ROLE OF CORPORATE REPORTING IN EMERGING ECONOMIES AS INVESTMENT INFORMATIONIAEME Publication
The present study is based on the information about corporate reporting parameter
and their standardized functionality procedure and distinctive perception about
corporate disclosure is mandatory to understand the basic requirement of each and
every person associated with investment. These financial information is accessed and
required by many users at different phases of analyzing company strength and
functioning structure. In this study we have tried to establish basic requirements that
will be required on regular basis by individual investor at different phases.
This document discusses evaluating company performance through financial analysis ratios. It begins by introducing the topic and defining financial analysis as using statistical and mathematical methods to evaluate organizational performance by analyzing financial statements and reports. The document then discusses the steps of financial analysis, sources of information, and types of analysis. It emphasizes that financial analysis is important for decision making, performance evaluation, and anticipating future performance.
mpact of Foreign Shares to Profitability in Turkish Participation Banksinventionjournals
Covering the period 2006 to 2015, this paper aims at empirically studying the impact of foreign shares on the profitability of participation banks. Several econometrical models have been implemented to reveal this relation among variables. There is no co-integration result between profitability on the one hand, and foreign shares, deposits, loans and equity on the other hand. According to the Granger causality test lag 1, a bidirectional relationship exists between deposits and loans. Meanwhile, a unidirectional relationship exists between profitability and foreign shares.
Assessing The Adverse Effects Of Interbank Funds On Bank Efficiency Through U...ertekg
Download Link > https://ertekprojects.com/gurdal-ertek-publications/blog/assessing-the-adverse-effects-of-interbank-funds-on-bank-efficiency-through-using-semiparametric-and-nonparametric-methods/
This chapter investigates the relationship between interbank funds and efficiencies for the commercial banks operating in Turkey between 2001 and 2006. Data Envelopment Analysis (DEA) is executed to find the efficiency scores of the banks for each year, and fixed effects panel data regression is carried out, with the efficiency scores being the response variable. It is observed that interbank funds (ratio) has negative effects on bank efficiency, while bank capitalization and loan ratio have positive, and profitability has insignificant effects. This chapter serves as novel evidence that interbank funds can have adverse effects in an emerging market.
JEL Classification Codes: C14 (Semiparametric and Nonparametric Methods), C67 (Input–Output Models), G21 (Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages).
The study examined the effect of fair value accounting on predictive power of earnings of listed Deposit Money banks (DMBs) in Nigeria. Fair value accounting has been a subject of serious concern in corporate finance and accounting literature following the adoption of International Financial Reporting standards. Data were collected from all the fifteen DMBs listed on the Nigerian stock exchange between 1st January 2011 and 31st December 2015. In analyzing the collected data, the study adopted descriptive statistics, correlation analysis and a panel multiple regression analysis to identify the possible effects of fair value accounting on predictive power of earnings. The results revealed that fair value accounting significantly enhances earnings predictability. The results further established that where as fair value hierarchy level one does not significantly enhance earnings predictability of listed DMBs in Nigeria, level two and three was found to be negatively and significantly influencing earnings predictability. This implies that level two and three significantly reduces earnings predictability of listed DMBs in Nigeria. Therefore, it is recommended that Financial Reporting Council of Nigeria should develop valuation guidelines that must be followed enhance reliability of fair value measurement in Nigeria.
An analytical and theoretical investigation of the determinants ofAlexander Decker
This document analyzes the determinants of deposit money banks' investments in treasury bills in Nigeria from 1970-2009. It finds that five variables (treasury bill rate, total loans and advances, total deposit liabilities, average lending rate, average liquidity ratio) explain 97% of variations in banks' treasury bill investments. Total deposit liabilities have the greatest influence, while total loans and advances have the least. It recommends that banks improve deposit mobilization strategies and that regulatory authorities make treasury bill rates more attractive to banks.
A STUDY ON THE FINANCIAL PERFORMANCE OF FOREIGN COMMERCIAL BANKS IN SRI LANKA...ectijjournal
Banks serve as backbone to the financial sector, which facilitate the proper utilization of financial
resources of a country. The banking sector is increasingly growing and it has witnessed a huge flow of
investment. The banking sector of developing countries is different from the developed countries in term of
performance. The banking sector, especially commercial banks of Sri Lanka plays a vital role in the Sri
Lankan economy. The focus of this study was to investigate the financial performance of foreign
commercial banks in Sri Lanka. Many studies are conducted in different countries to study the financial
performance of banking sector using the various statistical methods. In this study, the CAMEL rating
system is used to study the financial performance of foreign commercial banks in Sri Lanka. The study
selects three foreign banks for the analysis. Data was collected for the time period of 2008-2014.
According to the findings foreign sector banks are good in the performance of capital adequacy and
earnings while other variables show an average performance.
ROLE OF CORPORATE REPORTING IN EMERGING ECONOMIES AS INVESTMENT INFORMATIONIAEME Publication
The present study is based on the information about corporate reporting parameter
and their standardized functionality procedure and distinctive perception about
corporate disclosure is mandatory to understand the basic requirement of each and
every person associated with investment. These financial information is accessed and
required by many users at different phases of analyzing company strength and
functioning structure. In this study we have tried to establish basic requirements that
will be required on regular basis by individual investor at different phases.
This document discusses evaluating company performance through financial analysis ratios. It begins by introducing the topic and defining financial analysis as using statistical and mathematical methods to evaluate organizational performance by analyzing financial statements and reports. The document then discusses the steps of financial analysis, sources of information, and types of analysis. It emphasizes that financial analysis is important for decision making, performance evaluation, and anticipating future performance.
mpact of Foreign Shares to Profitability in Turkish Participation Banksinventionjournals
Covering the period 2006 to 2015, this paper aims at empirically studying the impact of foreign shares on the profitability of participation banks. Several econometrical models have been implemented to reveal this relation among variables. There is no co-integration result between profitability on the one hand, and foreign shares, deposits, loans and equity on the other hand. According to the Granger causality test lag 1, a bidirectional relationship exists between deposits and loans. Meanwhile, a unidirectional relationship exists between profitability and foreign shares.
Assessing The Adverse Effects Of Interbank Funds On Bank Efficiency Through U...ertekg
Download Link > https://ertekprojects.com/gurdal-ertek-publications/blog/assessing-the-adverse-effects-of-interbank-funds-on-bank-efficiency-through-using-semiparametric-and-nonparametric-methods/
This chapter investigates the relationship between interbank funds and efficiencies for the commercial banks operating in Turkey between 2001 and 2006. Data Envelopment Analysis (DEA) is executed to find the efficiency scores of the banks for each year, and fixed effects panel data regression is carried out, with the efficiency scores being the response variable. It is observed that interbank funds (ratio) has negative effects on bank efficiency, while bank capitalization and loan ratio have positive, and profitability has insignificant effects. This chapter serves as novel evidence that interbank funds can have adverse effects in an emerging market.
JEL Classification Codes: C14 (Semiparametric and Nonparametric Methods), C67 (Input–Output Models), G21 (Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages).
The study examined the effect of fair value accounting on predictive power of earnings of listed Deposit Money banks (DMBs) in Nigeria. Fair value accounting has been a subject of serious concern in corporate finance and accounting literature following the adoption of International Financial Reporting standards. Data were collected from all the fifteen DMBs listed on the Nigerian stock exchange between 1st January 2011 and 31st December 2015. In analyzing the collected data, the study adopted descriptive statistics, correlation analysis and a panel multiple regression analysis to identify the possible effects of fair value accounting on predictive power of earnings. The results revealed that fair value accounting significantly enhances earnings predictability. The results further established that where as fair value hierarchy level one does not significantly enhance earnings predictability of listed DMBs in Nigeria, level two and three was found to be negatively and significantly influencing earnings predictability. This implies that level two and three significantly reduces earnings predictability of listed DMBs in Nigeria. Therefore, it is recommended that Financial Reporting Council of Nigeria should develop valuation guidelines that must be followed enhance reliability of fair value measurement in Nigeria.
An analytical and theoretical investigation of the determinants ofAlexander Decker
This document analyzes the determinants of deposit money banks' investments in treasury bills in Nigeria from 1970-2009. It finds that five variables (treasury bill rate, total loans and advances, total deposit liabilities, average lending rate, average liquidity ratio) explain 97% of variations in banks' treasury bill investments. Total deposit liabilities have the greatest influence, while total loans and advances have the least. It recommends that banks improve deposit mobilization strategies and that regulatory authorities make treasury bill rates more attractive to banks.
A STUDY ON THE FINANCIAL PERFORMANCE OF FOREIGN COMMERCIAL BANKS IN SRI LANKA...ectijjournal
Banks serve as backbone to the financial sector, which facilitate the proper utilization of financial
resources of a country. The banking sector is increasingly growing and it has witnessed a huge flow of
investment. The banking sector of developing countries is different from the developed countries in term of
performance. The banking sector, especially commercial banks of Sri Lanka plays a vital role in the Sri
Lankan economy. The focus of this study was to investigate the financial performance of foreign
commercial banks in Sri Lanka. Many studies are conducted in different countries to study the financial
performance of banking sector using the various statistical methods. In this study, the CAMEL rating
system is used to study the financial performance of foreign commercial banks in Sri Lanka. The study
selects three foreign banks for the analysis. Data was collected for the time period of 2008-2014.
According to the findings foreign sector banks are good in the performance of capital adequacy and
earnings while other variables show an average performance.
Service Quality At Univrsity Of Dar Es Salaam Business...Jan Champagne
The document provides background information on the University of Dar Es Salaam Business School (UDBS) in Tanzania. It discusses how UDBS was established in 2008 as a result of the transformation of the former Faculty of Commerce and Management. It also outlines some of UDBS' strengths, including its staff and the breadth and quality of its undergraduate, postgraduate, and training programs in business and management. The document goes on to provide definitions of "service" and the key characteristics of services from various scholars in the literature.
This document provides an abstract for a literature review on the role of internal corporate governance mechanisms and their impact on financial reporting quality. It discusses how agency theory and institutional theory provide frameworks for understanding how governance mechanisms can enhance or reduce earnings management practices. The review aims to analyze the role of boards of directors in financial statement presentation and how earnings management impacts statement quality and stakeholder perceptions. It also summarizes literature on various earnings management measurement models and the relationship between governance mechanisms and earnings manipulation.
The reality of the changing process of accounting policies in jordanian touri...Alexander Decker
This document summarizes a study on the changing of accounting policies in Jordanian tourism companies. It finds that rules and regulations do not hinder changes to accounting policies. Administration and other departments do not participate in decisions to change policies, and new administrations often make changes simply because they want to. Companies make changes to attract lenders, and there is a lack of understanding of qualitative characteristics of information leading to policy changes. The study recommends organizing the process of changing accounting policies in these companies and involving more parties, including using external consultants and auditors. Companies should also develop a clear framework for understanding information quality when considering policy changes.
11.the reality of the changing process of accounting policies in jordanian to...Alexander Decker
This document summarizes a study on the changing of accounting policies in Jordanian tourism companies. It finds that rules and regulations do not hinder changes to accounting policies. Administrative departments do not participate in decisions to change policies, and new administrations often make changes simply because they want to. Companies make changes to attract lenders, and there is a lack of understanding of qualitative characteristics of information leading to policy changes. The study recommends organizing the policy change process and involving departments in decision making. Companies should also consider experience from consulting offices when changing policies.
Ethics in accounting and the reliability of financial informationAlexander Decker
This document summarizes the importance of ethics in the accounting profession. It discusses how accounting scandals in recent decades have questioned the integrity of financial reporting and the auditing process. Unethical practices, such as creative accounting and lack of independence, can undermine the reliability of financial information. For financial statements to be a reliable source of information for decision making, accountants must adhere to principles of integrity, objectivity, and care. Ethics codes guide members of the accounting profession to act with morality and support public trust in the financial system.
Luận Văn The Influence the Quality of Financial Reporting on Firm Value. The object of research in this study is the quality of financial reporting and corporate value. The focus of research is directed to the quality of financial reporting both weaknesses and advantages in increasing the value of the company. The research method used in this research is explanatory research (expalanatory reserach), because it is a research that explains the causal relationship between variables (Cooper and Schindler, 2006: 154) through census research.
This document discusses the evolution and development of accounting theories. It traces the origins of accounting to ancient civilizations like Mesopotamia and discusses early systems used in places like Greece, Rome, China, and the Middle Ages. A key development was the emergence of the "charge and discharge" system of accounting during this time period. Another important development was the introduction of double-entry bookkeeping in Italy in the 13th-14th centuries, which helped address limitations of earlier single-entry systems. The document also examines modern accounting theories and frameworks established by bodies like the IASB and discusses ongoing growth and changes in accounting standards and practices.
This study examines the relationship between corporate governance capabilities and accounting and financial disclosure in financial statements for industrial companies. The study found that there is a relationship between the existence of effective governance rules and increased disclosure and reporting quality. It also found a relationship between stakeholder support for oversight of management and stronger disclosure. Finally, it found a relationship between elements of transparency and increased disclosure. In summary, the study demonstrates that good corporate governance can enhance accounting disclosure and financial reporting.
Ethical dimensions in responsible professionalism and accounting procedures i...Alexander Decker
This document summarizes a research paper on ethical dimensions in responsible professionalism and accounting procedures in Kenya. The paper examines ethical theories and their application to management accounting challenges faced by accountants in Kenya. It employed a case research design and survey of 150 participants from central and Nairobi provinces. The findings suggest that current management accounting in Kenya is weak and should employ ethical considerations to improve transparency, accountability, clarity in reporting, and responsible professionalism. Taken together, the findings indicate that ethical considerations could help reform management accounting in Kenya.
11.ethical dimensions in responsible professionalism and accounting procedure...Alexander Decker
This document summarizes a research paper on the ethical dimensions of responsible professionalism and accounting procedures in Kenya. The paper examines ethical theories and how they apply to management challenges faced by accountants. It conducted a survey of 150 professionals in central and Nairobi provinces. The findings suggest that Kenya's current management accounting is weak and should incorporate more ethical considerations. Overall, the study found impediments in the existing system and that addressing ethics could help improve transparency, accountability, clarity in reporting and professional responsibility.
THE ADEQUACY OF ETHICS IN ACCOUNTING PRACTICE IN NIGERIAIAEME Publication
The document examines the adequacy of ethics in accounting practice in Nigeria. It discusses the importance of ethics for the accounting profession given its role in society. The study evaluates whether the existing code of ethics is adequate for professional accounting practice in Nigeria and identifies factors that inhibit strict adherence to ethical standards.
The literature review discusses the role and responsibilities of accountants. It outlines the five fundamental principles from the IESBA Code of Ethics that accountants must follow: integrity, independence and objectivity, confidentiality, professional competence and due care. The relevance of ethical codes for the accounting profession is also discussed as it establishes standards and maintains public trust.
The objectives of the study are to examine if the existing code of ethics is
Decision Usefulness Approach to Financial Reporting: A Case for EmployeesIJAEMSJORNAL
This document discusses the decision usefulness approach to financial reporting for employees. It argues that financial reporting should provide useful information to both present and prospective employees of a company. Present employees are interested in information about salary, corporate social responsibility initiatives, retirement plans, and future company plans. This information helps employees evaluate their compensation and benefits, the company's treatment of stakeholders, and the long-term prospects of the company. The document examines different aspects of financial reporting that could be useful to employees in making employment-related decisions.
Forensic Accounting and Integrated Financial Reporting of Banks using HausmanIJAEMSJORNAL
This study examined forensic accounting and integrated financial reporting of listed banks in Ghana. The study aimed to examine forensic accounting effects on the integrated financial reporting of the listed banks. Its specific objectives determined the impact Litigations, Claims, Fraud cases reported, Cost of forensic investigation and Non-performing loans (LCFCN) have on integrated financial reporting variables such as corporate social responsibility – CSR. Integrated financial reporting (IFR) is the dependent variable while forensic accounting (FA) is the independent variable. In line with these stated objectives, five research questions and five hypotheses were formulated and it adopted the ex-post facto research design. The population of study constitutes 24 listed banks in Ghana, only 8 listed banks was selected through a purposive sampling. The data for the study was purely secondary and sourced from related books of the banks via Central Banks bulletin (Ghana), African financials and banks reports for a period of 16years from 2004-2020. Moreover, data were analyzed using the descriptive statistics, the Shapiro -Wilk test for a diagnostic check for normality and a combination of the panel regression analysis with the Hausman test which aided appropriately specification whether the analysis should be done with a fixed effect or random effect model of which the fixed effect was used for the interpretation at (P 0.050 < 0.10). In nations analyzed, the results among others demonstrated that forensic accounting and integrated financial reporting were statistically significant at 1%, 5%, and 10% as claims is positive and have significant effect on CSR (β = 64687.53, P<0.10); Non-performing loans is statistically significant and had a negative effect on CSR (β = -2.934, P= 0.054 @ 0.10). The study hence concludes that the effective implementation of forensic accounting had a constructive and significant effect on the integrated financial reporting of listed banks in Ghana. The study recommends among others that the apex banks should mandate banks to incorporate forensic accounting when reassessing their employability skill set, report production, debt administration and management, and portray fairness virtue in their reporting system so as to attract more investment and positive public image.
This document summarizes a research study that examined the effect of fraud pentagon theory on financial statement fraud. The study used fraud score modeling to observe banking companies in Indonesia from 2016-2018. The results found that external pressure and financial stability had a significant effect on financial statement fraud, while audit opinion, audit committee changes, and external audit quality did not. The study aimed to empirically test relationships between several variables derived from fraud pentagon theory, agency theory, and information asymmetry theory on instances of financial statement fraud. Statistical analysis of the companies' financial data supported some but not all of the hypotheses.
Audit committee and timeliness of financial reportsAlexander Decker
This document summarizes a study that examines the relationship between audit committee characteristics and the timeliness of financial reporting for companies listed on the Nigerian Stock Exchange from 2007-2011. The study reviews relevant literature on agency theory, resource dependence theory, audit committees, and prior empirical research on timeliness of financial reporting. It describes how audit committee independence, expertise, size, and meetings are examined in relation to the timeliness of company financial reports. The results of the study are discussed in the document.
This document discusses a study that examined the role of accounting information systems in activating responsibility accounting in Jordanian industrial companies. The study found that accounting managers had positive attitudes toward the role of accounting information systems. It also found that accounting information systems can activate responsibility accounting. Additionally, the role of accounting information systems did not vary based on educational qualifications but did vary based on work experience. The study recommends focusing on social activity disclosures and improving information systems equipment in companies.
The document discusses whether the accounting profit figure is simply a measure of the true profit of an organization. It acknowledges that determining a true profit requires defining what true profit is. There is no single agreed definition of true profit. Accounting profit involves professional judgement and estimates, so it may differ from some conceptual true profit. Factors like provisions, depreciation, and fair value estimates mean accounting profit does not objectively capture economic reality or predict future cash flows. Therefore, the accounting profit figure cannot be said to directly equate to a true profit.
Abnormalities of hormones and inflammatory cytokines in women affected with p...Alexander Decker
Women with polycystic ovary syndrome (PCOS) have elevated levels of hormones like luteinizing hormone and testosterone, as well as higher levels of insulin and insulin resistance compared to healthy women. They also have increased levels of inflammatory markers like C-reactive protein, interleukin-6, and leptin. This study found these abnormalities in the hormones and inflammatory cytokines of women with PCOS ages 23-40, indicating that hormone imbalances associated with insulin resistance and elevated inflammatory markers may worsen infertility in women with PCOS.
Service Quality At Univrsity Of Dar Es Salaam Business...Jan Champagne
The document provides background information on the University of Dar Es Salaam Business School (UDBS) in Tanzania. It discusses how UDBS was established in 2008 as a result of the transformation of the former Faculty of Commerce and Management. It also outlines some of UDBS' strengths, including its staff and the breadth and quality of its undergraduate, postgraduate, and training programs in business and management. The document goes on to provide definitions of "service" and the key characteristics of services from various scholars in the literature.
This document provides an abstract for a literature review on the role of internal corporate governance mechanisms and their impact on financial reporting quality. It discusses how agency theory and institutional theory provide frameworks for understanding how governance mechanisms can enhance or reduce earnings management practices. The review aims to analyze the role of boards of directors in financial statement presentation and how earnings management impacts statement quality and stakeholder perceptions. It also summarizes literature on various earnings management measurement models and the relationship between governance mechanisms and earnings manipulation.
The reality of the changing process of accounting policies in jordanian touri...Alexander Decker
This document summarizes a study on the changing of accounting policies in Jordanian tourism companies. It finds that rules and regulations do not hinder changes to accounting policies. Administration and other departments do not participate in decisions to change policies, and new administrations often make changes simply because they want to. Companies make changes to attract lenders, and there is a lack of understanding of qualitative characteristics of information leading to policy changes. The study recommends organizing the process of changing accounting policies in these companies and involving more parties, including using external consultants and auditors. Companies should also develop a clear framework for understanding information quality when considering policy changes.
11.the reality of the changing process of accounting policies in jordanian to...Alexander Decker
This document summarizes a study on the changing of accounting policies in Jordanian tourism companies. It finds that rules and regulations do not hinder changes to accounting policies. Administrative departments do not participate in decisions to change policies, and new administrations often make changes simply because they want to. Companies make changes to attract lenders, and there is a lack of understanding of qualitative characteristics of information leading to policy changes. The study recommends organizing the policy change process and involving departments in decision making. Companies should also consider experience from consulting offices when changing policies.
Ethics in accounting and the reliability of financial informationAlexander Decker
This document summarizes the importance of ethics in the accounting profession. It discusses how accounting scandals in recent decades have questioned the integrity of financial reporting and the auditing process. Unethical practices, such as creative accounting and lack of independence, can undermine the reliability of financial information. For financial statements to be a reliable source of information for decision making, accountants must adhere to principles of integrity, objectivity, and care. Ethics codes guide members of the accounting profession to act with morality and support public trust in the financial system.
Luận Văn The Influence the Quality of Financial Reporting on Firm Value. The object of research in this study is the quality of financial reporting and corporate value. The focus of research is directed to the quality of financial reporting both weaknesses and advantages in increasing the value of the company. The research method used in this research is explanatory research (expalanatory reserach), because it is a research that explains the causal relationship between variables (Cooper and Schindler, 2006: 154) through census research.
This document discusses the evolution and development of accounting theories. It traces the origins of accounting to ancient civilizations like Mesopotamia and discusses early systems used in places like Greece, Rome, China, and the Middle Ages. A key development was the emergence of the "charge and discharge" system of accounting during this time period. Another important development was the introduction of double-entry bookkeeping in Italy in the 13th-14th centuries, which helped address limitations of earlier single-entry systems. The document also examines modern accounting theories and frameworks established by bodies like the IASB and discusses ongoing growth and changes in accounting standards and practices.
This study examines the relationship between corporate governance capabilities and accounting and financial disclosure in financial statements for industrial companies. The study found that there is a relationship between the existence of effective governance rules and increased disclosure and reporting quality. It also found a relationship between stakeholder support for oversight of management and stronger disclosure. Finally, it found a relationship between elements of transparency and increased disclosure. In summary, the study demonstrates that good corporate governance can enhance accounting disclosure and financial reporting.
Ethical dimensions in responsible professionalism and accounting procedures i...Alexander Decker
This document summarizes a research paper on ethical dimensions in responsible professionalism and accounting procedures in Kenya. The paper examines ethical theories and their application to management accounting challenges faced by accountants in Kenya. It employed a case research design and survey of 150 participants from central and Nairobi provinces. The findings suggest that current management accounting in Kenya is weak and should employ ethical considerations to improve transparency, accountability, clarity in reporting, and responsible professionalism. Taken together, the findings indicate that ethical considerations could help reform management accounting in Kenya.
11.ethical dimensions in responsible professionalism and accounting procedure...Alexander Decker
This document summarizes a research paper on the ethical dimensions of responsible professionalism and accounting procedures in Kenya. The paper examines ethical theories and how they apply to management challenges faced by accountants. It conducted a survey of 150 professionals in central and Nairobi provinces. The findings suggest that Kenya's current management accounting is weak and should incorporate more ethical considerations. Overall, the study found impediments in the existing system and that addressing ethics could help improve transparency, accountability, clarity in reporting and professional responsibility.
THE ADEQUACY OF ETHICS IN ACCOUNTING PRACTICE IN NIGERIAIAEME Publication
The document examines the adequacy of ethics in accounting practice in Nigeria. It discusses the importance of ethics for the accounting profession given its role in society. The study evaluates whether the existing code of ethics is adequate for professional accounting practice in Nigeria and identifies factors that inhibit strict adherence to ethical standards.
The literature review discusses the role and responsibilities of accountants. It outlines the five fundamental principles from the IESBA Code of Ethics that accountants must follow: integrity, independence and objectivity, confidentiality, professional competence and due care. The relevance of ethical codes for the accounting profession is also discussed as it establishes standards and maintains public trust.
The objectives of the study are to examine if the existing code of ethics is
Decision Usefulness Approach to Financial Reporting: A Case for EmployeesIJAEMSJORNAL
This document discusses the decision usefulness approach to financial reporting for employees. It argues that financial reporting should provide useful information to both present and prospective employees of a company. Present employees are interested in information about salary, corporate social responsibility initiatives, retirement plans, and future company plans. This information helps employees evaluate their compensation and benefits, the company's treatment of stakeholders, and the long-term prospects of the company. The document examines different aspects of financial reporting that could be useful to employees in making employment-related decisions.
Forensic Accounting and Integrated Financial Reporting of Banks using HausmanIJAEMSJORNAL
This study examined forensic accounting and integrated financial reporting of listed banks in Ghana. The study aimed to examine forensic accounting effects on the integrated financial reporting of the listed banks. Its specific objectives determined the impact Litigations, Claims, Fraud cases reported, Cost of forensic investigation and Non-performing loans (LCFCN) have on integrated financial reporting variables such as corporate social responsibility – CSR. Integrated financial reporting (IFR) is the dependent variable while forensic accounting (FA) is the independent variable. In line with these stated objectives, five research questions and five hypotheses were formulated and it adopted the ex-post facto research design. The population of study constitutes 24 listed banks in Ghana, only 8 listed banks was selected through a purposive sampling. The data for the study was purely secondary and sourced from related books of the banks via Central Banks bulletin (Ghana), African financials and banks reports for a period of 16years from 2004-2020. Moreover, data were analyzed using the descriptive statistics, the Shapiro -Wilk test for a diagnostic check for normality and a combination of the panel regression analysis with the Hausman test which aided appropriately specification whether the analysis should be done with a fixed effect or random effect model of which the fixed effect was used for the interpretation at (P 0.050 < 0.10). In nations analyzed, the results among others demonstrated that forensic accounting and integrated financial reporting were statistically significant at 1%, 5%, and 10% as claims is positive and have significant effect on CSR (β = 64687.53, P<0.10); Non-performing loans is statistically significant and had a negative effect on CSR (β = -2.934, P= 0.054 @ 0.10). The study hence concludes that the effective implementation of forensic accounting had a constructive and significant effect on the integrated financial reporting of listed banks in Ghana. The study recommends among others that the apex banks should mandate banks to incorporate forensic accounting when reassessing their employability skill set, report production, debt administration and management, and portray fairness virtue in their reporting system so as to attract more investment and positive public image.
This document summarizes a research study that examined the effect of fraud pentagon theory on financial statement fraud. The study used fraud score modeling to observe banking companies in Indonesia from 2016-2018. The results found that external pressure and financial stability had a significant effect on financial statement fraud, while audit opinion, audit committee changes, and external audit quality did not. The study aimed to empirically test relationships between several variables derived from fraud pentagon theory, agency theory, and information asymmetry theory on instances of financial statement fraud. Statistical analysis of the companies' financial data supported some but not all of the hypotheses.
Audit committee and timeliness of financial reportsAlexander Decker
This document summarizes a study that examines the relationship between audit committee characteristics and the timeliness of financial reporting for companies listed on the Nigerian Stock Exchange from 2007-2011. The study reviews relevant literature on agency theory, resource dependence theory, audit committees, and prior empirical research on timeliness of financial reporting. It describes how audit committee independence, expertise, size, and meetings are examined in relation to the timeliness of company financial reports. The results of the study are discussed in the document.
This document discusses a study that examined the role of accounting information systems in activating responsibility accounting in Jordanian industrial companies. The study found that accounting managers had positive attitudes toward the role of accounting information systems. It also found that accounting information systems can activate responsibility accounting. Additionally, the role of accounting information systems did not vary based on educational qualifications but did vary based on work experience. The study recommends focusing on social activity disclosures and improving information systems equipment in companies.
The document discusses whether the accounting profit figure is simply a measure of the true profit of an organization. It acknowledges that determining a true profit requires defining what true profit is. There is no single agreed definition of true profit. Accounting profit involves professional judgement and estimates, so it may differ from some conceptual true profit. Factors like provisions, depreciation, and fair value estimates mean accounting profit does not objectively capture economic reality or predict future cash flows. Therefore, the accounting profit figure cannot be said to directly equate to a true profit.
Similar to 14 tariq ismail fianl_paper--169-187 (20)
Abnormalities of hormones and inflammatory cytokines in women affected with p...Alexander Decker
Women with polycystic ovary syndrome (PCOS) have elevated levels of hormones like luteinizing hormone and testosterone, as well as higher levels of insulin and insulin resistance compared to healthy women. They also have increased levels of inflammatory markers like C-reactive protein, interleukin-6, and leptin. This study found these abnormalities in the hormones and inflammatory cytokines of women with PCOS ages 23-40, indicating that hormone imbalances associated with insulin resistance and elevated inflammatory markers may worsen infertility in women with PCOS.
A usability evaluation framework for b2 c e commerce websitesAlexander Decker
This document presents a framework for evaluating the usability of B2C e-commerce websites. It involves user testing methods like usability testing and interviews to identify usability problems in areas like navigation, design, purchasing processes, and customer service. The framework specifies goals for the evaluation, determines which website aspects to evaluate, and identifies target users. It then describes collecting data through user testing and analyzing the results to identify usability problems and suggest improvements.
A universal model for managing the marketing executives in nigerian banksAlexander Decker
This document discusses a study that aimed to synthesize motivation theories into a universal model for managing marketing executives in Nigerian banks. The study was guided by Maslow and McGregor's theories. A sample of 303 marketing executives was used. The results showed that managers will be most effective at motivating marketing executives if they consider individual needs and create challenging but attainable goals. The emerged model suggests managers should provide job satisfaction by tailoring assignments to abilities and monitoring performance with feedback. This addresses confusion faced by Nigerian bank managers in determining effective motivation strategies.
A unique common fixed point theorems in generalized dAlexander Decker
This document presents definitions and properties related to generalized D*-metric spaces and establishes some common fixed point theorems for contractive type mappings in these spaces. It begins by introducing D*-metric spaces and generalized D*-metric spaces, defines concepts like convergence and Cauchy sequences. It presents lemmas showing the uniqueness of limits in these spaces and the equivalence of different definitions of convergence. The goal of the paper is then stated as obtaining a unique common fixed point theorem for generalized D*-metric spaces.
A trends of salmonella and antibiotic resistanceAlexander Decker
This document provides a review of trends in Salmonella and antibiotic resistance. It begins with an introduction to Salmonella as a facultative anaerobe that causes nontyphoidal salmonellosis. The emergence of antimicrobial-resistant Salmonella is then discussed. The document proceeds to cover the historical perspective and classification of Salmonella, definitions of antimicrobials and antibiotic resistance, and mechanisms of antibiotic resistance in Salmonella including modification or destruction of antimicrobial agents, efflux pumps, modification of antibiotic targets, and decreased membrane permeability. Specific resistance mechanisms are discussed for several classes of antimicrobials.
A transformational generative approach towards understanding al-istifhamAlexander Decker
This document discusses a transformational-generative approach to understanding Al-Istifham, which refers to interrogative sentences in Arabic. It begins with an introduction to the origin and development of Arabic grammar. The paper then explains the theoretical framework of transformational-generative grammar that is used. Basic linguistic concepts and terms related to Arabic grammar are defined. The document analyzes how interrogative sentences in Arabic can be derived and transformed via tools from transformational-generative grammar, categorizing Al-Istifham into linguistic and literary questions.
A time series analysis of the determinants of savings in namibiaAlexander Decker
This document summarizes a study on the determinants of savings in Namibia from 1991 to 2012. It reviews previous literature on savings determinants in developing countries. The study uses time series analysis including unit root tests, cointegration, and error correction models to analyze the relationship between savings and variables like income, inflation, population growth, deposit rates, and financial deepening in Namibia. The results found inflation and income have a positive impact on savings, while population growth negatively impacts savings. Deposit rates and financial deepening were found to have no significant impact. The study reinforces previous work and emphasizes the importance of improving income levels to achieve higher savings rates in Namibia.
A therapy for physical and mental fitness of school childrenAlexander Decker
This document summarizes a study on the importance of exercise in maintaining physical and mental fitness for school children. It discusses how physical and mental fitness are developed through participation in regular physical exercises and cannot be achieved solely through classroom learning. The document outlines different types and components of fitness and argues that developing fitness should be a key objective of education systems. It recommends that schools ensure pupils engage in graded physical activities and exercises to support their overall development.
A theory of efficiency for managing the marketing executives in nigerian banksAlexander Decker
This document summarizes a study examining efficiency in managing marketing executives in Nigerian banks. The study was examined through the lenses of Kaizen theory (continuous improvement) and efficiency theory. A survey of 303 marketing executives from Nigerian banks found that management plays a key role in identifying and implementing efficiency improvements. The document recommends adopting a "3H grand strategy" to improve the heads, hearts, and hands of management and marketing executives by enhancing their knowledge, attitudes, and tools.
This document discusses evaluating the link budget for effective 900MHz GSM communication. It describes the basic parameters needed for a high-level link budget calculation, including transmitter power, antenna gains, path loss, and propagation models. Common propagation models for 900MHz that are described include Okumura model for urban areas and Hata model for urban, suburban, and open areas. Rain attenuation is also incorporated using the updated ITU model to improve communication during rainfall.
A synthetic review of contraceptive supplies in punjabAlexander Decker
This document discusses contraceptive use in Punjab, Pakistan. It begins by providing background on the benefits of family planning and contraceptive use for maternal and child health. It then analyzes contraceptive commodity data from Punjab, finding that use is still low despite efforts to improve access. The document concludes by emphasizing the need for strategies to bridge gaps and meet the unmet need for effective and affordable contraceptive methods and supplies in Punjab in order to improve health outcomes.
A synthesis of taylor’s and fayol’s management approaches for managing market...Alexander Decker
1) The document discusses synthesizing Taylor's scientific management approach and Fayol's process management approach to identify an effective way to manage marketing executives in Nigerian banks.
2) It reviews Taylor's emphasis on efficiency and breaking tasks into small parts, and Fayol's focus on developing general management principles.
3) The study administered a survey to 303 marketing executives in Nigerian banks to test if combining elements of Taylor and Fayol's approaches would help manage their performance through clear roles, accountability, and motivation. Statistical analysis supported combining the two approaches.
A survey paper on sequence pattern mining with incrementalAlexander Decker
This document summarizes four algorithms for sequential pattern mining: GSP, ISM, FreeSpan, and PrefixSpan. GSP is an Apriori-based algorithm that incorporates time constraints. ISM extends SPADE to incrementally update patterns after database changes. FreeSpan uses frequent items to recursively project databases and grow subsequences. PrefixSpan also uses projection but claims to not require candidate generation. It recursively projects databases based on short prefix patterns. The document concludes by stating the goal was to find an efficient scheme for extracting sequential patterns from transactional datasets.
A survey on live virtual machine migrations and its techniquesAlexander Decker
This document summarizes several techniques for live virtual machine migration in cloud computing. It discusses works that have proposed affinity-aware migration models to improve resource utilization, energy efficient migration approaches using storage migration and live VM migration, and a dynamic consolidation technique using migration control to avoid unnecessary migrations. The document also summarizes works that have designed methods to minimize migration downtime and network traffic, proposed a resource reservation framework for efficient migration of multiple VMs, and addressed real-time issues in live migration. Finally, it provides a table summarizing the techniques, tools used, and potential future work or gaps identified for each discussed work.
A survey on data mining and analysis in hadoop and mongo dbAlexander Decker
This document discusses data mining of big data using Hadoop and MongoDB. It provides an overview of Hadoop and MongoDB and their uses in big data analysis. Specifically, it proposes using Hadoop for distributed processing and MongoDB for data storage and input. The document reviews several related works that discuss big data analysis using these tools, as well as their capabilities for scalable data storage and mining. It aims to improve computational time and fault tolerance for big data analysis by mining data stored in Hadoop using MongoDB and MapReduce.
1. The document discusses several challenges for integrating media with cloud computing including media content convergence, scalability and expandability, finding appropriate applications, and reliability.
2. Media content convergence challenges include dealing with the heterogeneity of media types, services, networks, devices, and quality of service requirements as well as integrating technologies used by media providers and consumers.
3. Scalability and expandability challenges involve adapting to the increasing volume of media content and being able to support new media formats and outlets over time.
This document surveys trust architectures that leverage provenance in wireless sensor networks. It begins with background on provenance, which refers to the documented history or derivation of data. Provenance can be used to assess trust by providing metadata about how data was processed. The document then discusses challenges for using provenance to establish trust in wireless sensor networks, which have constraints on energy and computation. Finally, it provides background on trust, which is the subjective probability that a node will behave dependably. Trust architectures need to be lightweight to account for the constraints of wireless sensor networks.
This document discusses private equity investments in Kenya. It provides background on private equity and discusses trends in various regions. The objectives of the study discussed are to establish the extent of private equity adoption in Kenya, identify common forms of private equity utilized, and determine typical exit strategies. Private equity can involve venture capital, leveraged buyouts, or mezzanine financing. Exits allow recycling of capital into new opportunities. The document provides context on private equity globally and in developing markets like Africa to frame the goals of the study.
This document discusses a study that analyzes the financial health of the Indian logistics industry from 2005-2012 using Altman's Z-score model. The study finds that the average Z-score for selected logistics firms was in the healthy to very healthy range during the study period. The average Z-score increased from 2006 to 2010 when the Indian economy was hit by the global recession, indicating the overall performance of the Indian logistics industry was good. The document reviews previous literature on measuring financial performance and distress using ratios and Z-scores, and outlines the objectives and methodology used in the current study.
Understanding how timely GST payments influence a lender's decision to approve loans, this topic explores the correlation between GST compliance and creditworthiness. It highlights how consistent GST payments can enhance a business's financial credibility, potentially leading to higher chances of loan approval.
1. Elemental Economics - Introduction to mining.pdfNeal Brewster
After this first you should: Understand the nature of mining; have an awareness of the industry’s boundaries, corporate structure and size; appreciation the complex motivations and objectives of the industries’ various participants; know how mineral reserves are defined and estimated, and how they evolve over time.
5 Tips for Creating Standard Financial ReportsEasyReports
Well-crafted financial reports serve as vital tools for decision-making and transparency within an organization. By following the undermentioned tips, you can create standardized financial reports that effectively communicate your company's financial health and performance to stakeholders.
Discover the Future of Dogecoin with Our Comprehensive Guidance36 Crypto
Learn in-depth about Dogecoin's trajectory and stay informed with 36crypto's essential and up-to-date information about the crypto space.
Our presentation delves into Dogecoin's potential future, exploring whether it's destined to skyrocket to the moon or face a downward spiral. In addition, it highlights invaluable insights. Don't miss out on this opportunity to enhance your crypto understanding!
https://36crypto.com/the-future-of-dogecoin-how-high-can-this-cryptocurrency-reach/
The Universal Account Number (UAN) by EPFO centralizes multiple PF accounts, simplifying management for Indian employees. It streamlines PF transfers, withdrawals, and KYC updates, providing transparency and reducing employer dependency. Despite challenges like digital literacy and internet access, UAN is vital for financial empowerment and efficient provident fund management in today's digital age.
OJP data from firms like Vicinity Jobs have emerged as a complement to traditional sources of labour demand data, such as the Job Vacancy and Wages Survey (JVWS). Ibrahim Abuallail, PhD Candidate, University of Ottawa, presented research relating to bias in OJPs and a proposed approach to effectively adjust OJP data to complement existing official data (such as from the JVWS) and improve the measurement of labour demand.
STREETONOMICS: Exploring the Uncharted Territories of Informal Markets throug...sameer shah
Delve into the world of STREETONOMICS, where a team of 7 enthusiasts embarks on a journey to understand unorganized markets. By engaging with a coffee street vendor and crafting questionnaires, this project uncovers valuable insights into consumer behavior and market dynamics in informal settings."
Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby...Donc Test
Solution Manual For Financial Accounting, 8th Canadian Edition 2024, by Libby, Hodge, Verified Chapters 1 - 13, Complete Newest Version Solution Manual For Financial Accounting, 8th Canadian Edition by Libby, Hodge, Verified Chapters 1 - 13, Complete Newest Version Solution Manual For Financial Accounting 8th Canadian Edition Pdf Chapters Download Stuvia Solution Manual For Financial Accounting 8th Canadian Edition Ebook Download Stuvia Solution Manual For Financial Accounting 8th Canadian Edition Pdf Solution Manual For Financial Accounting 8th Canadian Edition Pdf Download Stuvia Financial Accounting 8th Canadian Edition Pdf Chapters Download Stuvia Financial Accounting 8th Canadian Edition Ebook Download Stuvia Financial Accounting 8th Canadian Edition Pdf Financial Accounting 8th Canadian Edition Pdf Download Stuvia
A toxic combination of 15 years of low growth, and four decades of high inequality, has left Britain poorer and falling behind its peers. Productivity growth is weak and public investment is low, while wages today are no higher than they were before the financial crisis. Britain needs a new economic strategy to lift itself out of stagnation.
Scotland is in many ways a microcosm of this challenge. It has become a hub for creative industries, is home to several world-class universities and a thriving community of businesses – strengths that need to be harness and leveraged. But it also has high levels of deprivation, with homelessness reaching a record high and nearly half a million people living in very deep poverty last year. Scotland won’t be truly thriving unless it finds ways to ensure that all its inhabitants benefit from growth and investment. This is the central challenge facing policy makers both in Holyrood and Westminster.
What should a new national economic strategy for Scotland include? What would the pursuit of stronger economic growth mean for local, national and UK-wide policy makers? How will economic change affect the jobs we do, the places we live and the businesses we work for? And what are the prospects for cities like Glasgow, and nations like Scotland, in rising to these challenges?
2. Elemental Economics - Mineral demand.pdfNeal Brewster
After this second you should be able to: Explain the main determinants of demand for any mineral product, and their relative importance; recognise and explain how demand for any product is likely to change with economic activity; recognise and explain the roles of technology and relative prices in influencing demand; be able to explain the differences between the rates of growth of demand for different products.
[4:55 p.m.] Bryan Oates
OJPs are becoming a critical resource for policy-makers and researchers who study the labour market. LMIC continues to work with Vicinity Jobs’ data on OJPs, which can be explored in our Canadian Job Trends Dashboard. Valuable insights have been gained through our analysis of OJP data, including LMIC research lead
Suzanne Spiteri’s recent report on improving the quality and accessibility of job postings to reduce employment barriers for neurodivergent people.
Decoding job postings: Improving accessibility for neurodivergent job seekers
Improving the quality and accessibility of job postings is one way to reduce employment barriers for neurodivergent people.
Optimizing Net Interest Margin (NIM) in the Financial Sector (With Examples).pdfshruti1menon2
NIM is calculated as the difference between interest income earned and interest expenses paid, divided by interest-earning assets.
Importance: NIM serves as a critical measure of a financial institution's profitability and operational efficiency. It reflects how effectively the institution is utilizing its interest-earning assets to generate income while managing interest costs.
Optimizing Net Interest Margin (NIM) in the Financial Sector (With Examples).pdf
14 tariq ismail fianl_paper--169-187
1. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 2, No 3, 2011
Ethical Perceptions on Earnings Manipulation in Turkey:
An Exploration of Differences in Preparers and Users’
Perspectives
Asuman Atik (Corresponding author)
Faculty of Economics and Administrative Sciences, Marmara University,
Goztepe Campus, Goztepe, Istanbul, Turkey
Email addresses: aatik@marmara.edu.tr
Tariq H. Ismail
Professor of Accounting, Faculty of Commerce, Cairo University,
P.O. Box 12613 Orman, Giza, Egypt
Email: thassaneen@cu.edu.eg
Professor of Accounting, Faculty of Management and Humanities, Majmaah University,
P.O.Box 66, Majmaah, Saudi Arabia.
Abstract
This study focuses on the impact of a more comprehensive set of scenarios that might be followed by
accounting practitioners and leading to earnings manipulations, where such scenarios are yet to be
investigated in Turkey and this study is the first to explore this issue. This study examines the ethical
perception differences concerning the three types of earnings manipulations; which are income
smoothing, earnings management and big bath accounting, between users and preparers’ perspectives of
financial information in Turkey. A structured questionnaire composed of seven scenarios was used to
elicit responses from users; based on 82 financial analysts and portfolio managers’
responses, and preparers of financial statements; using responses from 56 independent and 56
company affiliated accountants.
The results reveal that there are significant differences between the ethical perceptions of users and
preparers related to some types of earnings manipulations. Additionally, the most unethical tool of
earnings manipulations is fraudulent accounting, followed by manipulation through accounting
changes and manipulation through operational changes. The study provides insight on the current and
potential direction of earnings manipulation in Turkey and help regularity bodies in their efforts to
tighten and improve reporting standards and regulations.
Keywords: Earnings manipulation, income smoothing, earnings management, big bath
accounting, financial information, user of financial information, preparers of financial information, Turkey.
1. Introduction
The preparation and presentation of high quality financial reports is the responsibility of management
and accountants. Additionally, independent auditors play an important role in ensuring the reliability of
information provided and increasing the public confidence in the financial reports. Users of financial
reports are investors (current or potential), cred ito rs , supp liers , emp lo yee s , g o v e r n m e n t a l
agencies and o ther interested parties. All those users are external parties who can not get
169
2. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 2, No 3, 2011
information directly from internal sources and their information needs are supposed to
be satisfied with the information provided to them.
Users always require true, reliable, verifiable and timely financial information
about companies. Stockholders and potential investors use financial information in
making investment decisions, banks use it in making credit decisions, suppliers and prospective
employees may decide which companies to work with by using the provided financial
information (Fischer and Rosenzweig 1995).
This study is based on the assumption that users and preparers of financial information are two
different groups who have conflicting interests. For example, in the case of b orrowing, an accountant
manager wishes to decrease cost of borrowing, on the other hand, a financial analysts, who provides
credit decisions tries to increase interest rate or selling price of money, hence, the accountant and the
financial analyst have conflicting interests. However, studies t h a t examined the fairness judgments
of conflicting parties, especially in negotiations, showed that “the parties make egocentric
interpretations about the fairness and deem a settlement as a fair settlement when it is biased in favor
of their own side” (Paese and Yonker 2 0 0 1 , p. 114). Therefore, earnings manipulation, which
will make financial statements look better and decrease cost of borrowing, might be perceived as
less unethical by an accountant than a financial analyst.
Most of the previous research investigated how accountants and accounting students (or preparers)
perceive earnings management practices and they focused on the methods used for manipulation. They
ignored the earnings manipulations other than earnings management and parties o t h e r than p rep arer s .
The o nl y stud y t h at t r i e d to u n d e r s t a n d ethically related judgments of “users” belongs to
Kaplan (2001b). However participants of that study were not real users, rather, they were MBA students
who were assigned roles of shareholders and non- shareholders. A real user’s ethically related judgments
about earnings manipulation may be much different than an MBA student’s judgment.
We believe that there are differences between preparers and users as well as diverse types and
approaches to accounting manipulations. However, previous studies could examine only preparers with
reference to earning management, hence, we complement and extend these studies by looking at the
impact of users and preparers on accounting manipulations under diverse approaches to accounting
manipulations. The main purpose of this paper is to extend the study of Kaplan
(2001b) in order to investigate whether there are significant differences in ethical
perception of earnings manipulations between preparers and users of financial
information in Turkish settings.
Unlike Belski et al. (2008) and Ng et al. (2009), the current study focuses on the impact of a more
comprehensive set of scenarios that might be followed leading to earnings
manipulation, where such scenarios are yet to be investigated in Turkey and this study is the first to
explore this issue. This investigation may assist regulators to understand the impact of ethical
perceptions of preparers and users of financial information and thereby help them specify ways to
improve the provision of more information by listed Turkish companies. Therefore, this paper
contributes to the literature by (i) examining the ethical perceptions of “users” related to earnings
manipulations rather than just examining the ethical perceptions of “preparers, and (ii) testing the
ethical perceptions related to three different types of earnings manipulation (income smoothing,
earnings management and big bath accounting) rather than just earnings management.
The rest of this paper proceeds as follows; section two provides general overview of
accounting in Turkey, section three presents a review of the literature on earnings
manipulation; section four illustrates the development of the research hypotheses followed by a description
of the research methodology. Section five is the analysis of results and discussion. Finally, section six
provides conclusions and gives a summary of the main findings of this study, followed by the study
limitations in section seven.
170
3. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 2, No 3, 2011
2. General overview of accounting in Turkey
In Turkey, as an emerging economy, expansion of the trading and industrial production made
accounting applications more effective and inevitable. In addition, until the establishment of
Accounting and Auditing Standards Board of Turkiye (TMUDESK) in 1994,
accounting profession was not organized in a legal structure. This situation r e v e a l s m u c h d i v e r s i t y
amo ng c o mp a n i e s ’ r e p o r t i n g s ys te ms a n d accounting applications in the same sector.
On the other hand, another reason of the reporting diversities in Turkey came into practice as a result of
uncompromised attitudes of the standard setting institutions (TMUDESK, 2000:1). Today there are two
main accounting standards issued by the Ministry of Finance and Capital Markets Board of Turkey
(SPK). In practice, it is seen that SPK adjusted its own chart of accounts according to the notifications
of the Ministry of Finance. Although the financial statement’s form of these two institutions is
similar, there are some differences about the accounting concepts and asset evaluation a p p r o a c h e s .
Besides, the adoption of IAS to the Turkish accounting system by TMSK is an important step for the
reporting standardization for the future. However, all companies listed on the Istanbul Stock Exchange
are required to follow IFRSs. Communique Serial: XI No: 25 allows an option to follow IFRSs in one of
two ways due to delays in translating IFRSs into Turkish:
• A listed company can follow the official English version of IFRSs as published by the IASB, in
which case the audit report and basis of presentation footnote make an explicit statement of
compliance with International Financial Reporting Standards.
• A listed company can follow the Turkish translation of IFRSs. Because of the translation
delay, the audit report and basis of presentation footnote state that the financial statements
comply with "IFRSs as adopted for use in Turkey".
Financial reporting in Turkey is tax-driven and companies try to determine t a x -purpose income
rather t h a n p er fo r manc e evaluatio n -purpose inco me . Generally t a x l a ws determine
accounting treatments. With the establishment of the Capital Market Board in 1986, financial
accounting standards started to be developed, and all publicly traded companies
are required to apply IFRS a s o f beginning of January 2005. However, the
important point is that because Turkey has not a developed capital market, only a small portion of
the companies applies IFRS, higher portion (especially family-owned and small to medium sized
companies) continues to prepare financial statements according to tax laws. This fact plays an
important role in the determination of financial reporting quality in Turkey.
Furthermore, another economic factor that encourages manipulation of accounts in Turkey is the inflation.
Inflation rate in Turkey has been very high for many years; in 2004 it dropped to one-digit number as a
first time after nearly 30 years. Although inflation rate was high, inflation accounting was not allowed
in Turkey until 2004 and this caused fictitious earnings and increased tax burden. Governors, who have
been trying to win the battle with inflation and improve the economical conditions for many years, say
that increasing tax rates and economic austerity policies are unavoidable. Because of high inflation
rates, high tax rates, and difficult economic conditions, it is not easy for many companies to stay alive
and continue operations. In such environment, earnings manipulation may be deemed as ethical by the
company owners and workers (including accountants) who make a choice between bankruptcy and
staying alive. Therefore, the current paper sheds light on the ethical perceptions of earnings
manipulation between preparers and users and paves the way for standards setters towards developing
accounting standards that reduce earnings manipulation.
3. Literature review
According to the literature, there are mainly three types of earnings
manipulation; income smoothing (IS), earnings management (EM), and big bath accounting (BBA).
Income s m o o t h i n g h a s b e e n u s e d t o explain t h e m a n i p u l a t i v e b e h a v i o r o f
management to diminish the variability of income streams and to prevent sharp decreases and increases
in income figures (Atik 2009). According to Ashari, et al. (1994, p. 291), “income smoothing is
171
4. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 2, No 3, 2011
deliberate voluntary acts by management to reduce income variation by using certain a c c o u n t i n g
d e v i c e s .” Earnings management is used in the studies when it is hypothesized
that management tries to increase or decrease income figure with a specific purpose, such as
decreasing earnings before a managerial buyout (DeAngelo 1986), increasing share prices
before an initial public offering (Teoh, et al., 1998; Roosenboo et al. 2003), increasing bo nus
p a y me n t s ( Guidry, e t a l . 1999), d e c r e a s i n g tax p a y a b l e s (Keating, et al. 2000) and decreasing
debt contracting costs (Beatty and Weber 2003). Stolowy and Breton (2000, p.43) define big bath
accounting as large profit reducing write- offs or income-decreasing discretionary accruals in income
statements especially when a new chief executive officer (CEO) is appointed, so new CEO cleans the
accounts to be able to use it in the future to smooth earnings. Walsh et al. (1991) points out that in most
studies related to big bath accounting, the attention has focused on proving the incidence of large
write-offs.
On the other hand, there are three types of methods that are used to manipulate earnings, where
earnings manipulations can be made through (i) changes in operations, such as
changing time of an investment or an advertising campaign, (ii) changes in accounting
methods or estimates, such as changing the estimates of bad debts or changing depreciation method, or
(iii) fraudulent accounting practices, such as recording fictitious sales.
Bruns and Merchant (1990) provide a leading study on ethical perceptions of accounting
manipulations. They tried to explore the morals of short-term earnings management using a
questionnaire, composed of thirteen hypothetical operating and accounting manipulation methods of
earnings management situations. The survey was directed to 649 participants representing general
managers, finance managers, control and audit managers. The results reveal that operating
manipulations were judged more favorably than manipulations based on accounting methods, because
when operating manipulations are used, earnings numbers show what actually happened. Additionally,
earnings management was deemed more acceptable when (i) the result reduced earnings rather than
increasing it, (ii) the change was small, and (iii) it was made to meet an interim quarterly budget target
rather than to meet an annual budget target.
A number of research have employed the Bruns and Merchant (1990)’ questionnaire to test ethical
perceptions of earnings management. Among them are Fischer and Rosenzweig 1995, Clik man et
al. 2001, Geiger et al. 2003, Özer et al. 2003. Fischer and Rosenzweig 1995 surveyed
a sample of undergraduate students, MBA students and accounting practitioners. The
results are consistent with Bruns and Merchant 1990, where all the groups surveyed have a greater
tolerance for operating expense manipulations than the manipulations based on accounting methods.
Fischer and Rosenzweig 1995 commented that one of the possible reasons of these findings is that many
people think of ethics as a list of rules and assume that if something is not expressly prohibited, one
need not worry about ethics. Clikeman et al. 2001 tried to find out whether gender and national origin
influence accounting students’ perceptions of earnings management based on a
sample of 115 accounting students (54 male and 61 female) from six different countries (USA,
Hong Kong, Indonesia, Malaysia, Singapore and Taiwan). The findings did not support that gender and
culture significantly affect judgments on the ethical acceptability of earnings management. Geiger et al.
2003 extended Clikeman et al. 2000 study to test the impact of national culture o n ethical perceptions
of earnings management. They used a sample of 898 accounting students from
eight countries (Australia, Hong Kong, Indonesia, Malaysia, Singapore, Spain, UK and
USA). The findings suggested that individuals from different countries vary significantly in their
general perceptions regarding earnings management. However, there was only minimal association
between perceptions and the five cultural dimensions of Hofstede. Özer et al. 2003 examined ethical
judgments of undergraduate, MBA and PhD students, top executives and accounting staff
on earnings management. Results showed that significant variances exist among ethical judgments
concerning not only the type of manipulations but also within and between the groups of respondents.
Kaplan (2001a) conducted an experimental study on MBA students to understand whether an
individual’s ethically related judgments in response to earnings management activities are associated
172
5. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 2, No 3, 2011
with the individual’s role. The students were assigned one of three different roles: a shareholder, another
manager from the company who is unfamiliar with the manager engaging in earnings management
behavior or another manager from the company who is familiar with the manager engaging in earnings
management behavior. Results showed that individuals’ assigned role do not appear to make
differentiated ethically related judgments across different scenarios of earnings management as well as
individuals view any attempts to manipulate earnings are equally unethical.
Belski et al. (2008) extended prior studies that examined the ethics of earnings management by
further examining individuals' judgments of ethical acceptability related to specific earnings
management activities as they relate to the intent and type of the earnings management manipulation.
The experiment was conducted using business school students from a public university who responded
to six hypothetical vignettes involving the management of earnings. The study found that the intent of
the earnings management matters, where managers engaging in earnings management that was
deemed opportunistic or selfish were considered more unethical (or less ethical) than
earnings management behavior aimed at increasing firm contracting efficiency. Additionally, the
study found that the method of the manipulation was also important. Accounting estimate manipulations
was considered the least ethical followed by economic operating decisions. Changes in accounting
method were considered the least unethical.
Grasso et al. (2009) focused on the ethical perception of earnings management using a survey that
compares accounting students’ and professionals’ perception of the ethics of earnings management
before and after the accounting scandals that led to passage of the Sarbanes-Oxley Act of 2002 (SOX)
in USA. The 14-item version of Merchant’s earnings management survey instrument was used. The
results suggest that professionals and students in the era following the passage of SOX find earnings
management more questionable and less ethical than their pre-SOX counterparts. Overall, the
high-profile accounting scandals appear to have a higher effect than SOX on the perceived ethics of
earnings management. In addition, the results indicated that accounting
manipulations were perceived as significantly less ethical than operational
manipulations both pre- and post-SOX. On a relative basis, professionals and managers
judged accounting manipulations more harshly than students did, and students judged
operational manipulations more harshly than professionals and managers did.
Ng et al. (2009) carried out a pilot study on a sample of 262 final year undergraduate accounting
students, where they were asked to complete a questionnaire that tests the impact of moral intensity on
financial accountants’ propensity to manage earnings. Different ethical scenarios were presented to
respondents in the survey; each ethical scenario was designed in either high or low moral intensity form,
to reflect the importance of the moral dilemma at hand. The results indicated that three o f t h e f i v e
moral intensity c o m p o n e n t s h a v e a significant influence in the study. In addition, t- tests
indicated that the manipulation of high and low conditions within each scenario were also successful.
In Turkey, studies on ethical perceptions on earnings manipulation are lagging behind its counterpart in
developed countries, Kutay et al. (2005) surveyed managers in Turkey to elicit their perception on
creative accounting practices. The survey targeted managers of the companies that operate in the
Aegean Region of Turkey. Most of the respondents expressed that creative accounting practices
frequently take place and most of respondents believe that companies are benefiting from creative
accounting rather than having difficulties.
Atik (2009) noted that flexibility in selecting accounting methods sometimes motivates managers to
choose accounting methods or to change employed ones in order to increase, decrease or smooth
income figures. I ncome-smoothing behaviors of Turkish listed companies are detected through
empirical tests using discretionary accounting changes (DACs) between the years 1998 and 2003.
Financial institutions were excluded because of accounting and reporting differences. Parallel to
the study conducted by Moses (1987), income smoothing is accepted as one motivation
of DACs and the sample firms are classified as smoothers and non-smoothers by using Moses’
smoothing behavior index. Results showed that possible motivations of DACs are income smoothing,
173
6. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 2, No 3, 2011
economical characteristics of the periods in which the DACs are made, and the desire of Turkish firms
to have net incomes close to zero.
In the light of above discussion, it is noted that there is a lack in the literature generally as well as in
Turkey specifically, as an emerging market, on the ethical perceptions of preparers and users about
earnings manipulation. Majority of previous research have concentrated on ethical perceptions of only
one type of earnings manipulation; earnings management, based on the questionnaire developed by
Bruns and Merchant (1990). There is a need to e m p l o y new research instruments and methodologies
in this line of research, hence, this study tried to fill this gap by testing ethical perceptions of
“preparers” and “users” of financial information using a differently set questionnaire.
4. Research design
4.1 Research questions
The research questions of this study are:
1. To what extent ethical perceptions concerning the methods used for accounting manipulation
differ between preparers and users?
2. Does the method and type of earnings manipulation have different effects on ethical perceptions
of earnings manipulation?
3. Which of the methods; (i) changes in operations , (ii) changes in accounting methods and/or
estimates , (iii) fraudulent accounting practices, respondents believe to be more in Turkey in order
to change earnings?
4.2. Hypotheses development
4.2.1. Users and preparers ethical perceptions
In cases wh e r e parties have conflicting interests, their ethical perceptions on the same issues might
differ, as each party would evaluate the event based on his/her perspective. It has been noted that some
of the Turkish CPAs reported that although they have never manipulated financial information, earnings
manipulation aiming to decrease tax liability is unavoidable for many firms because tax rates are very
high and do not allow a living space for firms. On the other hand, it is not sound to expect that a tax
officer would also have similar opinions concerning manipulation made to decrease tax liability.
Therefore based on the intuition that users and preparers of financial information are two different
groups that have conflicting interests, the following hypothesis is developed.
H1: Users’ ethical perceptions concerning earnings manipulation are different from preparers’
ethical perceptions.
Furthermore, when one party thinks that manipulating earnings is an ethical (unethical) behavior,
then it may be expected that this party will also perceive the steps taken to manipulate
earnings as ethical (unethical). In order to understand whether users’ ethical perceptions
concerning the method used for manipulation are different from those of
preparers, the following second hypothesis is tested.
H2: Users’ ethical perceptions concerning the methods used for manipulation are different
f ro m t h o s e o f p re p a re r s .
4.2.2. Type of earnings manipulation
After reviewing the literature on earnings manipulations, we determined that studies that have tested the
ethical side of manipulations are rare. In general, studies were carried out to determine whether
companies manipulate earnings or not and what the possible outcomes of manipulative behaviors are.
However, although no comments have been raised about the ethics of earnings manipulation, some
studies (such as Hepworth 1953; Beidleman 1973; Moses 1987; Trueman and Titman 1988; Zucca and
Campbell 1992; Stolowy and Breton 2000) discuss the advantages of some types of
earnings manipulations. Among the advantages of income smoothing; (i) having
better relations with investors, creditors, workers, and so on, (ii) having higher security
174
7. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 2, No 3, 2011
prices and lower cost of capital, and (iii) creating more stable capital markets. Additionally, advantages
of big bath accounting are: (i) after having a big bath and cleaning the accounts, management
becomes able to smooth income figures in the future, and this is good for the
company, (ii) management may undertake a big bath to signal investors that bad times are behind
them and better times will follow. Therefore in the current study, it is expected that the type of earnings
manipulation would affect ethical perceptions. Hence, the following hypothesis is formulated:
H3 : Ethical p e r c e p t i o n s o n e a r n i n g s m a n i p u l a t i o n c h a n g e b y t h e t y p e o f
manipulation.
4.2.3. Methods of earnings manipulation
Earnings manipulation can be made through (1) changes in operations, (2) changes in accounting
methods or estimates, and (3) fraudulent accounting practices. Most of the previous
related research (Bruns and Merchant 1990; Fischer and Rosenzweig 1995; Elias 2002; Özer et al. 2003)
showed that operating manipulations were deemed less unethical than accounting manipulations and
frauds. Fraud was deemed as the most unethical case. Bruns and Merchant (1990, p.24) make the
following explanation related to this finding: “….operating manipulations were judged more favorably
because the earnings numbers are indicative of what actually took place. The operating manipulations
have changed reality and truth i s f a i r l y rep o r ted ”. Based o n t h e a b o v e d i s c u s s i o n , th e
f o l l o w i n g h yp o t he s is i s developed.
H4: Ethical perceptions on methods used for manipulation change by the type of the method.
4.2.4. Dominant method used in practice for manipulation of earnings
In order to understand the respondents’ thoughts about the frequency of occurrence of the three types of
earnings manipulation methods in Turkey, this study tests the following hypothesis:
H5: Fraudulent accounting is the dominant in practice to manipulate earnings.
4.3. Instrument
A questionnaire was developed for the purpose of this study that contains two sections; the first
section includes scenarios that describe the three different types of earnings
manipulation, which are income smoothing, earnings management and big bath accounting. In
developing the scenarios and the sub-statements, the paper inspires scenarios that have been discussed
in previous literature (for example, DeAngelo 1986; Bruns and Merchant 1990; Walsh et al. 1991;
Teoh et al. 1998; Healy and Wahlen 1999; Guidry et al. 1999; Stolowy and Breton 2000; Buckmaster
2001; Roosenboom et al. 2003; Beatty and Weber 2003,). The scenarios comprise seven scenarios;
the first scenario, describes an income smoothing case; the scenarios from two to six, describe earnings
management cases; and the seventh scenario, describes a big bath accounting case. The main
difference between the scenarios is the intent of management engaging in manipulative behavior.
Under each of the first six scenarios, there are three sub-statements that describe methods used to
manipulate financial information. The first sub-statements of each scenario describe manipulation
through changes in operations, the second sub-statements describe manipulations through accounting
method or policy changes, and the third ones describe fraudulent accounting practices. Respondents
were asked to express their opinions on the ethical acceptability of each scenario and sub-statement (or
methods used for manipulations) based on on a five-point Likert scale, that ranged from 1 “ethically”
to 5 “ not-ethically”.
Table 1 summarizes the scenarios that were used to test users’ and preparers’ perceptions towards
earning manipulation (questionnaire is available from the authors upon request).
(Table 1 here)
The second section of the questionnaire, is composed of five questions covering how often managers
change their operations, accounting methods/estimates and practice fraudulent accounting
in order to change the financial appearance of their firms. The respondents were asked to rate
their answers on each statement based on a five-point Likert scale ranging from
175
8. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 2, No 3, 2011
“strongly agree” to “strongly disagree” or “always” to “never”. An initial version of
the questionnaire was sent out to six accountants and four financial analysts working in Turkey, and
based on their feedback, minor modifications were made.
4.4. Sample selection
The questionnaire was directed to financial analysts who are working in financial
institutions and evaluate financial performances of the firms applying for loans, as well as to
portfolio managers and specialists who work for investment and portfolio
management companies were selected as representatives of financial information’ users,
to ensure awareness of the scenarios and related earnings manipulation types and methods.
Additionally, independent and company affiliated accountants representing the preparers of financial
information were subject to the survey. Due to difficulty in following the random method in selecting
the sample, where it is very hard to determine all the financial information users
and preparers in Turkey, representatives from the market were selected for this study.
The questionnaire was distributed mainly through e-mail, but to somewhere
delivered through mail as well as using a drop-off, pick-up method when convenient. There was no
check for the response rate where the number of users and preparers participating in the survey is not
counted. The completed questionnaires that were valid for analysis were 194; 82 from financial analysts
and portfolio managers, 56 independent and 56 company affiliated accountants.
5. Analysis of results and discussion
The survey tests the ethical perceptions of users and preparers on earnings manipulation in Turkey and
consensuses on the types and methods of manipulations and its effects on firms’ reports.
5.1. Reliability test
The questionnaire was tested for reliability and internal consistency using Cronbach’s alpha. This test
calculates the reliability coefficient (α) if one variable is removed from the original set of variables in the
questionnaire. This test helps determine the set of variables with high reliability
based on an α coefficient above 0.7. The coefficient of the original set of
questionnaire variables is judged reliable using this method with scores varying between 0.732 to 0.861
when one variable is removed from the questionnaire.
5.2. Awareness’s on earnings manipulation scenarios
Participants were requested to express and rate the degree to which they have awareness of scenarios
that can b e fo llo wed for ear nings ma n ip ula tio n . The answers of users and preparers to
each scenario and sub-statement of the scenarios were compared using t-tests. As mentioned before,
preparers (112 respondents) are company affiliated and independent accountants, and
users (82 respondents) are financial analysts and portfolio managers who work for financial
institutions. As for the fifteen of the total twenty-five questions, which are related to the scenarios, mean
scores of the answers of preparers are higher than mean scores of the answers of users. For example, as
shown in table 2, mean score of preparers is 2.552 against 2.549 of users for the first scenario and this is
the case for the reset of scenarios. The results reveal that those accountants deem most of the scenarios
and attempts under each scenario to earnings manipulation are more unethical than financial analysts
do. However, significant differences between preparers and users exist only for certain scenarios,
Scenario 1; 1.a, 1.b, 1.c, Scenario 2; 2.b, 2.c, Scenario 3; 3.a, Scenario 4; 4.a and Scenario 5; 5.c, as
follows:
(Table 2 here)
- The first scenario, describes an income smoothing case, where all types of attempts (changes in
operations, changes in accounting methods or estimates, and fraud) to smooth income were
deemed more ethical by financial analysts than accountants. Financial analysts
might have thought that smooth income figures are good in the long run.
176
9. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 2, No 3, 2011
- The second scenario, describes a managerial buyout situation where members of the board of
directors want to take over the firm that they work for. This scenario and the attempt, which was
changing depreciation method and recording next period’s prepaid expenses as current year’s
expenses, were evaluated significantly more unethical by accountants than financial analysts.
- According to the third scenario, question 3.a. describes a situation in which sales and promotion
expenses are decreased and advertisement project is postponed to next year. This is also
evaluated significantly more unethical by accountants. While evaluating the ethical acceptability
of the methods used for manipulation, accountants might have thought the benefits and harms of
the methods for firms in the long run.
- The fourth scenario, describes a situation in which a firm manipulates its financial information in
order to decrease cost of borrowing. Financial analysts evaluated this scenario significantly more
unethical than accountants did. This is not a surprising result. Financial analysts who responded
to this questionnaire are working in financial institutions and use financial information of firms
to make credit decisions. Because this scenario is about misleading them, they opposed
manipulative behavior more strongly.
- According to the fifth scenario, question 5.c, which describes a fraudulent accounting practice in
order to decrease tax payable, was also evaluated significantly more unethical by accountants.
On light of the above discussion, the firs hypothesis, Users’ ethical perceptions concerning earnings
manipulation are different from preparers’ ethical perceptions.
5.3. Impact of methods of manipulations on ethical perceptions
Analysis of preparers and users of financial information’ responses on their perceptions of the impact of
the method of earning manipulation on ethical perceptions were carried out. Therefore, this paper argues
that intents explained in the scenarios may affect the ethical perceptions related to the methods
explained in each sub-question. In other words, an operating manipulation might have been perceived
differently when it was made to smooth income rather than to decrease cost of borrowing or tax liability.
Therefore, it is necessary to replicate the t-test with the average scores of all questions related to each
scenario with all sub-scenarios.
As shown table 3, there are significant differences between the ethical perceptions of users and
preparers in scenarios one through four, in relation to income smoothing, management buyout and
increasing share prices before an IPO were deemed significantly less unethical by users.
(Table 3 here)
On the other hand, the fourth scenario, which is about trying to mislead banks, was deemed significantly
more unethical by users. Based on the above discussion, the second hypothesis, Users’ ethical
perceptions concerning the methods used for manipulation are different from preparers’ ethical
perceptions, is accepted.
5.4. Type of earnings manipulation
This study tests whether the type of earnings manipulation would affect ethical perceptions of preparers
and users. One-way ANOVA test is used to test preparers’ and users’ responses for the scenarios
presented. As shown in table 4, the results suggest that there are significant differences between the
scenarios. Scheffe test showed that there are four homogeneous subsets of the scenarios. The first
subset is composed of Scenarios 1, 7, 4 and 5, the second subset comprises scenarios 7, 4, 5 and 3, the
third one is composed of scenarios 5, 3 and 6, and the last one includes only the scenario 2.
(Table 4 here)
Ethical perceptions about income smoothing scenario are similar to big bath accounting scenario,
however different from earnings management scenarios. Additionally, income smoothing and big bath
accounting are deemed as the least unethical earnings manipulation. On the other hand, earnings
manipulations that are made for the benefits of managers are deemed as the most unethical ones. Hence,
the third hypothesis, Ethical perceptions on earnings manipulations change by the type of manipulation,
177
10. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 2, No 3, 2011
is accepted.
Further test is carried out based on the average scores of each scenario and related sub- statements.
As shown in table 5, there are three homogeneous subsets of the scenarios. The first subset is composed
of scenario 1 and 7, the second one is composed of scenarios 4, 3, 5 and 2, and the third one comprises
only the scenario 6. Again, ethical perceptions related to income smoothing and big bath accounting
are similar, but significantly different from the ethical perceptions related to earnings management
scenarios. This time scenario 6, which is about increasing bonus payments, is the most unethical
scenario.
(Table 5 here)
The methods used for manipulation were also compared with one-way ANOVA test. Results showed
that ethical perceptions about the three types of methods are significantly different from each other.
Manipulation through changes in operations was deemed as the least unethical one, followed by
manipulation through changing accounting methods and/or estimates. As expected, fraudulent
accounting practices were deemed as the most unethical.
5.5. Manipulation through changes in real operations
As shown in table 6, 46.12 % of the respondents think that manipulation through changes in real
operations take place “always” or “often, 47.67 % think that they happen “sometimes” and only 6.22 %
think they take place “rarely” or “never”. Results of T-test suggest that preparers and users think
similar about the frequency of the occurrence of this type of manipulation method.
(Table 6 here)
5.6. Manipulation through changes in accounting methods and/or estimates
As shown in table 7, 53.12 % of the respondents strongly agree or agree that manipulation through
changes in accounting methods and/or estimates take place in Turkey, 39.06 % of respondents
disagree o n the occurrence of such manip ulation, and only 7.81 % of respondents express
that such manipulation “rarely” or “never” take place. T-test results show that there are significant
differences between the answers of accountants and financial analysts about the frequency of
occurrence of the changes in accounting methods and/or estimates. A higher percentage of users think
that this type of manipulation method takes place more frequently.
(Table 7 here)
5.7. Manipulation through fraudulent accounting
As shown in table 8, 47.64 % of the respondents think that fraudulent accounting practices take place
“always” or “often”, 38.2 % think that they happen “sometimes” and only 14.14% think they take place
“rarely” or “never”. Again, there are significant differences between the answers of accountants and
financial analysts about the frequency of occurrence of frauds. Users think that managers engage in
fraudulent accounting more frequently.
(Table 8 here)
As the summary of tables 6, 7 and 8, we can say that most of the respondents think that all of the
methods to manipulate earnings are very common and practiced very often in Turkey.
6. Conclusion
Existing related literature examines mainly the ethical acceptability of earnings management practices
and perspectives of accountants, accounting major students and academics. Other types of earnings
manipulation such as income smoothing and big bath accounting, and perspectives of other parties such
as users, have been ignored by m a j o r i t y o f p r e v i o u s research. This study aimed to fill this gap.
The ethical perception differences of financial analysts and accountants about three types of
earnings manipulations were examined by using a questionnaire. The scenarios in the
questionnaire were developed based on the existing literature and included the information about the
purposes of management and three types of attempts to realize these purposes.
178
11. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 2, No 3, 2011
The findings of this study reveal that users o f a c c o u n t i n g i n fo r ma t i o n evaluate most of the
scenarios and attempts more unethical than preparers do. This is an interesting result because
manipulations and frauds harm mostly users, so it was expected that users would oppose manipulative
behavior more severely.
Significant differences exist between ethical perceptions of users and preparers related to scenario 1
(income smoothing), scenario 2 (management buyout), scenario 3 (manipulation before an IPO), and
scenario 4 (misleading banks). Accountants oppose the first three scenarios more strongly;
however, financial analysts assess the fourth scenario as more unethical.
Additionally, statistical results revealed that the respondents think that the three types of manipulation
tools significantly different from each other. As it is expected, the most unethical tool is
fraudulent accounting, then manipulation through accounting changes and manipulation through
operational changes. Here, some questions arise. Although accountants think that earnings manipulation
and fraud are unethical, what factors motivate them to behave unethical? Might some factors be high tax
rates, fear of losing their jobs, or being evaluated and paid according to financial results? Future research
may concentrate on these subjects.
For the preparation and presentation of reliable and useful financial information, there are many
responsible parties other than accountants, such as governmental agencies, owners or investors o f
f i r m s , a n d t o p m a n a g e r s . Each o f t h e s e p a r t i e s s h o u l d t r y t o c r e a t e a n environment in
which accountants feel free to behave according to their rights and wrongs. Additionally, accounting
ethics education will help accountants to develop better ethical rules while deciding on what is wrong
and right. Therefore, improving the quality of accounting ethics education and making it widespread is
very important in Turkey.
7. Limitations of the Study
The most important limitation of this study is the small sample size. Although there may tho usa nd s of
financial information users and preparers, findings of the study is derived based on the answers of only
194 respondents. The second limitation is that the responses were not anonymous. The respondents
delivered the filled questionnaire through e- mail. Although they were informed that the answers would
be kept strictly confidential, their answers might have been different if the research was web-based.
Furthermore, concerning the scenarios described in the questionnaire, the intent behind the earnings
manipulation was explained. However, in the real world, it is impossible to understand real intents of a
firm when it changes its operations and/or its accounting methods. Therefore, in a real operating
environment, without knowing the real purpose, making ethically related judgments will be very
difficult.
References
Ashari, N. H. C.,Koh, S. L.,Tan,W.,& Wong, H. (1994). Factors affecting income smoothing among listed
companies in Singapore. Accounting and Business Research, 24, 96, 291-301
Atik, A. (2009). Detecting income-smoothing behaviors of Turkish listed companies through empirical
tests using discretionary accounting changes. Critical Perspectives on Accounting, 20, 591-613
Beatty, A.,& Weber,W. (2003).The effects of debt contracting on voluntary accounting method changes. The
Accounting Review, 78, 1, 119-142
Beidleman, C. R. (1973). Income smoothing: The role of management. The Accounting Review, 48, 4, 653-668
179
12. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 2, No 3, 2011
Belski, W. H., Beams, J. D.,& Brozovsky, J. A. (2008). Ethical judgments in accounting: An examination on
the ethics of managed earning. Journal of Global Business Issues, 2, 2, 59-68
Bruns, W. J., & Merchant, K.A. (1990).The dangerous morality of managing earnings. Management
Accounting, 72, 2, 22-25
Buckmaster, D. A. (2001). Development of the income smoothing literature 1893-1998.1stEdition, The
Netherlands.
Clikeman, P. M.,Geiger, M.A.,& O’Connell, B.T. (2001). Students perceptions of earnings management: The
effects of national origin and gender. Teaching Business Ethics, 5, 4, 389-410
DeAngelo, L. E. (1986). Accounting numbers as market valuation substitutes:A study of management buyouts
of public stockholders. The Accounting Review, 61, 3, 400-420
Elias, R. Z. (2002). Determinants of earnings management ethics among accountants. Journal of Business
Ethics, 40, 1, 33-45
Fischer, M.,& Rosenzweig, K.(1995).Attitudes of students and accounting practitioners concerning the
ethical acceptability of earnings management. Journal of Business Ethics, 14, 6, 433-444
Geiger, M. A., O’Connell, B.T.,Clikeman, P.M.,Labru, E.O.,Witkowski, K.,&Basioudis, I. (2003).A
cross-country comparison of perceptions of manipulation of reported earnings. working paper, Available:
www.aaanz.org/web2004/papers/oconnellb- ETH.pdf )January 15, 2011).
Grasso, L. P., Tilley, P.A.,& White, R. A. (2009). The ethics of earnings management: Perceptions after
sarbanes-oxley. Management Accounting Quarterly, 11, 1, 12-29
Guidry, F., Leone, A. J., & Rock, S. (1999) Earnings-based bonus plans and earnings management by
business-unit managers. Journal of Accounting and Economics, 26, 1, 113-142
Healy, P. M.,&Wahlen, J. M. (1999).A review of the earnings management literature and its implications for
standard setting. Accounting Horizons, 13, 4,365-383
Hepworth, S. R. (1953). Smoothing periodic income. The Accounting Review, 28, 1, 32-39
Kaplan, S.E. (2001a).Ethically related judgments by observers of earnings management.
Journal of Business Ethics, 32, 4, 285-298
Kaplan, S. E. (2001b). Further evidence on the ethics of managing earnings: An examination
180
13. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 2, No 3, 2011
of the ethically related judgments of shareholders and non- shareholders. Journal of
Accounting and Public Policy, 20, 1, 27-44
Keating, A. S.,& Zimmerman, J. L.(2000). Depreciation-policy changes: Tax, earnings management, and
investment opportunity incentives. Journal of Accounting and Economics, 28, 3, 359-389
Kutay, N., Tükenmez, M., &Akkaya, C. (2005). Creative accounting: In the view of ethics, past experiences
and future perspectives. Paper presented at the 2nd Annual International Accounting Conference, 10-12
November, Istanbul, Turkey.
Moses, O. D. (1987). Income smoothing and incentives: Empirical tests using accounting changes. The
Accounting Review, 11, 2, 358-377
Ng, J., White, G. P., Lee, A.,& Moneta, A. (2009). Design and validation of a novel new instrument for
measuring the effect of moral intensity on accountants propensity to manage earnings. Journal of Business
Ethics, 84, 3, 367–387
Özer, G., Alpkan, L.,& Aren, S. (2003).Differences in judicial ethics of profit management practices.
Journal of Marmara University, 10, 20, 97-107
Paese, P. W.,&Yonker, R. D. (2001). Toward a better understanding of egocentric fairness judgments
innegotiations.The International Journal of Conflict Management, 12, 2, 114-131
Roosenboom, P., Goot, T.,&Mertens, G. (2003). Earnings management and initial public offerings: Evidence
from the Netherlands. The International Journal of Accounting, 38, 3, 243-266
Stolowy, H., & Breton, G. (2000).A framework for the classification of accounts manipulations.
Working paper No. 708/2000 HEC Accounting & Management Control, June 28, Available:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=263290 (September 10, 2010)
Teoh, S. H., Welch, I, &Wong, T. J. (1998).Earnings management and the underperformance of seasoned
equity offerings. Journal of Financial Economics, 50, 1, 63-99
Trueman, B., Titman, S. (1988).An explanation for accounting income smoothing. Journal of Accounting
Research,26, 127-139
Walsh, P., Craig, R.,&Clarke, F. (1991). Big bath accounting using extraordinary items adjustments:
Australian empirical evidence. Journal of Business Finance and Accounting, 18, 2, 173-189
Zucca, L. J., & Campbell, D. R. (1992).A closer look at discretionary write downs of impaired assets.
Accounting Horizons, 6, 3, 30-41
181
14. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 2, No 3, 2011
Table 1. The different scenarios of earnings manipulation
Earnings Scenario
Manipulation
(the purpose or intent of The Method used for manipulation
Type management)
Income 1. To have smooth income 1.a. Changing real operations
Smoothing figures over the long run
1.b. Changing accounting methods or estimates
1.c. Fraudulent accounting
Earnings 2. To take over the firm 2.a. Changing real operations
Management (Management buyout case)
2.b. Changing accounting methods or estimates
2.c. Fraudulent accounting
3. To increase share prices 3.a. Changing real operations
before an initial public offering
3.b. Changing accounting methods or estimates
3.c. Fraudulent accounting
4. To decrease cost of borrowing 4.a. Changing real operations
4.b. Changing accounting methods or estimates
4.c. Fraudulent accounting
5. To decrease taxes payable 5.a. Changing real operations
amount
5.b. Changing accounting methods or estimates
5.c. Fraudulent accounting
6. To increase bonus payments 6.a. Changing real operations
of top executives
6.b. Changing accounting methods or estimates
6.c. Fraudulent accounting
Big Bath 7. To benefit from the 7. Changing accounting methods or estimates
Accounting opportunity of blaming previous
(Method is indicated in the scenario)
management for the poor results
of the current year
182
16. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 2, No 3, 2011
Table 3: Comparison of mean scores of the scenarios between the user and the preparer groups
Group N Mean Std. Dev. t-statistics
Scenario 1 Preparers 112 3.209 1.000 3.165*
Users 82 2.818 0.721
Scenario 2 Preparers 112 4.021 0.907 2.183**
Users 82 3.721 0.991
Scenario 3 Preparers 112 3.428 0.995 1.776***
Users 82 3.184 0.873
Scenario 4 Preparers 112 2.861 0.914 -1.684***
Users 82 3.098 1.031
Scenario 5 Preparers 112 3.062 1.036 0.223
Users 82 3.030 0.864
Scenario 6 Preparers 112 3.800 0.948 -0.214
Users 82 3.829 0.888
Scenario 7 Preparers 112 2.896 1.462 1.363
Users 82 2.595 1.384
* Significant at 0.01 level ** Significant at 0.05 level *** Significant at 0.1 level
Table 4. Comparison of the ethical perceptions concerning the type of earnings manipulation
ANOVA F = 28.223 Sig. = 0.000
Scheffe Test Results
N Subset for alpha = .05
Scenario 1 2 3 4
1 (IS) 167 2.551
7 (BBA) 170 2.765 2.765
4 (EM) 153 2.863 2.863
5 (EM) 153 3.105 3.105 3.105
3 (EM) 152 3.184 3.184
6 (EM) 150 3.640
2 (EM) 163 4.239
Means for groups in homogeneous subsets are displayed.
a.) Uses Harmonic Mean Sample Size = 157.932.
b.) The group sizes are unequal. The harmonic mean of the group sizes is used. Type I error levels are not
guaranteed.
184
17. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 2, No 3, 2011
Table 5. Comparison of the ethical perceptions concerning the type of earnings manipulation- average
score
ANOVA F = 76.910 Sig. = 0.000
Scheffe Test Results
N Subset for alpha = .05
Scenario 1 2 3
1 194 2.614
7 170 2.765
4 194 3.182
3 194 3.253
5 194 3.467
2 194 3.491
6 194 4.285
Means for groups in homogeneous subsets are displayed.
a.) Uses Harmonic Mean Sample Size = 190.165.
b.) The group sizes are unequal. The harmonic mean of the group sizes is used. Type I error levels are not
guaranteed.
Table 6. Opinions on occurrence of changes in operations
Users Preparers
All Respondents
Freq. % Freq. % Freq. %
Always 7 3.63 1 1.22 6 5.41
Often 82 42.49 41 50.00 41 36.94
Sometimes 92 47.67 36 43.90 56 50.45
Rarely 11 5.70 4 4.88 7 6.31
Never 1 0.52 0 0 1 0.90
Total 193 100 82 100 111 100
Missing 1 0 1
Total 194 82 112
Table 7. Opinions on occurrence of changes in accounting methods/estimates
185
18. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol 2, No 3, 2011
Users Preparers
All Respondents
Freq. % Freq. % Freq. %
Strongly agree 16 8.33 6 7.32 10 9.09
Agree 86 44.79 47 57.32 39 35.45
Neither agree nor disagree 75 39.06 25 30.49 50 45.45
Disagree 11 5.73 4 4.88 7 6.36
Strongly disagree 4 2.08 0 0 4 3.64
Total 192 100 82 100 110 100
Missing 2 0 2
Total 194 82 112
Table 8. Opinions on occurrence of fraudulent accounting practices
Users Preparers
All Respondents
Freq. % Freq. % Freq. %
Always 15 7.85 8 10 7 6.31
Often 76 39.79 43 53.75 33 29.73
Sometimes 73 38.22 27 33.75 46 41.44
Rarely 16 8.38 2 2.5 14 12.61
Never 11 5.76 0 0 11 9.91
Total 191 100 80 100 111 100
Missing 3 2 1
Total 194 82 112
186