Contract Disclosure Research Articles

The impact of accounting disclosure according to the standard (IFRS-16) lease contracts on the efficiency of the finan

IFRS-16 standard showed changes in the quality of disclosure and accounting treatment of lease contracts, which was reflected in the information content of the financial statements. The research deals with the statement of the impact of applying IFRS-16 standard on the efficiency of the financial performance of banks by measuring the level of performance according to financial indicators. The research aims to evaluate the changes in reclassifying lease contracts to financing and operating on the financial position of banks. The financial analysis method was adopted, relying on some of the main financial indicators to evaluate the financial performance of Mansour Investment Bank, the research sample, such as the ratio of debt to equity, the ratio of fixed assets to equity, and some other indicators. The most important conclusions are that there is a clear impact in applying the standard on the efficiency of the bank's performance, the research sample. The most important recommendations are the necessity of applying the standard to all Iraqi banks in order to enhance the qualitative characteristics of accounting information in financial statements and increase the efficiency of these banks in the financial markets.

Contract Disclosure under External Scrutiny

ABSTRACT We examine the effects of mandating compensation disclosure on executive incentive contracts, earnings management, firm value, and social welfare. We develop a moral hazard model with multiple principal-agent pairs facing an external monitor who allocates resources across firms to verify earnings management. With such scrutiny allocation, contracts exhibit externalities that create a coordination problem among principals. Contract disclosure enables principals to design the contract anticipating the monitor’s reaction. However, it may also exacerbate the coordination problem among principals because they do not consider externalities on other principals caused by the effects of their contract choices on the monitor’s scrutiny allocation. If internal controls are relatively weak, contract disclosure may make contracts more strongly contingent on reported earnings, increase earnings manipulation, and nevertheless increase social welfare. Contract disclosure improves firm value only if the scrutiny resources available to the monitor are not strongly constrained. JEL Classifications: C72; D62; G38; M43; M46.

CONTRACTS IN MUSEUM OPERATIONS.PUBLIC-LAW ASPECTS

In 2022, the Wydawnictwo UniwersytetuGdańskiego published Umowy w działalności muzeów.Zagadnienia publicznoprawne [Contracts in MuseumOperations. Public-law Aspects] by Paulina Gwoździewicz-Matan. It is a supplement to the book by Paulina Gwoździewicz-Matan. Iwona Gredka-Ligarska, and Prof. Wojciech W. KowalskiUmowy w działalności muzeów. Prawo cywilne. Prawo autorskie[Contracts in Museum Operations. Civil Law. Copyright].The study’s Author does not deal with the application of thecorpus of public law to museum operations, but with the selectedissues related to the specificity of museums’ activityaimed at amassing and protecting collections. The first sectionsof the study tackle the legal status of museums and theimpact of subsequent regulations of public law on the contractsconcluded by museums, beginning with the basic act,namely the Act on Museums. Subsequently, the Author proceedsto analysing the Act of 11 September 2019 on PublicProcurement Law as well as fiscal regulations in the contextof such contracts. In the following chapters, the applicationof the provisions of the Act on the Security of Personal Dataand regulations concerning the disclosure of contracts by themuseums which are public sector units are discussed. A valuablecomplement to the study can be found in a set of contracttemplates contained in an Annex; they actually translate intothe summing up of the conclusions presented in the study andalso resulting from the study Contracts in Museum Operations.Civil Law. Copyright. The Annex contains the set of contracttemplates most frequently used by museums. The discussedstudy should be found in the book collection of every individualdealing with the legal aspects of museum operations.

Vertical Contract Disclosure in Three‐Tier Industries*

Consider a three‐tier industry with a monopolist supplying a manufacturer which sells its product to final consumers through two retailers. Contracts are linear and secret. Hence, upon receiving an out‐of‐equilibrium offer, each retailer must form a belief about the identity of the deviating upstream firm. This beliefs' specification problem wipes out if an Open Book Accounting (OBA) policy is implemented, whereby the input price is disclosed to retailers. Under Cournot (Bertrand) competition, OBA increases industry profits and consumer surplus if retailers believe that any out‐of‐equilibrium offer is more likely to reflect a deviation by the upstream supplier (by the manufacturer).

Covering crude bargains: The impacts of investigative media reporting on oil deals

After three decades of work on the resource curse and anti-corruption initiatives, poor resource governance and dubious oil deals are still common occurrences. Despite the climate imperative of phasing-out fossil fuels, these ‘crude bargains’ open up new oil acreage in exchange for questionable promises of prosperity. Media reporting can play a major role in exposing these deals and the risks of ‘oil curse’, yet few studies examine the practices and impacts of journalism. Looking at the case of Guyana, this study discusses the interplay between international extractive sector governance initiatives, investigative reporting, and domestic policy reforms. Whereas investors and the ruling party see massive profit potential in Guyana's offshore oil deposits, critics say this upper middle-income South American country is selling out its natural bounty and getting little in return. Beyond questioning the rhetoric of oil-driven development, findings suggest that media reporting can help expose questionable practices, push for contract disclosure, demand clarifications from authorities and corporations, and motivate some authorities to publicly commit to reforms and even to move ‘beyond oil’.

Scientists as spies?: Assessing U.S. claims about the security threat posed by China's Thousand Talents Program for the U.S. life sciences.

In 2008, the Chinese government created the Thousand Talents Program (TTP) to recruit overseas expertise to build up China's science and technology knowledge and innovation base. Ten years later, in 2018, the Federal Bureau of Investigation (FBI) announced a new "China Initiative" that aimed to counter the transfer by U.S.-based scientists involved in the TTP of knowledge and intellectual property that could support China's military and economic might and pose threats to U.S. national security. This initiative launched a number of investigations into major U.S. federal funding agencies and universities and charged several scientists, many of them life scientists, with failing to accurately report their work and affiliations with Chinese entities and illegally transferring scientific information to China. Although the FBI cases demonstrate a clear problem with disclosure of foreign contracts and research integrity among some TTP recipients, they have failed to demonstrate any harm to U.S. national security interests. At the heart of this controversy are core questions that remain unresolved and need more attention: What is required to transfer and develop knowledge to further a country's science and technology ambitions? And can the knowledge acquired by a visiting scientist be easily used to further a country's ambitions? Drawing on literature from the field of science and technology studies, this article discusses the key issues that should be considered in evaluating this question in the Chinese context and the potential scientific, intelligence, and policy implications of knowledge transfer as it relates to the TTP.

Mandatory disclosure of managerial contracts in NGOs

Nongovernmental Organizations (NGOs) have been recently mandated to disclose the details of their executives’ compensation packages. Contract information is now accessible not only to current and prospective donors, but also to rival NGOs competing for donations in the fundraising market. We analytically study the impact of publicly available contract information on fundraising competition of NGOs. Although such a provision makes contract information available to multiple stakeholders and increases the transparency of the NGO sector, we argue that it also induces NGOs to use properly designed managerial incentive contracts strategically to influence rival NGOs. In particular, we find that the observability of incentive contracts reduces existing fundraising competition. This can be beneficial in terms of NGOs’ outputs and social welfare, in particular when these organizations are trapped in a situation of excessive fundraising activities. However, we show that when donors’ willingness-to-give for projects are sufficiently different, publicly available contract information can distort the NGOs’ choice of projects, leading to socially inefficient project clustering.

Economic consequences of managerial compensation contract disclosure

We analytically study the economic consequences of the disclosure of managerial compensation contracts in a setting where two firms, by designing compensation contracts for their respective managers, compete for a new investment opportunity. Each manager is privately informed about her firm's profitability from this investment. We find that the disclosure leads to firms' emphasizing short-term stock performance in their managers' contracts. This, in turn, induces managers to signal favorable private information via myopic overinvestment, which deters rival firms' investments and gains their own firms a competitive edge. Nonetheless, such strategic use of compensation contracts is absent when the contracts are not disclosed; under this regime, equilibrium contracts only focus on long-term outcomes. Moreover, while disclosure-mandate-induced managerial myopia erodes firm profits, it may benefit consumer and social welfare. Our theory illuminates the economic consequences of the Compensation Discussion and Analysis (CD&A) disclosure implemented in 2006.

The Reflection of the Adoption of IFRS 17 “Insurance Contracts” on the Procedures for Auditing Insurance Contracts in the Iraqi Environment

IFRS 17 aims to provide a unified basis for accounting for all types of insurance contracts, including reinsurance contracts, in a manner that benefits both investors and insurance companies and enhances the ability of the financial statements of insurance companies for comparison between companies listed in financial markets around the world. According to this standard, insurance contracts are accounted for on the basis of the Asset-Liability Approach and the use of fair values that the standard requires updating regularly in order to provide more useful information to the users of financial statements, as a result of the failure of reporting requirements for insurance contracts in the Iraqi environment to provide adequate and honestly representative information about the result of the activity and the financial position as a result of the failure of the requirements of the unified accounting system for banks and insurance companies with regard to providing appropriate bases for recognition, measurement, presentation and disclosure of insurance contracts compared to IFRS 17. Consequently, the insurance contracts audit program prepared by the Federal Board of supreme audit is insufficient and lacks the necessary procedures, also, this program includes audit procedures for insurance companies only and does not include companies that deal in contracts of an insurance nature, as well as the absence of an integrated program or guide approved by private auditing companies and offices in the Iraqi environment for the purpose of auditing these contracts, which requires a statement of the importance of adopting the International Financial Reporting Standard IFRS 17 and its reflection on the audit procedures that auditors must adopt when auditing insurance contracts. The two researchers relied on the opinions of a sample of academics and professionals specialized in this field by preparing a questionnaire that focused on the importance of adopting IFRS 17 and the reflection of adoption on the procedures for auditing these contracts in the Iraqi environment. The most prominent finding of the research is the need to adopt IFRS 17 because it provides clear and specific guidelines that help provide more useful information to users of financial statements in companies that deal in insurance contracts, as well as the impact of adopting this standard on the insurance contract audit procedures approved by the Federal Board of supreme audit and private auditing companies and offices in the Iraqi environment

Legally Speaking: Public Perception and the Fine Print of the Law

Legal argumentation operates internally, in the construction of decisions, and externally, in the communication of those decisions. In this paper, I am interested in the external communication of legal decisions and the standards they assume. Treating “fine print” as a metonym that stands for much more than just contract disclosure, I explore what legal argumentation highlights and ways in which it marginalises features that a fully informed public should reasonably require for its own deliberations. In the course of this, I consider the nature of the “reasonable person” that the law addresses.

Vertical Contract Disclosure in Three-Tier Industries

Consider a three-tier industry with a monopolist supplying an essential input to a manufacturer, which in turn sells its product to final consumers through two differentiated retailers. Throughout the supply chain, contracts are linear and secret. In this setting, upon receiving an out-of-equilibrium offer by the manufacturer, a retailer has to form a belief about the identity of the deviating upstream firm. This beliefs' specification problem wipes out if an Open Book Accounting (OBA) policy is implemented (i.e., if the input price is disclosed to the retailers). I show that the welfare effects of OBA crucially depend on the retailers' beliefs: when retailers compete a la Cournot, OBA increases total industry profit and consumer surplus if and only if retailers believe that any out-of-equilibrium offer is more likely to reflect a deviation by the upstream supplier rather than by the manufacturer, whereas the opposite result emerges under Bertrand competition.

Onerous contracts: economics and reporting

Importance. The article discusses issues of reflecting onerous contracts in financial reporting prepared in accordance with IFRS and focuses on the impact of these contracts on businesses and the economy as a whole. Main provisions for onerous contracts reporting are analyzed and possible solutions for reporting issues are proposed. Special attention is devoted to importance of professional judgment and mutual correlation of information disclosures in various types of reporting. Objectives. Present author's research of the problem of accounting reflection of burdensome contracts and develop new proposals for disclosure of onerous contracts in the financial statements. Methods. Research is based on methods of logic, analogy and statistical analysis. Results. Stakeholders do not receive relevant information regarding the risks generated by onerous contracts and the risks they offset. The rules for forming financial statements regarding such agreements are not always detailed and leave room for various interpretations. Conclusions and Relevance. It is concluded that it is necessary to provide stakeholders with more complete information about onerous contracts based on the use of consolidated financial and non-financial reporting data, disclosure of risks caused by onerous contracts and mitigated by them. It is concluded that similar disclosures are useful for loss-making contracts prepared and structured using method of professional judgment and responsibility.

Contract Disclosure, Earnings Management, and External Enforcement

We examine the effects of mandating compensation disclosure on executive incentive contracts, earnings management, firm value, and social welfare. We develop a moral hazard model with multiple principal-agent pairs facing a representative investor who allocates resources across firms to uncover earnings management. With such scrutiny allocation, contracts exhibit externalities that create a coordination problem among principals. Contract disclosure provides principals with a first-mover advantage, allowing them to design the contract anticipating the investor's reaction. However, it may also exacerbate the coordination problem among principals as they do not consider externalities on other principals caused by the effects of their contract choices on the investor's scrutiny allocation. We find that, if internal controls are relatively weak, contract disclosure may make contracts more strongly contingent on reported earnings, increase earnings manipulation, and nevertheless increase social welfare. However, contract disclosure improves firm value only if the scrutiny resources available to the investor are not strongly constrained.

Mandatory Disclosure of Managerial Contracts in Nonprofit Organizations

Nonprofit organizations have been recently mandated to disclose the details of their executives’ compensation packages. Contract information is now accessible not only to current and prospective donors, but also to rival nonprofit organizations competing for donations in the fundraising market. Our aim is to investigate the impact of publicly available contract information on fundraising competition of nonprofit organizations. We argue that, although such provision makes contract information available to multiple stakeholders and increases the transparency of the nonprofit sector, it also induces nonprofits to use managerial incentive contracts strategically. In particular, we find that the observability of incentive contracts relaxes existing fundraising competition. This is beneficial in terms of nonprofits’ outputs, in particular when these organizations are trapped in a situation of excessive fundraising activities. However, we show that publicly available contract information distorts nonprofits’ choice of projects, thus potentially inducing socially inefficient project clustering.

Mandatory Disclosure of Managerial Contracts in Nonprofit Organizations

Nonprofit organizations have been recently mandated to disclose the details of their executives’ compensation packages. Contract information is now accessible not only to current and prospective donors, but also to rival nonprofit organizations competing for donations in the fundraising market. Our aim is to investigate the impact of publicly available contract information on fundraising competition of nonprofit organizations. We argue that, although such provision makes contract information available to multiple stakeholders and increases the transparency of the nonprofit sector, it also induces nonprofits to use managerial incentive contracts strategically. In particular, we find that the observability of incentive contracts relaxes existing fun draising competition. This is beneficial in terms of nonprofits’ outputs, in particular when these organizations are trapped in a situation of excessive fundraising activities. However, we show that publicly available contract information distorts nonprofits’ choice of projects, thus potentially inducing socially inefficient project clustering.

The Extent to Which Contracting Companies in Kuwait Comply with International Accounting Standards from the Point of View of the Internal Auditors

The study aims to demonstrate the degree to which contracting companies in Kuwait comply with the requirements of IAS 11 in terms of applying accounting disclosure requirements and applying the requirements for recognition of revenues and expenses of construction contracts. The study group consists of Kuwaiti contracting companies in the first category. The sample of the study consisted of accountants and internal auditors in contracting companies. The contracting companies in the State of Kuwait apply the requirements of accounting disclosure for construction contracts in accordance with the requirements of International Standard No. 11, and the contracting companies in the State of Kuwait apply the requirements for recognition of the revenues and expenses of construction contracts in accordance with the requirements of International Standard No. 11. The most recommendations: The necessity of contracting companies in the State of Kuwait to disclose the methods used to determine the level of completion of construction contracts under implementation, which helps in the application of full disclosure of construction contracts in addition to the possibility of integration of information elements of the financial statements. And the contracting companies to disclose the total amounts due to customers for the work of construction contracts as an asset within assets.

Functions and Limitations of Real Estate Contract Disclosure Statement under Real Estate Brokerage Act―As a Measure for Real Estate Purchaser's Risk Prevention and Reduction―

Functions and Limitations of Real Estate Contract Disclosure Statement under Real Estate Brokerage Act―As a Measure for Real Estate Purchaser's Risk Prevention and Reduction―

Relative Pay for Non-Relative Performance: Keeping Up with the Joneses with Optimal Contracts

We consider a multi-agent contracting setting when agents derive utility based in part on their pay relative to their peers. Because agents' productivity is affected by common as well as idiosyncratic shocks, it is optimal to base pay on the agent's performance relative to a benchmark of his peers. But when agents have keeping up with the Joneses (KUJ) preferences and care about how their pay compares to that of others, relative performance evaluation also increases agents' perceived risk. We show that when a single principal (or social planner) can commit to a public contract, the optimal contract hedges the risk of the agent's relative wage without sacrificing efficiency. While output is unchanged, however, hedging makes the contracts appear inefficient in the sense that performance is inadequately benchmarked. We also show that when there are multiple principals, or the principal is unable to commit, efficiency is undermined. In particular, KUJ effects induce agents to be more productive, but average wages increase even more, reducing firm profits. We also show that if the principal cannot commit not to privately renegotiate contracts, then wages and effort are increased when KUJ effects are weak, but are reduced, enhancing efficiency, when KUJ effects are sufficiently strong. Finally, public disclosure of contracts across firms can cause output to collapse.

Private and Social Incentives for Vertical Contract Disclosure

We follow the framework in Arya and Mittendorf's 2011 Rand Journal of Economics paper but extend their analysis by investigating supplier(s)' equilibrium choices of disclosure or confidentiality regarding their contract terms with the downstream retailers. In the case of a common supplier, we find that the unique subgame perfect Nash equilibrium (SPNE) is for the supplier to choose disclosure. This private incentive is opposite to social incentive, which calls for the regulator to choose confidentiality. In the case of dedicated suppliers, however, there are multiple SPNE due to coordination issues between the suppliers. The case which maximizes social surplus – disclosure – can be supported as a SPNE, together with the case of confidentiality, which maximizes supplier profits at the cost of everyone else. Copyright © 2014 John Wiley & Sons, Ltd.

Private and Social Incentives for Vertical Contract Disclosure

We follow the framework in Arya and Mittendorf (2011) but extend their analysis by investigating supplier(s)' equilibrium choices of disclosure or confidentiality regarding their contract terms with the downstream retailers. In the case of a common supplier, we find that the unique SPNE is for the supplier to choose disclosure. This private incentive is opposite to social incentive which calls for the regulator to choose confidentiality. In the case of dedicated suppliers, however, there are multiple SPNE due to coordination issues between the suppliers. The case which maximizes social surplus -- disclosure -- can be supported as a SPNE, together with the case of confidentiality which maximizes supplier profits at the cost of everyone else.