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An Empirical Assist To Determine Whether An Activity Is Engaged In For A Profit
Get PDFTaxpayers engage in activities for both tax and nontax reasons. Some of these undertakings are geared to earn a profit. Other activities provide personal pleasure and recreation. Regardless of the activity type, expenses are incurred and can be substantial. Depending on the type of engagement, profit may or may not be achieved. Naturally, many of these pursuits are undertaken for a number of consecutive years. Because of the tax benefits these activities possess, this issue remains highly litigated and closely scrutinized by the Internal Revenue Service. This study investigates the guidance delineated by the Service and creates a model of the significant variables that affect the judiciary’s decision-making. Backwards stepwise logistic regression is used to create the model. Chi-square is also used to determine statistical significance between the decision rendered and judge’s gender. Also, political affiliation of the judge is examined. The one variable (manner in which the taxpayer carries on an activity) model created correctly classifies 96.3% of the decisions made in the U.S. Tax Court. Additionally, a statistically significant difference is found between male and female judges. However, no difference is found based on the political affiliation of the judge
Changes In Special Items And Future Firm Growth
Get PDFThis study examines the effect of changes in special items on future firm growth. We find that a decrease in special items reverses almost completely through one-year-ahead earnings, whereas an increase in special items is positively associated with the next year’s earnings growth. We also find that the information embedded in changes in special items is incremental to that of fundamental signals documented in the literature, thereby identifying changes in special items as an additional fundamental signal. Furthermore, we find that both an increase and a decrease in special items lead to decreases in future sales and net operating assets, suggesting an inverse U-shaped relation between changes in special items and growth in these measures. Overall, our findings underscore the importance of considering various growth measures in understanding the implication of changes in special items for future firm growth
Style Influences And JSE Sector Returns: Evidence From The South African Stock Market
Get PDFA distinctive phenomenon on the Johannesburg Stock Exchange (JSE) is the market segmentation between the resource sector and the financial and industrial sectors documented in empirical literature. The dominance of the resource sector in the cap-weighted FTSE/JSE All-Share index (ALSI) implies that the ALSI index might not be mean-variance efficient due to the potential lack of diversification. We estimate and compare the historical sector exposures of the ALSI index to its hypothetically optimal sector exposures over the examination period from 2003 through 2013. It is found that to achieve mean-variance efficiency on the JSE over the examination period, one should maintain substantial investments in the industrial sector and tactically allocate the remainder of the investments to the financial sector and/or the resource sector. It is also observed that the sector exposures of the ALSI index have shifted significantly from the resource sector to the industrial sector. To gain a better understanding of the investment style influences on the JSE sector returns, we further investigate the exposures of the prominent JSE sector returns to the style risks using the Carhart (1997) four-factor model. It is found that investments in financial stocks are exposed to significant value risk and, to some degree, influenced by the performance of large caps on the JSE. In addition, excess returns on the industrial sector are attributed to value, small cap and momentum risk premiums to some degree. The performance of the resource sector, on the other hand, is mildly biased towards the growth, large cap and contrarian investment styles on the JSE
The Effect Of Corporate Governance On Unfaithful Disclosure Designation And Unfaithful Disclosure Penalty Points
Get PDFThis paper investigates the relation between Unfaithful Disclosure Corporations (“UDC”) and corporate governance using listed firm (KOSPI and KOSDAQ) data in Korea. Prior literature reports that corporate governance has an impact on the level of disclosure and the quality of disclosure provided by companies. However, it is hard to find the studies about corporate governance and UDC at the term of disclosure quality. Compare to some financially advanced countries, Korea established corporate governance in a relatively short period of time; hence concerns have been raised the corporate governance have not played effective role to monitor management. We question how corporate governance affects companies’ unfaithful disclosure by using several corporate governance proxy variables and UDC data which is unique system in Korea.
From the empirical tests, we find a negative association between the proportion of outside directors, an indicator of the board’s independence, and UDC designation, among companies listed on both KOSPI and KOSDAQ. On the other hand, there is a significant positive association between the proportion of outside directors and UDCs’ imposed and accumulated penalty points among KOSDAQ-listed companies. This implies that outside director system effectively play a monitoring role however due to different natures of members included in outside directors, the system often fails to control regarding based reasons for penalty points imposition. In addition, we find the percentage of foreign equity ownership showed statistically significant positive association with UDC designation and a significant positive association with the imposed and accumulated penalty points among KOSPI-listed companies. We interpret this results that foreign investors with a short-term investment propensity may not enough to play a proper monitoring role in Korea and thereby they cannot effectively control the disclosure quality provided by the management. We also find that there is a significant positive association between the percentage of managerial ownership and UDC designation in the KOSDAQ market.
This study will contribute to academics and disclosure-related practitioners by documenting about corporate governance and its impact on unfaithful disclosure corporations
Are Leaders’ Personality Traits Imperative For Employees’ Job Performance? The Context Of An Emerging Economy
Get PDFLeader’s personality considerably influences the behavior of employees and is perhaps one of the most important predictor of their job performance. The purpose of the study was to evaluate the personality-performance paradigm in the context of emerging economies. Personality was assessed through big five traits, namely openness to experience, conscientiousness, extraversion, agreeableness and neuroticism. While task performance attribute of job performance was considered as dependent variable. Stratified sampling technique was deployed to gather data from 149 SMEs belonging to diversified business sectors operating in the industrial city of Gujranwala, Pakistan. Cronbach’s alpha test endorsed the consistency of survey questionnaire, and multiple regression analysis was used to test hypotheses. All of the personality traits, with the exception of neuroticism, are found to be valid predictors of employee job performance, though the degree and significance of correlation varies. The study contributes to the enhanced understanding of the personality-performance relationship and highlights the desirable personality inventories of potential leaders and entrepreneurs. Broader practical implications and recommendations for future research bring the discussion to the close
Reported Profits And Effective Tax Rate Following Accounting Standards Changes Analysis Of Consolidated Financial Statements And Separate Financial Statements
Get PDFThis study empirically examines how the adoption of IFRS affected the reported profits and effective tax rates of firms by analyzing consolidated financial statements and separate financial statements. Firms that adopted IFRS in 2011 were required to disclose consolidated financial statements and separate financial statements in both K-IFRS and K-GAAP for this period. We conjecture that there will be a difference in the reported profits and effective tax rates between the financial statements that adopt the two different accounting standards. This study will provide policy implications with regards to the recent IFRS adoption and the use of accounting standards.
The findings of this study are as follows. First, we find that the effective tax rate and corporate tax expenses decreased after the adoption of K-IFRS from K-GAAP. Earnings Before Tax (EBT) and net income also decreased when reported in K-IFRS. When we divide the total sample into the listed firms and KOSDAQ firms, we found a significant difference between the accounting standards in the total sample and listed firms, but did not see such a difference in KOSDAQ firms. In addition, results from the analysis of separate financial statements were analogous to those from consolidated financial statements. Additional analyses examined the effect of the early adoption of IFRS, but a significant influence due to early adoption was not found in consolidated financial statements from both parametric and non-parametric tests. However, the effective tax rate did decrease in the separate financial statements of firms that adopted K-IFRS earlier.
The implementation of K-IFRS (changes in accounting standards) has made the managerial performance of firms accounted for in the Equity Method to be reflected in EBT and net income. This entailed an increase (or decrease) in the Equity Method profit, which in turn increased reported profits and decreased effective tax rates. In other words, the total increase of reported profits in consolidated financial statements can be attributed to subsidiary companies. However, the adoption of IFRS also reduced the tax burden, which is considered to be the motivation for firms to adopt IFRS in advance.
This article attempts to provide policy implications with regards to the adoption of new accounting standards and its influence on the corporate tax expenses and effective tax rates in listed firms and KOSDAQ firms.
 
The Effects Of Environmental Uncertainty And Search Costs On Relational Norms In Interfirm Relationships
Get PDFMany firms use network perspectives in the context of interfirm relationships, an approach that is causing a rapid change in industrial dynamics. However, although most firms are connected with exchange partners, it is difficult to have positive relationships because of the latter is opportunistic behavior. This study considers the factor of industrial dynamics in interfirm relationships. Thus, we investigate the moderation effect of network embeddedness in relational norms on environmental uncertainty and search costs regarding interfirm relationships. Specifically, we identify network relationships and focus on changes of network norms in a focal firm and its exchange partners. Consequently, this study offers several theoretical and managerial implications, and suggests areas of future research regarding interfirm relationships
Earnings Predictability And Broker-Analysts’ Earnings Forecast Bias
Get PDFScholars have reasoned that analysts issue optimistic forecasts to improve their access to managers’ private information when earnings are unpredictable. While this requires a managerial preference for analyst forecast optimism, the observed walk-down of analyst expectations to beatable forecasts is consistent with a managerial preference for pessimism in short-horizon forecasts. Using data from various sample periods, alternative model specifications, and various measures of earnings unpredictability, we find that pessimism, not optimism, in short-horizon forecasts is associated with increasingly unpredictable earnings. Our results suggest that firms can more effectively manage analysts’ earnings expectations downward when earnings are relatively unpredictable
Does The Implementation Of ERP Improve The Quality Of Accounting Information? Evidence From Chinese A-Share Listed Manufacturing Firms
Get PDFUsing the data of Chinese A-share listed manufacturing firms, the study explores the influence of ERP implementation on accounting information quality from reliability and relevance. Also, the study verifies the difference of the influence in firms which have different sizes and different ownership types. Compared with the firms not implementing ERP, accounting information quality of the firms implementing ERP improves significantly. In addition, the positive influence differs in firms of different sizes and different ownership types. In large-sized firms, ERP implementation has stronger influence on reliability of accounting information. In non-state-owned firms, ERP implementation has stronger influence on accounting information quality in respect to reliability and relevance. Our study supplies the new evidence to gauge the impact of ERP implementation on accounting information quality in an emerging economy context
An Examination Of How Middle School Science Teachers Conduct Collaborative Inquiry And Reflection About Students’ Conceptual Understanding
Get PDFThis qualitative case study examined how middle school science teachers conducted collaborative inquiry and reflection about students’ conceptual understanding, and how individual teachers in the middle school science group acted and made reflections in response to their collaborative inquiry. It also examined external influences that affected the teachers’ ability to engage in collaborative inquiry. Observational, written, and interview data were collected from observations of teachers’ face-to-face meetings and reflections, individual interviews, a focus group interview, and online reflections. The results of this study revealed that collaborative inquiry is a form of professional development that includes answering curricular questions through observation, communication, action, and reflection. This approach was developed and implemented by middle school science teachers. The premise of an inquiry is based on a need with students. Middle school science teachers came to consensus about actions to affect students’ conceptual understanding, took action as stated, and shared their reflections of the actions taken with consideration to current and upcoming school activities. Activities involved teachers brainstorming and sharing with one another, talking about how the variables were merged into their curriculum, and how they impacted students’ conceptual understanding. Teachers valued talking with one another about science content and pedagogy, but did find the inquiry portion of the approach to require more development. The greatest challenge to conducting collaborative inquiry and reflection was embedding teacher inquiry within a prescribed inquiry that was already being conducted by the Sundown School District. Collaborative inquiry should be structured so that it meets the needs of teachers in order to attend to the needs of students. A conducive atmosphere for collaborative inquiry and reflection is one in which administrators make the process mandatory and facilitate the process by removing an existing inquiry