The Matrix Format Income Statement: A Case Study about Earnings Management and Reporting Financial Performance

2007 ◽  
Vol 22 (4) ◽  
pp. 607-623
Author(s):  
Ann Tarca ◽  
Philip R. Brown ◽  
Phil Hancock ◽  
David R. Woodliff ◽  
Michael E. Bradbury ◽  
...  
Keyword(s):  
Earnings Management ◽  
Financial Performance ◽  
Fair Value ◽  
Financial Information ◽  
Income Statement ◽  
The Matrix ◽  
Value Changes ◽  
The Impact ◽  
Measurement Approach

The Matrix Format Income Statement case study allows you to explore the issue of earnings management and its impact on the transparency and understandability of reported financial results. Part A of the case demonstrates the impact of a commonly used accounting treatment for available-for-sale investments (presentation in the statement of changes in equity and recycling of fair value changes) on users' ability to extract decision-useful information. Part B investigates the effect on transparency and understandability of the same financial information when a different presentation and measurement approach, known as the matrix format income statement, is used.

The Impact of Claims Management, Treatment, and Rehabilitation on Recovery and Return to Independence

2012 ◽  
Vol 7 ◽  
pp. 35-39 ◽  
Author(s):  
Liz Cairns ◽  
Maree Dyson ◽  
Sally Canobi ◽  
Nic Vipond
Keyword(s):  
Financial Performance ◽  
Best Practice ◽  
Personal Injury ◽  
Quality Information ◽  
Client Outcomes ◽  
Evaluation Program ◽  
Accident Compensation ◽  
Serious Injury ◽  
The Impact

The use of contemporaneous evaluation in personal injury insurance enables schemes to maintain and enhance their viability through access to quality information on cost, liabilities and outcomes. Best practice in research programs in the sector requires data on client outcomes and financial performance to be collected. This article presents a case study of the research and evaluation program for the National Serious Injury Service of New Zealand's Accident Compensation Corporation.

Fair value and banking contagion

2016 ◽  
Vol 7 (3) ◽  
pp. 215-236 ◽  
Author(s):  
Leila Gharbi ◽  
Halioui Khamoussi
Keyword(s):  
Data Model ◽  
Banking Sector ◽  
Fair Value ◽  
Islamic Banks ◽  
Fair Value Accounting ◽  
Content Type ◽  
Gcc Countries ◽  
Conventional Banks ◽  
Value Changes ◽  
The Impact

Purpose This paper aims to explore empirically the impact of fair value accounting on banking contagion in a comparative context between Islamic banks and conventional banks. Design/methodology/approach The analysis of the impact of fair value changes on banking contagion is carried out through a panel data model. This study covers 20 Islamic banks and 40 conventional banks operating in the Gulf Cooperation Council (GCC) countries during nine years from 2003 to 2011. Findings Empirical evidence shows that there is a significant change in dynamic volatility in GCC banking sector because of financial crisis 2008. However, results fail to confirm the hypothesis that fair value accounting is significantly associated with an increase of banking contagion for both Islamic and conventional banks operating in GCC countries. Originality/value The outcome of this study provides some insights for academicians, accountants as well as regulators in terms of enhancing the effectiveness of accounting practices.

scholarly journals Determination of the Value of Intangible Assets in the Companies of Lithuania

2017 ◽  
Vol 14 (2) ◽  
pp. 55-68 ◽  
Author(s):  
Rita Bužinskienė
Keyword(s):  
Financial Management ◽  
Intangible Assets ◽  
Fair Value ◽  
Financial Information ◽  
Financial Accounting ◽  
True Value ◽  
A Value ◽  
The Impact

AbstractIn accordance with generally accepted accounting standards, most intangibles are not accounted for and not reflected in the traditional financial accounting. For this reason, most companies account intangible assets (IAs) as expenses. In the research, 57 sub-elements of IAs were applied, which are grouped into eight main elements of IAs. The classification of IAs consists in two parts of assets: accounting and non-accounting. This classification can be successfully applied in different branches of enterprises, to expand and supplement the theoretical and practical concepts of the company's financial management. The article proposes to evaluate not only the value of financial information for IAs (accounted) but also the value of non-financial information for IAs (non-accounted), thus revealing the true value of IAs that is available to the companies of Lithuania. It names a value of general IAs. The results of the research confirmed the IA valuation methodology, which allows companies to calculate the fair value of an IA. The obtained extended IAs valuation information may be valuable to both the owners of the company and investors, as this value plays an important practical role in assessing the impact of IAs on the market value of companies.

scholarly journals The Impact of Information Communication and Technology Utilization on the Financial Performance of Microfinance Institutions in Rwanda Case Study: Reseau Interdiocesain De Microfinance (Rim) Ltd, Rwanda (2011 -2015)

2017 ◽  
Vol 4 (2) ◽  
pp. 13
Author(s):  
Jean Bosco Harelimana
Keyword(s):  
Financial Performance ◽  
Quantitative Methods ◽  
Positive Impact ◽  
Financial Sustainability ◽  
Microfinance Institutions ◽  
Information Communication ◽  
Qualitative And Quantitative Methods ◽  
Descriptive Survey ◽  
The Impact

The study analyzed the impact of ICT utilization on the financial performance of microfinance institutions inRwanda with case study of Réseau Interdiocesain de microfinance (RIM) Ltd undertaken within 5 years (2011-2015). The study adopted the use of descriptive survey using both qualitative and quantitative methods for a totalsample size of 132. Purporsive and simple random simpling was used for this purpose. Primary and Secondary datawere collected and thene analyzed using SPSS version 16.00. The study found that ICT has been introduced and usedabout 5 years and above. The study found that ICT impact firstly on financial sustainability and profitability (65.8%),secondly on financial efficiency and productivity (23.7) and finally on portfolio quality (5.3%). ICT utilization havea high influence to the RIM Ltd.’s financial performance compared to the previous situation.The correlation results imply that ICT usage has a positive impact on financial sustainability and profitability as theymove in the same direction (R=0.502). The strength of the impact was found to be low due to the low investments inICT among microfinance institutions.

scholarly journals Fair Value Accounting and Earnings Management Using LLP and Realized Gains and Losses: Study in Banking Industry Listed on Indonesia Stock Exchange

2018 ◽  
Vol 14 (2) ◽  
pp. 126-137
Author(s):  
Ice Maria Ulfa ◽  
Bambang Subroto ◽  
Zaki Baridwan
Keyword(s):  
Earnings Management ◽  
Empirical Evidence ◽  
Banking Industry ◽  
Stock Exchange ◽  
Fair Value ◽  
Fair Value Accounting ◽  
Loan Loss ◽  
Trade Off ◽  
Gains And Losses ◽  
The Impact

Abstract: Fair Value Accounting and Earnings Management Using LLP and Realized Gains and Losses: Study in Banking Industry Listed on Indonesia Stock Exchange. This study examines whether earnings management can be limited by the implementation of fair value accounting in banking industry. The main contribution of this study is  providing provide empirical evidence about the impact of fair value accounting on earnings management in Indonesia. Earnings management is proxied by loan loss provision (LLP), the realized of gains and losses, and the trade-off between realized gains and losses and LLP following Bratten et al (2013). The study provides empirical evidence that earnings management is still performed by banks, by using LLP, realized gains and losses and also occurs trade-off between LLP and realized gains and losses as means to perform earnings management in accordance with the needs of management. If banks are exposed to fair value accounting, managers will have more flexibility in reporting banks’ financial performance to present a desired earning, by  providing them with additional earning managements tools. These findings can be informative for policymakers, banking practitioners, and academics.  Keywords: earnings management, fair value accounting, LLP, realized gains and losses, trade-off LLP and realized gains and losses.Abstrak: Akuntansi Nilai Wajar dan Manajemen Laba menggunakan CKPN dan Realized Gains and Losses: Studi pada Industri Perbankan yang terdaftar di Bursa Efek Indonesia. Studi ini bertujuan untuk meneliti apakah manajemen laba dapat dibatasi oleh penerapan akuntansi nilai wajar dalam industri perbankan. Kontribusi dari penelitian ini adalah untuk memberikan bukti empiris tentang dampak penerapan akuntansi nilai wajar pada manajemen laba di Indonesia. Manajemen laba diproksikan oleh cadangan kerugian penurunan nilai (CKPN), realized of gains and losses, dan trade-off antara realized of gains and losses dan CKPN mengikuti model penelitian Bratten et al (2013). Studi ini memberikan bukti empiris bahwa manajemen laba masih dilakukan oleh bank menggunakan CKPN, realized of gains and losses dan juga terjadi trade-off antara CKPN dan realized of gains and losses sebagai sarana manajemen laba sesuai dengan kebutuhan manajemen. Konsekuensi dari paparan bank terhadap akuntansi nilai wajar dapat meningkatkan fleksibilitas manajer dalam melaporkan penghasilan yang diinginkan dengan memberikan mereka alat manajemen laba. Temuan-temuan tersebut dapat bersifat informatif bagi pembuat kebijakan, anggota industri perbankan, dan akademisi. Kata kunci: manajemen laba, akuntansi nilai wajar, CKPN, realized gains and losses, trade-off CKPN dan realized gains and losses.

scholarly journals The Impact of Audit Committee Characteristics on Earnings Management: A Canadian Case Study

2015 ◽  
Vol 2 (1) ◽  
pp. 68
Author(s):  
Lynda Ioualalen ◽  
Hanen Khemakhem ◽  
Richard Fontaine
Keyword(s):  
Earnings Management ◽  
Audit Committee ◽  
Management Practices ◽  
Stock Exchange ◽  
Empirical Test ◽  
Control Group ◽  
Toronto Stock Exchange ◽  
Financial Expertise ◽  
The Impact

The objective of this study was to analyze the impact of three Audit Committee (AC) characteristics, financial expertise, diversity and activism on aggressive earnings management. We hypothesized that these AC characteristics are negatively related to aggressive earnings management. To test or hypothesis, we conducted an empirical test with a sample of 10 Canadian corporations listed on the Toronto stock exchange: 5 companies that were accused of aggressive earnings management and 5 other corporations used as a control group. We analyzed the 5-year period prior to the accusation (1999-2003). We measured earnings management by the level of discretionary accruals (using the modified Jones model (1995). Our results show that activism and the financial expertise of AC members are negatively related to aggressive earnings management; however, we did not find a significant relationship between diversity and aggressive earnings management. These results contribute to help governance oversight organizations identify AC characteristics that have the most influence on the detection of aggressive earnings management, which could help agencies develop and enforce methods to detect and reduce aggressive earnings management practices.

The impact of fair value estimates on audit fees: evidence from the financial sector in Jordan

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rateb Mohammad Alqatamin ◽  
Ernest Ezeani
Keyword(s):  
Positive Relationship ◽  
Stock Exchange ◽  
Random Effect ◽  
Audit Fees ◽  
Fair Value ◽  
Financial Information ◽  
Content Type ◽  
External Auditors ◽  
The Right ◽  
The Impact

PurposeThis study investigates the association between the estimates of fair value and external auditor's fees.Design/methodology/approachBased on a sample of 32 Jordanian financial companies listed on the Amman Stock Exchange (ASE) over the period 2005–2018. We employ random effect models to test our hypothesis.FindingsWe found a positive relationship between audit fees and the proportion of fair value assets, which implies that external auditors are more likely to spend more effort for complex estimates, thereby increasing audit fees. We examined the relationship between audit fees and three levels of fair value inputs and found a positive relationship between the level of effort spent on assessment of higher uncertainty fair value inputs and audit fees. The findings are consistent with the expectation that more audit effort is required in a highly regulated environment due to the possibility of a higher cost of litigation.Practical implicationsThe findings of this study could be beneficial for a number of users of financial information, such as investors, regulators, auditors. This group of users might consider the results of this study when they are using a company's financial information, and consequently, better able to make the right decisions.Originality/valueAlthough prior studies have researched fair value, no study to date among developing countries has investigated its relationship with audit fees. This study, therefore, provides new empirical evidence that the complexity and risk of fair value estimates significantly influences auditors' motivation to expend additional effort, resulting in higher audit cost.

scholarly journals Earnings Management and Value Relevance in Nigeria: A Pre and Post Ifrs Analysis

2018 ◽  
Vol 5 (5) ◽  
pp. 4672-4680
Author(s):  
Sunny O. Temile ◽  
Al Bahloul Mohammed ◽  
Dadang Prasetyo Jatmiko
Keyword(s):  
Earnings Management ◽  
Management Practices ◽  
Value Relevance ◽  
Stock Exchange ◽  
Outer Space ◽  
Financial Sector ◽  
Financial Information ◽  
Annual Reports ◽  
Space Law ◽  
The Impact

The purpose of this article is to analyse the literature concerning legal framework for outer space activities by states. Review was conducted on the elements of national space law, including literature critiquing particular strengths or weaknesses of existing laws and literature, on the obligations placed on States under international law and on why writers make particular recommendations as to the content of legislation. The article will summarise the key elements one would anticipate finding in the outer space regulatory framework and which will form the structure of the analytical framework when considering how States implement international space law in practice. In recent times, the issue of earnings management and value relevance has caused financial reports to come under scrutiny. With the introduction of the International Financial Reporting Standards (IFRS), a lot of studies have been carried out to see what kind of effect it has on key financial variables such as earnings management and value relevance of firms. Therefore, this study, “Earnings Management and Value Relevance in Nigeria: A Pre and Post IFRS Analysis”, examined the impact of IFRS on Earnings Management and Value Relevance of financial information in Non-Financial Companies quoted in the Nigerian Stock Exchange (NSE). Data gathered are from the financial statements and annual reports of 60 Companies from the Non-Financial Sector of the Nigeria Stock Exchange because companies in the financial sector are not overall amendable to accruals model. The empirical study covered the period from 2007 to 2016 statistical and econometric tools such as Panel data regression and paired samples tests. The results revealed an increase in value relevance, and a decrease in earnings management in the Post-IFRS era. Thus, we infer that earnings management level has decreased while value relevance has increased since IFRS adoption. This study therefore recommends that the relevant regulatory bodies should be empowered by the government to enable the formulation of effective measures and policies that check earnings management practices, and foster value relevance of the financial information presented in the annual reports and accounts of Nigerian companies.

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