Malek Alsharairi, Robert Dixon and Radhi Al-Hamadeen
The purpose of this paper is to re-examine the motivation to manage earnings in US mergers and acquisitions (M&As) by investigating whether the enactment of Sarbanes-Oxley act…
Abstract
Purpose
The purpose of this paper is to re-examine the motivation to manage earnings in US mergers and acquisitions (M&As) by investigating whether the enactment of Sarbanes-Oxley act (SOX) has affected pre-merger earnings management.
Design/methodology/approach
The authors used a sample of over 700 completed M&As of US public firms during 1999-2008. Using quarterly reports, they tracked down earnings management during the four quarters preceding the deal and consequently drew inferences about the implications of SOX on interim reporting practices.
Findings
We report evidence that in the post-SOX era, non-cash acquirers begin pre-merger upwards earnings management in an earlier quarter than in the pre-SOX era. Further, our evidence indicates that in the quarters prior to the takeover, targets engage in more aggressive upwards earnings management in the post-SOX era.
Originality/value
Unlike what is anticipated regarding earnings management practices after SOX, the study reveals significant evidence of upward earnings management by firms engaging in M&A in post-SOX era.
Details
Keywords
Dorotha “Mike” Monfore, Jeremy Lynch and Matthew Erickson
As teachers make desperate pleas for more paraeducators to be hired to support a diverse student population, the number of paraeducators working in public and private school…
Abstract
As teachers make desperate pleas for more paraeducators to be hired to support a diverse student population, the number of paraeducators working in public and private school classrooms is steadily rising as it reaches nearly half a million in the United States alone (Stockall, 2014). “Teacher shortages, increasing numbers of English language learners and the rising enrollment of students with disabilities and other special needs are just some of the factors that make the need for a dynamic school team more necessary than ever” (National Education Association, 2014, para. 1). Currently, limited research exists on paraeducators’ perceptions of their role in the inclusive classroom. Paraeducators are responsible for many duties throughout the course of the school day, have a high level of responsibility for the quality of services they provide to the students, and have many concerns and challenges related to their work (Downing, Ryndak, & Clark, 2000; Monfore, Lynch, & Erickson, 2013; Rosales, n.d.). This chapter expresses the voices of many paraeducators in the field and highlights their thoughts on best practices and the continued implementation of collaboration, effective teaming, and equality.
Details
Keywords
This research addresses the question of whether market competition influences a firm's implicit tax burden. Implicit taxes are defined as the pretax rate of return disadvantage…
Abstract
This research addresses the question of whether market competition influences a firm's implicit tax burden. Implicit taxes are defined as the pretax rate of return disadvantage earned on an investment that is taxed preferentially. The Scholes and Wolfson (1992) model predicts that implicit taxes will fully offset any benefit from preferential tax treatment leading to no benefit from lower explicit taxes; however, their theory assumes perfect market competition. This chapter relaxes the assumption of perfect market competition and finds that firms in industries with lower competition bear lower implicit taxes and firms in industries with higher competition bear higher implicit taxes. These findings are consistent with monopoly and oligopoly behavior predictions where firms in less competitive industries have greater price setting power and can retain more of their tax savings while market forces in competitive industries force companies to pass along any savings to customers (Mason, 1939). Furthermore, these findings answer the call in the literature for more research on determinants of cross-sectional variation in implicit taxes (Shackelford & Shevlin, 2001).
Details
Keywords
Tariq Zaglol Elrazaz, Moataz Elmassri and Yousry Ahmed
This paper aims to investigate whether UK public targets manage their earnings using real activities manipulation in the period prior to the announcement of a mergers and…
Abstract
Purpose
This paper aims to investigate whether UK public targets manage their earnings using real activities manipulation in the period prior to the announcement of a mergers and acquisition (M&A). It also examines whether the payment method in M&As affects the degree to which takeover targets manipulate earnings.
Design/methodology/approach
Using a sample of 131 UK listed targets acquired over the period 1995–2013, this paper examines real earnings management (REM) by employing OLS regression models. The data related to deals have been mainly collected from Thomson One Banker and Thomson Reuters Eikon databases. REM is examined by investigating abnormal cash flow from operations, abnormal discretionary expenses and abnormal production costs. This analysis was supplemented by conducting additional robustness checks.
Findings
The results show that UK takeover targets manage earnings upwards through cutting discretionary expenses in the year prior to the acquisition, while they do not do so by manipulating sales or production costs. Moreover, targets of cash-only or mixed-payment deals do not have the same strong motivation to manage their earnings as stock-financed deal target counterparts do. Our results continue to hold after using alternative accrual earnings management (EM) measures, controlling for unobservable firm heterogeneity using the fixed-effect model and controlling for endogeneity using the two-stage Heckman (1979) model.
Practical implications
The main findings of this study could be beneficial for various parties involved M&As, such as standard setters and regulators. A need arises to improve disclosure rules and enhance overall financial reporting quality in the capital markets with the aim of reducing information asymmetry and agency conflicts.
Originality/value
As far as the literature on EM around M&As is concerned, only EM by acquirers has been examined, and not much attention has been paid to targets’ EM.
Details
Keywords
The United Nation’s Convention of the Rights of Persons with Disabilities in 2006 declared the need for countries to facilitate the right of individuals with disabilities to their…
Abstract
The United Nation’s Convention of the Rights of Persons with Disabilities in 2006 declared the need for countries to facilitate the right of individuals with disabilities to their full inclusion and participation within communities across the globe. The community clearly plays a necessary role in the overall preparation and quality of life of students with disabilities and their families. The present chapter will specifically address the role of the community within instructional programming and parent advocacy. First, the chapter discusses the importance of integrating community experiences within inclusive K-12 preparation for students with disabilities for the purpose of enhancing students’ postsecondary outcomes. Second, the chapter reviews the role of community organizations in supporting parental advocacy for effective inclusive programming while highlighting the work of two specific community agencies. These sections are followed by concluding comments emphasizing the role of schools and community-based organizations in supporting inclusive education, community-based instruction, and family advocacy for students with disabilities.
Details
Keywords
Against the background of increasing regulation and spotlight on the tax position of MNEs, this study explores the relationship between tax and performance measurement. The paper…
Abstract
Against the background of increasing regulation and spotlight on the tax position of MNEs, this study explores the relationship between tax and performance measurement. The paper is informed by a series of in-depth semi-structured interviews conducted in 2006 with 26 senior tax executives from 15 Silicon Valley-based companies. We also draw on documentary evidence including the relevant 10K reports and take an interpretive approach to the analysis. Many of the performance measures referred to in prior literature were employed in the companies. There was no evidence to suggest the profit centre performance measurement model is being adopted by MNEs for their tax departments. Two distinct aspects particularly exercised the interviewees, that is, the effective tax rate (ETR) and post-tax versus pre-tax performance measurement. Many interviewees did not perceive the ETR as being an appropriate measure of performance, yet they recognised its importance internally and externally. Many companies worked on the basis that there is an ‘acceptable range’ of ETRs which won’t give rise to any unwanted questions. Most interviewees shared the view that a post-tax basis of measuring performance of business units might only serve to increase tax risks, preferring instead for the in-house tax executives to remain the exclusive tax knowledge experts. This study contributes to the diversification of tax research within accounting by demonstrating how qualitative work can provide unique insights. It enhances our understanding of how performance measurement of tax might influence the tax-planning behaviour of in-house tax executives and cautions against exclusive reliance on the ETR as a measure of the effect of tax planning.
Details
Keywords
Many specialized areas exist in the world of accounting education. One of these is the tax case. Considering published cases over the last quarter century, this review summarizes…
Abstract
Many specialized areas exist in the world of accounting education. One of these is the tax case. Considering published cases over the last quarter century, this review summarizes the parameters of this academic niche. The review discusses the specific tax topics that have been touched upon by case authors. The structure of these materials, most of which are common to all accounting cases, is also reviewed in a variety of ways. In addition, the current useability and educational contributions of tax cases is explored against the background of pedagogy in taxation. This supports ideas about areas of need and the broader future of writing cases in this domain. As a reflection on the literature as a whole, this review will not necessarily help faculty select cases nor is it intended to be an endorsement of any particular publication.
Details
Keywords
Qi Flora Dong, Yiting Cao, Xin Zhao and Ashutosh Deshmukh
The effect of tax policy on the repatriation of foreign earnings is a topic of ongoing discussion among policymakers, academics, and the popular press. It has become more salient…
Abstract
The effect of tax policy on the repatriation of foreign earnings is a topic of ongoing discussion among policymakers, academics, and the popular press. It has become more salient due to the 2017 Tax Cuts and Jobs Act (TCJA), which permanently removed repatriation tax. This paper synthesizes the academic literature examining US multinational firms’ responses to the repatriation tax holiday initiated by the 2004 American Jobs Creation Act (AJCA), which temporarily reduced the tax on the repatriation of foreign earnings. By synthesizing firm responses to the temporary tax reduction, we identify similarities and differences in: (1) theories about why and when repatriation tax affects firms’ repatriation decisions; (2) empirical evidence of whether repatriation tax affects firms’ repatriation decisions; and (3) empirical evidence of whether repatriation tax affects firms’ investment decisions. The analyses provide insights into the effect of the permanent removal of repatriation tax under the TCJA and explore avenues for future research. This synthesis of the AJCA literature informs tax research and practice as well as policymaking.
Details
Keywords
Yong-Mi Kim and Donna Newby-Bennett
Patient safety improvement through management has been a prime issue since 2000, when the Institute of Medicine reported that preventable mismanagement was responsible for the…
Abstract
Patient safety improvement through management has been a prime issue since 2000, when the Institute of Medicine reported that preventable mismanagement was responsible for the majority of medical errors. Learning culture, interdisciplinary action teams, and punitive culture have been discussed as viable ways to address these errors. While these individual factors have been found to be significant, we have yet to understand the interactions of these elements. The role of leadership, which has been overlooked, is critical to facilitate or constrain these elements. The interactions of these three elements and the role of leadership were analyzed using structural equation modeling. Our finding revealed the three elements were closely knitted, and leadership roles had considerable impact in nurturing learning culture and constraining punitive culture, which in turn enhanced patient safety