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Positive
Accounting Theory: A Critique --Suyash
Kamal Sinha
The
primary objective of Positive Accounting Theory (PAT) is
to explain as well as predict accounting practices in contrast
to the Normative Accounting Theories, which are prescriptive
in nature and which were a dominant part of accounting research
till the two controversial articles were published by Watts
and Zimmerman in 1978. It was a revolutionary idea, which
raised a number of issues prompting researchers to debate
the technical issues concerning research methods, issues
related to philosophy of science and issues concerning economics-based
research in accounting. This paper attempts to review these
issues and the validity of the questions raised from such
issues involved. As pointed out by various authors, there
is a need to integrate the two approaches of the discipline
to evolve its full potential. The best theory or the approach
emerges not in isolation, but as a result of intense arguments,
giving due weight to the others' view point.
©
2008 The Icfai University Press. All Rights Reserved
Value
Relevance: Evidence from SEM-7 Firms on the Mauritian Equity
Market --Subadar Agathee
Ushad, S Fowdar, R V Sannassee and Mannowa Leckraj
One
of the main objectives of accounting systems is to provide
investors with relevant information that may be useful in
decision making for efficient resource allocation. This
paper investigates the value relevance of accounting number
in Mauritius through the implementation of six models. Hence,
using a sample of all Mauritian firms listed on the SEM-7
for the period 1998-2005, the value relevance of book value,
earnings and dividends are analyzed. Through various comparisons,
the overall results of the study suggest that the Ohlson
model is a better model in explaining share prices. Based
on the above findings, the current issues that are hinging
the stock market development along with their plausible
solutions are subsequently discussed.
©
2008 The Icfai University Press. All Rights Reserved.
Determinants
of Timeliness of Corporate Disclosure of Selected Companies
in India
--Poonam
Mahajan and Subhash Chander
This
study empirically examines the quality of corporate disclosure
with special reference to its qualitative attribute of `Timeliness'.
It is based on a sample of 288 and 292 companies drawn from
BT-500 companies (November, 2004 issue) for the financial
years 2004-05 and 2005-06. Auditor's report has been used
as a surrogate for timeliness. PROWESS, the database of
Center for Monitoring Indian Economy (CMIE) has been used
as a major source of data collection. SPSS 10.05 has been
used as a statistical tool to arrive at results. Descriptive
statistics indicate that almost all the companies in the
sample report within 180 days (as set by regulatory authorities
in India) during both the years of the study. Non-parametric
test namely Spearman's rank correlation has been used to
check the association of the independent variables with
reporting lag. Backward stepwise regression analysis revealed
that the corporate attributes namely, size of a firm, nature
of industry and audit specific attributes namely, audit
firm size and audit complexity significantly influence the
reporting lag of selected companies in India during both
the years of study. Rest of the variables namely, profitability
of a firm, listing category, residential status, age, leverage
and audit fee could not significantly influence the reporting
lag during both the years of the study.
©
2008 The Icfai University Press. All Rights Reserved.
The
Effect of Quarterly Earnings Announcements on Sensex: A
Case with Clustering of Events --Santu
Das, J K Pattanayak and Pramod Pathak
An
event study examines the return behavior of a sample of
firms experiencing common type of event, for e.g., earning
announcement, stock split, issue of new debt or equity,
merger and acquisition and so on. The objective is to asses
the significance of the economic event on the market value
of the firm. This paper investigates the impact of quarterly
earnings announcements on the stock price movement of the
firms constituting the BSE-Sensex. Daily return data has
been used to study the mean stock price effect. The effect
of clustering of events has been accommodated to analyze
the effect of announcements. The study also examines the
drifting up of share prices with reference to `good announcement'
and `bad announcement'.
©
2008 The Icfai University Press. All Rights Reserved.
Factors
Influencing Investment in Tax-Saving Schemes --K
Natarajan
From
time to time, various tax-saving schemes are made available
for the individual income tax assessees. These schemes have
different features such as tax-benefit return, liquidity,
safety, risk coverage, old age benefit, etc., which may
influence and attract the assessees to invest. Whenever
a new investment is made, not only the tax benefit on contribution
but also the tax concession on the income arising out of
such investment becomes an important consideration. A good
investment is one, which ensures safety, profitability and
liquidity. Investment planning is nothing but achieving
a balance among these three principles i.e., safety, profitability
and liquidity. Most of the investment in tax-saving schemes
directly goes to the exchequer. Majority of the salaried
assessees do not know that they could save considerable
amount of income-tax by adopting suitable tax planning measures
provided in the Income Tax Act. In this connection, they
usually approach the tax consultants. The guidance and information
provided by the tax consultants about the tax-saving schemes
may not be suitable, adequate or in time. Ironically, the
agencies dealing with tax-saving schemes also have not taken
adequate steps to popularize their schemes among the assessees.
The government is also interested to know which tax-saving
scheme is mostly preferred by the salaried assessees for
further investment, if the maximum qualifying limit for
tax-saving schemes stands raised. Hence to provide a valid
solution, both to the assessees and to the government, a
study is undertaken among the salaried assessees in Erode
District of Tamil Nadu. The analysis and result thereof
is presented below.
©
2008 The Icfai Univesity Press. All Rights Reserved.
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