Journal of accounting, finance and auditing studies

17-36

Authors: Gladys Wanjiku THUITA

The study sought to investigate tax incentives, exclusively tax holiday and capital deductions and how they influence the attraction and retention of the Foreign Direct Investments in Export Processing Zones. A sample size of 72 employees of the firms operating under EPZs was selected for the study using stratified method for the firms and purposive method for the respondents. The study utilized descriptive survey design using self administered questionnaires to solicit information from sampled senior of Export Processing Zones firms. The study found that the use of tax holiday greatly influences the attraction and retention of Foreign Direct Investments. Arguably, the manufacturing sector seems greatly favored by the tax incentives compared to other sectors due to extended capital allowances. The research concludes that tax incentives should be enhanced towards boosting the growth and expansion of the foreign director investors and that the government should be willing to extend the tax holiday beyond ten years for the firms depending on capital injected on long term basis.

52-63

Authors: Hasan BASRI, Dahlia BUCHARI

This research was conducted to address the prevalent issues regarding the effect of industrial diversification and geographic diversification either partially or simultaneously on the practice of earnings management. By utilizing purposive sampling techniques on the secondary data, the total of 80 sample studies were drawn from manufacturing companies listed on Indonesian Stock Exchange for the period of 2011-2014. Multiple linear regression analysis provided by SPSS 21.0 was also employed to test the hypotheses constructed within this research. The result of the multiple linear regression analysis presents evidence that industrial diversification and geographic diversification simultaneously have a significant effect on the practice of earnings management. Alongside, it also affirms that partially, industrial diversification and geographic diversification have a significance effect on the practice of earnings management. These findings provide scholarly evidence on the implication of diversification strategies on the practice of earnings management to help financial statement users (investors, creditors, stakeholders, etc.), accounting standard setters, and regulators to assess the pervasiveness of earnings management within the company.

80-90

Authors: Dirk BEERBAUM, Maciej PIECHOCKI

Manuscript Type: Theoretical Main topic: A tsunami of regulations since the 2013 financial crisis is steering toward’s Europe’s financial service sector. At the same time the accounting standard for financial institutions’ core products the financial instruments will be changing. As disclosures according to IFRS 9 become mandatory by 2018, the existing IFRS Taxonomy for IFRS 9 already developed by the IFRS Foundation, represents a suitable and objective framework to assess IFRS 9 impact on disclosures. The specific goal of this paper is to perform a conceptual gap analysis considering the IFRS 9 taxonomy issued by the IASB and the Financial Reporting (FinRep) taxonomy on IFRS 9 issued by the European Banking Authority (EBA). In general, the IFRS Taxonomy is not used very much in practice. This is not understandable as several advantages relate to the IFRS taxonomy: as it is not the objective of a principle-based accounting standard to define specific rules for each and every disclosure, this is the reason why to derive reporting elements would be very difficult to accomplish. The IASB started to perform a review process of the XBRL Due Process in 2013. As a result the development of the IFRS taxonomy should become part of the general due process of the financial reporting standards. Due to these changes it is expected that the importance of the IFRS taxonomy will be growing. The FinRep-taxonomy has become mandatory since 2014 for all banks within Europe, to fulfill the regulatory reporting requirements according to the Capital Requirements Directive (CRR) IV. Results: Even though the disclosures for external reporting and for regulatory reporting are based on the same accounting framework International Financial Reporting Standards Boards (IFRS), differences can be observed with regard to disclosures, which are partly material. These differences become transparent when analysing IFRS- and FinRep-taxonomy reporting elements. This is caused by the principle-based IFRS, which enable scope of interpretation and the different objectives of the IASB and the banking supervision. Whereas the IASB follows the objective to develop industry non-specific international financial reporting standards, the banking supervision core focus lies on the banking industry. The EBA follows specific information requests with the FinRep-taxonomy in the role as banking supervisory. The IASB intends to provide decision useful information for investors. Nevertheless these two taxonomies provide the possibility for a starting point for the harmonization and the development of common practice disclosures, which could counteract against heterogeneous financial reporting and the issue of “information overload”. Method: Analytical Practical Implications: This paper is relevant for managers who are responsible for external and regulatory reporting.