Chen, Esther, and Ilanit Gavious. “The Roles of Book-Tax Conformity and Tax Enforcement in Regulating Tax Reporting Behaviour following International Financial Reporting Standards Adoption.” Accounting & Finance (early view; online first).
This study investigates whether increasing the level of tax enforcement can potentially offset the primary cost of a reduction in the level of book-tax conformity (BTC) following International Financial Reporting Standards (IFRS) adoption – increased tax avoidance. We find that after the decrease in BTC and the concomitant increase in tax enforcement that followed IFRS adoption in Israel, tax avoidance declined significantly. Our results imply that one of the primary costs of reducing BTC can be avoided. Moreover, the results suggest that rather than one strict regulatory approach to deal with reporting manipulations, a combination of trust and control is more effective and less radical.
Daraghma, Zahran Mohammad Ali and Raed Ali Mahmoud Iriqat. “Exploring Economy Dependence in the Middle East Using Governmental Accounting Indicators: The Case of Palestine, Jordan & Israel.” International Business Research 9.1 (2016): 154-64.
This paper aims at examining the causality between Palestine, Jordan, and Israel economics using three macroeconomic (governmental accounting) measurement indices: Gross Domestic Product [GDP], Inflation Rate [IR] and Unemployment Rate [UR]. In order to achieve this purpose, this manuscript employs a macroeconomic time series analysis on data gathered in Palestine, Jordan, and Israel from 1997-2014. The paper employs a variety of econometric statistical methods (e.g. descriptive statistics, correlation tests, ordinary least squares, and Granger causality test). The findings of this paper statistically support the notion that both GDP in Israel and GDP in Jordan effects the Palestinian GDP. These findings put an emphasis on the dependency of the Palestinian economy on both the Jordanian and Israeli economies. Furthermore, in lieu of the findings, this study recommends that fiscal policy makers in Palestine exert serious efforts to attract additional foreign and expatriate investments, attempt to create a stable and attractive entrepreneurial and investment climate, and build national support for local products and services to minimize the interdependence. These recommendation could inspire greater confidence in the Palestinian economy and help create a better investment climate.
eXtensible Business Reporting Language (XBRL) is a language for the electronic communication of business and financial data which is revolutionizing business reporting around the world. It is a tool to bridge potential language barriers and unify financial reporting. This has appeal to foreign investors, among others, who can rely on information in XBRL-tagged financial reports to make investment decisions without having to translate financial statements from local language. In 2008, Israel required most public companies to adopt International Financial Reporting Standards (IFRS) for financial reporting and to use XBRL-tagged reporting format, as part of an aggressive effort to make its capital markets more transparent and attractive for foreign investors. In this paper, we study all Israeli public companies and analyze the accuracy and reliability of their XBRL-tagged financial statements that are available on MAGNA, the Israel Securities Authority’s electronic system. We describe the process by which the XBRL-based data were collected and reported. We document, categorize, and analyze deficiencies in the XBRL-tagged filings, and inconsistencies between them and the Hebrew-based annual reports. We observe pervasive data entry errors resulting in inaccurate XBRL-generated financial reports, which went undetected for over one year. Further, first year XBRL reporting (in conjunction with IFRS adoption) did not increase foreign investment in the Israeli capital markets. This analysis allows us to better understand the benefits and challenges of the adoption of XBRL.