FINANCIAL REPORTING INCENTIVES: TAXATION AND EXTERNAL FINANCING NEED

Earnings management literature extensively explores tax regime and debt contracting as possible incentives in financial reporting. Firms engage with aggressive financial reporting to bias earnings in periods when the need for external financing increases. Contrary to this, the tax burden represents incentive for more conservative reporting.   We argue that the level of firm’s financial reporting aggressiveness is not constant but rather floating from period to period, directly effecting quality of financial reports. We assume that firm’s management on its own discretion determines level of conservatism balancing between these two incentives. The prevailing of two incentives, the need for external financing and the tax burden, determines level of conservatism in particular reporting period.   We hypothesised that the reduction in tax burden incentive overcomes the debt contracting incentive in years of decreasing external financing need, implying more conservative accounting to balance between economic and taxable income. The total accruals are used as a measure of earnings management reflected to working capital accruals.   The data analysis conducted on financial reports of 297 firms in the time-series of five years shows significant correlation between total accruals, external financing needs and the difference between economic and taxable income

DOING BUSINESS WITH THE STATE AND FIRMS' GROWTH. GRASPING INVISIBLE RELATIONAL CAPITAL

This study investigates relationships between reported assets growth, human capital effectiveness, ability to do business with state and firms' growth. Longitudinal data were extracted from annual financial reports. Sample includes 80 companies in construction industry of Bosnia and Herzegovina from 2008-2013. Generalized estimating equations (GEE) approach is used for investigation of previously mentioned associations. We found that working with the state in Bosnian construction sector is dominant factor for outstanding increase in net reported income, while the human capital efficiency is negatively associated to its change. These findings support the theory of markets with asymmetric information, suggesting that the relational and social capital of the firm in the imperfect markets, where the state is dominant customer, drives the growth and that precedes firm’s investments into development of intellectual capital.JEL Codes - M4

Correlation of work ability and degree of depression in patients with primarly generalised epilepsy

Cilj: Cilj istraživanja bio je utvrditi korelaciju radne sposobnosti i stepena depresivnih simptoma kod osoba sa primarno generaliziranom epilepsijom. Materijali i metode: U studiju je uključeno 100 pacijenata (50 muškaraca i 50 žena) sa generaliziranim toničko kloničkim (GTK) atacima. Analizirana je životna dob, spol, stručna sprema, radni status i stepen depresije. Depresivni simptomi ispitanika su mjereni Hamiltonovom skalom za depresiju, a korelacija Pearsonovim testom. Rezultati: Srednja životna dob ispitanika je 32.3±12.1. Srednju stručnu spremu je imalo 57 ispitanika, osnovnu školu 31, a jednak broj (6) ispitanika je bio bez škole ili sa visokim obrazovanjem. Najveći broj ispitanika je bio nezaposlen (36), zaposlenih 25, domaćica 21, učenika 11, studenata 5, te jedan redovni i prijevremeni penzioner. Prosječna vrijednost stepena depresivnosti pacijenata sa GTK atacima iznosila je 10.5±7.6 (0-31). Najveći broj pacijenata nije imalo znakove depresivnosti (46) dok je umjerenu depresivnost imalo 33 pacijenta, izrazitu depresivnost 21 pacijent. Zaposleni imaju srednju vrijednost skora Hamiltonove skale 11.1±7.0 (2-27), 32% nije imalo simptome depresivnosti, 52% je imalo simptome manje depresije, dok je 16% imalo veliku depresiju. Stepen depresivnosti kod pacijenata koji su bili nezaposleni nije se signifikantno razlikovao (p=0.4) od stepena depresivnosti zaposlenih 9.6±7.6 (0-31). Simptome depresivnosti kod nezaposlenih nije imalo 41.7% ispitanika, simptome manje depresije je imalo 38.9%, a veliku depresiju je imalo 13.9%. Koeficijent korelacije stepena depresivnih simptoma i radne sposobnosti iznosio je (r=-0.71). Zaključci: Analiza pokazuje da epilepsija bitno narušava radnu sposobnost, kao i njenu značajnu povezanost sa stepenom depresivnosti. Signifikantna je razlika u stepenu obrazovanja muškaraca i žena, u smislu boljeg obrazovnog statusa u žena.Aim: The aim of this study was to determine the correlation between work ability and degree of depression in patients with primarly generalised epilepsy. Materials and Methods: This study included 100 patients (50 male and 50 female) with generalized tonic-clonic (GTC) seizures. The age, qualifications, gender, working status and degree of depression were analyzed. Depression symptoms were measured by the Hamilton depression scale, and correlation by Pearsons test. Results: Average age of included patients was 32.3 ± 12.1. There were 57 secondary school graduates, elementary school 31 and equal number without elementary or higher education. The maior number were unemployed (36), 25 employees, housewives 21, students 11, faculty students 5 and one regular/early retirees. The average degree of depression of patients with GTC seizures was 10.5 ± 7.6 (0-31). The maior number had no signs of depression (46), moderate depression had 33 patients, meaningly depressed 21. Employees had a middle value 11.1 ± 7.0 (2-27), 32% had no symptoms of depression, 52 % less depression and 16% great depression. The degree of depression in patients who were unemployed did not changed significantly comparing to employed patients 9.6 ± 7.6 (0-31). There were no symptoms of depression in 41.7% unemployed patients, less depression symptoms in 38.9% and high grade depression in 13.9% . Correlation coefficient of variables was r=-0.71. Conclusions: Analysis show that epilepsy affects work ability, as its significant association with the degree of depression. Also there is difference in the level of education between gender, in terms of better educational status in women

Doing Business with the State and Firms’ Growth. Grasping Invisible Relational Capital

This study investigates relationships between reported assets growth, human capital effectiveness, ability to do business with state and firms' growth. Longitudinal data were extracted from annual financial reports. Sample includes 80 companies in construction industry of Bosnia and Herzegovina from 2008-2013. Generalized estimating equations (GEE) approach is used for investigation of previously mentioned associations. We found that working with the state in Bosnian construction sector is dominant factor for outstanding increase in net reported income, while the human capital efficiency is negatively associated to its change. These findings support the theory of markets with asymmetric information, suggesting that the relational and social capital of the firm in the imperfect markets, where the state is dominant customer, drives the growth and that precedes firm’s investments into development of intellectual capital