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Article
Publication date: 19 July 2011

Magdy Farag and Rafik Elias

The purpose of this paper is to examine the stability or loyalty in the auditor‐client relationship. It explores the association between audit fees and auditor loyalty…

2010

Abstract

Purpose

The purpose of this paper is to examine the stability or loyalty in the auditor‐client relationship. It explores the association between audit fees and auditor loyalty. Specifically, it investigates whether clients paying less audit fees relative to other companies in their industries are more likely to be loyal to their auditors.

Design/methodology/approach

Logistic and ordinal regression analyses are used to compare loyal clients to clients that switched audit firms after controlling for factors that are expected to be associated with client loyalty.

Findings

Results show that relative audit fees have a significant effect on the degree of loyalty of clients to their audit firms. Additional analysis shows that the loyalty of clients that pay higher audit fees relative to similar clients in their industry are highly affected by increases in audit fees. However, the loyalty of clients who pay lower audit fees compared to similar clients in their industry is not affected by further increases in relative audit fees.

Research limitations/implications

The study does not differentiate between auditor dismissal and auditor resignation in the classification of clients that switched auditors. It also does not classify auditor switches into auditor‐initiated switches and client‐initiated switches.

Practical implications

It is cost effective for clients to stay with the same audit firm. Audit firms should be careful when adjusting their audit fees from one period to another, as there is a higher probability of losing a client, when increasing the audit fees, especially if this client is already paying higher audit fees relative to similar clients.

Originality/value

The findings of this study increase the understanding of how relative audit fees affect client loyalty in the audit market.

Details

Accounting Research Journal, vol. 24 no. 1
Type: Research Article
ISSN: 1030-9616

Keywords

Open Access
Article
Publication date: 12 October 2021

Shengsheng Wang, Bangxi Li and Shan Gu

Different from Marx's analysis of the dialectical relationship between the production and realization of surplus value, the Okishio theorem only shows one aspect of the…

Abstract

Purpose

Different from Marx's analysis of the dialectical relationship between the production and realization of surplus value, the Okishio theorem only shows one aspect of the contradictory movement of the total social capital, that is, the reverse effect of the realization of surplus value on the production of surplus value.

Design/methodology/approach

The production of surplus value and the realization of surplus value are simplified into one process. This simplification eliminates the contradiction between the production and realization of surplus value, and the antagonistic contradiction between accumulation and consumption and the antagonistic production-distribution relationship in capitalist society are naturally covered up.

Findings

Therefore, it cannot explain the actual expansion way of the falling general rate of profit as the historical development law of capitalism. Nevertheless, it should be noted that the Okishio theorem places the analysis of the general rate of profit back into the social reproduction model with department equilibrium, which points out the significance of wage income to the realization of surplus value and outlines the macro mechanism of the realization of surplus value reacting to the production of surplus value. It also strongly promotes the research progress of the law that the profit rate tends to decline.

Originality/value

The mistake of the Okishio theorem is that the exchange process in the labor market forms the real wage rate. It determines the production price of wage goods, which thereby determines that the production price of capital goods and general rate of profit, the production of surplus value and realization of surplus value are simplified into the same process, and only the value that can be realized is the real value.

Details

China Political Economy, vol. 4 no. 1
Type: Research Article
ISSN: 2516-1652

Keywords

Article
Publication date: 2 March 2015

Lynn Johnson and Terrence B. O'Keefe

The purpose of this study is to test whether the realization rate on audit engagements increases with auditor tenure in competitive markets, suggesting the presence of…

1041

Abstract

Purpose

The purpose of this study is to test whether the realization rate on audit engagements increases with auditor tenure in competitive markets, suggesting the presence of initial audit lowballing.

Design/methodology/approach

Using regression analysis, we test this hypothesis with fee- and cost-related data from a sample of local governments audited by a single audit firm. Based on representations of the firm, we classify the audit market for the 127 cities, counties and school districts in our sample as competitive and the audit market for the 93 special district audits as non-competitive.

Findings

As hypothesized, we find that in the competitive market, the realization rate on audit engagements increases with auditor tenure but does not do so in the non-competitive audit market.

Research limitations/implications

We cannot identify the specific engagements which were subject to a competitive bidding process, so we rely on the auditor’s representation of competitiveness by entity type.

Originality/value

To our knowledge, the central prediction of audit pricing models that the auditor’s realization rate increases with auditor tenure has not been tested in real audit markets because proprietary cost data are rarely available. Testing this prediction is the primary contribution of this paper.

Details

Managerial Auditing Journal, vol. 30 no. 3
Type: Research Article
ISSN: 0268-6902

Keywords

Open Access
Article
Publication date: 10 May 2022

Jindong Song, Jingbao Zhu and Shanyou Li

Using the strong motion data of K-net in Japan, the continuous magnitude prediction method based on support vector machine (SVM) was studied.

Abstract

Purpose

Using the strong motion data of K-net in Japan, the continuous magnitude prediction method based on support vector machine (SVM) was studied.

Design/methodology/approach

In the range of 0.5–10.0 s after the P-wave arrival, the prediction time window was established at an interval of 0.5 s. 12 P-wave characteristic parameters were selected as the model input parameters to construct the earthquake early warning (EEW) magnitude prediction model (SVM-HRM) for high-speed railway based on SVM.

Findings

The magnitude prediction results of the SVM-HRM model were compared with the traditional magnitude prediction model and the high-speed railway EEW current norm. Results show that at the 3.0 s time window, the magnitude prediction error of the SVM-HRM model is obviously smaller than that of the traditional τc method and Pd method. The overestimation of small earthquakes is obviously improved, and the construction of the model is not affected by epicenter distance, so it has generalization performance. For earthquake events with the magnitude range of 3–5, the single station realization rate of the SVM-HRM model reaches 95% at 0.5 s after the arrival of P-wave, which is better than the first alarm realization rate norm required by “The Test Method of EEW and Monitoring System for High-Speed Railway.” For earthquake events with magnitudes ranging from 3 to 5, 5 to 7 and 7 to 8, the single station realization rate of the SVM-HRM model is at 0.5 s, 1.5 s and 0.5 s after the P-wave arrival, respectively, which is better than the realization rate norm of multiple stations.

Originality/value

At the latest, 1.5 s after the P-wave arrival, the SVM-HRM model can issue the first earthquake alarm that meets the norm of magnitude prediction realization rate, which meets the accuracy and continuity requirements of high-speed railway EEW magnitude prediction.

Details

Railway Sciences, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2755-0907

Keywords

Article
Publication date: 9 May 2016

Silvio Tarca and Marek Rutkowski

This study aims to render a fundamental assessment of the Basel II internal ratings-based (IRB) approach by taking readings of the Australian banking sector since the…

Abstract

Purpose

This study aims to render a fundamental assessment of the Basel II internal ratings-based (IRB) approach by taking readings of the Australian banking sector since the implementation of Basel II and comparing them with signals from macroeconomic indicators, financial statistics and external credit ratings. The IRB approach to capital adequacy for credit risk, which implements an asymptotic single risk factor (ASRF) model, plays an important role in protecting the Australian banking sector against insolvency.

Design/methodology/approach

Realisations of the single systematic risk factor, interpreted as describing the prevailing state of the Australian economy, are recovered from the ASRF model and compared with macroeconomic indicators. Similarly, estimates of distance-to-default, reflecting the capacity of the Australian banking sector to absorb credit losses, are recovered from the ASRF model and compared with financial statistics and external credit ratings. With the implementation of Basel II preceding the time when the effect of the financial crisis of 2007-2009 was most acutely felt, the authors measure the impact of the crisis on the Australian banking sector.

Findings

Measurements from the ASRF model find general agreement with signals from macroeconomic indicators, financial statistics and external credit ratings. This leads to a favourable assessment of the ASRF model for the purposes of capital allocation, performance attribution and risk monitoring. The empirical analysis used in this paper reveals that the recent crisis imparted a mild stress on the Australian banking sector.

Research limitations/implications

Given the range of economic conditions, from mild contraction to moderate expansion, experienced in Australia since the implementation of Basel II, the authors cannot attest to the validity of the model specification of the IRB approach for its intended purpose of solvency assessment.

Originality/value

Access to internal bank data collected by the prudential regulator distinguishes this paper from other empirical studies on the IRB approach and financial crisis of 2007-2009. The authors are not the first to attempt to measure the effects of the recent crisis, but they believe that they are the first to do so using regulatory data.

Book part
Publication date: 7 November 2011

Riccardo Bellofiore

There are two influential interpretative positions in the current debate on the crisis among Marxists. The first understands financialization as a consequence of the…

Abstract

There are two influential interpretative positions in the current debate on the crisis among Marxists. The first understands financialization as a consequence of the tendential fall of the rate of profit. The other interpretation, prevalent among those influenced by Keynesianism and Neoricardianism, refers to the tendency toward the crisis of realisation, because of the squeeze on the wage bill and the insufficiency of consumer demand. In both cases, the current crisis is the crisis of a feeble capitalism, permanently stagnationist. A Marxian interpretation of the crisis cannot be separated from the tendential fall of the rate of profit. This latter, however, cannot be accepted as it is presented by Marx, and it must be rethought as a meta-theory of the crisis, including within it the different crisis theories that can be derived from Capital. This article first provides a personal survey of Marx's crisis theories, often presented as opposed to each other. Second, it seeks to integrate the different positions into a unitary discourse, within a nonmechanical reading of the fall of the rate of profit. This discourse then mutates into an historical sketch of the long dynamic of capital: from the Great Depression of the end of the nineteenth century, to the Great Crash of the 1930s, to the Social Crisis in the immediate processes of valorisation of the 1960s–1970s (the Great Inflation). Finally, the “new” capitalism (the Great Moderation) and its recent crisis (the Great Recession) are read – integrating Marx and Minsky – as the conjunction between the real subsumption of labour to finance and the fragmentation of labour.

Details

Revitalizing Marxist Theory for Today's Capitalism
Type: Book
ISBN: 978-1-78052-255-5

Article
Publication date: 20 November 2017

Stephen A. Woods, Michael James Mustafa, Neil Anderson and Benjamin Sayer

The literature on individual differences in innovative work behavior (IWB) reveals inconsistencies in the relations of personality traits and tenure on innovation at work…

4130

Abstract

Purpose

The literature on individual differences in innovative work behavior (IWB) reveals inconsistencies in the relations of personality traits and tenure on innovation at work. To provide greater clarity about the effects of these antecedents, the purpose of this paper is to report a study of the moderating effects of tenure on the associations of traits and IWB, and apply a theoretical lens based on the trait-activation theory.

Design/methodology/approach

In all, 146 employees of a UK-based financial institution completed measures of conscientiousness and openness, and had three aspects of IWB (idea generation, promotion, and realization) rated by their line-supervisor. All participants were on graduate training programs. Hierarchical regression analyses were used to test the moderating effects of tenure on the associations of the self-reported traits with the supervisor-rated IWB outcomes.

Findings

Tenure moderated the effects of conscientiousness on IWB, with highly conscientious employees being less innovative with longer tenure. Tenure moderated the effect of openness with idea generation with highly open employees generating more ideas if they were longer tenured.

Practical implications

Management of innovation requires differentiated strategies based on the personality traits and tenure of individual employees. Implications for recruitment, socialization and development are discussed.

Originality/value

This is the first study to examine empirically the interactions of traits and contextual factors (i.e. organizational tenure) on IWB, framed around a strong theoretical foundation (i.e. trait activation theory). The study also makes notable contributions by measuring innovative behavior using a supervisor-rated and multidimensional approach.

Details

Journal of Managerial Psychology, vol. 33 no. 1
Type: Research Article
ISSN: 0268-3946

Keywords

Book part
Publication date: 21 August 2019

Peter Huaiyu Chen, Sheen X. Liu and Chunchi Wu

Current US tax laws provide investors an incentive to time the sales of their bonds to minimize tax liability. This gives rise to a tax-timing option that affects bond…

Abstract

Current US tax laws provide investors an incentive to time the sales of their bonds to minimize tax liability. This gives rise to a tax-timing option that affects bond value. In reality, corporate bond investors’ tax-timing strategy is complicated by risk of default. Existing term structure models have ignored the effect of the tax-timing option, and how much corporate bond value is due to the tax-timing option is unknown. In this chapter, we assess the effects of taxes and stochastic interest rates on the timing option value and equilibrium price of corporate bonds by considering discount and premium amortization, multiple trading dates, transaction costs, and changes in the level and volatility of interest rates. We find that the value of the tax-timing option accounts for a substantial proportion of corporate bond price even when interest rate volatility is low. Ignoring the timing option value results in overestimation of credit spread, and underestimation of default probability and the marginal investor’s income tax rate. These estimation biases generally increase with bond maturity and credit risk.

Details

Advances in Pacific Basin Business, Economics and Finance
Type: Book
ISBN: 978-1-78973-285-6

Keywords

Open Access
Article
Publication date: 19 November 2018

Mienati Somya Lasmana and Reni Eka Isyatir Rodhiyah

The purpose of this paper is to know the relevance between the changes in non-taxable income with the receipt of Income Tax Article 21, Income Tax Article 25/29, the…

2629

Abstract

Purpose

The purpose of this paper is to know the relevance between the changes in non-taxable income with the receipt of Income Tax Article 21, Income Tax Article 25/29, the receipt of value added tax and the receipt of luxury sales tax r (PPnBM).

Design/methodology/approach

Changes in non-taxable income have potentially reduced the receipt of Income Tax Article 21, Income Tax Article 25/29 of individual taxpayers, otherwise it increased value added tax and luxury sales tax receipts. This study used the descriptive qualitative approach, by conducting a simple case study based on actual data. Data analysis technique used is descriptive statistics and comparison analysis. Research conducted at the Kantor Wilayah Direktorat Jenderal Pajak Jawa Timur II.

Findings

The results show that the changes of non-taxable income in 2013 and 2015 did not affect the receipt of Income Tax Article 21 but the growth is slowed, while the receipt of Income Tax Article 25/29 increased.

Originality/value

Value added tax and luxury sales tax receipts, increasing every year, slowed down in 2013, but increased higher in 2015.

Details

Asian Journal of Accounting Research, vol. 3 no. 2
Type: Research Article
ISSN: 2443-4175

Keywords

Book part
Publication date: 1 July 2002

Claire Y. Nash, W.Mark Wilder and Morris H. Stocks

Investment companies dominate U.S. equity markets, both in terms of the large proportion of equity capital they control and the sizable trading volume they generate. This…

Abstract

Investment companies dominate U.S. equity markets, both in terms of the large proportion of equity capital they control and the sizable trading volume they generate. This shift in the ownership of U.S. equity securities could lessen the impact of changes in U.S. capital gains tax policy which are aimed at individual investors. This paper examines the effect of capital gains tax rates on investment company capital gains realizations. Empirical tests on cross-sectional, time-series data provide evidence of an unlocking effect of lower marginal capital gains tax rates. Investment companies exhibit economic response behavior consistent with the lock-in effect characteristic of individual investors. Capital gains realized are higher during periods of low marginal capital gains tax rates. The significant permanent tax effects estimated in the analysis are strengthened when transitory effects are introduced into the model.

Details

Advances in Taxation
Type: Book
ISBN: 978-1-84950-158-3

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