One of the critical issues that face the accounting profession today involves choosing among alternative accounting information modes. This dissertation provides comparative empirical evidence on the predictive power of accrual-based accounting signals versus cash-flow accounting signals versus both of these signals jointly. The empirical hypotheses compare the degrees of association between the market evaluative criteria, market beta and security price behavior, and the different accounting signals. The research methodology employed includes the following. 1. Market beta and changes in security prices are used as the evaluative criteria. 2. Two regression models are developed and used to test the predictive power of the alternative accounting signals. 3. Several specifications for each model are used. These specifications are simple regression, multiple regression, interaction effect, partial correlation, incremental correlation, and time series and cross sectional analysis.

Magister Legum - LLM / South Africa

Sustainability is becoming a more important topic, not just in terms of the environment but also through social and governmental aspects. There are different views on what responsibility firms should take and what their incentives might be. Companies get more pressure from society to perform activities related to Corporate Social Responsibility (CSR) and not just focus on maximizing wealth for their shareholders. Thus, creates incentives to manipulate their earnings, either by managing their accruals (AEM) or by performing real activity earnings management (REM), to please all parties. On the other hand, firms who already manipulate their earnings have motives to increase their participation in CSR activities as a cover to hide their performance of Earnings Management (EM). There are plenty of previous studies investigating the relationships between CSR and EM, but with contradicting results. Some have tested a one-way relationship while others have evaluated a bi-directional relationship. This thesis has provided evidence that there exists a relationship between CSR and EM, where AEM (REM) has a negative (positive) effect on CSR while CSR has a negative (positive) effect on AEM (REM). Also, there is a significant difference between their effects in both directions of the relationship. Thereby, the proposed research question is answered: ‘’What are the relationships between Corporate Social Responsibility and Earnings Management?’’. Firms who are highly engaged in CSR care about all of their stakeholders and they are ethical, therefore they manipulate their accruals less. But they can also have increased agency issues and therefore they perform more real activity earnings management. From the other perspective, firms who engage in accrual-based earnings management are likely to have an overconfident CEO who wants to send out the right signals but does not feel the need to hide their actions behind CSR activities. Moreover, the managers that execute real activity earnings management might feel the need to not get detected and therefore they hide their manipulations behind CSR activities. These findings are both aligned and contradicting several theories depending on what direction of the relationship one is looking at. However, the legitimacy theory has been found to have a large impact in both directions of the relationship, all companies feel the urge to either be legitimate, or appear as it. This is a quantitative cross-sectional study including 5.026 observations from European companies. The authors are aligned with the positivist paradigm and the study takes a deductive approach. The statistically significant results from OLS regression with fixed effects are backed up and compared to theories and previous studies within the area.

The topic of intangible assets in relation to earnings management has been a debated subject for a long time. Different aspects of intangible assets have been thoroughly examined in relationship to earnings management by scholars over the years whether it’s about goodwill from business acquisition, recognition of intangible assets, timely impairments and so on. The authors found from their literature review that there was a knowledge gap when it came to intangible assets as most studies have focused on one part of the intangible assets and that has usually been goodwill. The theoretical framework consists of different theories which are explained and discussed in how they can relate to and give incentives for engaging with earnings management. This can range from opportunistic managers trying to reach bonus goals to pressure from within the company or from other stakeholders to an intent to reach the market expectations for the company. The purpose for this thesis is to examine the relationship if a larger proportion of intangible assets increases the risk for earnings management. In order to do this the authors will use an economical model to measure accruals earnings management. The connection between intangible assets and earnings management is a well threaded area where most results point towards a positive correlation. However, as far as the authors of this study can see no research has been done in a larger geographical context. This thesis aims to fill the gap of a larger geographical area. This has been done by examining publicly listed firms in the European Union. The European Union was chosen since it was a good opportunity to check this relationship over a larger geographical area and it is also suitable since it is mandatory that all publicly listed firms within the European Union region use the same accounting standard (IFRS) which makes it possible to do comparisons. This research has found evidence for a negative correlation between intangible assets and earnings management, this result is contrary to most other studies and therefore shines a light on a possible bias on the earlier research in this area. It could possibly be an indication of income minimizing and/or income smoothing when viewed through the lens of agency theory since managers viewed from that want to reach a desired result to trigger larger bonuses and promotions for him/herself. Aggressive depreciations of intangible assets and goodwill could be done to reach expected results and trigger higher bonuses. When it comes to the shareholder theory there is a possibility that this thesis does not capture it fully since the goal for the shareholder theory is to maximize the net present value and the closest proxy for that in this thesis is ROA which was shown to have a positive correlation to earnings management but not on a significant level. Positive accounting theory gives weight to the agency theory when it comes to our findings since it states that managers act in their own self-interest and choose accounting methods that allow them to reach those goals. This is a quantitative cross-sectional study consisting of 6373 observations that has been collected over a five-year period (2016-2020) from a financial database (ORBIS). The data has been tested with a standard linear regression analysis and shows significant results.

No description available.

<p>This thesis focuses on three important topics in corporate finance: corporate governance, management efforts to avoid debt covenant violations and the cost of such violations. The thesis adds to these aspects of the finance literature and the findings are reported in chapters two, three and four.</p> <p>The second chapter focuses on the role of corporate governance in determining the interactions between financial leverage and profits and attests to the validity of the trade-off theory of capital structure. It examines management’s financing choice behaviour in distinctly different corporate governance settings to ascertain the effect of governance mechanisms on such behavior. The estimation methodology allows for financial leverage, profits and governance to be determined jointly, using an instrumental variable approach. The results of the paper demonstrate that leverage is increasing in profits when controlled for agency problems, and good governance firms exhibit the results predicted by the trade-off theory of capital structure.</p> <p>The third chapter examines management’s earnings manipulation activities around debt covenant violation through accrual manipulation and real earnings management. Covenant restrictions are expected to influence these activities in the quarters surrounding and the quarter of the violation. Cross-sectional analyses reveal the use of such strategies to report higher earnings in the periods surrounding the covenant violation. The results also show disparity in the use of accrual based and real earnings management techniques.</p> <p>The fourth chapter investigates the relation between debt covenant violation and the cost of new borrowing from three different aspects: the incidence of violation, the timing of violation and the frequency of violation. The results show that there are significant benefits to not violating a debt covenant and violators are penalized by the creditors for not upholding the contractual restrictions.</p> / Doctor of Philosophy (PhD)

Title: Navigating between Accounting and Taxation: An Examination of the Impact of their Relationship on Manipulation  Level: Student thesis, final assignment for bachelor’s degree in business administration.  Authors: Isabell Helgöstam och Fanny Hallencreutz  Supervisor: Fredrik Hartwig  Date: 2024 - May  Aim: The purpose of this study is to examine whether the link between accounting and taxation affects the extent of manipulation in corporate financial reports.  Method: The thesis has been conducted using a qualitative method, which involves four semi-structured interviews. The paper is also based on previous studies and literature.   Results and conclusions: The link between accounting and taxation does increase the level of manipulation in a firm's financial reports, often in the form manipulating downwards.   Contribution of the thesis: The link has a negative impact on the Swedish Generally Accepted Accounting Principles (Swedish GAAP). The progression is mainly held back by the fact that changes aimed at improving quality often result in earlier taxation, leading companies to pay more taxes. In the connected area it is expected, according to us, that the companies will manipulate their financial statements in order to lower the taxable income. Our contribution will be to demonstrate how manipulation can occur through means other than increasing the reported income.   Suggestions for future research: To investigate how the quality of accounting may be affected by companies choosing to manipulate their accounting due to the relationship. The quality investigation could be conducted by examining the extent to which the quality is affected and how it impacts the Swedish GAAP. Key words: Accounting, taxation, accounting quality, manipulation, accrual, Swedish GAAP

In this dissertation, we consider timeliness and energy optimization in battery-powered, mobile embedded real-time systems. We focus on real-time systems that operate in environments with dynamically uncertain properties, including context-dependent activity execution times and arbitrary activity arrival patterns. We consider an application model where activities are subject to time/utility function (or TUF) time constraints, mutual exclusion constraints on concurrent sharing of non-CPU resources, timeliness requirements including assurances on individual activity timeliness behavior, and system-level energy consumption requirements including a non-exhaustable energy budget. To account for uncertainties in activity properties in dynamic systems, we stochastically describe activity execution demands, and describe activity arrival behaviors using the unimodal arbitrary arrival model, which allows unbounded arrival frequencies. We consider the scheduling optimality criteria of: (1) probabilistically satisfying lower bounds on individual activities' maximal timeliness utilities, and (2) maximizing system-level energy efficiency, while ensuring that the system's energy consumption never exhausts the energy budget and resource mutual exclusion constraints are satisfied. For this multi-criteria scheduling problem, we present a DVS (dynamic voltage scaling)-based, real-time scheduling algorithm called the Energy-Bounded Utility Accrual Algorithm (or EBUA). Since the scheduling problem is NP-hard, EBUA heuristically (and dynamically) allocates CPU cycles to activities, computes activity schedules, and scales CPU voltage and frequency with a polynomial-time cost. If activities' cumulative execution demands exceed the available CPU time or may exhaust the system's energy budget, the algorithm defers and rejects jobs in a controlled fashion, minimizing system-level energy consumption and maximizing total accrued utility. We analytically establish several properties of EBUA. We prove that the algorithm never exhausts the specified energy budget. Further, we establish EBUA's timeliness optimality during under-loads, freedom from deadlocks, and correctness in mutually exclusive resource sharing. In particular, we prove that the algorithm's timeliness behavior subsumes the optimal timeliness behavior of deadline scheduling as a special case, and identify the conditions under which lower bounds on individual activity utilities are satisfied. In addition, we upper bound the time needed for mutually exclusively accessing shared resources under EBUA. We conduct experimental studies by simulating the algorithm on the DVS-enabled AMD k6 processor model, and by implementing it on QNX Neutrino 6.2.1 RTOS. Our experimental results validate our analytical results. Further, they confirm EBUA's superiority over other energy-efficient real-time scheduling algorithms on timeliness and energy consumption behaviors. / Ph. D.

In this dissertation, we consider scheduling distributed soft real-time tasks in unreliable (e.g., those with arbitrary node and network failures) and untrustworthy systems (e.g., those with Byzantine node behaviors). We present a distributed real-time scheduling algorithm called Gamma. Gamma considers a distributed (i.e., multi-node) task model where tasks are subject to Time/Utility Function (or TUF) end-to-end time constraints, and the scheduling optimality criterion of maximizing the total accrued utility. The algorithm makes three novel contributions. First, Gamma uses gossip for reliably propagating task scheduling parameters and for discovering task execution nodes. Second, Gamma achieves distributed real-time mutual exclusion in unreliable environments. Third, the algorithm guards against potential disruption of message propagation due to Byzantine attacks using a mechanism called Launcher-Attacker-Infective-Susceptible-Immunized-Removed-Consumer (or LAISIRC). By doing so, the algorithm schedules tasks with probabilistic termination-time satisfactions, despite system unreliability and untrustworthiness. We analytically establish several timeliness and non-timeliness properties of the algorithm including probabilistic end-to-end task termination time satisfactions, optimality of message overheads, mutual exclusion guarantees, and the mathematical model of the LAISIRC mechanism. We conducted simulation-based experimental studies and compared Gamma with its competitors. Our experimental studies reveal that Gamma's scheduling algorithm accrues greater utility and satisfies a greater number of deadlines than do competitor algorithms (e.g., HVDF) by as much as 47% and 45%, respectively. LAISIRC is more tolerant to Byzantine attacks than competitor protocols (e.g., Path Verification) by obtaining as much as 28% higher correctness ratio. Gamma's mutual exclusion algorithm accrues greater utility than do competitor algorithms (e.g., EDF-Sigma) by as much as 25%. Further, we implemented the basic Gamma algorithm in the Emulab/ChronOS 250-node testbed, and measured the algorithm's performance. Our implementation measurements validate our theoretical analysis and the algorithm's effectiveness and robustness. / Ph. D.

Fair value accounting of biological assets in the public sector was introduced with the adoption of the public sector specific accounting standard, Generally Recognised Accounting Practice (GRAP) 101. The public sector currently uses different bases of accounting: public entities and municipalities must use accrual accounting and apply the principles of GRAP, while government departments report on the modified cash basis. Furthermore, public entities do not consistently apply the requirements of GRAP 101. This lack of a uniform basis of accounting has a negative effect on the comparability of financial information. This study identified the challenges facing the public sector in the application of GRAP 101, specifically regarding the fair value accounting of biological assets. The successful implementation of GRAP 101 by a public entity, AsgiSA-EC, was used as a case study to clarify the fair value accounting challenges in the reporting of biological assets in the sector. / Business Management / M. Accounting Science