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An intractable effect of revenue and expense recognition based on tax regulation and accounting rules is unresolved and may be manageable only by reducing the value of deferred taxes. Therefore, in this study, the authors examined the relationship between the International Accounting Standard 12 (IAS 12) and deferred income taxes associated with tax and accounting rules.

The authors used a large sample of balanced data from 144 firms across 1992–2019. To mitigate the problem of superfluous results, the authors used the same number of firms and years for pre- and post-IAS 12 periods. The authors employed robust econometric estimations to establish the impact of IAS 12 on deferred tax.

The regression results show that deferred tax assets decreased significantly, whereas deferred tax liabilities increased significantly, in the post-IAS 12 period. These contrasting results imply that IAS 12 implementation has increased conservatism and prudence in financial reporting. However, the authors find that the increase in deferred tax assets post-IAS 12 is value destructive, suggesting that its implementation has unintended consequences. The results are robust to alternative measurements and econometric identification strategies.

While prior studies have explored topics such as deferred tax measurement and the impact of income and expense recognition, the authors specifically analyzed how IAS 12 affects deferred taxes and their effect on the market valuation. The authors find that certain accounting standards may not be relevant to the capital market.

This study aims to examines both accrual and real-based earnings management (EM) behavior of listed corporations in tax-free countries during different economic situations. It also addresses the link between firm- and country-level determinants of accrual and real-based EM and explores economic conditions' influence on these determinants.

The study examines 1,608 firm-years, covers sixteen years (2004–2019), clustered into three periods according to the global financial crisis (GFC): four years prior (2004–2007), two years during (2008–2009), and ten years post the GFC (2010–2019). We employ the modified Jones model (performance-matched) developed by Kothari et al. (2005) to measure the accrual-based EM (positive and negative discretionary accrual EM) and the three levels model for Dechow et al. (1998) to measure the real-based EM (cash flow from operating, discretionary expenses and abnormal production cost).

The study finds a significant increase in EM practices in the listed corporations in tax-free countries during the economic downturn. These corporations are found to understate their earnings during the economic stress period. Simultaneously, the firm-level determinants of EM practices were at the same level of significance during different economic conditions in accrual-based EM. In contrast, the country-level EM determinants vary based on the economic conditions.

Financial reports' users gain a deep understanding of the quality of financial reports in the context of tax-free country. And, the study outcomes inspire policymakers to develop relevant legislation to mitigate financial reports' risk and adequately protect the financial reports' users.

This paper empirically examines whether the order of liability and preferred stock accounts presented on the balance sheet is consistent with how the stock market values their riskiness.

This paper measures a firm’s riskiness with idiosyncratic risk and employs the first-difference design to test the relation between idiosyncratic risk and the order of current liabilities, noncurrent liabilities and preferred stock, respectively. Further, the paper tests whether operating liabilities are viewed as riskier than financial liabilities. Finally, the authors partition their sample based on the degree of financial distress and investigate whether the results differ between the two subsamples.

The paper finds that current liabilities are viewed as riskier than noncurrent liabilities and preferred stock is viewed as less risky than current and noncurrent liabilities, consistent with the ordering on the balance sheet. Further, the paper finds that operating liabilities are viewed as riskier than financial liabilities. Finally, the authors find that total liabilities and preferred stock (redeemable and convertible classes) are viewed as riskier for distressed firms than for nondistressed firms.

The authors thoroughly investigate the riskiness of several classes of claims and document that the classification of liabilities and preferred stock classes is relevant to common stockholders for assessing their associated risk.

The purpose of this paper is to study the concept of purging and present a comparative study of the existing purging methodologies prevailing in the market with a view to evolving a more effective method of capturing the entire impure income to be purged.

To illustrate the present discussion, a case study of purging based on numerical examples has been included. The argument has also been supported with empirical data related to the universe of Sharīʿah-compliant stocks listed on Indian stock exchanges.

During the study, it was found that the existing purging methodologies of calculating impure income to be purged have conceptual and practical shortcomings.

The scope of the current research is limited to calculation of impure income which accrues on account of Sharīʿah non-compliant investments directly or indirectly. It does not try to quantify the benefit which may be imputed in the form of capital gains made in trading of the investee company shares due to higher market value of the shares as a result of the impure income earned by the investee company. The paper has focused on identifying and calculating the impure income on account of interest. Impure income earned from specific Sharīʿah non-compliant products or services has not been considered directly. The reason for this is that companies dealing in such products or services are generally excluded at the business screening stage itself. In the case of those companies which derive a relatively small proportion of their total income from such activities and pass the business screening stage, the quantum of the impure income is not generally reported separately in company accounts.

The result of adopting the proposed methodology will lead to complete purging of impure income (to the extent that is possible under present Company Law and stock exchange reporting regulations). Implementation of the proposed method requires a proper understanding of the working of listed companies and either a sound mathematical background or access to a software application to calculate the impure income to be purged.

The current paper is original and based on the authors’ personal understanding and experience of providing Sharīʿah consultancy services related to Sharīʿah-compliant investments.

This study examines whether and how government fiscal pressure influences corporate charitable giving (CCG).

The authors exploit sub-national tax revenue sharing changes as exogenous variations to government’s fiscal pressure at the city level and then construct a quasi difference-in-differences (DiD) model to conduct the analysis based on a sample that consists of 14,168 firm-year observations in China during the period of 2003 to 2012.

The authors found that firms increase charitable donations when local governments face higher fiscal pressure. Such effects are more pronounced for firms that have stronger demand for political connectedness in the sample period. Furthermore, this study’s findings suggest that the timing strategy of donating helps firms to lower the effective tax rate and to build stronger political connections. In addition, donating firms outperform non-donating firms in terms of bank loan access and market reputation.

The authors contribute to at least three lines of literature: first, extend the understanding of timing strategies of corporate charitable behaviors; second, contribute to the literature studying the “crowd out” effect between government-provided charitable funds and private donations; finally, contribute to the emerging literature exploring the financial interests associated with corporate donation strategy (Claessens et al., 2008; Cull et al., 2015).

Correct registration for the value-added tax (VAT) is a key aspect of tax compliance; it is vital in ensuring adequate tax revenue collection in all countries but particularly in developing countries such as South Africa. Non-registration hinders sufficient tax revenue collection, stifles economic growth and causes unfair competition with formal businesses. The purpose of this study is to determine whether changes in the VAT rate affect the registration decisions of businesses, ultimately impacting upon tax compliance behaviour and tax revenue collection.

An online 2 × 2 between-subjects field experiment was conducted, as part of a broader study, to consider compliance with registration requirements by small business entities in South Africa, specifically when there are changes in the VAT rate.

Although the study establishes that changes in the VAT rate tend not to have a significant impact on the registration decisions of such taxpayers, it nonetheless indicates that the magnitude of the change in the VAT rate may be influential on registration decisions, whether relating to compulsory or voluntary registration. More particularly, the greater the magnitude of the VAT rate decrease (increase), the more likely it is that taxpayers will register (deregister) for VAT purposes, indicating that the magnitude of changes in the VAT rate do have an impact on VAT registration decisions and therefore on tax compliance more generally.

Not only does the study add to the limited knowledge available on registration decisions of small businesses, but also gives valuable guidance to policymakers in terms of determining the VAT rate for the country.

Not only does the study add to the limited knowledge available on registration decisions of small businesses, but it also gives valuable guidance to policymakers in terms of determining the VAT rate for the country.

Drawing on the resource-based view (RBV), this study investigates how tax planning affects the likelihood of financial default in different stages of the corporate life cycle.

Collecting a large sample of US firms between 1989 and 2016, hypotheses are tested using a hazard model. Several robustness and endogeneity checks corroborate the main findings.

The results show that tax-planning firms are less likely to default in the introduction and decline stages, while they are more likely to default in the growth and maturity stages. The findings suggest that introductory and declining firms use cash resources obtained from tax planning efficiently to meet their needs and acquire other useful resources. In growing and mature firms, tax aggressiveness generates unnecessary slack resources, weakens managerial discipline and increases reputational risks.

The results shed light on the benefits and costs associated with tax planning throughout firms' life cycle, holding great significance for managers, investors, lenders and other stakeholders.

This study contributes to the literature that examines resource management at different life cycle stages by showing that cash resources from tax planning are managed in distinctive ways in each life cycle stage, having a varied impact on the likelihood of default. The authors shed light on underexplored cash resources. Furthermore, this study shows the potential linkages between the agency theory and RBV.

Mental budgeting, as a part of mental accounting theory, is expected to impact a household's budgetary management in terms of expenses. The purpose of this paper is to study whether and how mental budgeting can explain differences in farmers' reactions to different incentives of low-toxicity pesticide use.

Based on data from a survey of 393 vegetable farmers in the Sichuan Province, this analysis, using a Likert Scale approach, first explores whether farmers utilize mental budgeting. Secondly, using a Probit model, this paper analyzes how mental budgeting affects farmers' intentions to switch to low-toxicity pesticide use when faced with different incentives.

The results show that the majority of farmers categorize agricultural inputs into different groups and that 26.46% of the investigated farmers utilize mental budgeting for pest control practices. In addition, farmers who utilizing mental budgeting report a higher willingness to switch to low-toxicity pesticides when they're presented with a specific subsidy. Furthermore, if offered a price premium for quality, the willingness to switch to low-toxicity pesticides for farmers utilizing mentally budget is lower compared to other farmers.

This paper examines the existence of mental budgeting among farmers. It provides a better understanding of how farmers categorize agricultural inputs and their mental mechanisms with respect to agricultural expenses. Finally, this paper is the first to study the effects of mental budgeting on farmers' reactions to different incentives aimed at stimulating the adoption of low-toxicity pesticides.

This paper tests whether Bayesian A/B testing yields better decisions that traditional Neyman-Pearson hypothesis testing. It proposes a model and tests it using a large, multiyear Google Analytics (GA) dataset.

This paper is an empirical study. Competing A/B testing models were used to analyze a large, multiyear dataset of GA dataset for a firm that relies entirely on their website and online transactions for customer engagement and sales.

Bayesian A/B tests of the data not only yielded a clear delineation of the timing and impact of the intellectual property fraud, but calculated the loss of sales dollars, traffic and time on the firm’s website, with precise confidence limits. Frequentist A/B testing identified fraud in bounce rate at 5% significance, and bounces at 10% significance, but was unable to ascertain fraud at the standard significance cutoffs for scientific studies.

None within the scope of the research plan.

Bayesian A/B tests of the data not only yielded a clear delineation of the timing and impact of the IP fraud, but calculated the loss of sales dollars, traffic and time on the firm’s website, with precise confidence limits.

Bayesian A/B testing can derive economically meaningful statistics, whereas frequentist A/B testing only provide p-value’s whose meaning may be hard to grasp, and where misuse is widespread and has been a major topic in metascience. While misuse of p-values in scholarly articles may simply be grist for academic debate, the uncertainty surrounding the meaning of p-values in business analytics actually can cost firms money.

There is very little empirical research in e-commerce that uses Bayesian A/B testing. Almost all corporate testing is done via frequentist Neyman-Pearson methods.

It has been suggested that to be successful in the current global economy with increased competition and ever changing markets, especially in the post-crisis context, firms need to focus more on innovation in exploring new ideas and designing new products to develop new markets than on cost-cutting strategies to maintain cost leadership in old markets. However, because of the lack of micro data, this conjecture has not been systematically evaluated. This paper aims to fill this important void by studying the economic performance associated with these two different business strategies using Canadian micro data.

The main data for our analysis are from the Survey of Innovation and Business Strategy (2009 and 2012) which is a sample-based survey of Canadian government. The authors used in this research regression models for the econometric analysis of the underlying factors for undertaking certain business strategies and how business strategies link to economic performance. They also used propensity score matching to ensure the group of firms with innovation strategy being comparable to that with cost-cutting.

The research shows that firms focusing on product innovation are indeed more productive than firms focusing on cost-cutting, although there is no evidence that these two different strategies make a difference in profitability. The first indication from the research has been that certain characteristics of Canadian firms are very useful predictors for firms to undertake product innovation. They are, among other things, the age of the firms, the single-establishment structure of the business and being multinationals.

This empirical research opens up many interesting avenues for future research. Some other variables could be integrated into the models to increase the rate of explained variance. Moreover, because this research is based only on the case of Canadian firms and for a relatively short period of four years after the 2008 crisis, an extension to other context and to a longer period of time should be interesting.

The research has confirmed that Canadian firms adopting long-term business strategies based on product innovation are more productive.

The results truly concur with the vision of the Government of Canada, like some other developed countries, on the importance of innovation and its policies in encouraging business innovation in driving the growth of the Canadian economy and improving the standard of living of country.

Mainly because of the lack of micro data, the existing researches have not provided solid evidence on why firms are choosing different business strategies when they are operating in the same business conditions and how the financial crisis has affected the undertaking of business strategies. They have not established a clear linkage between economic performance and different business strategies, although there has been some anecdotal evidence about their association. This study aims to bridge the knowledge gaps with theoretical and practical contributions.