• The Journal of Asian Finance, Economics and Business
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• v.8 no.4
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• pp.105-112
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• 2021

This study aims to find empirical evidence of the effect of increasing income on the potential transfer of wealth from manufacturing companies that go public to stakeholders. Earnings management with an accrual approach with the Modified Jones model is an identifier of the availability of earnings management practices, without paying attention to both positive and negative symbols. The interpretation of the results of the discretionary accrual measurement between positive and negative symbols has different meanings. Positive discretionary accruals indicate that management uses income-increasing techniques. Meanwhile, negative discretionary accruals indicate that management uses income-reducing techniques. Income-increasing techniques tend to be viewed as opportunistic behavior of managers. This study used 111 data from manufacturing companies listed on the IDX (Indonesia Stock Exchange) from 2015-2018. Path analysis is used to test the hypothesis. The results of this study are in line with the point of view of management strategy, increasing income is used as a way to transfer potential welfare from the company to stakeholders. Social welfare (tax) and managerial remuneration are proven to be mediators in increasing the effect of increasing income on future company value. Further research can complete the potential welfare transfer against the shareholders related to income-increasing strategy.

• Journal of Navigation and Port Research
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• v.45 no.3
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• pp.173-180
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• 2021

Although accounting is one of the core fields of corporate management, few studies have reported accounting phenomena involving shipping companies. In addition, although financial reporting is very important to shipping companies that use several financial tools such as ship finance and financial lease, it is difficult to identify studies investigating shipping companies' financial reporting, especially their earnings management. The purpose of this study is to analyze accrual earnings management behavior of shipping companies. Companies with high debt ratios and net losses are known to have incentives for earnings management. Due to the nature of the industry, shipping companies have a high debt ratio and often report net losses. Accordingly, shipping companies are expected to engage in substantial earnings management. Based on the analysis of KOSP I companies listed on the Korea Exchange from 2001 to 2020, it was found that shipping companies are engaged in higher levels of earnings management than non-shipping companies. Discretionary accrual was used as a proxy variable for earnings management. Discretionary accrual was measured using the modified Jones model of Dechow et al. (1995) and the performance matched model of Kothari et al.(2005). In this study, significant results were derived by comparatively analyzing the earnings management practices, which is one of the major accounting behaviors of shipping and non-shipping companies. Stakeholders such as external auditors, investors, financial institutions, analysts, and government authorities need to be aware of the earnings management behavior of listed shipping companies during their external audit, financial analysis, and supervision. Finally, listed shipping companies must conduct stricter accounting based on accounting principles.

• Asian Journal of Business Environment
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• v.11 no.4
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• pp.5-16
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• 2021

Purpose: This study aims to investigate the impact of auditor-client traffic convenience on accrual -based and real earnings management of the client firms. Research design, data and methodology: Using a sample of firms listed in Shanghai and Shenzhen Stock Exchanges over the period of 2007 to 2018, this paper empirically investigates the association between auditor-client traffic convenience and earnings management. We use three measures of auditor-client traffic convenience: railway traffic convenience, expressway traffic convenience, and air traffic convenience. The accrual-based earnings management is measured by abnormal accruals estimated by industry and year using the Modified Jones Model. Results: Findings indicate that traffic convenience is conducive to detecting and restraining positive accrual earnings management and real earnings management. After changing the measurement of independent variable and dependent variable, including potential omitted variables, the results are statistically unchanged. Further, the research shows that traffic convenience can not only improve audit quality, but also lead to higher fee premiums. Auditors didn't share with clients the cost reduction benefits caused by traffic convenience. Conclusions: Traffic convenience provides auditors with easy access to the client firms, alleviating the information asymmetry and improving corporate earnings quality. The findings have implications for regulators, audit practitioners and stakeholders.

• Journal of Navigation and Port Research
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• v.28 no.7
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• pp.593-600
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• 2004

This paper aims to introduce budgetary accounting system for not-for-profit organizations related to maritime and fishery in Korea Especially, these not-for-profit organizations related to maritime and fishery should design and maintain the original accounting systems because they have some objectives and activities of organizations different to for-profit organizations. Currently, while the accounting for not-for-profit units is difficult to understand, this case study of budgetary accounting system for not-for-profit organizations related to maritime and fishery as KSSIT may be great help to them by reflecting all administrative activities of these units and offering objectively and fairly financial position and phase or operating results. This paper concentrate primarily upon this subject about double-entry accounting system to be introduced in order to improve budgetary systems of not-for-profit organizations. These units are governmental organizations as public corporations and bodies corporate and politic. Therefore, not-for-profit organizations related to maritime and fishery should be applied to regulations of the Governmental Accounting Standards Board. GASB has the authority to establish standards of financial reporting for all units of government. With conclusion, this paper reviewed a case of double-entry system for budgetary accounting, and examined a process of financial reporting in not-for-profit organizations. Through this paper, the comprehensive understanding of budgetary accounting system for not-for-profit organizations as KSSIT would be promoted.

• The Journal of Economics, Marketing and Management
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• v.12 no.3
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• pp.13-22
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• 2024

Purpose: While there has been extensive research on discretionary accruals (hereafter, 'DA') and accounting conservatism, interpretations have varied among researchers depending on how discretionary accruals are determined as proxies. This study investigates the relationship between discretionary accruals (DA) and accounting conservatism, focusing on the distinctions between signed DA and absolute DA. Research design, data and methodology: Using financial data from companies listed on the KOSPI and KOSDAQ markets from 2010 to 2020, we employ regression analysis to explore how signed and absolute DA impact accounting conservatism. This approach allows us to parse out the effects of positive versus negative discretionary accruals systematically. Results: Our findings indicate a divergent impact of DA on accounting conservatism. Specifically, in cases of negative DA, an increase in DA corresponds with heightened accounting conservatism. Conversely, when DA is positive, increases in DA do not exhibit a significant relationship with changes in accounting conservatism. These effects suggest that the nature of DA-whether it represents upward or downward earnings adjustments-critically influences its relationship with conservatism. Conclusions: The results elucidate the nuanced role of discretionary accruals in influencing accounting conservatism. The decrease in accounting conservatism associated with absolute increases in DA appears primarily driven by groups with downward earnings adjustments. This suggests that as negative DA diminishes toward zero, accounting conservatism intensifies, whereas positive DA does not have a parallel effect.

• Journal of Distribution Science
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• v.18 no.9
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• pp.5-11
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• 2020

Purpose: We sought to investigate the operation status of internal accounting control systems in the distribution and service industries and verify whether investing in internal accounting personnel significantly influences the quality of the companies' financial reporting. Research design, data and methodology: We identified descriptive statistics and performed a univariate analysis. Furthermore, a regression analysis verified the impact of investing in internal accounting personnel on the absolute value of discretionary accruals, a proxy for financial reporting quality. Results: Distribution and service companies allocated a significantly higher number of accountants to their internal accounting control systems than companies in other industries. We also confirmed that the absolute value of discretionary accruals significantly decreased as the average working experience of internal accounting personnel in distribution and service companies, in months, increased. Conclusions: In this study, we confirmed that distribution and service companies are devoting efforts to establishing internal accounting control systems and found that financial reporting quality is more effectively controlled as companies allocate more experienced personnel in their internal accounting control system.

• The Journal of Asian Finance, Economics and Business
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• v.9 no.4
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• pp.39-52
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• 2022

This study examines whether accounting conservatism can support real earnings management by reducing accrual earnings management techniques. The net impact of conservative reporting on earnings management is also analyzed. It is assumed that moderating the role of conservative financial reporting during uncertainty can mitigate earnings management practices. For our analysis, 5354 firm-year observations for the period 2007-2020 of nonfinancial companies listed on the Pakistan Stock Exchange are applied. To measure conservatism in the non-financial sector of Pakistan, Khan and Watts' (2009) model is used to provide evidence that conservatism is a way to restrict earnings management during uncertainty. "Prospector" and "Defender" Business strategy is applied for measuring firm-level uncertainty. To measure accrual earnings management Modified Jones (1995) model and Dechow and Dichev (2002) approach and Kasznik (1999) model are applied, and for real earnings management Roychowdhury model is applied which follows three approaches to measure real earnings management i.e. cash flow manipulation, Overproduction, and discretionary expenses. The estimations support our hypothesis by providing statistically significant proof that conservative financial reporting in a developing economy like Pakistan may be used to overcome the net impact of earnings management during uncertainty. Our results provide critical and practical implications for investors, researchers, and standard setters.

• Management & Information Systems Review
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• v.13
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• pp.99-125
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• 2003

The purpose of this study is to improve local government accounting system for value creation. In order to achieve this object: First, improvement of public finance policy can be obtained through connection of policy and estimate, and evaluation of soundness and rationality of tax system. Second, innovation of appropriation is achieved through effective division of cost, efficient division of budgetary resources and perfect accrual accounting. Third, a performance report must include accurate performance measures and performance indicators, for its effect is linked to public finance policy. Fourth, general principles of local government accounting must include significance, reliability, consistency with user concepts, relevance, understandability and comparability for financial reports.

• The Journal of Industrial Distribution & Business
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• v.8 no.1
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• pp.33-39
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• 2017

Purpose - The main purpose of the current study is to examine the impact of accounting information quality and information asymmetry on the underinvestment phenomenon among the listed companies on the Tehran Stock Exchange (TSE). Research design, data, and methodology - The population includes 94 firms selected through systematic sampling. The data is collected from the audited financial statements of the firms provided by TSE's website from 2010 to 2015. Accounting information quality and information asymmetry is considered as independent variables, and their impact is examined on the dependent variable (underinvestment). Results - The statistical results, based on data collected from 94 listed companies on the TSE during 2010-2015, revealed positive impact of accounting information quality and positive impact of information asymmetry on underinvestment. There was a significant relationship between accrual quality (AQ) and underinvestment, and spread and underinvestment. The results also showed that information asymmetry is the main factor in the creation underinvestment. Conclusions - Findings of this article can assist accounting researchers and theoreticians in comparing Real world facts with hypotheses developed with respect to accounting information quality, information asymmetry and underinvestment. However, the results of fuzzy regression analysis indicate significant relationships between the independent variable except underinvestment.

• Journal of Digital Convergence
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• v.17 no.9
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• pp.507-516
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• 2019

The purpose of this study is to propose a policy for accounting practice education system to improve the national credibility. The biggest reason why the national credibility is the lowest is that the auditor's free appointment system is the next, and the education on accounting is not done properly. This study is a bibliographical study that examines the previous studies on the improvement of accounting audit and accounting education in Korea, various public hearings, press releases, and government policy data, and summarizes. The way to increase accounting transparency is to improve the audit system and to guarantee accounting practice education. Since the subjects of practical education belong to all areas such as private and government, it is intended to propose the establishment of accounting professional education institution, called (tentatively) 'Accounting Training Institute'. Through this, it is expected that the practical and professional training will improve accounting transparency and contribute to the improvement of national credibility.