Abstract

Current accounting standards allow purchased goodwill to be offset by expenses related to internally generated intangible assets. We find that firms with purchased goodwill strategically misclassify core expenses—specifically cost of goods sold (COGS) and selling, general, and administrative expenses (SG&A)—as research and development (R&D) spending to avoid recognizing goodwill impairments. However, this misclassification does not preserve the economic asset quality of purchased goodwill nor re...

Abstract

This study examines the potential impact of the OECD Global Minimum Tax (GMT), which began taking effects in major jurisdictions starting in 2024, on Taiwanese multinational enterprises (MNEs). Using data from Taiwanese listed and over-the-counter (OTC) companies, we simulate additional tax liabilities under the GMT framework and investigate how firm characteristics and industry attributes are associated with firms’ exposure to the minimum tax. The results show that firms with larger revenue sc...

Abstract

Using inventory and accounts receivable as primary examples, this paper investigates whether Key Audit Matters (KAM) effectively convey significant corporate operational risks and whether the reporting of KAM influences the subsequent operational decisions. Based on empirical data analysis of listed companies in Taiwan (excluding the financial industry) from 2016 to 2023, the empirical results reveal that when a company’s inventory (or accounts receivable) is reported as a KAM, there is a signif...

Abstract

Discretionary accruals are often used to measure financial reporting quality. To be a valid proxy for earnings management detection, its large magnitude should not be systematically related to other growth characteristics or economic fundamentals. This study finds that the large values of discretionary accruals estimated from the Jones-type regression model, with and without ROA-matching adjustment, are skewed towards extreme earnings-to-price ratios and past sales growth in the Taiwan market. W...