Journal of Modern Accounting and Auditing-David Publishing Company
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  Journal of Modern Accounting and Auditing

Volume 8, Number 4, April 2012

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Volume 8, Number 4, April 2012
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1 (pp. 445-460)

Noncompliance Opportunities and Tax Compliance Behavior in Nigeria: The Moderating Effect of Taxpayers Financial Condition and Risk Preference

James O. Alabede, Zaimah Bt. Zainol Ariffin, Kamil Md Idris, Universiti Utara Malaysia, Sintok, Malaysia


In Nigeria, like some other developing countries, income tax administration is characterized by noncompliance problem and this has been hindering tax revenue performance. Although a number of factors may be responsible for such phenomenon, the literature has suggested that the relationship between tax compliance behavior and its determinants may be moderated by other factors. In order to account for situational and environmental peculiarity of Nigeria, this study extends tax compliance model to incorporate moderating effects of taxpayers financial condition and risk preference. However, the study investigates the moderating effects of financial condition and risk preference on the relationship between noncompliance opportunity and tax compliance behavior. The study was conducted through a survey of individual taxpayers opinions and the data collected were statistically treated using multiple regression technique. The study reveals among others that the effects of financial condition and risk preference significantly moderated the influences of taxpayers source of income and occupation on tax compliance behavior. These findings pose some theoretical and policy implications.


Keywords: noncompliance opportunity, tax compliance behavior, individual income tax

2 (pp. 461-471)

Property Tax Performance of Local Authorities in Malaysia

Soeb Pawi, David Martin Juanil, Wan Zahari Wan Yusoff, University of Tun Hussein Onn Malaysia, Malaysia; Ibrahim Sipan, University of Technology Malaysia, Malaysia; Fazira Shafie, University of Tun Hussein Onn Malaysia, Malaysia


Property tax income of local authorities has become more challenging due to robust developments. Property tax revenue is the main income for local authorities that are used to pay for services and maintenance in the local authority administrative areas. However, the amount of revenue collected is decreasing due to the serious problem of property tax arrears that affects the administrative system and as a corollary, the delivery of services by local authorities. The performance measurement of property tax is very important in order to manage the services, and for maintenance and development of sustainable local authorities. Therefore, this paper represents a review of the Malaysian local authority property tax collection performance. The rating system is applied to address the performance of property tax collection in Malaysia. The result revealed that most of the property tax collection in Malaysia performed under inadequate level. Property tax collection statistics for the research include the total revenue and property tax arrears for each local authority in Malaysia within five years from 2004 to 2007. It is expected that this property tax performance will be employed as a basis to pursue the appropriate, innovative, and creative approaches for local authorities in Malaysia.


Keywords: local authorities, property tax, property tax performance, revenue collection, tax arrears

3 (pp. 472-479)

The Impact of Unrealized Foreign Exchange Differences for Accounting and Taxation

Georgiana Gabriela Toader, Mihaela Dumitrana, The Bucharest Academy of Economic Studies, Romania


The present study is intended to be an analysis of the main Romanian legal provision in what concerns the impact of foreign exchange differences and potential consequences at the level of financial statements for companies. In Romanian legislation, the issue of the foreign exchange differences is treated at a general level: these are recognized as a profit and loss item and as a consequence, they are included in the taxable base when booked in the accounting. Our legislation does not provide for specific treatments depending on the realization moment of these differences or depending on the conditions for recognizing a gain/loss from foreign exchange differences. For the unrealized exchange differences arising from the application of accounting rules on monthly assessment of foreign currency monetary items, there is not a specific event or transaction to determine income or expenditure. This monthly review depending on the National Bank of Romania [BNR] foreign exchange rate valid on the last day of the month aims to bring closer to reality the financial position of an entity. The exchange rate is a monetary policy item set by the central bank and may be influenced by various factors such as: monetary policy of the BNR; inflation target objectives and rate of exchange stabilization or reduction efforts, as is the case of BNR in the last years to fulfill EU criteria for adoption of the EURO; periodical influences of speculative capitals on the exchange rate level; economic status and especially exports and imports. However, a taxpayer should not be charged unless there is evidence of the economic enrichment thereof. However, this enrichment, seen as a rising economic value of the company, depends on the perspective from which is seen: the owner of the company or the tax authorities. The exchange differences impact also the value of the owners equity for which a minimum level is requested under the commercial company law. In case of negative values, this triggers various risks at the level of the continuity principle or even endangers the existence of the company.


Keywords: foreign exchange differences, profit allocation, accrual principle, economic enrichment, realized income/profit

4 (pp. 480-487)

Attitude, Secondary Schools and Student Success in a Tertiary Mathematics Unit

Luz Centeno Stenberg, University of Notre Dame Australia, Sydney, Australia; Maria Estela Varua, University of Western Sydney, Sydney, Australia; Jackie Yong, University of Newcastle, Sydney, Australia


There is a consensus in the literature that mathematical ability contributes to student success in tertiary education. More importantly, mathematical skills are necessary when successfully completing mathematics- and/or science-based degrees. Social sciences such as psychology and economics require statistical skills which also require knowledge of mathematics. Even business students, such as marketing and accounting students need the necessary mathematical skills to successfully complete their degrees at university. This paper suggests that student success in a core business subject is dependent on their mathematical aptitude, attitude, and type of secondary schooling whether government or non-government schools. There is urgency for universities to recognize that high failure rates are due to insufficient mathematics exposure in secondary schooling and remedial classes might not be enough. Specifying a minimum (maths, e.g., two units) requirement for entry and/or providing bridging programs to ensure students have the necessary basic mathematical skills would increase student success in quantitative units.


Keywords: quantitative units, mathematics aptitude, mathematical attitude, secondary schooling

5 (pp. 488-502)

Inward foreign direct investment (FDI) is expected to grow further by virtue of economic globalization. A thorough understanding of the locational determinants of inward FDI will be conducive to enhanced efficiency in attracting direct and SOC-related investments from foreign entities. This study analyzes 51 cases of inward direct foreign investment made in the Incheon free economic zone (IFEZ) from 2002 to 2009 to determine the factors influencing FDI volume, the relevance of locations and the correlation between investment size and location. First, the relationship between the locational determinants of FDI and the total investment size (total expected project cost) is analyzed. Second, the relationship between the locational determinants of FDI and the FDI is analyzed. Third, the relationship between the locational determinants of FDI and the location choice is analyzed. The results indicate the determinants that influence locations and investment size of FDI entities; whether these factors exercise influence in the zone; and the factors that have relatively significant effects. Ultimately, based on the analytical findings, a few implications for policy and practice are derived.


Keywords: ordinary least square method, binary logistic regression analysis, foreign direct investment (FDI), determinants of location choice, Incheon free economic zone (IFEZ)

6 (pp. 503-528)

Impact of Mobile Access to the Internet on Sales Completion Time in E-Commerce

Ushio Sumita, Jun Yoshii, University of Tsukuba, Japan


Supported by a new generation of mobile devices, e-commerce is now in the process of being converted into m-commerce. While the traditional fixed PC access to the Internet continues to be important, the mobile access appears to attract more people because of its flexibility. The purpose of this paper is to develop and analyze a mathematical model for capturing how e-commerce performance would be affected by the mobile access to the Internet, where the original paper by Sumita and Yoshii (2010) is extended for better reality. The traditional e-commerce via the fixed PC access is compared with m-commerce which accommodates both the fixed PC access and the mobile access. The distribution of the number of products purchased by time t and the distribution of the time required for selling K products are derived explicitly. Numerical examples are given for illustrating behavioral differences between m-commerce consumers and traditional e-commerce consumers.


Keyword: e-commerce, m-commerce, consumer behavior, semi-Markov process, sales completion time

7 (pp. 529-536)

Do Satisfaction and Loyalty Have a Linear Relationship? Effect of the Education Level on Arts Participation

Javier Flores-Zamora, Jess Garca-Madariaga, Complutense University of Madrid, Spain


This paper aims to explore the relationship between perceived satisfaction and loyalty of Spanish arts participants. Evidence suggests that customer satisfaction plays a key role in an organizations ability to maintain a relationship with its customers. We examined the link between satisfaction and loyalty within a theoretical framework based on an empirical study in which data from more than 14,000 respondents were obtained. This data allowed us to evaluate the arts consumer from an attitudinal and behavioral perspective looking at their interests, satisfaction level, frequency of attendance, and compare it using the participants education level. A descriptive statistical analysis using ANOVA (analysis of variance), correlation, partial correlation, and multiple regression provided evidence that, in the context of experiencing an arts show, satisfaction does not have any impact on loyalty but education level plays a significant role in peoples interest and loyalty.


Keywords: satisfaction, loyalty, arts marketing, leisure, audience, ANOVA (analysis of variance)

8 (pp. 537-548)

The Contribution of Accounting for the Definition of Performance Indicators: The Case of Higher* Education Institutions

Carmem Pereira Leal, UTAD University, Vila Real, Portugal; João Baptista Carvalho, University of Minho, Braga, Portugal; Carlos Machado-Santos, UTAD University, Vila Real, Portugal


The influence of the New Public Management (NPM) principles in Portuguese Public Administration, particularly in higher education, has led these institutions on a path of adaptation of structures and systems in order to improve their decision-making processes. Public organizations must, at the present, to consider the strategic issues that are of vitally importance to their survival. In this context, the Balanced Scorecard (BSC), due to its intrinsic characteristics, is presented as value added in attempts to link the set of objectives with the corporate strategy; determining, a priori, a course of action that must be constantly monitored. Our research analyzes the issues underlining the development of a model of performance management based on the BSC and formatted to a higher education institution (HEI). The analysis of the results confirms the viability of applying an evaluation model constructed within a specific framework. In addition, the analysis attests the importance of performance indicators in this model of evaluation, specifically those of accounting, and consequently, the added contribution they can make in the process of decision-making within HEI, particularly, in current times when the priority is to achieve more with fewer resources.


Keywords: higher education, performance indicators, accounting, balanced scorecard (BSC)

9 (pp. 549-568)

Internal Mechanisms of Corporate Governance and Firm Performance: A Review of Theory and Empirical Evidence

Husam-Aldin Nizar Al-Malkawi, King Abdulaziz University, Saudi Arabia; Rekha Pillai, ALHOSN University, Abu Dhabi, UAE


Literature has revealed the existence of several external and internal disciplining mechanisms that are hypothesized as factors influencing corporate governance. This paper reviews the theoretical and empirical literature on five internal mechanisms of corporate governance, namely, dividend payouts, financial leverage, institutional shareholding, board duality, and board size. These mechanisms have received the greatest deal of attention in the literature. The paper makes an original contribution to the literature as it is the first of its type, to the best of our knowledge, to provide a comprehensive idea on these five internal mechanisms of corporate governance. This study will help in investigating the relationship between internal corporate governance mechanisms and firm performance with the main aim of extending the existing literature on firm performance by empirically investigating the contribution of these mechanisms in the smooth conduct of business operations. The empirical evidence amassed favors a smaller board size, non-existence of duality and favorable dividend mechanisms as effective internal governance mechanisms affecting firm performance. At the same time, there is no conclusive evidence on the relationship between leverage and institutional ownership as internal governance mechanisms influencing agency cost and firm performance.


Keywords: corporate governance, agency cost, internal mechanisms

10 (pp. 569-577)

An Overview of the New Listing Rules and Corporate Governance Best Practice in Sri Lanka

Chitra Sriyani De Silva Loku Waduge, Victoria University, Melbourne, Australia


Corporate governance represents institutional structures and incentive mechanisms that are implemented in order to mitigate the principal-agent problem and to thus promote the long-term competitiveness of the firm. The purpose of this paper is to examine the nature of corporate governance best practice and the new listing rules in Sri Lanka. The paper discusses the evolution of the corporate governance best practice giving special reference to the new listing rules in Sri Lanka, Sri Lankan stock market overview and the importance of best practice governance for the developing economy of Sri Lanka. Corporate governance practices in Sri Lanka has made a progress towards best practice, but, this paper argues, that substantial reforms need to be implemented to effectively promote and sustain the accountability and transparency.


Keywords: corporate governance, best practice, listing rules, Sri Lanka

11 (pp. 578-586)

The Performance Evaluation System Transformation Based on Balanced ScorecardA Case Study of SEICO Company

Li Yuling, Chen Yuanhong, Yu Zengbiao, Tsinghua University, Beijing, China


Application of Balanced Scorecard (BSC) is not so successful in China in the past few years. This paper is to represent how the company Sichuan Ertan Industrial Corporation (SEICO), design performance evaluation system to improve its efficiency and effectiveness and satisfy customers needs with the help of BSC principles and methodology. It is found from this case study that the key steps to design performance evaluation system are to: (1) link strategy and performance measurements at company-level; (2) decompose them into all the members in all the units at all the levels of that company; and (3) tie them to an incentive plan. Those steps have not been detailed in publications by Kaplan and Norton.


Keywords: balanced scorecard (BSC), strategy map, performance evaluation

12 (pp. 587-592)

In order to gain a more comprehensive understanding of institutional change, researchers need to go beyond a snapshot view of significant events but consider events in their temporal setting. Pierson (2004) advocated that the events that lead to institutional change should be placed in a moving temporal context, as this will not only add to our comprehension of the dynamics of change, but also enrich the existing research and enhance the theories we employ to give meaning to these events. Pierson (2004) laid the foundation for the research that was later developed by Thelen (2009) that considered incremental endogenous shifts in institutional thinking that can often result in fundamental transformations. The central issues of Piersons (2004) thesis lay in his interpretation of history and its relationship with path dependence. He claimed that once an institution has chosen a particular path to follow, it can become locked into that pathway and so the options of choice are restricted. This then presumed that an institutions first choice of action is crucial to whether they become locked into a successful course of action or not. The result of the first choice being successful or not would be dependent on the presence of increasing returns. The explication Pierson proffers of increasing returns is different to an economic one in that it is based on positive feedback processes and politics in time. The implications of Piersons work and those that followed have a very serious place in our understanding of institutional change.


Keywords: incremental institutional change, path dependence, change management




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This is Journal of Modern Accounting and Auditing (ISSN 1548-6583), a professional journal sponsored by American Sino-US Association of Entrepreneurs, and published across the United States by David Publishing Company, USA.


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