faculty-news

Research by Erv Black and co-authors D. Viana and I. Lourenço, "Does National Ethical Judgment Matter for Earnings Management?" was recently accepted for publication in Sustainability Accounting, Management and Policy Journal. This study’s findings suggest that firms from countries where ethically suspect behavior is less acceptable are associated with lower levels of accruals-based earnings management, and that firm-level enforcement and the quality of accounting standards dampen such association. The research contributes to the debate about ethical issues in the accounting profession in an international context.

Brad Blaylock and co-authors Tassos Elemes and Crawford Spence published “Tax-motivated Profit Shifting in Big 4 Networks: Evidence from Europe” in Accounting, Organizations, and Society. Using a unique dataset of Big 4 affiliated companies in Europe, this study explored the extent to which these companies coordinate their efforts across countries to lower their taxes. The results indicate that there is some cross-border coordination on taxes, particularly after the incorporation of regional coordinating entities.

Also, Blaylock collaborated with co-authors Jimmy Downes, Mollie Mathis and Scott White on the research question "Do Bondholders Incorporate Expected Repatriation Taxes Into Their Pricing of Debt?" published in Review of Accounting Studies.

This research examined the circumstances under which expected repatriation taxes affect the pricing of publicly traded bonds, focusing on key events surrounding the election of President Trump and the passage of the Tax Cuts and Jobs Act. This study’s findings indicate that companies have incrementally higher borrowing costs when taxes on the repatriation of foreign income cause distortions in their need to borrow domestically.

Andy Cuccia and co-authors Marcus Doxey and Shane Stinson examined “The Impact of Tax Incentive Structure on Taxpayers’ Retirement Savings Decisions” in a series of experiments that found that when all restrictions currently imposed differently across deductible and nondeductible (i.e., Roth) retirement savings plans are eliminated, nondeductible plans are much more attractive to taxpayers than are deductible plans. This preference is consistent with the predictions of general models of intertemporal choice developed in psychology and behavioral economics. The findings suggest that since a preference for nondeductible plans may by psychologically hard-wired for a large portion of the population, retirement savings may be enhanced by making nondeductible plans more generally available to taxpayers. This research is forthcoming in the Journal of the American Taxation Association.

Kevan Jensen and co-author Mark Smith (Steed SOA alum) recently published “A Preliminary Examination of the Effectiveness of Assessment Questions in Detecting Dishonest Behavior” in the Journal of Forensic Accounting Research. The research examines the effectiveness of assessment questions in distinguishing those who commit dishonest acts from those who do not act dishonestly. In a series of experiments with student subjects, the findings show that students who have cheated or shoplifted respond differently to assessment questions than non-cheaters and non-shoplifters.

Research by Ashley Newton, “On the Threshold of Compliance: Public Charities and the Public Support Test,” was recently published in Accounting Horizons. This study investigates the tendency of public charities to misreport financial support to meet a regulatory threshold. Specifically, the IRS public support test requires that at least one-third of a public charity’s financial support is derived from public sources. The results indicate that a disproportionately large number of charities just exceed this one-third public support threshold.

Beth Stetson recently presented “Tax Practice Ethics” at the 60^th Annual Arkansas Federal Tax Institute.

Wayne Thomas with co-authors Dirk Black and Spencer Pierce recently published “A Test of Income Smoothing Using Pseudo Fiscal Years” in Management Science. Prior academic research demonstrates that fourth-quarter accruals are affected by the integral approach to accounting (i.e., “settling up” of accrual estimation errors in the first three quarters of the fiscal year) or earnings management to meet certain reporting objectives (e.g., analyst forecasts). The purpose of this study was to investigate another factor affecting fourth-quarter accruals — managers’ incentives to smooth fiscal-year earnings. Consistent evidence is found across several tests showing managers’ ability to use fourth-quarter accruals to smooth reported fiscal-year earnings.

Wayne Thomas also presented results of a research project, “Economic Consequences of Operating Lease Recognition,” co-authored with Ph.D. alumnus Mark Ma, to workshop participants at the University of Arizona, Arizona State University, Oklahoma State University, and University of Wisconsin.