scholarly journals The Impact of Financial Information Comparability on Aggressive Tax Avoidance with Respect to the Information Environment

2020 ◽  
Vol 15 (3) ◽  
pp. 134-151
Author(s):  
Zahra Farhadi
Keyword(s):  
Financial Reporting ◽  
Confidence Level ◽  
Tax Avoidance ◽  
Generalized Least Squares ◽  
Financial Statements ◽  
Information Environment ◽  
Financial Information ◽  
Least Squares Regression ◽  
Aggressive Tax Avoidance ◽  
The Impact

The overall tax avoidance perspective suggests that managers who seek opportunities to avoid paying taxes are pursuing financial abuse by creating a lack of transparency in the financial reporting environment. It seems that many companies are involved in tax avoidance. For this reason, it is crucial to determine the factors influencing the rate of tax avoidance. In this study, it is assumed that, in weak information environments, there is much incentive to avoid paying taxes. Thus, in this research, the effect of financial information comparability on aggressive tax avoidance with respect to the information environment has been investigated. To this end, 88 companies were examined during the period from 2011 to 2016. The required financial information was extracted by referring to the financial statements using Rahavard Novin software; summarized, classified and calculated in Excel software; and finally, analyzed through EViews software. By using the combined data and taking advantage of the generalized least squares regression test, it was established that the impact of financial statement comparability on aggressive tax avoidance in companies with a weaker information environment was more significant at a 90% confidence level. On the other hand, in a situation where there is a weak information environment, the ability to compare financial statements plays a significant role in reducing tax avoidance. Thus, it can reduce companies’ involvement in avoiding daring taxes, especially in a weak information environment. Furthermore, no reliable evidence was found concerning the effectiveness of financial information comparability in aggressive tax avoidance at a 95% confidence level.

scholarly journals THE ROLE OF CORPORATE DIVERSIFICATION IN TAX AVOIDANCE IN COMPANIES LISTED IN THE TEHRAN STOCK EXCHANGE

2019 ◽  
Vol 7 (1) ◽  
pp. 291-299
Author(s):  
Mohammad Vahdani ◽  
Abdolhossein Talebi Najafabadi ◽  
Narjes Kamali Kermani ◽  
Zahra Farhadi
Keyword(s):  
Confidence Level ◽  
Stock Exchange ◽  
Tax Avoidance ◽  
Financial Information ◽  
Corporate Diversification ◽  
Effective Tax Rate ◽  
Tax Rate ◽  
The Government ◽  
A Charge ◽  
The Impact

Purpose of the Study: Tax avoidance means the use of gaps in tax laws for non-payment or late payment of taxes for companies, which is affected by different factors. The present study investigates the impact of diversification on tax avoidance in companies. To this end, the financial information of 384 firms during the period of 2011- 2016 in the Tehran Stock Exchange was examined. Methodology: In this research, the required financial information was summarized, classified, and calculated in Excel software and the data were analyzed by using E-views software. The dependent variables were effective tax rate and book-tax difference, while the independent variable was corporate diversification, which shows how to divide the market between business sectors (units) in a company. Control variables include size, financial leverage, company’s loss-making, ROA, capital expenditures, R&D, market to book value, CEO ownership, and management of ownership. Conclusions/Results: The findings obtained from this study demonstrate that at a 95% confidence level, there is no significant relationship between diversification and effective tax rates in companies listed in the Tehran Stock Exchange. However, at a 90% confidence level, diversification reduces the effective tax rate. Furthermore, no reliable evidence was found regarding the effect of diversification on book-tax difference at a 95% confidence level. Novelty: Tax is a charge imposed by the government on all organizational profits. Various enterprises have complex operations due to their institutional structure, which makes it possible to increase tax avoidance in these companies. The production or sale of a variety of products (diversification) is bigger and has more complex organizational structures that increase the cost of management and non-management decisions, making it difficult for companies to coordinate their policies. Thematic classification: G10, M41

scholarly journals The impact of firm characteristics on timeliness of financial information: Evidence from listed firms in Vietnam

2016 ◽  
Vol 19 (4) ◽  
pp. 143-157
Author(s):  
Vy Thi Xuan Nguyen ◽  
Khuong Vinh Nguyen
Keyword(s):  
Financial Reporting ◽  
Stock Exchange ◽  
Structural Characteristics ◽  
Financial Statements ◽  
Financial Information ◽  
Firm Characteristics ◽  
Audit Opinion ◽  
Listed Firms ◽  
Financial Characteristics ◽  
The Impact

The accuracy and timeliness of information in financial statements help investors make prompt and effective decisions. This study is conducted to provide an empirical evidence for a relationship between the timeliness of financial reporting and characteristics of 100 companies listed on the Vietnam Stock Exchange in the period 2012 - 2014. The findings show that the number of subsidiaries and the complexity of activities (representing the structural characteristics), change in annual profitability (representing financial characteristics) and audit opinion affect the timeliness of financial reporting.

Particularities of the independent auditor's report on reliability of accounting (financial) statements for 2019: COVID-19 as qualitatively essential information (Part 2)

2020 ◽  
Vol 23 (7) ◽  
pp. 777-799
Author(s):  
O.I. Shvyreva ◽  
Z.I. Kruglyak ◽  
A.V. Petukh
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
Economic Situation ◽  
Risk Disclosure ◽  
Essential Information ◽  
Logical Method ◽  
Annual Reporting ◽  
The Face ◽  
Key Aspects ◽  
The Impact

Subject. This article discusses the issues related to the practice of financial reporting in the face of uncertainties caused by the coronavirus contagion, as well as the specifics of the audit strategy and formation of an audit opinion on this reporting. Objectives. The article aims to identify the quality characteristics of financial reporting prepared in the context of the COVID-19 pandemic and justify the key aspects of assurance engagement completion in an extremely uncertain epidemiological and economic situation. Methods. For the study, we used an abstract-logical method, content analysis techniques, systematization, and classification. Results. Analyzing the impact of the extremely uncertain epidemiological and economic situation on financial statements, the article clarifies aspects of disclosure of events after the reporting date and threats to business continuity in the annual reporting of economic entities. The article identifies possible alternative procedures and algorithms to obtain proper evidence when it is insufficient in the face of the inability to meet certain audit standards requirements in a remote audit environment. The article defines the impact of COVID-19 risk disclosure on the structure of the audit report and opinion. Relevance. The results of the study can be used in the practical activities of economic entities that prepare financial statements in the face of significant uncertainty, as well as auditors and audit organizations.

IFRS IMPLEMENTATION AS ONE OF THE FACTORS FOR IMPROVING THE INVESTMENT CLIMATE IN UKRAINE

2017 ◽  
Author(s):  
Kateryna Sova ◽  
◽  
Natalia Yatsenko ◽  
Denys Zagirniak ◽  
◽  
...  
Keyword(s):  
Financial Reporting ◽  
Direct Investment ◽  
Financial Statements ◽  
International Standards ◽  
Investment Climate ◽  
The European Union ◽  
Economic Activities ◽  
Financial Reporting Standards ◽  
Almost All ◽  
The Impact

The article is devoted to the study of the impact of the introduction of International Financial Reporting Standards (IFRS) on changes in the investment climate in Ukraine. The relevance of the topic is that improving the practice of applying IFRS as a tool for exchanging financial information is one of the key conditions for improving the investment climate in Ukraine. The authors have created the generalized scheme that illustrates the chronological list of enterprises that are required by law to prepare financial statements in accordance with IFRS. It was noted that in 2018, in accordance with Part 2 of Article 12 of the law on accounting and financial reporting in Ukraine and resolution of the Cabinet of Ministers of Ukraine No. 547 from 11.07.2018, the criteria of enterprises that are required to prepare financial statements in accordance with IFRS were updated. This step significantly increased the level of application of international standards due to the adoption of such a decision at the legislative level. The dynamics of the number of IFRS enterprises in Ukraine was analyzed. The analysis showed that over the past three years, the number of almost all enterprises that must apply international standards has been growing. The advantages of using IFRS for different users of financial statements were determined. It was determined that the priority users of IFRS financial statements are investors. At the same time, it was noted that the main advantage for other users of financial statements prepared in accordance with international standards is the improvement of the investment climate. The dynamics of the Investment Attractiveness Index of Ukraine based on the Likert scale in the period from 2016 to 2020 was analyzed. The direct investment receipts to Ukraine from the European Union countries were studied. The dynamics of direct investment in the Ukrainian economy was analyzed for two types of economic activities that should form financial statements in accordance with IFRS, namely, the extractive industry and quarrying, as well as financial and insurance activities.

scholarly journals Reliability of Financial Information from the Perspective of Benford’s Law

Entropy ◽  
2021 ◽  
Vol 23 (5) ◽  
pp. 557
Author(s):  
Ionel Jianu ◽  
Iulia Jianu
Keyword(s):  
Financial Reporting ◽  
Capital Market ◽  
Financial Statements ◽  
Financial Information ◽  
Benford’S Law ◽  
Professional Judgment ◽  
Reporting Standards ◽  
Financial Reporting Standards ◽  
Benford's Law ◽  
Before And After

This study investigates the conformity to Benford’s Law of the information disclosed in financial statements. Using the first digit test of Benford’s Law, the study analyses the reliability of financial information provided by listed companies on an emerging capital market before and after the implementation of International Financial Reporting Standards (IFRS). The results of the study confirm the increase of reliability on the information disclosed in the financial statements after IFRS implementation. The study contributes to the existing literature by bringing new insights into the types of financial information that do not comply with Benford’s Law such as the amounts determined by estimates or by applying professional judgment.

scholarly journals Statutory audit in Slovakia – significant phenomenon of global European changes

2020 ◽  
Vol 74 ◽  
pp. 06006
Author(s):  
Denisa Domaracká ◽  
Veronika Kňažková
Keyword(s):  
Financial Reporting ◽  
Global Economy ◽  
Financial Statements ◽  
Legislative Regulation ◽  
Significant Phenomenon ◽  
The Subject ◽  
The Impact ◽  
Regulation Changes ◽  
Audit Performance

The changing global economy environment also affected the area of statutory audit. Nowadays, statutory audit faces the significant changes not only because of the processes of digitization and automation in accounting and auditing, but because of increased and tightened legislative regulation, too. The most important aspects of financial reporting and auditing are subject to EU Regulations and EU Directives. For this reason, the issue of legislative regulation changes in field of statutory audit in Slovakia has become the subject of our article. Currently, the proposal of amending and supplementing Act. No 431/2002 Coll. on Accounting, as amended underwent an interdepartmental comment procedure. The proposal includes the changes on requirements for statutory audit. This article examines the current proposal to change (mainly increase) the conditions for performing the mandatory statutory audit of financial statements in Slovak audit environment. Our goal is to clarify the reasons and implications behind the changes of Slovak legislation as well as the impact of these changes on audit performance in Slovakia. We believe conducting statutory audits in accordance with the applicable legislation accepted and implemented at international European level can contribute to transparency and improve the quality of audit performance. In order to achieve the goal, it was necessary to choose a purposeful work methodology and research methods.

scholarly journals A literature review on the impact of IAS/IFRS and regulations on quality of financial reporting

2016 ◽  
Vol 6 (4) ◽  
pp. 102-114 ◽  
Author(s):  
Newman Wadesango ◽  
Edmore Tasa ◽  
Khazamula Milondzo ◽  
Ongayi Vongai Wadesango
Keyword(s):  
Financial Reporting ◽  
Accounting Standards ◽  
Reporting Quality ◽  
Financial Statements ◽  
Conclusive Evidence ◽  
Financial Reporting Quality ◽  
International Accounting Standards ◽  
Ifrs Adoption ◽  
The Impact

The International Accounting Standards Board (IASB) in its objectives and preamble, presume that IFRS adoption and perceived compliance to regulatory framework is associated with increased financial reporting quality. Based on these assumptions, this desktop study reviewed several documents to determine whether the IFRS adoption has led to increased financial reporting quality in Zimbabwe. The researchers reviewed literature on how the IAS/IFRS and regulations affect the financial reporting quality of listed companies. The factors around IFRS adoption were identified (mandatory, voluntary and convergence) and discussed in relation to the financial reporting quality. Evidence from previous studies conducted in line with this same issue shows that there is no conclusive evidence on how IFRS and regulations affect the financial reporting quality. Issues to be addressed in further studies include the importance of financial statements prepared under IFRS framework and the importance of compliance with accounting and auditing requirements.

scholarly journals Formation of XBRL reporting

2020 ◽  
pp. 95-102
Author(s):  
Нalyna Umantsiv ◽  
Yevheniia Polovyk
Keyword(s):  
Financial Reporting ◽  
Reporting System ◽  
Financial Statements ◽  
Developed Countries ◽  
Inductive Method ◽  
Basic Material ◽  
Problem Statement ◽  
Or Methodology ◽  
The Developed Countries ◽  
The Impact

Relevance of the research topic. At the present stage of transformational transformation of the economy, the issue with the use of the XBRL format in Ukraine, which is a prerequisite for successful interaction of enterprises in the global financial market and enhancing the competitiveness of domestic enterprises. Problem statement. The absence of the practice of applying taxonomy of financial statements in Ukraine, causes the relevance of this study. The developed countries of the world have already introduced this format, because it allows to make the reporting not only transparent and accessible to potential investors, but also convenient for analysis. Analysis of recent studies and publications. The process of functioning of the financial reporting system in the format XBRL is the newest, it was researched in works: Kuznetsova S. A., Borisenko A. A., Boyko R. V., Ostrovskaya O. A., Khatib E., Yassin M., Harber M., Marx B., De Jager P. and other. Highlighting unexplored parts of a common problem. Particular attention is needed to develop solutions that will minimize potential problems associated with the implementation and use of the XBRL format in Ukraine. Setting of the task, objectives of the research. Analyzing the implementation of XBRL format in Ukraine. Identifying prospects for using and setting the potential issues in the preparation of new financial statements using global experience. Research method or methodology. Dialectical methods of scientific cognition, collection and analysis of information and inductive method were used in the course of the research. Basic material presentation (results of work). The article defines the essence of the XBRL format, analyzes the stages of its implementation in Ukraine. Prospects and typical errors in the preparation of financial statements using the format have been identified. Measures have been developed to minimize the likelihood of occurrence and to overcome problems associated with its application, taking into account world experience. Areas of application of the results. The results of this study may be applied in the preparation of financial statements in accordance with the specified format. Conclusions to the article. All of the benefits of implementing XBRL far outweigh the impact of its application Its use in Ukraine shall allow reporting entities to properly prepare financial statements, adjust the requirement for duplicating financial statements while presenting to regulators, and help woo investors through formation of the qualitative financial statements.

scholarly journals The impact of Key Audit Matters (KAMs) on financial information quality: Evidence from Lebanon

2021 ◽  
Vol 19 (2) ◽  
pp. 135
Author(s):  
Joelle Matta ◽  
Khalil Feghali
Keyword(s):  
Value Creation ◽  
Information Quality ◽  
Investment Decision ◽  
Financial Statements ◽  
Financial Information ◽  
Audit Report ◽  
External Auditors ◽  
Expectations Gap ◽  
Expectation Gap ◽  
The Impact

<p>The purpose of this study is to discover the impact of Key Audit Matters (KAMs) on financial information quality and their value for Lebanese auditors. The value creation of KAMs is determined by its financial information quality, its ability to help during investment decision and its effect on the audit expectation gap. The research is conducted through a survey that was filled by external auditors who audit Lebanese banks exclusively, and are involved in the new audit report. The main results show that reporting by using Key Audit Matters adds value to the audit report from the perspective of Lebanese external auditors, and can reduce information asymmetry, increase trust in accounting and reduce the expectation gap. Moreover, the results marked that KAM improves the auditee's understanding in the audited entity, builds confidence in the audited financial statements, and helps to reduce the audit expectations gap.</p>

scholarly journals Management Of Accrual Components In Response To Corporate Income Tax Rate Changes: Evidence From Korea

2013 ◽  
Vol 29 (5) ◽  
pp. 1421 ◽  
Author(s):  
Won-Wook Choi ◽  
Hyun-Ah Lee
Keyword(s):  
Financial Reporting ◽  
Income Tax ◽  
Tax Avoidance ◽  
Corporate Income Tax ◽  
Tax Rate ◽  
Taxable Income ◽  
Accruals Management ◽  
Accrual Management ◽  
Aggressive Tax Avoidance ◽  
Statutory Tax Rate

Changes in the statutory corporate income tax rate provide firms with an opportunity to reduce their tax burden by shifting their taxable income from higher to lower tax rate years. One negative consequence of shifting taxable income across years is higher variation in book income for financial reporting purposes. Taxable income and book income are closely related in most countries, and, in general, reporting volatile book income across years is not a favorable signal to investors. This study investigates how firms shift taxable income and concurrently mitigate book income fluctuation by managing accrual components separately when the statutory income tax rate changes. Unlike prior studies, we decompose discretionary accruals into two components and examine distinctive patterns of accrual management in Korea, where book-tax conformity is high and aggressive tax avoidance is restricted. We find that firms manage book-tax accruals for taxable income shifting and manage book-only accruals to mitigate book income fluctuation. Furthermore, we find the extent of book-tax and book-only accruals management varies depending on the firms tax and financial reporting costs. The results of this study provide clear and compelling evidence of firms opportunistic accrual management behavior in response to statutory tax rate reduction.

Sign in / Sign up

Export Citation Format

Share Document