International Journal of Economics and Financial Research

Online ISSN: 2411-9407
Print ISSN: 2413-8533

Quarterly Published (4 Issues Per Year)


Volume 2 Number 7 July 2016

Financial Reporting Quality on Investors? Decisions

Authors: Nwaobia A. N. ; Kwarbai J. D. ; Jayeoba, O. O. ; Ajibade A. T.
Pages: 140-147
Financial reporting quality has been said to play an important role in reducing information asymmetry. Thus, firms with high financial reporting quality may enhance more investors’ decision. Hence, the basic objective of this study is to determine whether earnings quality influence investors’ decision. The sample consisted of 10 manufacturing companies listed on the Nigerian Stock Exchange Market. The study period is 5 years (2010-2014). Data on accrual quality, volume of investment, Size, age and growth rate and earnings per share were drawn from the published annual report and accounts of the sampled companies. Correlation matrix, Vector auto regressive estimation and Pooled OLS model were employed for the analysis. Diagnostic tests for post estimation were also performed on the model. The result of the Ramsey Reset test shows a p-value of 0.2105, implying that model has no omitted variables. Also, Wooldridge test for autocorrelation in panel data indicates no first-order autocorrelation, showing a p-value of 0.3642. We calculated accruals quality based on the modified accrual model proposed by Mac Nichols in 2002. In this paper, the absolute value of residual error represents the financial reporting quality. This threshold is based on the idea that accruals reduce the smoothing initiated by the change in the cash flow and thus increase the earnings awareness.  The study finds evidence of a positive association between investors’ decision and financial reporting quality.  

VAT Compliance Challenges in Ghana and How to Address Them

Authors: Boadu Ayeboafo
Pages: 132-139
The government of Ghana replaced Sales and Services Tax with Value Added Tax (VAT)) in March 1998 with the aim of widening the tax net and improving the efficiency of tax administration.  It has been 17 years since VAT was introduced in Ghana, but the VAT systems have not achieved most of its objectives due to many compliance challenges.  VAT strives on voluntary compliance and accurate bookkeeping because VAT is self-assessed. This paper examines the various compliance challenges facing VAT administration in Ghana and makes recommendations for improving voluntary compliance and efficient VAT administration.  Semi-structured interviews were conducted with VAT Administrators and taxable persons to ascertain their perceptions on the major challenges confronting compliance and how best to address them. The study found out that VAT compliance is low partly because VAT registration and filing procedures are too complex for the small traders. Also most businesses fail to keep proper books of accounts on which accurate VAT assessment could be done.  In addition many taxpayers fail to comply because they have negative perception about how the government uses tax revenue. The paper makes many recommendations that could be implemented to improve VAT compliance in Ghana.  These include implementation of electronic VAT registers; simplification of VAT registration and filing procedures, decentralization and ensuring regular VAT Audits.