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Students participate in the Volunteer Income Tax Assistance program (VITA) to improve both technical competence and soft skills. To date, research primarily assesses student perceptions about these outcomes. We empirically measure and test for changes in technical competence and soft skills at the beginning and end of VITA participation at one major midwestern university. Our results indicate first-time participants in VITA improve in technical competence, but students do not become better calibrated with respect to “knowing what they know” as a result of VITA participation. Importantly however, participants in the program improve in their soft skills. Further, both first-time and repeat participants improve their communication skills, although we do not find improvement in interpersonal relations or personal abilities for repeat participants. In sum, our empirical results indicate that the VITA program does deliver the hoped-for outcomes across a wide range of skills.

Purpose The purpose of this study is to investigate whether investor views regarding the benefits of corporate environmental responsibility moderate the influence of environmental performance and assurance information on their judgments. Specifically, the authors examine the effects of two broad views: environmental responsibility is more important than financial performance, regardless of investment returns (i.e. environmental responsibility importance) and positive environmental performance will increase investment returns (i.e. environmental performance return). Design/methodology/approach Nonprofessional investors completed an online study where environmental performance (high or low) and assurance on environmental performance information (present or absent) were varied. Participants’ corporate environmental responsibility views were assessed using a series of questions adapted from Cheah et al.’s (2011) study. Findings Environmental performance and assurance information had a greater influence on the investment judgments of investors with strong environmental responsibility views. In contrast, participants’ environmental performance return views did not moderate the influence of environmental performance and assurance information on their judgments. Supplemental analysis indicates that these contrasting results are due to the fact that the two investor views have differing influences on the relative importance that investors place on financial vs environmental performance information. Research limitations/implications This study presented participants with summarized financial and environmental performance information to maintain scale compatibility between financial and environmental measures. However, the information was presented in a format similar to those used by online brokerages. Practical implications This study suggests that financial statement preparers should consider investors’ views regarding the importance and value of environmental performance information when making decisions to disclose and obtain assurance on this information. Social implications Standard setters should consider individual differences among investors when developing guidance regarding the disclosure and assurance of environmental performance information. Originality/value There is limited prior research which examines how investors’ views of the importance of environmental performance information may influence investment judgments. This research indicates that the strength of investors’ environmental responsibility importance moderates the previously reported influence of environmental performance and assurance information on investment judgments.

Olibe (2016) uses price and trading volume responses around IFRS earnings disclosures for U.K. cross-listed firms trading as American Depository Receipts in U.S. equity markets to investigate whether such disclosures provide information to market participants over and above U.S. GAAP earnings disclosures. He finds evidence of significant price and trading volume responses for IFRS earnings disclosures, leading to the conclusion that market participants find that those disclosures facilitate trading in U.S. equity markets. This discussion focuses on the paper's incremental contribution to the literature and offers suggestions for improvements in the research design and analyses.

Purpose Despite the increasing demand for socially responsible investments (SRIs) and the importance of information intermediaries in providing corporate social responsibility (CSR) performance information through SRI screens, relatively little is known about the relationship between nonprofessional investors’ views regarding SRI, their use of SRI screens and their actual SRI behavior. This study aims to distinguish between investor views about the importance of corporate environmental responsibility (environmental performance importance views) and whether they view environmentally responsible firms as yielding higher returns (environmental performance return views). It examines the association between these views, SRI screen use and reported SRI holdings. Design/methodology/approach Nonprofessional investor participants completed an online survey about their SRI investment views, screen use and investment behavior. The survey yielded 201 usable responses. Findings The strength of participants’ environmental performance importance and environmental performance return views is positively associated with their use of SRI screens and the proportion of their portfolios held in SRIs. SRI screen use only partially mediates the association between investors’ environmental performance importance and return views and their SRI holdings. Research limitations/implications The study does not precisely address what types of SRI screens nonprofessional investors may be using. It does not control for investors’ specific experience with SRIs, nor does it examine how or why investors come to believe that environmental responsibility may improve a company’s return potential. Practical implications The fact that SRI screen use only partially mediates the association between investors’ views and their SRI holdings suggests that either reliable, unfiltered CSR information is important for nonprofessional investors or some investors are choosing SRIs without obtaining adequate relevant information. Social implications The study’s findings confirm earlier research findings which show an association between investors’ pro-environmental views and their decision to invest in SRIs (Williams, 2007; Nilsson, 2008) and suggest that nonprofessional investors are becoming aware of the positive relation between environmental performance and firm value (Dhaliwal et al., 2011; Clarkson et al., 2013; Hawn et al., 2014; Matsumura et al., 2014). Originality/value This study simultaneously examines the influence of environmental performance importance (an “alternative” investment perspective) and environmental performance return (a “traditional” investment perspective) on investors’ SRI behavior.

Energy taxes are intended to internalize the costs of greenhouse gas (GHG) emissions and to incentivize reductions in GHG emissions; evaluating whether taxes have the desired effect on emissions is an important research question. A second tool to incentivize GHG reductions is an emissions trading system (ETS). We examine data across countries in the EU from 1996 to 2009 and find that as implicit tax rates on energy increased, carbon intensity of emissions decreased. Further, participation in an ETS also resulted in a significant reduction in overall carbon intensity. Carbon emissions can be reduced by using fuel with a lower carbon content (effectiveness) or by using less fuel per unit of output (efficiency); we decompose overall carbon intensity into effectiveness and efficiency measures. We find that as implicit tax rates on energy increased, efficiency measure improved, but effectiveness did not. The EU introduced the ETS in 2005, and we find that while participation in an ETS reduced carbon intensity, it also changed the relation between implicit tax rates on energy and carbon intensity. Specifically, there is a significant inverse relationship between implicit tax rates on energy and all three carbon intensity measures prior to the imposition of the ETS, but after imposition of the ETS, implicit tax rates on energy are only significantly inversely related to the efficiency measure. We suggest that the need to immediately reduce emissions below a specified cap encourages companies to focus on efficiency measures with immediate results, potentially at the expense of effectiveness initiatives. These trade-offs have potential implications for long-run policy outcomes.

Cisco Systems, Inc. manufactures and sells networking and communications products and provides services associated with that equipment and its use. In April 2001, Cisco announced a charge of $2.249 billion against earnings for obsolete inventory. The financial press gave extensive coverage to the write-off, including claims that Cisco was writing off inventory in an effort to set up future windfall profits. Students are required to examine and integrate information from multiple sources, including the relevant U.S. authoritative literature, SEC commentary relevant to Cisco's decision, and Cisco's disclosures, to critically evaluate reactions from the financial press and examine the potential for biased reporting in both Cisco's disclosures and the reactions of the financial press. This case is appropriate for an undergraduate intermediate accounting course or for graduate courses in financial statement analysis or accounting theory.

Businesses are often subject to energy taxes that impose a charge on greenhouse gas emissions. Theoretically, energy taxes should motivate business spending on emissions abatement up to the point that, at the margin, the cost of reducing emissions equals the amount of the tax that is avoided. We use European Union (EU) data from 2001 to 2008 to test the hypothesized positive relationship between energy taxes and business spending on abatement initiatives for the protection of ambient air and climate. We find that while overall business spending and business investment expenditures are positively related to energy tax rates, current period expenditures are not related to energy tax rates. Supplemental analyses indicate that the imposition of the EU Emissions Trading Scheme (ETS) in 2005 affected these relationships. In the pre-ETS period, energy taxes were not related to overall business spending or to current period expenditures, but there was a significant positive relationship between energy taxes and investment expenditures. After the ETS was introduced, there was a significant positive relationship between energy tax rates and both overall business spending and business current period abatement expenditures, but the relationship between business investment spending and energy tax rates was not significant. Our results indicate that energy taxes are effective in motivating business spending on emissions abatement. However, the nature of the effect varies across investment spending and current period expenditures. As both long-term and current initiatives are necessary to meet abatement goals, policymakers should be aware of these differences.

Recently, pressure from multiple stakeholders regarding corporate social responsibility (CSR) policies and activities has resulted in firms' increased effort to measure and report information on numerous environmental and social issues. Disclosure of CSR information has generally been voluntary, and guidelines regarding the measurement and reporting of such information have been developed by stakeholder groups, evolving as a function of social norms. In spite of the apparent plurality of viewpoints contributing to the process, research results indicate that the outcomes seldom reflect the full range of stakeholder concerns, and often reflect only the preferences of dominant corporate interests (see, for example, Archel et al., 2011). Shortcomings in existing reporting and the perceived importance of this information for stakeholder decision making are factors in the call for greater regulation of CSR reporting to facilitate both the existence and comparability of CSR disclosure. While accountability to so...

SUMMARY This study investigated whether auditors who used a diagram designed around systems-thinking principles to acquire information for analytical procedures would focus more on patterns of changes in accounts and assess misstatement risk differently than auditors who used an informationally equivalent diagram organized by business-process categories. During a laboratory experiment, experienced auditors performed analytical procedures using one of two alternative diagrams. Participants documented their concerns about misstatement risk and rated the diagnostic relevance of information about patterns of changes in accounts. Auditors who used the systems-thinking tool focused more on diagnostic patterns of fluctuations in accounts and came to different conclusions about risk. Data Availability: Data will be made available by the authors upon request.

Many studies have shown that individuals make economically irrational decisions by using, rather than ignoring, sunk cost information. In this study, the effects of relevant academic training, financial experience and decision justification on investment decisions involving sunk costs were examined. Data on both the process (strategy) and outcome of the decisions were collected. The results indicate that practicing Certified Public Accountants (CPAs), Masters of Business Administration students (MBAs) and undergraduate accounting students perform better than undergraduate psychology students. The level of training, as measured by the number of college courses in managerial accounting, was found to be positively correlated with performance, while the level of experience, as measured by years of financially-related work, was not. Justification was found to improve decisions only for those participants with significant work experience (MBAs and CPAs). Strategies used in this type of decision were examined with the surprising finding that economically rational decisions can be made even if sunk costs are not ignored. Copyright © 2007 John Wiley & Sons, Ltd.

We analyze the effect of social norms and enforcement on the dynamics of taxpayer compliance. Specifically, we develop two models to evaluate the movement between classes of compliant and noncompliant taxpayers. Our analysis suggests that the effect on compliance of changing enforcement levels depends on whether the taxpayer population is initially compliant or noncompliant. Compliant populations are insensitive to changes in enforcement policies until enforcement becomes sufficiently lax, when we observe a sudden shift to high levels of noncompliance in equilibrium. In contrast, relatively noncompliant populations respond to increased enforcement by gradually increasing compliance. Then, when enforcement becomes sufficiently harsh, we find a sudden shift in equilibrium to very high levels of compliance. After the taxpayer population shifts from compliance to noncompliance, or vice versa, our models predict that returning to the previous enforcement policy will not cause the population to return to its previous state. On the whole, our models' results help explain why taxpayer compliance varies across time and across geographic regions, even under similar enforcement regimes.

Corporate social responsibility (CSR) reporting is emerging in response to demand from a broad range of stakeholders. Comparability and reliability of information would be enhanced if CSR reporting becomes mandatory. If CSR reporting is mandated, which we believe is desirable, the content and form of the disclosure needs to be determined. We examine the underlying conceptual frameworks for both CSR and financial reporting to determine whether it is feasible or desirable for CSR reporting to be integrated with financial reporting. We discuss whether a regulatory body or a participative entity should be responsible for developing an appropriate framework. We also discuss the potential for assurance if CSR reporting were to be integrated with financial reporting as well as specific problems that would be associated with the audit of integrated reports.

This study extends prior research by investigating and finding that nonprofessional investors’ attitudes regarding environmental sustainability affect their views on the relative importance of environmental versus financial performance and whether environmental performance affects firm investment returns. It also investigates how these views moderate the influence of environmental performance and assurance information on investor judgments. Environmental performance has a positive effect on the investment desirability and amount judgments of nonprofessional investors who find environmental performance relatively more important, and assurance has a positive effect on the investment desirability judgments of this same group of investors. However, neither environmental performance nor assurance affects the investment judgments of nonprofessional investors who believe that environmentally responsible companies yield higher returns. The results suggest that investors’ environmental attitudes are important in influencing the effects of environmental performance information on investment judgments.

There is an increasing demand for socially responsible investment (SRI), and SRI screens are an important source of information for investors. Yet, little is known about the relationship between investors’ attitudes, use of SRI screens, and actual SRI behavior. To examine this relationship, we gathered data on investors’ environmental attitudes, use of SRI screens, and SRI behavior. We find that four out of five components of the New Ecological Paradigm (NEP) scale, a measure of basic environmental attitudes, are associated with specific attitudes towards environmentally responsible investment. These specific attitudes in turn are positively associated with SRI screen use, and SRI screen use is positively associated with the percentage of investors’ portfolio held in SRIs. There is also a significant direct relationship between specific environmentally responsible investment attitudes and SRI holdings. Our results suggest that there are complex, multi-dimensional relationships between investor attitudes, SRI screen use, and investment behavior.

This paper reports the results of a study designed to investigate the existence of an unintended causal relation between firm corporate social responsibility (CSR) performance and investors' assess...

This paper provides a theoretical analysis of the impact of social norms and enforcement regime on the dynamics of taxpayer compliance. An aggregate-level model, inspired by epidemic models in mathematical biology, is developed to evaluate the flows between classes of compliant and noncompliant taxpayers. Convergence in theoretical results is sought and found via a second model that emphasizes micro-level agent behavior. Several interesting observations arise from our analysis. In particular, the impact of changing enforcement levels on compliance depends upon whether the initial population is relatively compliant or non-compliant. Compliant populations are insensitive to changes in enforcement policies until the policies become sufficiently lax. Then a sudden shift to high levels of noncompliance is observed. In contrast, relatively noncompliant populations respond to increased enforcement severity by gradually increasing compliance. Then, when enforcement becomes sufficiently harsh, a sudden shift in aggregate behavior is observed, to very high levels of compliance. Once the discontinuous shift in behavior (from compliance to noncompliance or vice versa) occurs, our models predict that a return to the enforcement policy existing immediately before the change in behavior will be insufficient to cause the population to return to its previous state. Finally, over a range of compliance levels, two equilibria are observed that are dependent on the initial compliance behavior of the population. This is consistent with the observation that compliance varies considerably across time and geographically under similar enforcement regimes.