Ainul Islam

Big 4 Auditor Affiliation and Accruals Quality in Bangladesh

Purpose - Bangladesh is an emerging economy and international audit firms operate there through affiliated local audit firms. The Bangladesh audit market can be characterized as an intensely competitive small audit market with relatively poor demand for high-audit quality. In addition, Bangladesh has a relatively small and under developed but growing capital market that is characterized by poor corporate regulation and weak investor protection. The purpose of this paper is to examine the association between Big 4 affiliated auditors and accruals quality in Bangladesh. Design/methodology/approach - Following prior literature, this paper uses both absolute discretionary accruals and signed discretionary accruals as proxies of accruals quality. The sample is 382 firm-year observations and covers fiscal years 2000-2003. Findings - It was found that the association between Big 4 affiliates and accruals quality in Bangladesh depends on measures of accruals quality and accruals models used. Overall, Big 4 affiliates do not have a positive impact on accruals quality of their clients in Bangladesh. Originality/value - This paper contributes to the literature on audit quality and accruals quality. The results potentially suggest that Big 4 affiliates do not have any positive impact on accruals quality of clients in an intensely competitive audit market where the demand for quality audit is poor and monitoring is lax and raise potential implications for policy makers and market participants in Bangladesh.

Consumption Taxes in Developing Countries - The Case of the Bangladesh VAT

In common with many developing countries, Bangladesh faces problems in raising sufficient tax revenues to fund its economic and social development. To address this problem and to improve economic efficiency and growth, a major tax reform program was initiated in 1991 which centred on the introduction of a valued-added tax (VAT) to replace a range of narrowly-based consumption taxes. This paper revisit the basic structure of VAT system of Bangladesh and attempt to analysis the contribution and performance of VAT in Bangladesh as comparing to other developing countries and also attempt to identify and provide some suggestions in possible area where attention and improved performance are required to enhance the contribution of VAT in economic development of Bangladesh. The relevant data shows that the performance of VAT was quite satisfactory in the initial years - but subsequently VAT collection has remained stagnant at a certain level. As a result, VAT is unable to meet the objectives for which it was introduced. The reasons behind this performance are many, such as: a relatively small number of VAT tax-payers, a general lack of awareness, and a weak monitoring system etc. There is still scope for improving the revenue collection from VAT: by increasing the number of VAT taxpayers; reforming the VAT administration; creating intensive awareness among the people, revisiting the list of VAT exempted items and increasing the efficiency of the monitoring system.

Intellectual capital and market performance: The case of multinational R&D firms in the U.S.

ABSTRACT:Intellectual capital (IC) is considered as a key resource in business. However, it is difficult to measure and compare across firms due to its intangible nature. The Value Added Intellectual Coefficient (VAIC) model proposed by Pulic (1998; 2000) might be used to overcome these issues. The purpose of this study is to apply the VAIC model to investigate the impact of IC on market performance among R&D engaging firms. The sample for this study comprises multinational firms listed on the United States (U.S.) stock exchanges which engaged in R&D activity during the period 2006-2013. The sample employed consists of 1,328 firm-year observations and the data were obtained from the Compustat database. Market performance is measured using the market-to-book ratio and Tobin’s q ratio. The study employs the VAIC model to measure aggregate IC efficiency and its elements: human capital efficiency, structural capital efficiency and tangible capital efficiency. The study also controls for the effects of size, leverage, year and industry on market performance. The data were analyzed using descriptive, correlation and multiple linear regression analyses. From the regression analysis, the results indicate that aggregate IC efficiency has a positive and significant association with market performance among R&D firms. However, among the components of aggregate IC efficiency, human capital efficiency has no significant association with R&D firms’ market performance while structural capital efficiency and tangible capital efficiency have a positive and significant association with market performance. The findings suggest that the synergy derived from the combination of IC and tangible resources has a significant influence on the market valuation of R&D firms. The finding also suggests the importance of structural and tangible capital over human capital in R&D engaging firms. The findings provide not only empirical evidence on the relationship between IC and market performance among R&D engaging firms, but also provides important further evidence on the VAIC model as an IC measurement method. Empirical studies to date have found mixed evidence on the adequacy of the VAIC model. In respect of structural and tangible capital the results of this study provide support for the VAIC model; but not in respect of human capital.