Are accounting standards understandable?

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Abstract

There is concern that accounting standards are difficult to understand by those who use them. We investigate factors that enhance and inhibit the ability of the standards' users to comprehend their meaning and requirements. Readability statistics reveal that Australian accounting standards are difficult or very difficult to read. Interviews with experienced financial statement preparers and auditors from the for-profit, not-for-profit private, and public sectors reveal that ‘understandability’ is a function of many inter-related factors, only some of which relate to how standards are written and presented. We offer recommendations to standards-setters about how the understandability of standards could be improved.

A Study on Dynamics of Food Inflation in India

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The Indian Economic Journal, Volume 71, Issue 5, Page 783-804, October 2023.
The role of food prices is vital for people living in low- and middle-income countries like India as they spend a high share of their income on food items. As the earlier literature suggests, there can be interlinkages between food prices, non-food prices and rural wages. Therefore, this study’s first objective was to empirically test the relationship between (1) food prices and non-food prices based on consumer price index (CPI). The second objective of the study was to test the relationship between (2) food prices based on both CPI and WPI (wholesale price index) and rural wages (agricultural and non-agricultural wages). The time series econometric technique for monthly data available from January 2015 to March 2020 is used to arrive at the findings. The study found no long-run relationship between food and non-food prices. Also, no long-run or short-run relationship is found between food prices and rural wages. However, the impulse response function graphs suggest that food prices and non-food prices are affected by their own lagged prices, and short-run transmission runs from non-food prices to food prices in opposite directions in both urban and rural areas of India. Since we find that food prices are affected by their own lagged prices and non-food prices in the short-run only, the interest rate policy of RBI, which is supposed to influence the prices of non-food sectors faster, has limited capacity to influence the prices of food sectors in the long-run.JEL Codes: E4, E6, 02

An examination of self‐efficacy and sense of belonging on accounting student achievement

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Abstract

Student success is impacted by many factors, both individual and institutional. We examine Tinto's (Journal of College Student Retention: Research, Theory & Practice, 2017, 19, 254) theoretical model of achievement by surveying students enrolled in an introductory accounting subject (n = 132) at a New Zealand university twice and relating their responses to their levels of achievement in the subject. We find that both self-efficacy beliefs and a sense of belonging to the university are significantly related to academic success. This study builds on the body of work examining non-cognitive factors in accounting education and provides practical implications for accounting educators.

Investigating the Determinants of Foreign Institutional Investor Inflows in Indian Equity Market: An Application of the Augmented Autoregressive Distributed Lag Bounds Testing Approach

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The Indian Economic Journal, Volume 71, Issue 5, Page 805-819, October 2023.
The purpose of this study was to investigate the determinants of foreign institutional investors (FIIs) in the Indian equity market. For this purpose, the study has chosen country-specific push and pull factors for the period from January 2011 to December 2019. The beginning of the concerned period is marked by increased FII flows in the Indian market after the global financial crisis of 2008. The study has identified the stock market index of India, interest rate differential between India and the USA, inflation rate, and exchange rate as possible determinants of FII inflows in India and used the augmented autoregressive distributed lag (ARDL) approach based on the statistical properties of variables selected. The study found that in the long-run Indian stock market index, appreciating exchange rate, inflation, and interest rate differential are positively related to FII inflows in the Indian equity market whereas the US stock index is negatively related to FII inflows in India.JEL Codes: F30, G1

The interplay of episodic power in enabling and coercive budgetary designs in universities: A case study

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Abstract

This paper explores how power exercised at the individual level within existing power relations in a university influences its enabling and coercive budgeting forms. A qualitative case study in a Sri Lankan university involved interviews and document analysis. Findings demonstrate the dominance of coercive controls over enabling controls in the university due to the power and influence of dominant individuals stemming from ongoing struggles among those pursuing diverse interests and strategic actions. We contribute to the literature by demonstrating how power is mobilised by actors and its impact on the variations of the enabling and coercive budgetary forms and practice.

Need for Policy Reforms in the Aftermath of COVID-19? An Analysis of Indian Pharmaceutical Sector

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The Indian Economic Journal, Volume 71, Issue 5, Page 820-844, October 2023.
Acknowledging coronavirus disease 2019 (COVID-19) as a persistent health challenge in the foreseeable future, there is a need to evaluate how India can emerge as a major exporter in this category. This analysis with 41 COVID-19-related pharmaceutical products indicates that India currently lacks comparative advantage in several categories, for example, active pharmaceutical ingredient, medical equipment and devices, disinfectants and sterilisation products, and personal protective equipment. The country, however, enjoys a comparative advantage in manufacturing vaccines and formulations. Interestingly, India imposes higher tariffs and non-tariff measures (NTMs) on both sets of products, irrespective of the comparative advantages. Additionally, the article identifies important operational, logistic, and financial issues that can improve the efficiency of the pharmaceutical supply chain (PSC), which in turn can ensure smoother availability of these pharmaceutical products in the domestic market. While the operational issues underline the need for better coordination between multiple stakeholders, the logistic bottlenecks call for a general improvement at the infrastructure level. The financial issues correspond to infrastructural bottlenecks, transport costs and resulting cost escalation. The article concludes that the policymakers need to focus on the reduction of import barriers and improve the PSC to ensure the easier availability of COVID-19 medicines, vaccines, and related products.JEL Codes: F13, F15, I18, O25

Group budget‐based bonus scheme and group cooperation: The role of social value orientation, goal alignment, and group identity

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Abstract

In a workgroup setting, we use a quasi-experiment to examine whether and why proself rather than prosocial employees benefit more from high group identity to foster group cooperation. We validate the goal-transformation hypothesis that proself rather than prosocial employees benefit more from high group identity. Consistent with the goal-expectation hypothesis, we show that goal alignment explains why proself rather than prosocial employees benefit more from high group identity. The main implication of our results is that, when group identity is high, proself employees reinforce their strategic behaviour to cooperate with the group to obtain higher individual payoffs through greater goal alignment.

CFO facial beauty and bank loan contracting

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Abstract

We examine whether the facial attractiveness of borrower firms' chief financial officers (CFOs) influences bank loan contracting terms. Using a machine learning-based algorithm to measure facial attractiveness, we document that firms led by CFOs with greater facial attractiveness receive more favourable loan contracts from their banks. We further show that the relation between CFO facial attractiveness and bank loan contracting terms is significantly influenced by the characteristics of both the borrower and the lender. Collectively, our results suggest that loan contracting is not an entirely rational process, as the ‘beauty premium’ is at least partly driven by taste-based discrimination.

The disciplinary role of unsuccessful takeovers and changes in corporate governance

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Abstract

This study examines if unsuccessful takeovers trigger the replacement of directors and changes in other governance attributes and result in improvements in target firm performance. Using an Australian sample this study finds that following failed bids, target firms are more likely to remove directors and experience an increase in director ownership, board independence, and block ownership. In contrast, target firm director expertise and prestige decrease following failed bids. We also find that post-bid accounting and stock performance of targets are largely unrelated to changes in governance attributes after the unsuccessful takeover.