Accounting Rules Research Articles

Aggregate tone and gross domestic product

AbstractWe examine whether the change in earnings announcement textual tone, aggregated across individual publicly traded firms, helps predict gross domestic product (GDP) growth. The literature finds that changes in aggregate accounting earnings do help predict GDP growth, but only when aggregate earnings changes are negative. Because conservative accounting rules limit managers' ability to communicate positive news promptly, we examine the tone of quarterly corporate earnings announcements as a possible source of timely positive information provided by firms. We find that the change in aggregate tone in the earnings announcements from the same quarter in the previous year predicts one‐quarter‐ahead GDP growth, but only when the change is positive. Our study contributes to the literature by investigating the relation between aggregate corporate disclosure tone and macroeconomic outcomes.

An Empirical Analysis on Institutional Quality, Fiscal Policy and Debt Sustainability in Sub-Saharan Africa (SSA)

Many Sub-Saharan African (SSA) countries are finding it difficult to fulfill their massive debt repayment obligations, which bilateral financial institutions have declared to be unmanageable. Government institutions are to blame for such disparities in the budgetary components, which have been empirically confirmed to be detrimental. Part of the reason for SSA's income generation and debt management problems is related to fiscal policy components where there has been an unwarranted exaggeration of government expenditure. Accordingly, the current study used a panel Autoregressive Distributed Lag (ARDL) to examine how fiscal policy and institutional quality affected the sustainability of debt in 48 SSA nations between 2008 and 2022. The study’s findings suggested that the elements of fiscal policy (expenditure and revenue) as well as indicators of institutional quality (governance), such as control of corruption, effectiveness of government, political stability, absence of violence, regulatory quality, the rule of law, voice, and accountability, were important in explaining the long-term sustainability of public debt. The speed of adjustment to the long-run equilibrium was slow, which may be related to the unstable governance in each of the cross-sectional nations. Hence, the study concluded that the interactive effects of institutional quality and fiscal policy significantly influenced debt sustainability in the long run. The study’s conclusions can be very helpful to policymakers, particularly in those nations where major fiscal and external imbalances are being generated by low ratings for key institutional quality indices.

The Role of Governance in Strengthening of the Constitutional Judiciary

This research article aims to identify the governance of the judiciary in various aspects (transparency, rule of law, participation, accountability, justice, and equality) and its impact on the development of constitutional judicial powers. To centralize the authority and achieve judicial goals within the state, reforms must be implemented. The concept of judicial governance was previously nonexistent, with some viewing judicial power as separate entities performing their duties independently. However, due to developments that the world has witnessed, the responsibilities of the constitutional judiciary have increased, leading to the adoption and application of governance principles. This can only be achieved through promoting the concept of governance and implementing its principles in all state institutions, particularly those of a constitutional nature. This includes reforming the institutional structure to recover the powers to the judiciary, which serves as the arbiter, separator, and balancer among all branches of government.

Exploring the nexus between exports’ economic complexity and institutional quality: insights from Italian provinces

ABSTRACT The present research aims to investigate the determinants of economic development and productivity by proposing an empirical analysis of the economic effects of institutional quality on the economic complexity of export at the intra-national level, focusing on 103 Italian provinces from 2004 to 2016. Using the System Generalised Method of Moments (System-GMM) estimator, the study assesses the influence of various institutional dimensions on provincial economic complexity, as measured by the Economic Complexity Index (ECI). The findings indicate that institutional quality, particularly rule of law, regulatory quality, and voice and accountability, significantly enhances economic complexity. Better formal and informal institutions such as completeness of contracts, social cohesion, contract enforcement, by reducing transaction costs and uncertainty, and by favouring knowledge dissemination and security of investments, are source of comparative advantage in complex industries that lead to diversified and sophisticated production, fostering economic growth and innovation. Moreover, the study emphasises the importance of related activities, which interact with institutions to support complex and innovative export-related activities through knowledge spillovers and related diversification. The analysis also highlights the pivotal role of human capital, social capital, and innovation, which should remain focal points for policymakers.

Better data for budgetary surveillance: EU law on statistics as key to unlocking the potential of public sector accounting

The quality of the data available for monitoring budgetary discipline of the Member States has been a hot topic within the European Union (EU) institutions and in the literature ever since the beginning of the economic crisis in 2008. The COVID-19 pandemic has shown the inadequacy, not only of the data, but also of the policy instruments available for coordinating efforts and decision-making. In this paper, we attempt to unlock the potential of public sector accounting (PSA) for contributing to the improvement of EU surveillance mechanisms. We look beyond the idea of standardised accounting rules for the entire EU public sector (European Public Sector Accounting Standards) into a less controversial area of EU competence, and we explore the conditions for introducing reporting obligations based on PSA data as part of EU law on statistics. Points for practitioners The current succession of crises might create momentum for a change in EU fiscal policy-making. New instruments for the monitoring of the budgetary situation in the Member States could become necessary. The EU institutions cannot impose the European Public Sector Accounting Standards. However, a new standardised reporting instrument could become binding EU law if it would come in the shape of a statistical methodology. Basic principles of EU law guarantee that any new statistical reporting obligations are limited to what is necessary, proportionate and cost-effective.

How to Prevent Political Violence

ABSTRACT: In the United States, France, and Germany, political violence has been rising. Three factors are salient: Polarization convinces some people that violence is acceptable to keep opponents from power; extreme political parties normalize polarization and violence, leading to attacks from—and against—their supporters; and the democratically disillusioned use violence, not votes, to express themselves. Political violence can be reduced if: 1) leaders insist on nonviolence; 2) governments and politicians support the rule of law, accountability, and equitable policing; 3) voting systems dampen extremism; 4) communities organize across difference against violence; and 5) activists insist on nonviolence within their movements.

Treasury monitoring as a method of state financial control

The article identifies the elements of the control system, on the basis of which the organizational and functional structure of control monitoring as a method of internal state financial control is disclosed. The definition of the budgetary procedure is given and, based on the powers of the internal state financial control body, the budgetary procedures within which control monitoring is carried out are specified. The subject of control monitoring has been defined, which is to ensure that the object of control complies with the rules of accounting, preparation and provision of accounting (financial) statements, fulfillment of the terms of contracts (agreements) for the provision of budgetary funds, provision of reports on the implementation of state programs and government assignments, etc. The implementation of the powers to conduct control monitoring is carried out through operational and proactive interaction between the objects of control and the Federal Treasury through automated (information) systems, which allows you to receive real-time data on the use of financial resources and form a motivational opinion on the need to adjust the financial and economic activities of the object of control.

Legal Considerations for Improving the Financial Accounting of Social Welfare Foundations and Facilities - Focusing on the Revising the "Financial Accounting Rules for Social Welfare Foundations and Facilities" -

Legal Considerations for Improving the Financial Accounting of Social Welfare Foundations and Facilities - Focusing on the Revising the "Financial Accounting Rules for Social Welfare Foundations and Facilities" -

Emergy and the rules of emergy accounting applied to calculate transformities for some of the primary, secondary, and tertiary exergy flows of the Geobiosphere

Emergy and the rules of emergy accounting applied to calculate transformities for some of the primary, secondary, and tertiary exergy flows of the Geobiosphere

How do governance indicators, trade openness, industrialization, and population growth affect environmental degradation in BRICS Nations?

Against the backdrop of the dismal performance of BRICS nations in terms of governance, this study examines the relationship between governance indicators and carbon emissions. By employing DOLS and FMOLS cointegration techniques from 1996 to 2022, we find that effective governance helps in reducing environmental pollution. Specifically, indicators namely government effectiveness, political stability, the rule of law, voice and accountability, regulatory quality, and control of corruption show a favourable impact in mitigating carbon emissions. Additionally, our findings reveal that both foreign direct investments and trade openness contribute positively in lowering carbon emissions by introducing advanced technologies and sustainable practices. Conversely, rapid industrialization and population growth exacerbate carbon emissions due to increased reliance on fossil fuels and higher energy demand. Our study underscores the need for enhanced governance, green investments, and stringent environmental regulations to balance economic growth with environmental sustainability in BRICS nations.

Corporate Tax Disclosure

ABSTRACT Policies that require, or recommend, disclosure of corporate tax information are becoming more common throughout the world, as are examples of tax-related information increasingly influencing public policy and perceptions. In addition, companies are increasing the voluntary provision of tax-related information. We describe those trends and place them within a taxonomy of public and private tax disclosure. We then review the academic literature on corporate tax disclosures and discuss what is known about their effects. One key takeaway is the paucity of evidence that many tax disclosures mandated with the aim of increasing tax revenue have produced additional revenue. We highlight many crucial unanswered questions, answers to which would inform future tax legislation and financial accounting rule making.

Valuation and hedging of cryptocurrency inverse options

Currently, the most liquidly traded options on the crypto underlying are the so-called inverse options. An inverse option contract is quoted and traded in the units of the underlying cryptocurrency. The main economic reason for the popularity of inverse contracts in the crypto exchanges (such as Deribit) is that inverse contracts enable traders to operate without maintaining fiat cash accounts. For the theoretical part, we show that inverse options are just regular vanilla options considered under the martingale measure using the forward of the underlying as the numéraire. This measure requires an adjustment to option delta. For the empirical part, we use Deribit options data of past five years to backtest delta-hedged option strategies. We introduce USD and Coin accounting of trading Profit&Loss (P&L) which is important for designing strategies in crypto options. We show empirically that USD and Coin accounting rules are equivalent when performance is measured is Coin and USD units, respectively. We establish that the risk-premia observed in options on Deribit is negative and significant so that strategies selling volatility are expected to generate positive risk-adjusted performance in the long-term.

Political Stability, Corruption Control, Rule of Law, Voice and Accountability, and Per Capita Income Nexus in Arab Oil-Exporting Countries

Political Stability, Corruption Control, Rule of Law, Voice and Accountability, and Per Capita Income Nexus in Arab Oil-Exporting Countries

Corruption and Economic Growth Nexus: Empirical Evidence From Dynamic Threshold Panel Data

The relationship between corruption and growth has two primary theories. The concept of “sand the wheels” implies that corruption impedes economic advancement, while the notion of “grease the wheels” contends that corruption facilitates the process of growth (according to this concept, in highly corrupt states with weak institutions and a large amount of bureaucracy (under certain circumstances, such as specific conditions, situations, economic structures, or phases of economic transformation), public officials tend to manipulate: to speed up certain decisions (sometimes significant for the economic growth of the state) if they receive a bribe while moving through legal channels may be slow and sometimes make these decisions impossible). The prevailing consensus in empirical research has primarily backed the “sand the wheels” theory, with minimal acceptance seen for the “grease the wheels” hypothesis. This paper examines the link between corruption and economic growth of 9 East Asian nations and 14 Middle East and North African countries between 1996 and 2019. By embracing the fundamental assumption that the influence of corruption on economic growth may not follow a linear trajectory, linear and non-linear dynamic models were used to incentivize the corruption levels at which its impact on growth transforms. The study finds an inverted U link between corruption and growth, suggesting a threshold of 0.2228, where corruption in these counties has a beneficial impact on growth and a harmful impact above it. The paper also examines the potential indirect influence of corruption on economic growth via the investment channel, explicitly defining the corruption threshold. The empirical findings in these counties show a significant positive relationship between investment and growth when corruption exceeds the threshold value of 0.3028. It means that under certain circumstances and economic contexts, corruption can potentially foster investment, particularly when bureaucratic inefficiencies and strict regulations impede investment endeavors (through various means, including facilitating the acquisition of permits, licenses, and financing and establishing a more foreseeable business environment). This phenomenon is especially evident in industries where time-critical possibilities require prompt decision-making. The findings indicate a statistically significant and advantageous influence of the Rule of law on economic growth (when considering the impacts of institutional factors), a positive considerable link between regulatory quality and prosperity (even when the squared corruption variable was included), a statistically significant negative effect of government spending on growth. According to the results of the calculations, the article emphasizes that in the countries of East Asia, the Middle East and North Africa, the issues of ensuring the Rule of law, accountability, transparency and reduction of bureaucracy are of particular relevance.

Double Counting of Emission Reductions Undermines the Credibility of Corporate Mitigation Claims.

Companies are increasingly relying on emission reductions attributable to their adoption of renewable electricity to achieve net-zero emission targets. However, there is a risk of double counting of emission reductions threatening the credibility of corporate climate actions due to defective accounting rules of GHG emissions related to electricity consumption and the overlap between different market-based instruments, including carbon credit markets, renewable power purchase agreements, and renewable energy certificates. Using data of 63 major Chinese companies in seven sectors, we quantitatively assess the risks of double counting related to corporate sourcing of renewables and their consequent influences on the alignment of corporate emission trajectories with the 1.5 °C goal of the Paris Agreement. Results show that 7.1% of the electricity consumed by sample companies in 2021 was from renewable energy procurement and deployment, with which they reported 8.27 Mt of CO2e emission reductions compared to the scenario with no renewable electricity consumption. However, emission reductions that could be double counted are predicted to be 0.9-1.3 times as many as emission reductions that companies will report during 2021-2030. After adjustment of the reported emissions that might be underestimated due to double counting, the overall emission trajectories of sample companies are no longer aligned with the 1.5 °C goal. Our findings suggest that it is urgently needed to improve the corporate carbon accounting rules and increase the transparency of corporate carbon disclosures.

Money laundering and terrorist financing risks and democratic governance: a global correlational analysis

PurposeThis paper aims to examine the association between money laundering (ML)/terrorist financing (TF) risks (hereafter, money laundering risks) and democratic governance across 117 countries.Design/methodology/approachA cross-sectional design was used to examine the association between ML risks and democratic governance by a quantitative approach. The findings are based on annual ratings of 117 countries on ML/TF risks and democracy while controlling for criminality and peace. The data was compiled from the Basel Anti-Money Laundering/Countering Financing Terrorism Risks Index, the Economic Intelligence Unit (Democracy Index), the Global Initiative against Transnational Organized Crimes (Criminality Index) and the Institute for Economics and Peace Index for 2020.FindingsA multiple linear regression model found a statistically significant negative association between democratic governance and ML risks (B = −0.354, t = −7.454, p = <0.001) and a significant positive association between criminality and ML risks (B = 0.242, t = 2.692, p = 0.008).Research limitations/implicationsA cross-sectional design cannot determine causal inferences and generalization (Levin, 2006). The study only used a year to examine the hypothesis of a negative correlation between ML risks and democratic governance, thus making generalization difficult.Originality/valueExtant literature examined ML, terrorism and AML diversely. There was a need to estimate the association between ML risks and democratic governance, especially globally, during a global crisis like COVID-19, when democratic principles, such as the rule of law, transparency and accountability, are challenged. Many personnel were laid off, thus limiting supervision for ML and TF. This study presents evidence of this association.

The relationship between governance structure and tourism development in China: Evidence from time and frequency domains

AbstractThe purpose of this study is to examine the relationship between governance structure and tourism growth in China. This study examines the worldwide governance indicators’ correlation with tourism development (TD) through the time and frequency approach. The sample used in this study covers the duration from 2002Q1–2019Q4; the connection among the variables under consideration, named corruption control, political stability and absence of violence/terrorism, the rule of law, voice and accountability and regulatory quality, is examined individually with respect to TD. The outcome of the study highlights the considerable importance of governance structure indicators in developing the tourism sector. Moreover, the results verify causal connections among the time‐series of the variables under consideration, pointing towards the dynamic nature of their influence. Based on the results, this study stresses the imperative role of government and authorities in improving the quality of governance. Moreover, governance indicators are crucial for economies as they portray the reputation and image of a country, therefore interesting international tourists and strengthening the tourism sector. Additionally, the results not just emphasize the significance of a strong governance structure but also call for a strategic plan which fosters TD in the upcoming years.

Updating the Content of Bookkeeping Method in Conditions of Regulatory Framework Reorganization and On-Going Digitalization of Accounting in Russia

The article tries to substantiate the extension of the list of accounting methods, which make up the method of current bookkeeping. Focus is not made on specifying content of the present and established in practice ways of accounting but on insertion in the list such elements of the method that foster realization of tasks facing the current accounting within the frames of informational support of management and outward control. At the same time these elements of the method were not taken into consideration in the regulatory framework. According to the author, extension of the list of elements of bookkeeping methods can build a frame for shaping the home regulatory framework in bookkeeping. Reorganization of Russian accounting rules (standards), which can be traced lately, demonstrates timeliness of introduction of new approaches to elaborating the system of enactments. Insertion in the list of key issues liable to regulation of matters of methodology underlines the importance of the principle of content priority over form. It can help adjust regulatory framework in accordance with procedure and technological principle. The author put forward methodology, which can be applied to any type of objective accounting.

Revocation of Article 370; Restoration of Peace &amp; Sharp Decline of Terrorism in Jammu and Kashmir

The focus of this research work is on the transformative impacts of the abrogation of article 370 and 35A of the Indian constitution and how for the peace has been restored by introducing political reforms and how far the sharp decline in militancy related incidents has witnessed after August 5, 2019. The political truth actualized by the Modi led central government, by abrogating the ingredients like article 370 and 35A and the way government architected the state into two union territories-Jammu &amp; Kashmir and Ladakh for bringing stability based on four components-modernity, rule of law, accountability and peace. With changing political scenario, new social and political thoughts are emerging under the umbrella of liberal democracy and the people’s positive political participation is showing huge improvement.

Data protection and appropriate measures: too many uncertainties in the judicial applications?

The present paper analyses, from a comparative perspective, the accountability rules outlined in the GDPR and their practical application by the courts of Member States. The first part of the article highlights the influence of the GDPR on Third Countries, with specific attention to Chinese legislation regarding data protection. The second part is mainly focused on the obligations relating to accountability and the notion of appropriateness of measures to be adopted by Data Controllers, as well as its connection with liability rules stated in Article 82 of the GDPR. The analysis considers the application of these rules, emphasising the different interpretations made by Data Protection Authorities, national courts, and more recently, by the Court of Justice of the European Union.