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Key research themes
1. How does accounting income measurement interact with economic performance and management decision-making?
This research theme investigates how accounting income, as reported in financial statements, reflects an entity's economic performance and influences managerial choices. It emphasizes the role of accounting policies, income measurement models, and informational content of accounting earnings in providing decision-useful information to users including investors, managers, and external stakeholders. Understanding these interactions matters because it clarifies the reliability and relevance of accounting income as an indicator of business success, economic growth, and resource allocation.
Key finding: This study finds that while the profit and loss account is central in assessing firm performance, it often fails to capture the comprehensive economic result due to limitations in accounting policies and measurement choices.... Read more
Key finding: By deriving a composite index that combines accounting earnings and cash flows weighted approximately 79% and 21%, respectively, this paper demonstrates improved explanatory power for insurance stock returns. This finding... Read more
Key finding: Through empirical analysis linking accounting income changes with stock price reactions, this paper finds that unexpected components of net income provide useful information to investors. The study confirms that the... Read more
Key finding: This research reveals that accounting income is fundamentally based on professional judgment in the application of flexible accounting methods permitted by standards, which users perceive as understandable given adequate... Read more
Key finding: By conducting a bibliometric analysis, this article identifies a growing research trajectory linking micro-level accounting earnings to macroeconomic development. It consolidates evidence that aggregate accounting earnings... Read more
2. What are the challenges and consequences of earnings management and creative accounting on the quality of accounting income?
This theme explores the evolving practices of earnings management and creative accounting that influence the measurement, reliability, and credibility of accounting income. It scrutinizes how opportunistic behaviors, accounting discretion, and manipulative transactions distort reported income, potentially misleading financial statement users and affecting capital markets. The importance lies in understanding how such practices threaten financial reporting quality, regulatory responses, and the formulation of standards aimed at preserving the integrity of accounting income.
Key finding: This study identifies the differentiation between permissible earnings management under regulatory frameworks and illegal fraudulent financial reporting. It highlights that while cosmetic earnings management manipulates... Read more
Key finding: This paper documents the shift in profit management from traditional accounting manipulations towards manipulation through real transactions, which affect cash flows and are harder to detect. It underscores limitations in... Read more
Key finding: The study finds that aggressive accounting and income smoothing practices create significant discrepancies in the measurement of business income by exploiting loopholes in standards like IFRS. These creative accounting... Read more
3. How do accounting principles, tax regulations, and conceptual frameworks interact with accounting income measurement?
This theme investigates the relationship between accounting income and the frameworks—conceptual, regulatory, and tax-related—that govern its measurement and reporting. It focuses on how different conceptualizations of income, reconciliation of accounting and taxable income, and standard-setting impact the definition, recognition, and reliability of income. The theme matters because these frameworks directly influence how accounting income is calculated, interpreted, and used for diverse purposes such as financial reporting, taxation, and policymaking.
Key finding: This thesis reveals a bifurcated book-tax income gap, one conceptual due to differing principles between accounting standards (e.g., IFRS) and tax law, and one behavioral stemming from policy-based deductions and tax... Read more
Key finding: The research elucidates the complex interplay between accounting and taxation regarding income tax determination and reporting. It explains how divergent principles, regulatory frameworks, and fiscal policies cause... Read more
Key finding: This paper analyzes J.R. Hicks' economic income concept emphasizing capital maintenance and opportunity cost approaches, evaluating their applicability to accounting income measurement. It finds that despite theoretical... Read more
Key finding: Reviewing the financial reporting of income taxes, this paper highlights that accounting for income taxes involves reconciling tax and book income under differing rules and assumptions. It shows that empirical studies focus... Read more
Key finding: The comprehensive text details the operational mechanics of accrual-based accounting, the evolution of accounting standards (IAS and IFRS), and regulatory frameworks shaping financial reporting. It emphasizes the theoretical... Read more