Behavioral Charity: Third‐Party Ratings of Nonprofits as Salience and Heuristics

Dear Editor, In dermatology, a correct visual diagnosis is essential for successful patient care. Therefore, the key component of its teachings must be repetitive visual learning such as different cases that enable students to create mental templates. While experience develops, these are subsequently compared in every new patient.1 The actual process of reasoning (metacognition), or in other words the mental pathways that lead to the diagnosis, remain largely obscure and are frequently overlooked in medical education.2 Many theories have been proposed about how experienced clinicians reason and diagnose. One of these, the dual process theory, comes probably very near to the clinical reality in dermatology because of its important role of visual findings.3, 4 The model polarizes two different modes of recognition and thinking, a fast, intuitive method (system 1) and a slower, analytic method (system 2). The first one is characterized by prima vista diagnosis, pattern recognition and mental shortcuts (heuristics), but limited by tendency to bias. The other, a more analytical approach, builds on careful analysis of complex cases, algorithms and active deduction. However, putting the clinician under a higher cognitive load and consuming time.5 Experienced clinicians are most likely to use an interplay of intuitive and analytic thinking depending on the clinical context and the individual findings, described as the cognitive continuum theory.6 Although this might sound very theoretical, every practicing dermatologist recognizes the dichotomy of easier, “doorstep diagnoses” compared to complex multi-faceted patients with confounding signs and symptoms that require careful analysis. Students of dermatology often do not yet possess ample clinical experience and the needed number of visual repetitions that are prerequisites for intuitive recognition. They therefore rely highly on analytic thinking.7 This is one of the reasons, why algorithms, lists of differentials, and in general, a mental framework is so desired in the beginning of medical studies. The author has been teaching clinical dermatology and observational skills for many years at the University of Helsinki, Finland, as parts of undergraduate courses or postgraduate specialist education. During teachings, the author has observed, that students are often unaware of metacognitive processes, such as the above-described modes of clinical reasoning or mental sources of diagnostic errors and cognitive bias.8 In this regard, the author has used a symbol to visualize the two polarized approaches (Figure 1) and to explain the importance of the dual process model. In addition, students have received assignments to distinguish key differences between intuitive and analytic clinical reasoning (examples listed in Table 1). Although there is very limited research data regarding dermatology education, the author has noticed that the training of metacognition, such as distinguishing specific modes of thinking in one's own reasoning, have often been like small motivating revelations and helped students to understand the process of diagnosing. As a result, even if there is no proof that metacognitive awareness improves students' diagnostic skills, the author thinks that by incorporating teachings of metacognition into clinical courses, bedside teachings or digital self-teaching material, students' self-reflection may be enhanced, and the recognition of potential biases and differential diagnostic capabilities may be improved. Snapshot diagnosis (prima vista) Pattern recognition Heuristics Careful analysis of complex cases Algorithms Hypothetical-deductive Developed through clinical experience Entity-based Mental templates or shortcuts Unconscious Gathering information and validation List of differentials Comprehensive Adaptive Conscious Fast Efficient Scientific Analytical Reduction of diagnostic errors Possible biases Less cognitive load Time consuming High cognitive load Metacognitive aids, such as explaining and symbolizing the dual process model, may provide practicable frameworks to augment teaching outcomes of visual recognition and diagnostic accuracy in dermatology.9 Accompanying an experienced dermatologist establishing a snapshot diagnosis is impressive and surely, has high educational value, but highlighting and discussing possible underlaying mental processes may be an eye-opener for students. There were no funding resources that supported this work. The author declares no conflict of interest and no financial disclosures. The data that support the findings of this study are available from the corresponding author (A.S.) upon reasonable request.

PurposeThe purpose of this paper is to understand and explain the financial disclosure processes among Malaysian local authorities (MLAs).Design/methodology/approachEmploying semi-structured interviews, data were collected from 26 members in five case study organisations, and interpreted using Gibbinset al.(1990, 1992) framework of financial disclosure.FindingsThe study finds that financial disclosure is influenced by a hierarchical structure consisting of accountants, the Financial Accounts Committee, the mayor and other managers. The decision to disclose or not disclose was influenced by how sensitive the issue was. External auditors and mediators influenced both the identification of issues, disclosure position and disclosure output. Though there are many laws governing financial accounting, MLAs opportunistically chose to apply the Federal Treasury Circular largely because the external auditors used it.Research limitations/implicationsThis study contributes to the literature by illuminating who makes disclosure decisions, what influences these decisions and how. The study reveals hitherto un-researched contextual factors that affect disclosure, namely, religion and external auditors and the opportunistic choice of which laws and regulations to apply in financial disclosure. Future studies might want to apply this approach in other contexts to see what we can learn from them.Originality/valueUsing case studies in the study of financial disclosure provided valuable insights into the complex and multi-dimensional phenomenon of financial information disclosure. The application of Gibbinset al.(1990, 1992) framework in the public sector and in Malaysia is novel.

New pressures for financial disclosure: A changing concept of the audit

Due to the advantages of high stock price, managers usually take actions to explain watered stock. Therefore, at least, they disclose less information about financial aspects of the corporation. The objective of this study is to provide evidence on the relationship between overvalued equity and the disclosure of financial information via the internet in the Tehran Stock Exchange (TSE). To this end, using 83 companies' data, it was tried to examine the relationship between the variables. According to correlation analysis (Pearson and partial), regression analysis (annual and biennial) and t-test, a negative significant relationship between overvalued equity and internet disclosure of financial information in the Iranian companies is determined. That is to say, when companies experience overvaluation, Iranian managers disclose less information through the company's website too. Also, the results reveal the existence of significant and positive relationship between previous internet disclosure of financial information and internet disclosure of financial information.

Is Tax Return Information Useful to Equity Investors?

Financial reports are of primary significance not just to the final consumers but to society as a whole, as they influence financial decisions that have a substantial influence on humanity. Various key issues are constantly impeding the quality and productivity of the county government financial reporting functions. This is related to weak proper accounting factors on the performance, poor management, insufficient financial guidelines for decision support, low employee desire, and negative mindsets about accounting and responsibility. In the context of this, this investigation seeks to determine the effect of adoption of public sector accounting standards on financial reporting of Nairobi city county government, Kenya. Its specific objective is to examine the effect of preparation of financial statements, disclosure of financial information, presentation of budget information of Nairobi city county government in Kenya. The investigation was anchored on stakeholder, institutional and the theory of Isomorphism. The investigation targeted a population of 102 Employees of Nairobi city county government in the finance and planning division mainly. This investigation adopted descriptive and inferential analysis for analyzing the data, a sample of eighty-one (81) employees was chosen using a stratified random sampling technique. The investigation used questionnaires that were given to the finance persons in the finance and planning division under the planning division of Nairobi city county government staff. Findings from the survey displayed that presentation of financial statements has a significant positive effect on the overall quality of financial reporting; the effect of financial information disclosure on the quality of financial reporting was both significant and negative; and while the presentation of budget information had a positive and insignificant effect on the quality of financial reporting, this effect was not statistically significant in Nairobi City County government in Kenya. The survey recommends that the county government should prioritize the improvement of the presentation of financial statements. This can be achieved by implementing standardized reporting formats that adhere to established accounting principles, ensuring consistency and clarity in financial disclosures. Keywords: Financial Reporting, Public Sector Accounting Standards, Financial Statements, Information Disclosure, Budget Information DOI : 10.7176/EJBM/16-9-10 Publication date : November 30th 2024

İklim ile ilişkili hususların (iklim değişikliği, iklim krizi) oluşturduğu riskler ya da fırsatlar, sadece çevresel değil aynı zamanda sosyal ve ekonomik etkilere de sahiptir. Bu etkilerin doğal olarak ekonominin en büyük aktörleri olan işletmelerin; faaliyetleri (üretim, tedarik zinciri, insan kaynakları vb.) ve finansal göstergeleri üzerinde de sonuçları olmaktadır. Dolayısıyla yatırımcılar başta olmak üzere birçok işletme paydaşı iklim ile ilişkili veya diğer muhtelif finansal olmayan hususların işletmenin faaliyetleri üzerindeki etkileri hakkındaki bilgilerin finansal raporlar içerisinde sunulmasını talep etmektedirler. İklim ile ilişkili hususların finansal açıklamalara dahil edilmesi konusunda artan bu talebi karşılamak adına uluslararası kurumlar (TCFD, CDSB, EFRAG vb.) son yıllarda birtakım çalışmalar yürütmektedir. Bu çalışmaların oluşturduğu karmaşık ve çoklu yapının IFRS Vakfı’nın Uluslararası Sürdürülebilirlik Standartları Kurulu’nu (ISSB) kurduğunu ilan etmesi ile birlikte daha sade hale geleceği öngörülmektedir. Kurul, konu hakkında IFRS S1 Sürdürülebilirlik ile İlişkili Finansal Bilgilerin Açıklanması için Genel Koşullar ve IFRS S2 İklim ile İlişkili Açıklamalar isimli iki standardı en kısa sürede sonuçlandırıp işletmelerin kullanımına sunmayı planlamaktadır. Böylelikle IFRS Vakfı bünyesinde faaliyet gösteren IASB ile finansal raporlamada sağlanan uluslararası standartlaşmanın ISSB ile finansal olmayan raporlamada da sağlanması öngörülmektedir. Uluslararası alanda bu gelişmeler yaşanırken Türkiye’deki işletmelerin iklim ile ilişkili hususlara yönelik açıklamaları finansal raporlarında nasıl yapacakları konusunda ise bir boşluk bulunmaktadır. Bu çalışmada söz konusu boşluktan hareket edilmiş olup konu ile ilgililere hem bir kavramsal çerçeve sunulmuş hem de konunun somut olarak anlaşılması için bir havayolu işletmesi örnek olayı üzerinden iklim ile ilişkili hususların zincirleme şekilde işletmenin finansal raporlarını nasıl etkilediği ve bu etkinin raporlarda nasıl sunulabileceği gösterilmiştir.

Summaries of Papers in This Issue

The main aim of the present study is to relation between finansial information disclosure and capital structure decisions in companies listed on Tehran Stock Exchange. Methodology: Statistical population of this study is consisted of companies listed on Tehran Stock Exchange during the time period of 2009 to 2014 and sample volume is equal to 118 companeis by using screening method and after the elimination of outlaying observations. In this study rating of information including rating of regulations compliance, rating of timely financial disclosure, rating of financial forecasts disclosure, rating of annual financial reports disclosure and rating of company website disclosure were taken as independent variables in order to study their effect on capital structure decisions. Results: This study is an applied study in terms of goal, in terms of nature and content it is a descriptive - correlation study and in terms of research design, it is an ex post facto (semi-empirical) study, which means, it is conducted on the basis of historical and past data analysis (financial statements of companies). In this study, in which panel data with fixed and random effects are used, results obtained from firm data analysis by using multivariate regression at 95% indicated that there is a direct relationship between rating of timely financial disclosures, rating of financial forecasts disclosure and rating of annual financial reports disclosure with capital structure decisions. Conclusion: It was also indicated that there is no significant relationship between rating of regulations compliance and rating of company web site disclosure with capital structure decisions of a company.

Surveillance in Barrett's Esophagus: Lessons from Behavioral Economics

The objective of this paper is to assess if publicly financial disclosed information was relevant and reliable to predict bankruptcy of the bank Snoras. To assess financial information about the bank Snoras, an analysis of public disclosure by various sources: the entity itself, auditors, regulating bodies, and mass-media prior to the bank Snoras bankruptcy announcement has been conducted.The results of the research reveal that the bank Snoras financial difficulties and nationalisation emerged unexpectedly neither to general public nor to professionals. In the case of the bankruptcy of the bank Snoras we conclude that financial disclosures by various sources were neither sufficient nor timely. Reliable information sources have not disclosed any warnings or possible financial difficulties. Publicly disclosed information was not relevant to predict forthcoming bank Snoras bankruptcy. Therefore it raises questions if accounting harmonisation as well as banking sector regulation and supervision efforts are sufficient under rapidly changing economic conditions.DOI: http://dx.doi.org/10.5755/j01.em.17.3.2090

Inferring U.S. Tax Liability from Financial Statement Information

Abstract: Using a multi-year matched tax return-financial statement data set, this study builds empirical models that infer U.S. tax liability on the corporate tax return from publicly available financial statement disclosures, including those of Statement on Financial Accounting Standards No. 109, Accounting for Income Taxes. Results show that current U.S. tax expense, the tax benefit from stock options, current-year tax cushion accrual, consolidation book-tax differences, and R&D are informative in inferring actual tax, while intraperiod tax allocation is not. Additionally, the sign of pretax book income and the existence of net operating loss carryforwards are useful partitioning variables in estimating actual tax. In general, for every dollar of current U.S. tax expense reported on the financial statements, approximately $0.70 is reported in U.S. tax liability on the tax return. The models are validated using a holdout sample, providing support for the notion that public parties can reliably use these results to estimate a firm's tax position. Additional tests reveal a hierarchy of subsamples that researchers may employ when maximizing the usefulness of tax-related disclosures in inferring U.S. tax liability.

We investigate whether government support influences investors' perceptions of firms' financial disclosure. We find that earnings announcements from firms receiving more subsidies are perceived as more reliable by outsiders, eliciting stronger market reactions. Further analysis indicates that this positive effect is more pronounced when firms have poorer corporate governance and greater information asymmetry. Supplementary analysis shows that government support enhances investors' reactions through three possible channels: improving firms' earnings quality, investment efficiency, and market competitiveness. There are implications for the informativeness of firms' financial disclosures and the mechanism that government support on investors' attitude towards the released information.

I examine whether tax return information is useful to equity investors. I do so indirectly, by exploiting unique features of the syndicated loan market, as evidence shows that lenders obtain tax returns from borrowers and that lenders’ private information is transmitted to equity markets when institutional investors are part of a loan syndicate. I find significant increases in tax expense valuation and decreases in tax-related market anomalies following the issuance of institutional syndicated loans, suggesting that equity investors find information about firm performance in tax returns that is useful for their trading decisions. I also find evidence suggesting that institutional investors may determine their loan syndicate participation in part based on the value of tax return information. This study extends prior research and informs policy debates over public disclosure of corporate tax return information by providing evidence to support that tax returns can be useful to investor decision making.