Profit Account Research Articles

Management quality and acquisition performance: New evidence based on firm profitability

AbstractUsing corporate accounting profitability measures to proxy for management quality, we report evidence that acquisitions made by higher quality acquirers create greater shareholder value. More profitable acquirers earn better stock returns over the long term, although no consistent relationship is found between announcement‐period abnormal returns and firm profitability. More profitable acquirers also preserve shareholder value by reducing the likelihood of paying stock for acquisitions or overpaying the targets. Overall, our results provide new support for the hypothesis that better acquirers make better acquisitions. Our results also convey a clear message to corporate accounting and financial executives, outside investors, and other professionals. When firms with poor accounting profitability make acquisitions, it is usually not good news.

PENGARUH LABA AKUNTANSI DAN UKURAN PERUSAHAAN TERHADAP RETURN SAHAM DENGAN RISIKO PERUSAHAAN SEBAGAI VARIABEL INTERVIENING PADA PERUSAHAAN YANG TERGABUNG DALAM INDEKS KOMPAS 100 PERIODE 2011-2015

This study aims to determine the effect of accounting earnings and firm size on stock returns with company risk as an intervening variable. The sampling method used was purposive sampling, from the population of companies in the kompas index 100 period 2011-2015, several samples will be selected based on certain criteria. This study has a characteristic that is by measuring accounting profit and company size by regressing each variable with company risk and also measuring accounting profit and company size and company risk by regressing each variable with stock returns so that the sensitivity values of each variable will be generated. The research data was tested by classical assumptions by using multiple regression analysis techniques using spss 22 for windows.The results showed that accounting profit partially affects the company's risk, the size of the company has a significant influence on company risk, accounting profit does not have a significant effect on stock returns, firm size does not have a significant effect on company size. The test is based on a confidence level of 95%, and an error rate of 5%.

Investment efficiency: Dual-class vs. Single-class firms

This study examines the effects of a dual-class structure on investment efficiency. Agency theory suggests that a dual-class structure exacerbates agency problems, leading to under- or overinvestment, but another view posits that the dual-class structure insulates managers from the pressure of the marketplace or activist investors seeking short-term profits. We find that dual-class firms invest more efficiently than single-class peers. This effect is more pronounced among firms with less transparent investments such as R&D. Our findings are robust to a propensity score matching approach and a setting where single-class firms recapitalize with dual-class shares. Furthermore, we find that among firms most at risk of overinvestment, dual-class firms have higher future accounting profitability and less volatile future returns.

Internal Information Quality and the Sensitivity of Investment to Market Prices and Accounting Profits

ABSTRACTWe ask whether the quality of internal information matters for investment decisions. We predict that investment is more sensitive to internal profit signals and less sensitive to external price signals when managers have higher‐quality internal information. Consistent with recent theoretical and empirical research, we proxy for internal information quality using observable information properties. We find that the sensitivity of investment to profitability is increasing, while the sensitivity of investment to market‐to‐book is decreasing in internal information quality. Our focus on internal information and decision making offers new and unique insights on the importance of information quality and complements the growing literature on the role of external reporting quality in reducing financing frictions.

Accounting and Tax Accounting of Fixed Assets, Intangible Assets and Depreciation for Development and Improvement of Approaches to Assessment of the Company's Assets

The article describes the method of accounting of fixed and intangible assets, as well as depreciation charges, in comparison of its different types, in particular accounting and tax accounting when receiving and forming the initial value of non-current assets, in their evaluation, flow and depreciation. The implementation of the described methods will give specialists an opportunity to streamline accounting and to eliminate the unnecessary and artificial discrepancy between accounting and tax accounting. All the data will be transparent and the cost and tax systems will function in compliance with common principles of accounting. Thus, the rules for accounting and tax accounting policies will become uniform. At the same time there will be no need to generate a far-fetched «taxable» profit, detached from the real economic base — accounting profit. It will be possible to tax real accounting profit generated on the accounts. The proposed methods of fixed and intangible assets accounting will reduce the cost of collecting information, it will also give an opportunity to evaluate the real state of non-current assets. The article provides recommendations on the approximation and improvement of accounting and tax accounting of fixed assets, intangible assets and depreciation.

For banks, fair value adjustments do influence dividend policy

5Most researchers who investigate the interplay between fair value accounting (FVA) and the financial crisis look at the time period during the crisis. This paper investigates a potential role for FVA prior to the crisis: If FVA led to increased accounting profits with the recognition of transitory gains through profit and loss during the boom, and if those increased profits provided the rationale for increased dividends, then bank capital became riskier prior to the crisis, and this would have made the system more prone to failure. A study by Goncharov and Van Triest (2011) found no empirical support for an increase in dividends in response to unrealised positive fair value adjustments to income. In contrast, when the setting is limited to only South African banks, this paper finds that South African banks did pay dividends from unrealised transitory gains. This finding is based on a combination of three strands of evidence: a panel regression of the annual dividends declared by the large South African universal banks that showed that those banks probably ignored the unrealised nature of FVA profits when dividends were determined; monthly data from the total South African bank system in a co-integrated regression that showed that unrealised fair value profits from the banking book raised the average level of bank profits materially; and simple descriptive statistics on distributions that showed that South African banks distributed a greater proportion of profits during the critical period of 2004 to 2008 when unrealised fair value profits from the banking book raised the level of bank profits. The finding that South African banks did pay dividends from unrealised transitory gains was also confirmed by bank representatives and the post-financial crisis disclosure of one of the South African banks.

A Non-Linear and Disaggregated Approach to Studying the Impact of CSR on Accounting Profitability: Evidence from the Polish Banking Industry

Corporate social responsibility (CSR) is now extensively promoted in the European Union and highly desired by stakeholders. However, from a manager’s point of view, the question of whether or not corporations should conduct CSR activities is controversial because of the accompanying high cost and uncertain benefits. The vast empirical literature appears to be rather inconclusive with respect to the question of whether CSR business engagement creates or destroys financial performance (FP). This study suggests that the inconsistent findings may be due to the use of aggregated CSR measures and a linear approach, as well as the omission of the industry or country context. Thus, the purpose of this study is to provide an updated assessment of the relationship between CSR and FP. Based on content analysis, we developed four individual CSR disclosure indices, corresponding to the environmental, human resources, product and customers, and community involvement dimensions, instead of an overall CSR composite score, and we examined their impact on accounting-based measures. We applied both linear and non-linear approaches. Data from Poland’s banking industry for the period 2008–2015 provided the background for this study. Our results confirm the existence of a U-shaped relationship between human resources and FP, and an inverse-U-shaped relationship between FP and community involvement, and FP and product and customers. This study contributes not only to the CSR literature by providing new insights into this relationship between CSR dimensions and FP, but it also offers policy suggestions for both bank managers and government regulators.

The Relation Between Capital and Labor as a Basis for the Distribution of the Added Value

The author discusses the basis of distributing the added value in the view of social responsibility. He finds the distribution of added value as a crucial challenge in following the principles of social responsibility. The study shows the considering of intellectual capital as a prerequisite for the distribution of the surplus added value according the social responsibility of the company. The findings significantly change and improve the understanding of social responsibility in the area of distribution and the structure of the added value in the company. The basic expression of social responsibility is the contribution to the welfare of the whole society. This contribution should be understand in its broadest sense. The main starting point for distribution of added value is stakeholders' contribution to managing the business risk. The author developed a new category <i>surplus value added</i> by subtraction of minimal wages and opportunity cost of equity. On this basis the author proposes a new statement of surplus added value, compared with actual accounting profit and loss statement. Statement of surplus added value should become the basis expression of social responsibility of the company and its orientation to sustainable development.

ANALISIS PENGARUH ARUS KAS OPERASI DAN LABA AKUNTANSI TERHADAP RETURN SAHAM PERUSAHAAN PERAIH INVESTMENT AWARD (BEST ISSUERS) DI BURSA EFEK INDONESIA

Investors in investing always expect high stock returns. Therefore, investors should beable to assess which companies have good performance, so the stock return is also high. Thefinancial statements, particularly those relating to information on changes in operating cashflows and corporate accounting profit, are one of the important information that can be usedby investors to assess company performance. This study aims to provide empirical evidencerelated to the effect of operating cash flow and accounting earnings on stock returns.The data in this study is secondary data obtained from the company's annual financialstatements in Indonesia Capital Market Directory (ICMD) and Indonesia Stock Exchange(IDX). This study was conducted using the company population of the company winning theinvestment award (best issues) 2017 listed on the Indonesia Stock Exchange in 2015 and 2016.The result of this research is partially variable of operating cash flow (AKO) havepositive and significant effect to stock return, while partially, variable of accountancy profit(LAK) have no effect to stock return and simultaneously variable operating cash flow (AKO)and change of accountancy profit (LAK) jointly have a significant effect on stock returns inthe company's winning investment award (best issues) 2017 listed on the Indonesia StockExchange in 2015 and 2016.Keywords: Operating Cash Flow, Accounting Profit, and Stock Return

Within-Seller and Buyer–Seller Network Structures and Key Account Profitability

In business-to-business (B2B) markets, the success of key account management (KAM) teams depends on how they are structured and how they handle customer relationships. The authors conceptualize relationships among selling team members as a within-seller (intrafirm) network and the relationships between selling team members and buyer representatives as a buyer–seller (interfirm) network. Drawing on both structural (buyer–seller density, within-seller density, and within-seller centralization) and functional (buyer–seller similar function ties and within-seller cross-functional ties) composition attributes of these networks, the authors examine how the interplay between these networks drives seller account profitability. Using data from 207 key account managers across B2B industries, the authors uncover a nuanced pattern of interplay across the two networks. Densities in the two networks are mutually substitutive, but density in the buyer–seller networks and centralization in the within-seller networks serve complementary roles. Cross-function ties in the within-seller network serve a complementary role too, but only in relation to similar function ties in the buyer–seller network. In contrast, within-seller centralization supports both network density and similar function ties in the buyer–seller network and, thus, emerges as a valuable KAM team characteristic. These findings suggest multiple ways for firms to align interfirm and intrafirm KAM networks to improve account profitability.

PENGARUH ANTARA LABA AKUNTANSI DAN TOTAL ARUS KAS TERHADAP HARGA SAHAM

This strong growth is happening because of the expansion of the Indonesian economy is fertile. Consumer spending makes a strong middle class residential business segment was the largest contributor to growth in Indonesia properties .. In this study, the parameters used to measure the performance of the company's financial statements is the accounting profit and the total cash flow. This study aims to examine and analyze the effect of variable accounting profit, and total cash flow to share price. Using multiple regression analysis, the study population is all companies sub-sector property and real estate listed on the Indonesia Stock Exchange in 2013-2015.&#x0D; The results showed that the accounting profit that affect stock prices. Accounting profits will provide information and a positive signal on the stock price on the property sub-sector and real estate, so it will affect the reduction or increase in the company's stock price. Total variable cash flows do not affect the stock price. Data in the cash flow statement only provide weak support for investors.

ANALISIS PENGARUH PERBEDAAN LABA AKUNTANSI DAN LABA FISKAL TERHADAP PERSISTENSI LABA DAN ARUS KAS PADA KPRI “KARYA SEHAT” JOMBANG

Intention of this research is to know difference between accountancy profit and fiscal profit that is having an effect to persistension of profit and cash flow in one period to the fore and to know how difference impact between accountancy profit and fiscal profit to persistension of profit and cash flow.In writing of this research use approach of descriptive-quantitative at KPRI “Karya Sehat” Jombang. The method to collecting data that used is documentation and interview, while analysis of data use analysis examination of doubled regression.Pursuant to result of examination of data to doubled regression show result of that there are influence or regression between accountancy profit (X1) and fiscal profit (X2) by simultant to persistension of profit. While between accountancy profit (X1) and fiscal profit (X2) by simultant do not have an effect on to cash flow. Examination by parcial show result that there are no influence between variable of accountancy profit (X1) and fiscal profit (X2) to persistension of profit, while accountancy profit (X1) by parcial have an effect to cash flow (X2) but fiscal profit (X2) by parcial do not have an effect on to cash flow (X2). Pursuant to result of examination of data to test of SPSS, the data give information that have happened autocorrelasion at dependent variable persistension of profit, its intention that model of regression there is correlation between mistake of intruder at period of t with mistake of intruder at period of t-1 ( previous) and also happened multicolonieritasion with the meaning that model of regression have found there is existence of correlation between free variable ( independent ).

Risk-assessment V1.0: A new interactive software to develop risk assessment using MATLAB®

This article presents the use of an interactive computer tool developed in MATLAB® called RISK-ASSESSMENT v1.0, to perform market risk analysis of commercial products, through the development of cash flow, sensitivity analysis, and SpiderPlot graphics, which allow the identification of the economic-financial equilibrium point of a company. The tool facilitates the reduction of the uncertainty produced in the return on investment due to changes in the economic environment of the sector in which the company operates, through statistical techniques and tools that involve parameters such as the annual effective rate in the Colombian national currency, net present value, internal rate of return, period of recovery of capital, through a sensitivity analysis. To validate the effectiveness of using software in the development of risk analysis, a case study was conducted for an alcohol beverage sales business, where, based on the portfolio containing the product quantity, unit variable cost, sales price, percentage of sales growth and annual sales volume, in addition to detailed information on the initial investment, the cash flow with a 5-year horizon, the net present value, the internal rate of return, the period of capital recovery and the average accounting profitability are calculated. The tool also performs sensitivity analysis and SpiderPlot for each of the products. Finally, the program presented allows to calculate the annual cash flows in a fast and didactic way, which normally requires time and specialized training in a traditional exercise.

ANALISIS PENGARUH ARUS KAS OPERASI DAN LABA AKUNTANSI TERHADAP RETURN SAHAM PERUSAHAAN PERAIH INVESTMENT AWARD (BEST ISSUERS) DI BURSA EFEK INDONESIA

Investors in investing always expect high stock returns. Therefore, investors should be able to assess which companies have good performance, so the stock return is also high. The financial statements, particularly those relating to information on changes in operating cash flows and corporate accounting profit, are one of the important information that can be used by investors to assess company performance. This study aims to provide empirical evidence related to the effect of operating cash flow and accounting earnings on stock returns.&#x0D; The data in this study is secondary data obtained from the company's annual financial statements in Indonesia Capital Market Directory (ICMD) and Indonesia Stock Exchange (IDX). This study was conducted using the company population of the company winning the investment award (best issues) 2017 listed on the Indonesia Stock Exchange in 2015 and 2016.&#x0D; The result of this research is partially variable of operating cash flow (AKO) have positive and significant effect to stock return, while partially, variable of accountancy profit (LAK) have no effect to stock return and simultaneously variable operating cash flow (AKO) and change of accountancy profit (LAK) jointly have a significant effect on stock returns in the company's winning investment award (best issues) 2017 listed on the Indonesia Stock Exchange in 2015 and 2016.&#x0D; Keywords: Operating Cash Flow, Accounting Profit, and Stock Return

Pengaruh Laba Akuntansi, Total Arus Kas, dan Net Profit Margin terhadap Return Saham pada Perusahaan Otomotif yang Terdaftar di Bursa Efek Indonesia

This study aims to determine whether accounting profit, total cash flow and Net Profit Margin effect on Return Shares in Automotive Companies listed on the Indonesia Stock Exchange. The population in this study are all automotive companies listing period 2013 - 2016. Sample taken based on certain criteria or purposive sampling. Data analysis techniques use multiple linear regression. The results show that overall from the period of 2013 to 2016 Accounting profit does not have a significant effect on stock returns due to transitory events in accounting so as not used as a reference by investors to invest, Total cash flow does not have a partial significant influence on stock return because the total cash flow is not enough to have information to be a benchmark to predict stock returns. Net profit margin has a partially significant influence on stock return because the profits generated by the company from the level of sales is also greater then it will attract investors.

Is CSR reporting always favorable?

PurposeIn addition to their profit maximization objective, firms are often challenged to meet environmental and social demands. The purpose of this paper is to test whether a firm’s macroeconomic environment moderates the efficiency of its social and environmental disclosures.Design/methodology/approachThe study uses the Bloomberg database to collect data on the FTSE 350 listed firms for the years 2007-2012. The sample is split into crisis and post-crisis periods, to study the investor reaction to social disclosures under different economic conditions.FindingsThe results suggest that the effect of corporate social responsibility (CSR) disclosure on future firm performance depends on the surrounding macroeconomic environment. During tight economic situations, market participants become more self-centered and penalize firms diverting scarce resources toward non-profitable societal engagements. Moreover, the findings indicate that firms with a high participation of outside directors and low accounting profit experience negative future performance when engaging in social disclosures during times of crisis.Practical implicationsCorporate governance is a system of interconnected practices that is affected by various firm and environmental characteristics. The results are in line with the premise that, depending on macroeconomic changes and specific firm attributes, CSR reporting may have dissimilar implications across different situations and conditions. Social disclosures and engagements are not always favorable, and should only be utilized in non-recessionary periods by firms possessing certain characteristics in terms of board composition and accounting profitability.Originality/valueThis study identifies key moderating variables which present additional obstacles for firms engaging in CSR during adverse economic conditions. Outsiders’ inferior firm-specific expertise, along with the firm’s poor accounting performance, present additional financial constraints for firms engaging in CSR activities during economic downturns.

The information content of aggregate profitability

Recently, there has been significant interest in the information content of aggregate accounting profitability. I collect evidence on whether aggregate profitability captures information about changes in the cost of capital as predicted by classical investment theory. Consistent with these predictions, I find that the stock market return is negatively related to future accounting profitability for several years into the future. I provide evidence that this relation is most likely due to a positive association between changes in expected returns which exert a negative impact on stock returns and future profitability. These findings indicate that aggregate accounting profitability reflects significant economic content related to the cost of capital. This study is the first to link changes in accounting profitability to the market cost of capital under an investment-based mechanism.

Judging Banks' Risk by the Profits They Report

In competitive capital markets, portfolios of risky debt claims have high systematic risk exposure in bad times if they offer a high yield in good times. We apply this idea to measurement of bank risk. Rather than trying to directly measure asset risks on the balance sheet — the typical (manipulation-prone) approach in model-based regulation — we explore high rates of profit in good times as an indicator of systematic tail risk exposure. We show empirically, for cross-sections of banks in the financial crisis of 2007–2008 as well as the savings and loan crisis of the 1980s, that high accounting profitability prior to the crisis predicts high systematic tail risk of equity market values during the crisis, and most strongly so if pre-crisis profits arise from non-interest income or are paid out as dividends and managerial compensation. Pre-crisis profit measures do a better job in predicting systematic tail risk than conventional measures based on risk-weighted assets.

Interest rate risk and bank equity valuations

Using high-frequency identification, we estimate the reaction of bank stock prices to movements in interest rates prompted by FOMC announcements and examine how this reaction varies with key bank characteristics. Bank stock prices decline significantly following unanticipated increases in the level or slope of the yield curve. The reaction is larger for banks that rely heavily on core deposits but is reduced for banks with a large maturity mismatch, consistent with banks’ role in maturity transformation. Policy-induced interest rate changes appear to affect accounting profits primarily through net interest margins and changes in the composition of bank balance sheets.

Evaluation of Chinese E-commerce Cost and Lead Time Performance to Estonia

Purpose: Retail sales growth has been sluggish in the recent decade in North European countries. Number of factors have caused this, like problems in macro-economy, sanctions and the effect of ageing population. Also increasing amount of e-commerce from China has taken its share. Future development paths need to be researched further to identify the outlook of North European retail.Methodology/Approach: Four different imported items were examined, which were hypothetically planned to be brought on Estonian consumer markets from China. We take into account freight costs, custom duties, VAT and profit margin requirement. Also lead time performance is being examined.Findings: Analysis shows that company based imports is not that viable model as profit margin requirement as well as governmental costs (duty and VAT) take lion share from overall costs. Even if profit requirement of company importing the products would decrease, wage inflation in Asia and freight will probably lead to higher product prices. Therefore, e-commerce needs to enlarge to lower cost manufacturing locations and/or use more direct sales to consumers. Total lead time soughts new solutions too (e.g. railway connection to Europe).Research Limitation/implication: Examination is limited to small Estonian market, and their custom tariffs and VAT. Also logistics costs to Northern Europe are higher than to Central Europe.Originality/Value of paper:Research is one of the first based on the examination of products and overall costs. It adds value through understanding of import cost structures.