute to the increase of financial-reporting quality, the value of the audit report and implicit interest in it. Moreover, KAM’s disclosure has a positive influence over the expectation gap between the auditors and other users of the audit report and financial statements. This study aims to identify relevant drivers influencing the Key Audit Matters (KAMs) disclosed in the audit report, based on a review of the articles published in top accounting journals. Our results reveal the fact that the audited company itself especially influences the disclosure of the KAMs, emphasizing the size of the company, the complexity of the business, the applicable regulation of the industry in which the company operates, all of which impact the overall client-risk level. Other relevant factors are the accounting standards with which the company must comply and on which it must report, the audit company (‘Big Four’ or not) and the audited company’s location.
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Research background: Deteriorating economic conditions and a negative outlook increase the pressure on financial management and the need to show high financial performance. According to Positive Accounting Theory, the growing risk of bankruptcy is associated with the phenomenon of earnings management. Bankruptcy risk and the quality of reported profits, along with other aspects of financial performance, vary throughout the company's life cycle. Nevertheless, these factors or their interactions are investigated only to a very small extent. Purpose of the article: The aim of this study is to clarify the impact of corporate life cycle and bankruptcy on earnings management, in order to describe behaviour of companies at different stages of corporate life cycle. Methods: A hierarchical mixed model with a random time and industry effect was chosen as appropriate because it allows the investigation of multilevel data that is not independent. The sample covers the financial indicators of more than 33,000 Central European companies from 2015–2019. The non-sequential Dickinson model, company age, and three models of accrual earnings management were used as proxies for the company's life cycle and quality of reported profit. Findings & value added: Earnings management and bankruptcy risk have a U-shape, indicating that financially distressed firms reduce reported accounting profit at the Introduction, Decline and, to a lesser extent, at the Growth stage. Slovak and Czech companies manipulate profits to a similar extent, Hungarian companies increase accounting profit to a greatest extent than the surveyed countries by controlling bankruptcy — life cycle effect; however, the variability of accounting manipulations across industries has not been demonstrated
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Research background: The paper investigates the earnings management phenomenon in the context of Central European countries, attempting to identify the factors and incentives that can influence earnings management behavior on a sample of 8,156 enterprises from Slovakia, the Czech Republic, Hungary, and Poland. Purpose of the article: The main purpose of the manuscript is to prove that there are significant differences in earnings management practices (measured by discretionary accruals) across the countries and to find the firm-specific features that influence the way enterprises manage their earnings. Methods: The modified Jones model was used to calculate the discretionary accruals, which are further analyzed across the countries. The statistically significant differences were confirmed across the countries. Thus, the impact of the economic sector, firm size, firm age, legal form, and ownership structure on earnings management behavior is studied by the Kruskal-Wallis test. The Dunn-Bonferroni post hoc tests then revealed the significant differences across the categories of the investigated earnings management determinants. To find the association between the particular earnings management practice (income-increasing or income-decreasing manipulation), correspondence analysis was used to visualize the mutual relations. Findings & value added: The results of the realized investigation revealed that the economic sector is one of the most important earnings management determinants, as its statistical significance was confirmed in each analyzed country. The correspondence analysis determined specific sectors, where income-increasing manipulation with earnings is practiced (NACE codes F, J, K, M, N), and vice versa, income-decreasing earnings management is characteristic for enterprises in sectors A, C, D, G or L. In specific economic conditions, firm size is also a relevant indicator (Hungary), or firm age and legal form and ownership structure (Poland).
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Theoretical background: One of the factors influencing internal audit effectiveness is the expectation gap understood as the extent to which the function does not meet the expectations of auditees, managers, executives, and audit committee members.Purpose of the article: The purpose of the article was to determine why they perceive internal audit in their organisations as not fulfiling their expectations and how their awareness of this affects internal audit effectiveness.Research methods: This article is a pilot study that uses the results of a critical review of the literature and the findings of the survey of internal audit stakeholders in Poland.Main findings: The article shows that internal audit stakeholders have limited knowledge of the role and responsibilities of internal auditors and the purpose of their work. According to their views, the raison d’être of the internal audit function is fraud detection. This perception of internal audit that emerged in its early years still determines the majority of opinions about its effectiveness.
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This study focuses on the use of Instagram by tourism companies. Specifically, it aims to analyze how Instagram empowers individuals over corporations in the digital dialogue, thus balancing the information asymmetry between corporations and stakeholders. Four categories of metrics have been collected to analyze the use of Instagram by companies: presence, impact, conversation, and influence. Additionally, OLS regressions have been performed to identify potential explanatory factors to explain the different behavior of each firm and its corresponding communities. While the use of Instagram by the selected firms is still scarce, significant results are as follows: corporations are using Instagram as an additional channel in their current communication; some explanatory factors account for significant differences in countries, size, and industries; and users are somehow reactive to the stream of pictures and texts disclosed by firms. The presence and impact of companies on Instagram are a highly important source for driving stakeholders’ conversation within the digital arena.
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The paper conducts a descriptive analysis of cash management, as well as the factors that determine the movement of cash. The first part of the paper provides a theoretical overview of the matter of cash and an analysis of the factors that affect the amount of cash held by the company to settle due liabilities and investments in business activities. In the second part of the paper, a research was conducted related to the descriptive analysis of cash management and the identification of factors that have a significant effect on cash holding. The research is based on a sample of 578 observations of companies, ie 289 financial reports of companies listed on the Banja Luka Stock Exchange in the period 2018-2019. The results of the research indicate that companies on average hold cash in the amount of 4% in relation to total assets. On the other hand, the results of the research indicate that the amount of cash is primarily influenced by the size of the company and indebtedness. The size of the company has a negative effect on the matter of holding cash, and also companies that have a higher level of indebtedness have a smaller amount of cash measured through the ratio of total assets.
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The purpose of this paper is to analyse capital structure and its dynamics for farms in Poland, a leading European Union producer. The theoretical framework is based on the trade-off and pecking order theories of capital structure. We use data from the Farm Accountancy Data Network (FADN), which is representative of Polish professional farms during the period 2009–2018. We adopt a dynamic partial adjustment model using the generalized method of moments in order to explain the financing of farms through debt. The results show that Polish farms exhibit low target levels of debt, which they adjust dynamically, thus partially validating the trade-off theory. While size and growth opportunities positively influence the indebtedness of farms, profitability and land have the opposite effect. Polish farmers therefore use available internal funds, especially retained earnings, as a substitute for debt, in line with the pecking order theory.
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The single tax statement may be corrected anytime by the tax-payers on their own initiative, wherever the information does not correspond with what was stated in the previously submitted form. In the situation were the natural person wishes to send a rectifying statement, he/she shall use the same form, ticking the adequate box in order to mark the fact that it is about a rectification. In this statement only one chapter or both chapters may be corrected, at al headings, as necessary. The tax-payers may rectify the estimated income tax until the 31st of December of the tax year. There is also the possibility of submitting a rectifying statement for the previous years (2018-2020), if the tax-payer finds that the information does not correspond with those in the previously submitted statements.
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At European level, in recent years, a tendency of the investors heading towards the real estate sector can be noticed, which, in our opinion, may lead to important structural changes of this market. The changes are mainly determined by the liberalization process of the real estate offer formation method on the investment markets. Thus, the adequate estimation of the value of real estate and the knowledge of its characteristics become more and more important. In this context, this article is important by presenting the adequate techniques and methods for the allocation of the market value of a real estate on its components.
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The objective of this research is to study the impact of applying the AAOIFIs in Islamic banks, while referring to the impact of applying the AAOIFIs in Arab countries, the focus being on the Iraqi Islamic banks. The major responsibility of the AAOIFIs is to guarantee that accounting methods comply with Sharia – Islamic law, which is only used by a few financial institutions in Islamic countries especially Islamic banks. The AAOIFIs are an enchanting prospect coming from the holy scripts.The researchers obtained the data for the study through a questionnaire prepared for this purpose, distributed to 68 workers in the field of Islamic banks. The researchers received 52 responses from several Islamic banks. The study concluded with the set of results that Islamic banks are seeking for the profitability without increasing the security for their deposits or attracting more investors, and the customers of Islamic banks are seeking for “legal benefits” by their investment.The study led to the conclusion that the adoption of the AAOIFIs in Islamic banks will not help attracting foreign investments. The study suggested there is an urgent and actual need to adopt and implement the IFRSs instead of the AAOIFIs within the sample of the study and include other institutions with a similar environment like Islamic banks.
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This descriptive and exploratory study aims to analyse and compare the macro-level determinants of board effectiveness of listed companies for two European countries, the UK and Romania. The main focus is on the relationships between national culture and legal-institutional factors (macro-determinants) and how they might affect board effectiveness in both countries. By investigating the moderating effect of macro-level determinants on board effectiveness, this research contributes to the small number of cross-border studies on board effectiveness in this area. The cross-national context of this study is also relevant against the background of the increasing internationalization of boards. This implies that the understanding of macro-determinants and their effect on board processes becomes increasingly important for boards, and especially chairs, to take into consideration.
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