JOFRP_Title_2020


Volume 9, 2020



pdf TABLE OF CONTENTS



pdf Impact of Accountant Resource on Quality of Accounting Information System: Evidence from Vietnamese Small and Medium Enterprises

Vu Thi Thanh Binh, Nhat-Minh Tran, Do Minh Thanh, Nguyen Thi Hong Nga

Hanoi University of Industry
National Economics University
Thuongmai University

Abstract
Improving the quality of accounting information systems through accountant resources is beneficial to the performance and sustainable development of SMEs. This study investigated the impact of accountant resources on the quality of accounting information systems in Vietnamese SMEs. Accounting information system quality was measured by a multidimensional scale including system quality, information quality, and usefulness. The study tested hypotheses using Path analysis of Structural Equation Model based on 434 respondents. The findings indicated a strong interaction between the components of the accounting information system quality under the effect of accountant resources. The results showed a positive direct effect of accountant resources on system quality and the path analysis results also revealed an influence of accountant resources on information quality and usefulness via mediating variables. The results highlighted the importance of accountant resources for the quality of accounting information systems. This study contributed theoretically to the non-financial indicator for measuring accounting information system quality.

Keywords: Accountant Resource, Performance measurement, Quality of accounting information system, SMEs




pdf Corporate Social Responsibility and Executive Compensation: The Negative Externality Perspective

Ahmed Marhfor, Kais Bouslah, M’Zali Bouchra

Université du Québec en Abitibi-Témiscamingue
University of St. Andrews
Université du Québec à Montréal

Abstract
This research develops a new argument that departs from traditional theories that explain the potential impact of Corporate Social Responsibility (CSR) on Chiefs Executive Officers (CEOs) compensation. More specifically, we argue that if CSR investments provide value for firm’s shareholders and stakeholders, they can also decrease firm’s competitors’ value (negative externality hypothesis). As a result, inefficient CEO compensation may arise even if CSR choice allows managers to act in the best interest of firm’s shareholders and non-investing stakeholders. In sum, our new perspective indicates that excessive levels of CEO compensation are more than a principal-agent-stakeholder problem. In addition, our new theoretical argument suggests that voluntarily CSR should not be a relevant factor for achieving efficient levels of CEO compensation.

Keywords: Corporate social responsibility, CEO compensation, Negative externality, Market failure, Stakeholder`s management, Public interest theory




pdf The Effect of Access to Debt on Lebanese Small and Medium Enterprises Performance

Zainab Abdulawood Jadoua, Nihal Farid Mostapha

Beirut Arab University

Abstract
Since thirties access to debt has been considered as one of the main challenges facing the growth of Small and medium-sized enterprises (SMEs). Therefore, empirical studies focused on how facilitating access to debt affects SMEs financial performance in developed countries. However, this is not the case in the developing economies countries such as Lebanon due to the lack of financial transparency and poor financial reporting. In addition, very few studies discussed the theoretical pillar behind SMEs financial behavior on how access to debt affects firm performance in developed and developing countries. Therefore, this study attempts to investigate the effect of access to debt on Lebanese SMEs financial performance in terms of profitability and tangibility. In addition, the study explores the theoretical explanation of how Lebanese SMEs access to debt affects profitability (PR) and tangibility (ST) using trade-off theory (TOT) and pecking order theory (POT). Data of 102 SMEs for the period 2014 till 2017 from 12 official audit firms located in Beirut-Lebanon. Additionally, generalized least squares (GLS) method was used to conduct regression analysis. The analysis reveals the positive effect of Lebanese SMEs access to debt on SMEs profitability and tangibility confirming the adoption of trade-off theory as an approach by Lebanese SMEs and lenders. It is concluded that facilitating Lebanese SMEs access to debt to reach proper debt level improves SMEs performance which in return affects positively the lenders and economy as whole.

Keywords: SMEs performance, Access to debt, Trade off theory, Pecking order theory, Assets structure, Tangibility, Profitability




pdf Risk Determinant of Musharakah Financing: A Study in Indonesia

Rosmini Ramli, Erie Febrian, Dian Masyita, Mokhamad Anwar

Universitas Padjadjaran – Bandung, Universitas Indonesia Timur
Universitas Padjadjaran – Bandung

Abstract
The purpose of this paper is to find out the influence of internal and external factors on the risk of musharaka financing of Islamic Commercial Banks in Indonesia. Financing risks in previous Islamic banking studies focus more on overall financing risks involving internal and external aspects, both separately and jointly. There have been no studies that examine the internal and external aspects of sharia commercial banks on financing risks, especially in the musharakah contract. This study will complement the literature on the aforementioned issue. This study uses a quantitative method with panel data regression analysis. The data used is quarter financial ratio data from all Sharia Commercial Banks in Indonesia for the period 2012-2017. The results of the study show that bank internal factors predominantly influence the risk of musharakah financing. Whereas on external factors, only GDP growth has a significant effect.

Keywords: Financing risk, Musharakah contract, Risky sector, Internal and external factors



pdf Cox Proportional Hazards Regression Analysis to assess Default Risk of German-listed Companies with Industry Grouping

Andreas V. Ledwon, Clemens C. Jäger

FOM University of Applied Sciences for Economics and Management, Germany & UCAM – Catholic, University of Murcia, Spain
FOM University of Applied Sciences for Economics and Management, Germany

Abstract
This study evaluates three corporate failure prediction models using latest available data on corporate insolvencies for non-financial constitutes represented in CDAX. We estimate semiparametric Cox proportional hazards models considering Andersen-Gill counting process (AG-CP) to explore the importance of accounting and financial ratios as well as industry effects that are useful in detecting potential insolvencies. The contribution of this paper is twofold. First, the literature on corporate default prediction is manifold and predominantly focused on U.S. data. Thus, academic contribution based on German-listed companies is limited. To our best knowledge, we are the first to conduct thorough comparative out-of-sample Cox regression models considering AG-CP based on a unique dataset for non-financial constitutes subject to the German insolvency statute (“InsO”). Relying on a parsimonious accounting-based approach inspired by Altman (1968) and Ohlson (1980) is merely adequate. Shumway (2001) and Campbell et al. (2008) variable selection delivers the best discriminatory power and calibration results. In particular, a combination of pure accounting ratios augmented with market-driven information in Model (2) indicates superior accuracy rates in top deciles. However, in-sample empirical results underpin the importance towards market-based indicators, as all accounting ratios enter statistically insignificant. Secondly, we test to what extend industry variables improve discriminatory power and forecasting accuracy of fitted models. Contrary to the findings of Chava & Jarrow (2004), our research implies that industry grouping adds marginal predictive power and no overall improvement in accuracy rates when market variables are already included in the probability of default (PD) model.

Keywords: Insolvency, Default prediction, Cox proportional hazards regression, AG-CP, Recursive AUC, Walk-forward analysis, Industry grouping




pdf Digital Accounting and the Human Factor: Theory and Practice

Shawnie Kruskopf, Charlotta Lobbas, Hanna Meinander, Kira Söderling, Minna Martikainen, Othmar Lehner

Hanken School of Economics, Helsinki

Abstract
This paper gives an overview of the current and future technologies impacting accounting and auditing fields. The aim is to present the technological disruptions shaping these fields and also look at how they might influence future jobs and required skills. Starting with a historical background check on how Industry 4.0 emerged, we survey four main areas of the topic: 1) current developments supported with real-life cases, 2) a literature review of on-going research, 3) possible future job descriptions, and 4) required skills and how to acquire them.

Keywords: Digitalisation, Accounting, Auditing, Industry 4.0, Skills



pdf Current State and Challenges in the Implementation of Smart Robotic Process Automation in Accounting and Auditing

Max Gotthardt, Dan Koivulaakso, Okyanus Paksoy, Cornelius Saramo, Minna Martikainen, Othmar Lehner

Hanken School of Economics, Helsinki

Abstract
Technology development has grown rapidly in the last decades and gained importance for accounting and auditing through its identified potentials. Particularly the automation of judgment systems and systems that require human intervention, are deemed to be more relevant to confront a transformation through Robotic Process Automation (RPA). During the continuous development, the augmentation of such systems through Artificial Intelligence (AI) presents a greenfield project with high expectations. However theoretical frameworks have not yet been elaborative and sufficient to capture how such deployments can be conducted. Addressing this research gap, this study presents a summarized overview of the transforming RPA ecosystem and indicates what challenges are critical to being confronted for a successful implementation of such systems in accounting and auditing.

Keywords: Robotic Process Automation, Artificial Intelligence, Financial technologies, Accounting, Auditing, Technology implementation, Black Box Solutions




pdf SOX Section 404 Twenty Years After: Reviewing Costs and Benefits

Bianca Fischer, Bernadette Gral, Othmar Lehner

University of Applied Sciences Upper Austria
Said Business School, University of Oxford

Abstract
Some issues of the Sarbanes Oxley Act of 2002 are still discussed controversially in literature. Thereof, Section 404 concerning internal control over financial reporting is one of the most criticized parts. This article focuses on costs and benefits of the section and impacts on earnings management. Most authors agree that compliance costs of Section 404 far outweigh its benefits. However, long-term benefits are expected. Regarding earnings management, studies show that the section has positive effects such as increased earnings quality and improved internal control systems. Although the section is heavily debated in literature, there is consensus that SOX Section 404 greatly contributed to the improvement of quality of financial reporting and of corporate governance as a whole.

Keywords: Sarbanes Oxley, Section 404, Internal control, Costs of SOX, Benefits of SOX, Earnings management, Earnings quality