Current Accounting Research Articles

Paying for forest carbon: Cost‐effectiveness of the Verified Carbon Standard (VCS) remuneration scheme

AbstractForests play an essential role in climate change mitigation by absorbing carbon dioxide from the atmosphere and storing carbon in biomass. Carbon sequestration can be increased by the extension of rotation cycles in existing plantation forests. This study examines the cost‐effectiveness of the remuneration scheme employed by Verified Carbon Standard (VCS), a commonly used carbon accounting method based on the average amount of carbon stored in the forest. We compare the net present value of carbon remuneration under VCS with that of a scheme that remunerates actual carbon storage in each year which we call “current carbon accounting.” We use data for an Acacia mangium plantation in Indonesia where the forestry sector is expected to contribute more than half of the reductions of carbon emissions according to Indonesia's Nationally Determined Contribution (NDC) under the Paris Agreement. For our baseline scenario, we find, first, that the payments needed to incentivise additional carbon storage under VCS are considerably higher than under current carbon accounting. Second, the inefficiency is more pronounced at lower discount rates. Third, recent prices reported for VCS forest credits are not sufficient to incentivise forest managers to lengthen the forest rotation in Indonesian plantation forests.

Comparison of carbon management and emissions of universities that did and did not adopt voluntary carbon offsets

ABSTRACT The urgent need to reduce greenhouse gas emissions, remove carbon from the atmosphere and stabilize natural carbon sinks has led to the development of many carbon management measures, increasingly including voluntary carbon offsets (VCOs). We studied carbon management in universities, institutions with large carbon footprints and considerable influence in climate science and policy fora. However, concerns that VCOs may deter adopters (including universities) from adopting other carbon reduction measures and limit emissions reductions, for example, through moral hazard, have been raised but understudied. We compared the carbon management characteristics (priorities, policies, practices and emissions) of universities that did and did not adopt VCOs. We found adopters measured carbon emissions for longer, and had set targets to reach net zero earlier than had non-adopters. Adopters of VCOs also undertook more carbon management practices in both 2010 and 2020 than non-adopters. We also found that both adopters and non-adopters significantly increased their carbon management practices over the decade studied, but with no difference between groups. Gross CO2 emissions were reduced significantly over time by adopters of VCOs but not by non-adopters, whereas carbon intensity and percentage annual emissions reductions did not relate to adoption status. Consequently, our study showed no indication of mitigation deterrence due to adoption of VCOs at the universities studied. Rather, greater emissions reductions correlated with earlier net zero target dates, and a higher number of policies and carbon management practices. However, our study was constrained to universities that were affiliated with a national environmental network, so research beyond these organizations, and with individuals, would be useful. The survey was voluntary, exposing the study to potential self-selection bias so the findings may not be generalized beyond the study group. Finally, we found the carbon accounting method currently required of universities for scope 1 and 2 emissions may underestimate emissions reductions, particularly for adopters of VCOs. Augmenting the current location-based accounting method with market-based carbon accounts may overcome this.

The Impact of Cloud Computing on Developing Accounting Education at Private Universities in the Republic of Yemen: A Field Study

The study aimed to identify and measure the impact of cloud computing on developing accounting education from the perspective of academics in the accounting department and experts and technicians in the field of information technology in the Republic of Yemen. To achieve this objective, (180) questionnaires were distributed to a purposive sample in (25) private universities in Sana’a, but only (155) were valid for analysis. The study results revealed a positive impact of cloud computing (organizational readiness, and technological readiness, and environmental readiness) on developing accounting education. Based on the multiple regression analysis, the results showed that technological readiness has a high positive impact on developing accounting education, followed by the organizational readiness, and then the environmental readiness. The results also showed that the most available dimensions of developing accounting education from the sample’s perspective is teaching methods, followed by accounting plans and courses, and then the academic staff. The study recommends that, the Board of Trustees of private universities in Yemen need to adopt cloud computing technology for digital transformation in education. It also recommends that, there is a need to include accounting programs that are professionally used within the accounting curricula, activating field training, reconsidering the current accounting teaching methods, and amending accounting plans and courses to suit technological and technical developments as well as keep pace with the requirements of the labor market.

Carbon neutrality assumption hides significant contribution of growers to carbon sequestration

Current greenhouse gas accounting systems explicitly exclude carbon changes in annual crop biomass. However, neglecting the sequestration and emission of biogenic carbon from annual crops can hide a part of the carbon responsibilities of growers and food consumers, hindering the attainment of social equity. Here, we defined a new system boundary that encompassed crop carbon sequestration, straw consumption, and human metabolism and analyzed the magnitude, structure, and spatiotemporal variation of carbon emissions and carbon sinks in the crop production-consumption system of Chinese growers from 1995 to 2018. We found that the net carbon sink for growers in 2018 was -463 Mt CO2e when accounting for crop production emissions and soil carbon sequestration using the old boundary, while under the new boundary it was 1042 Mt CO2e. Therefore, it is desirable to strengthen research on the distribution of carbon responsibilities among different groups and regions in the future.

Adoption of International Financial Reporting Standards (IFRS) to Enhance Financial Reporting in Oman

International Financial Reporting Standards (IFRS) are rapidly adopted globally to enhance financial reporting quality. All firms in Oman are required to follow IFRS. In addition, the Accounting Standards Board adopted IFRS in their entirety. The project objective is to test the relationship between the adoption of IFRS and financial reporting in Oman. This research used a quantitative method. The population of this study were 112 companies at Muscat Stock Exchange (MSX) for the year ended 2020 in Oman. The sample size of this project was 92 from three sectors of listed companies (Financial Sector 30, Industrial Sector 32, and Service Sector 30). The project results show a significant positive relationship between the adoption of IFRS and financial reporting in Oman. Firms that were Adopt-IFRS-Effective had high financial reporting quality, while firms that were Adopt-IFRS-Not-Effective did not affect their quality. This is because financial reporting is not solely dependent on these standards but has an impact. The implications of this research result in better-informed judgments for investors as the information included in the annual reports improves comparisons that facilitate the further flow of investments. Furthermore, provides significant insight into the International Accounting Standards Board (IASB). Also, this study has been added to the literature by examining the Adoption of IFRS on financial reporting in Oman context. Besides, this might add benefits to many firms relating to their current accounting standards practice that might lead to adopting IFRS to ensure the application of applicable accounting standards to show fair financial statements to its stakeholders. This current research is one of the first works in the context of Sultanate of Oman. It has added a new discussion to the body of knowledge considering the IFRS and their link with financial reporting quality. Furthermore, conducting such research in the accounting field provides new insight into the IFRS literature among both developed and emerging economies including Oman.

Blockchain-Based Triple-Entry Accounting: A Systematic Literature Review and Future Research Agenda

ABSTRACT Recent cases, such as Wirecard, Luckin Coffee, and Steinhoff, highlight the vulnerability of current accounting practices and question their suitability to prevent criminal behavior. Triple-entry accounting (TEA) is a possible answer against accounting fraud and financial manipulation that is increasingly discussed in research and practice. By being based on blockchain technology, TEA is tamper-proof and, thus, might be an effective instrument against manipulation in accounting. However, despite the potential of TEA, research on this topic is scattered and mostly isolated from each other. By conducting a systematic literature review, we synthesize and summarize current research on blockchain-based TEA. Hereby, we find that current research is almost entirely theoretical. Up to now, real-world implementations and their evaluation are still missing in both research and practice. To address these gaps, we develop guiding research questions for interested scholars to pave the way for TEA’s practical use. JEL Classifications: M40; M41.

Recent Development in Accounting Education and Accounting Practice

The objective of the study is to review the recent development in Accounting education and Accounting practice. The qualitative and library research was employed for the study. The study found that it has been found that the current accounting courses offered by several Nigerian universities are insufficient in meeting the labor market needs. Also found further that there is a significant disparity exists between employers and educators regarding the importance of graduate skills. It is therefore concluded that there should be a stronger relationship and collaboration among accounting practitioners, policymakers, and academic researchers are vital for shaping the future of accounting work and determining the type of accounting that will be practiced and studied. The study recommended that it is the responsibility of universities to establish a robust educational foundation for professional accounting training and it is imperative to reintroduce compulsory internship programs before graduation, similar to the practices in other professions like law and medicine.

Accounting reforms and public financial management of federal government agencies in Bayelsa State

The study investigates the relationship between Accounting reforms and Public Financial Management of Federal Government Agencies in Bayelsa State. The target of the study is Federal Government Agencies in Bayelsa State. The study adopts judgmental sampling techniques to select 100 respondents from the study population. A total of 100 copies of structured questionnaires were distributed to the respondents and 83 copies were effectively recovered. The study utilized descriptive statistics to analyze respondent bio-information and univariate analysis, while Pearson product moment correlation regression analysis were used to test the hypothesis formulated. The findings shows that; there is a significant relationship between treasury single account and public revenue management; that there is a significant relationship between international public sector relationship between accounting reforms and public financial management of Federal Government Agencies in Bayelsa State. The study concludes that Accounting reform is Government mechanism which enhances efficient public financial management and accountability. All Federal Government Agencies should comply and adopt international public sector accounting standard. Government should continuously review current accounting reforms and seek for alternative where there is weakness in the platform

Role of due diligence in business takeover

Motivation: The topic of the article is of paramount importance in today’s ever-evolving business landscape. As companies strive to expand their operations and stay ahead of the competition, mergers and acquisitions have become a popular strategy. However, the risks and complexities associated with these transactions cannot be overlooked. Understanding the role of due diligence is essential for any organization considering a business takeover. It serves as a powerful tool to uncover potential risks, assess the viability of the transaction, and make well-informed decisions. By conducting a thorough due diligence process, companies can identify financial discrepancies, legal liabilities, operational inefficiencies, and hidden risks that may impact the success of the transaction.Aim: The goal of the research was to analyze to what extent is the resulting value of a business is affected by improperly performed due diligence. The method used for data collection was in-debt literature research based on the Web of Science database. Subsequent content analysis was used to identify the 10 most common errors that can occur during the process of due diligence. The following research used the data obtained from answering the first research question with. Ishikawa fishbone diagram was used as a specific method of causal analysis.Results: The main findings include the identification of the most common errors occurring during the performance of due diligence, such as wrong financial analysis, incomplete financial accounts, Incomplete accounting statements, or adjusting entries for receivables. The main causes include excessive work pressure on auditors, past due receivables, poor supplier vetting, or failure to document the application of prices. The research is beneficial for auditors or audited companies so that they could avoid such errors. However, there are also several limitations as it is very time and cost-consuming to deal with due diligence on a company-by-company basis. Also, the application of Ishikawa fishbone diagram and brainstorming prior to diagram depends on the number of experts involve. Another limitation is that the research results applied under current accounting legislation only, and there are different laws and regulations in different countries.

Corporate carbon management system

The basis of the company’s decarbonization is the effective management of greenhouse gas emissions. The article visualizes in graphic material the forecast values of the mass of greenhouse gas emissions in the fuel and energy sector of Russia until 2030 and determines the trends in their changes. Based on the results of the analysis, it was revealed that in order to achieve a low-carbon development path, it is necessary to introduce additional measures to reduce greenhouse gas emissions. The purpose of the scientific research is to develop a corporate carbon management system, which can become a guideline for the development of corporate systems by Russian oil and gas companies. A reliable system for recording and monitoring greenhouse gas emissions serves as the basis for obtaining up-to-date, complete and reliable data. At the same time, for the quality control of the decarbonization process, a scheme of interaction within the company should be clearly built. The development and implementation of a carbon management system will allow the company to systematically reduce greenhouse gas emissions, which will create conditions for the transformation of climate risks associated with government regulation into the category of opportunities such as entering carbon markets, attracting investors, etc. The authors note that in most large Russian companies have already developed and introduced carbon management systems into production. After analyzing the current greenhouse gas accounting system of JSC “Zarubezhneft’’, the authors propose to create a carbon management system taking into account the specifics of the company, which consists in organizing activities on the territory of different countries (Cuba, Bosnia and Herzegovina, Egypt, Uzbekistan, Indonesia, Vietnam and Russia). It is proposed to adapt the methodological approaches for calculating greenhouse gas emissions to the requirements of the legislation in force in the territory where the production facilities of the JSC “Zarubezhneft’’ are located, and also to apply national coefficients in the calculation to ensure more accurate emission estimates. The result of the study is the development of the concept of the carbon management system of JSC “Zarubezhneft’’.

Research on Enterprise Accounting Informationization and Integration of Industry and Finance

The steady development of accounting informationization has become an inevitable requirement for the sustainable development of enterprises. The integration of industry and finance, as an effective way for enterprises to maintain business vitality and improve business efficiency in response to fierce market competition, is also gradually deepening. However, the current accounting informationization and industry financial integration still exist fragmentation, individualization, system is not strong and accounting personnel concept and quality and integration requirements gap between large and other issues. In this regard, this paper analyzes and discusses accounting informationization and business integration, mainly analyzes its functional role and specific implementation path. At the same time, it points out the implementation focus of the financial sharing center model to promote the integration of industry and finance, systematically explains the meaning of financial sharing and industry and finance integration, and further clariifies the relationship between the two and the promotion effect of financial sharing on industry and finance integration. On this basis, the problems existing in the process of enterprise industry-finance integration under the mode of financial sharing are deeply analyzed, countermeasures and suggestions are put forward to solve these problems, in order to provide certain guidance and reference for the development of enterprise industry-finance integration. At the same time, it is hoped that it can innovate financial management mode, help enterprises understand and promote the process of enterprise industry-finance integration management, keep up with the historical pace of data management and data operation, and realize the ultimate goal of maximizing enterprise value.

How big data features drive financial accounting and firm sustainability in the energy industry

PurposeThis study aims to scrutinize the relationship between the perception of big data (BD) features and the primary outcomes of financial accounting. Likewise, it explores whether financial accounting practices moderate the relationship between BD features and firm sustainability.Design/methodology/approachThe study used a questionnaire survey based on the Likert scale for two distinct groups of participants: academic scholars and industry practitioners operating in the BD era within the energy sector.FindingsThe results reveal significant positive associations between BD features and firm performance, reporting quality, earnings determinants, fair value measurements, risk management, firm value, the efficiency of the decision-making process, narrative disclosure and firm sustainability. Besides, the path analysis indicates an indirect impact of BD on firm sustainability via financial accounting practices. The results suggest that energy firms should consider incorporating BD analysis into their financial accounting processes to improve their sustainability performance and create long-term value for their stakeholders.Practical implicationsThe findings are particularly interesting to academics in accounting and business to improve the accounting curriculums to fit the technological revolution, especially in the field of BD analytics. Practitioners within energy industries must also refine their skills and knowledge to meet the challenges of BD in the foreseeable future. The results provide important implications for policy setters to revise current financial accounting standards to cope with technological innovation.Originality/valueThe study makes a valuable contribution by critically examining the impact of BD on various financial accounting practices neglected in prior research. It highlights the transformative power of BD in the domain of financial accounting and provides insights into its potential implications for energy firms.

Non-monetary double-entry carbon accounting method for entities in emission trading systems

This paper introduced a non-monetary double-entry carbon accounting method for entities in emission trading systems. To mitigate climate change, government imposed carbon emission reduction obligations to industries with high greenhouse gas emissions. These entities performed carbon accounting and participated in emission trading systems annually to acquire enough carbon emission allowance and carbon credit to compensate for their greenhouse gas emissions. However, current carbon accounting methods did not account for their long-term emission potential, undermining assessment for their sustainability and financial risk. The proposed method addressed this issue by considering carbon emission allowance and carbon credit as carbon asset and emission potential from life cycle and embodied carbon assessment as long-term liability. Double-entry accounting methods were used to introduce carbon accounting balance sheet, income statement and flow statements and to enable carbon management performance analysis by analogous methods on financial statements. A case study was performed with historical data of an emission trading system. The result revealed that an entity's future carbon emission potential imposed significant long-term liability and risk. Its relevant emission expense was also found to incur much earlier before the actual emission. But more research was needed to expand the method to entities with their carbon neutrality targets, to enable comparison of entities in different emission trading systems and to ensure data credibility in generated reports.

Re-Evaluating the Value of Ecosystem Based on Carbon Benefit: A Case Study in Chengdu, China

Despite the acknowledged importance of terrestrial ecosystems in achieving carbon neutrality, current carbon accounting predominantly focuses on CO2 uptake, neglecting indirect contributions from ecosystem services, such as temperature regulation and air purification. We established a carbon benefit (C benefit) accounting framework that integrated these services and analyzed the drivers influencing the spatial and temporal changes in the C benefit. It was found that the average annual growth rate of C benefits in Chengdu over the past 20 years was 0.91 Tg/a, and the CO2 emissions reduction due to ecosystem services was 22.47 times that of carbon sinks. Therefore, the contribution of ecosystem regulating services to carbon neutrality cannot be ignored. In addition, the elevation, gross domestic product (GDP), and normalized differential vegetation index (NDVI) are key factors affecting C benefits. It is worth noting that the intensive management of constructed ecosystems can result in significant reductions in ecosystem C benefits. Finally, our findings underline the need for low-carbon policies to not only promote carbon sink projects but also enhance the overall capacity of ecosystem services, which could substantially mitigate global climate change.

The Problems and Countermeasures of Accounting in Manufacturing Industry

Accounting is the soul of an enterprise development, it plays an important role in improving the economic benefits of enterprises, and the level of enterprise development is affected by the level of accounting to a certain extent. At present, there are still many problems in the accounting treatment of China's manufacturing enterprises, so that it can not well adapt to the production needs of enterprises, affecting the healthy and orderly development of enterprises. In this case, manufacturing enterprises should strengthen accounting, so that managers can make decisions favorable to the development of enterprises. Based on this, this paper expounds the significance of accounting in the development and operation of manufacturing enterprises, analyzes the problems in the current accounting work of manufacturing enterprises, and puts forward some reasonable countermeasures and suggestions.

THE ROLE OF ACCOUNTING AND INTERNAL CONTROL IN THE ENTERPRISE MANAGEMENT SYSTEM

For the development of international economic relations in Georgia, the role of accounting as the language of business is great, which requires compliance of accounting and reporting with the norms and rules recognized by the international practice of accounting. Because of this, a national accounting-reporting model was created in our country, for which the main normative documents of accounting regulation, the Law of Entrepreneurs and others were developed and put into effect. In enterprises, when the economic activity increases, it becomes necessary to create an internal control system for the protection of the current accounting and reporting legislation. In order for the internal control system to be fully involved in the management of enterprises, the main element of which is the internal audit, its goals must be realized, awareness raising, which is the goal of the abovementioned paper. Internal audit - this is the internal control of the enterprise, which is organized as a separate service in the enterprise, and their main task is to help accounting workers to perform their duties as efficiently and effectively as possible. Because of this, it is the duty of the internal auditors to check the accuracy of accounting information and to make recommendations for their improvement, thus they contribute to raising the quality of accounting and reporting in the enterprise. Keywords: accounting, financial reporting, internal control, internal audit.

Extrapolation of professional judgment in the accounting system: significance and impact on development

Introduction. In the process of making important management decisions, the professional judgment of the accounting specialist is decisive. The novelty of such an object as the professional judgment of an accounting specialist requires research for trend changes, effectiveness, risks of its extrapolation, which have an impact on the development of the accounting system, business, and the accounting profession itself.The purpose of the study is to examine the criteria and prerequisites for the practical application of the professional judgment of an accounting specialist and its effectiveness in the context of extrapolation in the accounting system, in the economic activity of the economic entity, in the development of the accounting profession.Methods. In the process of researching the prerequisites for applying the accountant’s professional judgment, general scientific methodological techniques were used, in particular induction and deduction. Structural-logical and semantic analysis - to clarify the risks associated with the implementation of professional judgment, as well as the possible negative impact on the practice of making such decisions. Grouping and classification - to justify the criteria of effective information based on the professional judgment of an accounting specialist.The information base of the research consists of the works of domestic and foreign scientists on the issues of necessity, prerequisites and results of extrapolation of professional judgment, materials of international scientific and practical conferences, results of personal experience and observations.Results. The conditions of application of the accountant’s professional judgment are outlined. The scientific plane of forming professional judgment is characterized, which involves serious training of a specialist according to modern international approaches based on the international code of ethics of professional accountants, which is a model for the development of national ethical and professional recommendations. The results of the extrapolation of professional judgment in the accounting system, in the economic activity of the business entity, and in the development of the accounting profession are analyzed.The risks associated with the implementation of professional judgment are analyzed, as well as the possible negative impact on the practice of making such decisions, on the basis of which the need for further development is outlined, based on which a logical sequence prevails between the principles, standards of accounting and reporting, and the current regulatory and methodological regulation accounting and financial reporting in Ukraine and the professional judgment of accounting specialists.Perspectives. It is expedient to carry out further scientific research in the direction of expanding the scientific and methodical plane of studies regarding the effectiveness of the extrapolation of professional judgments.

Accounting paradigm in application conditions of electronic information technologies

Introduction. The widespread introduction of modern electronic information and communication technologies into the economy requires a rethinking of the theoretical foundations of accounting. The current accounting methodology, based on the documentation of economic transactions, their reflection on accounts by double entry, balance sheet summarization, was initiated several centuries ago. With the development of automated systems, the latest information technologies for the formation, processing and transmission of information, there is a need of developing of a new accounting paradigm that would reflect not only the new information requests of a wide range of information consumers, but also take into account radical changes in accounting techniques.Purpose. The purpose of the study is to generalize the existing developments regarding the paradigmatic development of accounting science and to provide proposals for the development of a new accounting paradigm, based on modern information and communication technologies, the new role of accounting as an important economic institution.Methods. General scientific and empirical methods of knowledge and generalization of past and present processes and phenomena are used to reveal the purpose of the article.\Results. The existing developments regarding the paradigmatic development of accounting science are summarized. The main features and criteria of each stage of accounting development are defined. The need for the formation of a new accounting paradigm based on the current circumstances in the world economy and society is substantiated. The main criteria that characterize the modern accounting paradigm and distinguish it from the previous ones are the new purpose and tasks of accounting, the introduction of intellectual resources into the accounting system, new approaches to resource assessment. However, the development and introduction of electronic accounting and information systems, which have a significant impact on the methodological and organizational foundations of accounting, collection, registration, processing, storage and transmission of accounting and reporting information, can be considered the main factor in the change of the accounting paradigm.Perspectives. Further research can be aimed at improving methodological, organizational and technical tools for the practical implementation of a new accounting paradigm based on modern electronic accounting and information systems.

The Construction of Linear Regression Model Based on the Index Evaluation Method to Account Green GDP

With the popularization of sustainable development, the traditional GDP index is discussed to be revised to build a new green GDP (hereinafter referred to as GGDP) to meet the needs of sustainable development. At present, there are many methods of calculating GGDP in the academic circle, but due to the complex and diverse environmental factors and the large differences in different countries, these methods fail to achieve the feasibility and simplicity of GGDP accounting operation while pursuing the theoretical accuracy. For this problem, this paper tries to start from the perspective of Value quantity accounting and uses pollution loss method for reference, establishes accounting method which can not only achieve the purpose of GGDP accounting, but also relatively simple, and easy to calculate. First, this paper constructs environmental cost variables through four indicators: Coal, Oil, Gas and Carbon dioxide. Next, to emphasize the importance of "green", a coefficient is introduced to increase the weight of environmental costs in the accounting of GGDP. Then, a linear regression model based on the index evaluation method is established where GGDP is calculated by subtracting the environmental cost of a certain weight from GDP. To justify the model effectiveness, a benefit prediction model is established to predict the environmental cost over the next 50 years under the conditions in which GDP and GGDP are adopted, respectively. The results prove the effectiveness of the linear regression model based on the index evaluation method constructed in this paper. Under the background that the current GGDP accounting methods proposed in the academic circle pursue accurate theory while ignoring the difficulties in practical accounting, the accounting model established in this paper, which is relatively simple and easy to calculate, will provide practical application value for the implementation of GGDP accounting in the future.

The explanatory power of explanatory variables

AbstractThis paper examines the current empirical accounting research paradigm. We ask: In general, do the estimated regressions support the promoted narratives? We focus on a regression model’s main variable of interest and consider the extent to which it contributes to the explanation of the dependent variable. We replicate 10 recently published accounting studies, all of which rely on significant t-statistics, per conventional levels, to claim rejection of the null hypothesis. Our examination shows that in eight studies, the incremental explanatory power contributed by the main variable of interest is effectively zero. For the remaining two, the incremental contribution is at best marginal. These findings highlight the apparent overreliance on t-statistics as the primary evaluation metric. A closer examination of the data shows that the t-statistics produced reject the null hypothesis primarily due to a large number of observations (N). Empirical accounting studies often require N > 10,000 to reject the null hypothesis. To avoid the drawback of t-statistics’ connection with N, we consider the implications of using Standardized Regressions (SR). The magnitude of SR coefficients indicates variables’ relevance directly. Empirical analyses establish a strong correlation between a variable’s estimated SR coefficient magnitude and its incremental explanatory power, without reference to N or t-statistics.