We explore the role of auditor reputation in driving the value of smart contract audits (SCAs) within the decentralized finance (DeFi) ecosystem. Given the lack of regulatory oversight and the risk of cybersecurity breaches against the protocols comprising the DeFi ecosystem, a marketplace has emerged for voluntary on-demand assurance to identify vulnerabilities in smart contracts’ coded logic. After documenting that market participants value SCAs and exploring the protocol attributes associated with the demand for smart contract audits, we show that auditor reputation can be established through both advertising (i.e., engagement on Twitter) and the delivery of a high-quality audit, which significantly shape the extent to which an SCA is valued. Additional analyses suggest that the value of an SCA is maximized when both high advertising and high audit quality are present, highlighting the complementary role of these two factors in enhancing auditor reputation. Furthermore, we find that events conceivably damaging the reputation of the auditor (i.e., breaches of protocols recently audited) generate a negative spillover to the auditor’s other recent clients. Overall, our study provides novel insights about the role of auditor reputation in emerging audit markets. This paper was accepted by Suraj Srinivasan, accounting. Supplemental Material: The online appendices and data files are available at https://doi.org/10.1287/mnsc.2023.02245 .
Given Vietnam's current anticorruption campaign and its distinctive context of decentralized governance and public sector dominance, this paper investigates how anticorruption efforts affect corporate investment behaviour during 2006 and 2019. Using a novel text-based measure of anticorruption and comprehensive firm-level datasets, we uncover a consistent pattern that firms tend to delay investments in response to heightened uncertainty triggered by anticorruption activities. This strategic hesitation reflects a rational response to avoid potential regulatory and political uncertainty, and holds across a wide range of robustness checks, including alternative model specifications, variable definitions, and advanced estimation techniques such as system GMM and entropy balancing. Our findings also reveal that anticorruption campaigns significantly reduce informal business costs—particularly bribery, thus highlighting institutional improvements and a more transparent business environment. Notably, while public sector investment efficiency improves under the campaign, private firms show no significant efficiency gains, underscoring the asymmetry in how reforms affect different ownership structures. By bridging institutional reform with corporate finance, the study offers new insights into the channels through which anticorruption influences firm decision-making, governance, and political strategy. This research fills a critical gap in the literature, demonstrating that anticorruption is not merely a legal or ethical issue, but a transformative force in corporate investment dynamics.
Anas Ghazalat, Ala’a Zuhair Mansour, Shadi Maher Al-Khasawneh, Mohammad Abedalrahman Alhmood
Background SMEs failure is common within the first 5 years. For efficient resource management and improve corporate performance, SMEs need management accounting systems. Structure, strategy, and staff qualifications affect MAS adoption in organizations. Objective : This study aims to examine the effect of contingent factors in the adoption of MAS, as well as the effect of MAS on performance, and also the role of MAS as a mediator between performance and contingent factors in SMEs in Jordan. Methods PLS-SEM was used to evaluate a questionnaire of accounting department heads and finance managers from Jordanian SMEs ( N = 415). Results Decentralization, accounting staff qualification, differentiation strategy, and low-cost strategy directly increase MAS adoption. This study shows that MAS improve performance significantly. This study also shows that MAS mediate the relationship between decentralization, accounting staff qualification, differentiation strategy, and low-cost strategy and SME performance in Jordan. Conclusions The study found that contingent factors can help us understand how managers can use MAS information to improve performance. The results only somewhat expand the corpus of research on MAS’s usefulness, but they help us understand the aspects that may affect MAS design and performance in firms.
This study explores how blockchain technology enhances enterprise accounting information quality through a mixed-methods approach combining theoretical analysis and empirical testing. By constructing a "technology characteristics-quality dimensions-market efficiency" theoretical framework, we examine the specific mechanisms by which blockchain's decentralization, immutability, traceability, and transparency affect accounting information reliability, timeliness, and comparability. Using machine learning techniques on data from listed companies across retail, finance, and manufacturing sectors, we verify significant improvements in accounting information quality post-blockchain implementation, with notable industry heterogeneities. The research contributes a blockchain accounting maturity model and provides practical guidance for enterprises and regulatory authorities in promoting digital transformation of accounting systems.
This study investigates the transformative potential of blockchain technology in financial accounting by examining its applications, challenges, and implications. The study begins with a review of blockchain’s origins and its ability to address inefficiencies, fraud risks, and transparency limitations in traditional accounting. A mixed-methods approach was employed, combining qualitative thematic analysis and quantitative statistical techniques. The qualitative analysis involved thematic coding of data from case studies and organizational reports, while the quantitative analysis assessed financial data using descriptive and inferential statistical methods. Eight organizations from diverse industries—including banking, retail, and technology—were purposively sampled to capture varied experiences and applications of blockchain technology. Key findings reveal blockchain’s ability to enhance transparency, efficiency, and security in financial transactions, offering significant advantages for financial reporting and auditing. However, challenges such as regulatory uncertainties, scalability concerns, and technical complexities remain barriers to its widespread adoption. This research provides actionable recommendations to overcome these challenges and maximize blockchain’s benefits in financial accounting. By integrating theoretical insights with empirical evidence, this study contributes to advancing the understanding of blockchain’s role in transforming financial practices, offering practical guidance for academia and industry practitioners alike.
Triple Entry (TE) is an accounting method that utilizes three accounts or 'entries' to record each transaction, rather than the conventional double-entry bookkeeping system. Existing studies have found that TE accounting, with its additional layer of verification and disclosure of inter-organizational relationships, could help improve transparency in complex financial and supply chain transactions such as blockchain. Machine learning (ML) presents a promising avenue to augment the transparency advantages of TE accounting. By automating some of the data collection and analysis needed for TE bookkeeping, ML techniques have the potential to make this more transparent accounting method scalable for large organizations with complex international supply chains, further enhancing the visibility and trustworthiness of financial reporting. By leveraging ML algorithms, anomalies within distributed ledger data can be swiftly identified, flagging potential instances of fraud or errors. Furthermore, by delving into transaction relationships over time, ML can untangle intricate webs of transactions, shedding light on obscured dealings and adding an investigative dimension. This paper aims to demonstrate the interaction between TE and ML and how they can leverage transparency levels.
We analyse the economic determinants and dynamics of transaction fees in the Ethereum blockchain before and after two significant platform updates. The first is the August 2021 EIP-1559 ‘London’ upgrade, a switch from user-bid gas price (transaction fee per unit of complexity) to a fee model in which the gas price is the sum of an algorithmically determined base fee and an optional priority fee (tip) chosen by the user. The second update (‘the Merge’) is the switch from proof-of-work to proof-of-stake transactions validation in September 2022. We estimate the impact on Ethereum transaction fees of both demand factors (block utilization, transaction type, ETH price in USD) and algorithmic supply-side factors (the block gas limit and base fee). Using data from nearly 900 million blockchain transactions, we find that the gas price is statistically significantly positively associated with the block utilization rate. A larger share of contract call transactions or legacy (user-bid gas price) transactions is linked with higher gas prices on average. On the supply side, a higher block gas limit is statistically significantly associated with lower gas prices.
This study examined the association between corporate cryptocurrency activities and tax avoidance outcomes, utilizing data from US public firms covering the period from 2015 to 2023. Financial data were sourced from Compustat, while details regarding cryptocurrency activities were manually extracted from 10-K and 10-Q filings. Our analysis employed a fixed-effects regression model to examine the impact of these activities on cash effective tax rates (ETR). The findings indicate that firms engaged in cryptocurrency activities tend to have a lower ETR compared with those without such involvement. Notably, this effect was predominantly observed in companies directly engaged in cryptocurrency activities, such as accepting cryptocurrency as a payment method or actively trading cryptocurrency on an exchange platform. In contrast, firms involved in crypto mining or initial coin offerings did not exhibit a similar association. Our findings offer significant regulatory insights for governance bodies concerned with the implications of corporate cryptocurrency activities on tax strategies.
Against the backdrop of the Industrial Revolution 4.0, the advantages of blockchain technology in traceability, transparency, safety improvement, and efficiency improvement have made it possible to reduce the work of accounting personnel by 50 %, thus saving billions of dollars for global companies by combining this technology with accounting. However, the blockchain technology associated with accounting is in the experimental stage and has several problems to be solved including limited data processing capacity, information confidentiality, and regulatory difficulties. This innovation and progress in science and technology has provided more abundant, efficient, and professional technical support for the research of blockchain accounting documents. Among these advances, CiteSpace software has promoted the development of blockchain and accounting in the direction of visualization, comprehensiveness, security, and relevance. In this study, we used the knowledge map drawn by CiteSpace to search the core Blockchain Accounting database from 2013 to 2023 on the Web of Science (WoS). We obtained 1414 documents measured according to co-citation analysis, log-likelihood ratio (LLR) network clustering, co-occurrence keywords, and emergent time zone diagram method. We analyzed and summarized the important documents, research keywords, key research fields, and knowledge evolution related to "blockchain accounting" by network, literature integration, and popular research topics. We found that adopting blockchain technology in accounting information systems is expected to improve recordkeeping and reporting. Blockchain, as an innovative technology, provides a tamper-proof, traceable, and shareable platform for accounting information by using a distributed ledger system. By implementing blockchain, artificial intelligence can improve safety, transparency, and accuracy, and also may completely change the way we manage financial records. With its ability to improve overall efficiency and reduce errors, blockchain technology may change our familiar accounting methods. In addition, blockchain technology, intelligent contract, artificial intelligence, the Internet, information systems, and supply chain are the most important keywords, while blockchain technology, intelligent contract, and artificial intelligence are important components of blockchain accounting knowledge system. This research provided an important opportunity to advance the understanding of the crucial contribution of blockchain to the accounting field.
Johnnatan Messias Peixoto Afonso, Krzysztof Gogol, Maria Inês Silva, Benjamin Livshits
This paper examines inscription-related transactions on Ethereum and major EVM-compatible rollups, assessing their impact on scalability during transaction surges. Our results show that, on certain days, inscriptions accounted for nearly 90% of transactions on Arbitrum and ZKsync Era, while 53% on Ethereum, with 99% of these inscriptions involving meme coin minting. Furthermore, we show that ZKsync and Arbitrum saw lower median gas fees during these surges. ZKsync Era, a ZK-rollup, showed a greater fee reduction than the optimistic rollups studied -- Arbitrum, Base, and Optimism.
This study aims to investigate the influence of blockchain and artificial intelligence on the audit quality of firms from Turkey. Primary data from 300 respondents are collected through random sampling to attain the study's objectives. PLS-SEM is used to investigate the relationship between exogenous and endogenous variables. Our findings show that blockchain technologies and artificial intelligence (AI) utilization in their financial system positively impact audit quality by assisting in the audit process and the detection of fraud, which also improves financial reporting. Blockchain and Artificial Intelligence in the financial system create confidence for investors, stakeholders, and legislators. Moreover, this study advocated significant implications for investors, government, firms, and policymakers. Investors can make investment decisions based on the accuracy of the financial accounts; the government and policymakers can improve the governance mechanism by using the study's findings.
Darigi Bharath Naik, Sebastian Terence, Angeline Lydia
This article provides a comprehensive analysis of the emerging market for non-fungible tokens (NFTs), focusing on the role of rarity in the valuation of these digital assets. It is well known that rarity has an impact on the price of non-fungible tokens (NFTs). Investors often make purchasing decisions based on NFT lows. In this paper we used the trait rarity method to calculate the rarity of NFTs and identified rare NFT. Since the rarity plays vital role in pricing and value of NFT, we have utilized rarity in NFT price calculation. Through a rigorous analysis of rarity scores and other methods of measuring rarity, we came to understand their impact on NFT value. This research contributes to the digital asset valuation debate and provides insight into the development of the NFT market.
To understand the disruption and implications of distributed ledger technologies for financial reporting and auditing, we analyze firm misreporting, auditor monitoring and competition, and regulatory policy in a unified model. A federated blockchain for financial reporting and auditing can improve verification efficiency not only for transactions in private databases but also for cross-chain verifications through privacy-preserving computation protocols. Despite the potential benefit of blockchains, private incentives for firms and first-mover advantages for auditors can create inefficient under-adoption or partial adoption that favors larger auditors. Although a regulator can help coordinate the adoption of technology, endogenous choice of transaction partners by firms can still lead to adoption failure. Our model also provides an initial framework for further studies of the costs and implications of the use of distributed ledgers and secure multiparty computation in financial reporting, including the positive spillover to discretionary auditing and who should bear the cost of adoption. This paper was accepted by David Simchi-Levi, finance. Funding: The authors gratefully acknowledge research support from the FinTech Laboratory at J. Mack Robinson College of Business at Georgia State University, the Center for Research in Security Prices at the University of Chicago, the Ripple University Blockchain Research Initiative, and the Smith AI Initiative for Capital Market Research at the University of Maryland. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2023.02577 .
D. Larry Crumbley, Donald L. Ariail, Amine Khayati
Crypto assets have upset the pillars of regulatory and centralized monetary policy, and the Financial Accounting Standards Board (FASB) has been slow in developing a position on how to account for cryptocurrencies. Currently, there are many accounting, finance, and tax meanings of cryptocurrencies. The purpose of this study is to show the path FASB has taken to develop accounting standards for more than 20,000 crypto assets, outline the positions other authorities and agencies have taken, and discuss Central Bank Digital Currencies since the United States and other countries are considering replacing their fiat currency with a digital currency. Furthermore, the study presents insights from an exploratory survey of accounting faculty opinions on cryptocurrencies. The discussion of virtual currency regulatory and accounting treatments informs the development of a regulatory framework.
Yazan Abu Huson, Laura Sierra‐García, María Antonia García Benau
This study analyzes the state of the art in the literature about information technology, artificial intelligence, and blockchain in auditing. A bibliometric analysis was utilized to depict publishing activity, research trends, and popular topics. In all, 328 studies were published between 2017, and 2022 in the Web of Science core collection, which is one of the most trustworthy databases, and the most important authors, journals, topics, and countries related to the keywords of the study were identified. To visually represent the data, the study employed the software VOSviewer, which graphically displays the relationships and patterns within the literature. This research allows us to suggest potential future research directions that may be useful in reflecting on the significant impact that technology will have on the development of the auditing profession. Four independent research trends were identified: The first trend shows the determinants of independence, and audit quality in an information technology environment. The second trend focuses on the challenges of applying blockchain technology in the auditing, and accounting professions. The third trend is the analysis of accounting data using artificial intelligence technologies. The fourth trend is related to the impact of modern technological systems on auditors’ performance in the future.
Internal Auditing (IA) as a profession has reshaped over decades in order to adapt to the constantly changing environment surrounding it. Internal auditors are ongoingly confronted with new technologies and need to be aware of complex digital risks, new fraud schemes, but also hot topics like Internet of Things, Artificial Intelligence and Blockchain. For blockchain a lot of the spotlight was historically on the investment and capitalization aspects of cryptocurrencies whereas the technology itself has evolved from a mere means of payment and value storage to more complex business constructs managed by self-enforcing smart contracts and oracles. In this dissertation the established and internationally recognized standards of internal auditing are applied to the context of newly popping up blockchain-based Decentralized Autonomous Organizations (DAOs) that operate on a series of smart contracts. The tokenized nature of ownership of these distributed ledgers as well as some law experts' assessments imply that they may have to be classified as public capital corporations and therefore be subjected to stricter rules and standards. Not only are internal audit functions highly recommended for large organizations but depending on the corporate laws of a country and the industry they are likely to be mandatory. While DAO-enthusiasts imply that the immutable nature of the blockchain, the recognized consensus mechanism, and strong preventive and automated controls will make internal auditing obsolete, this research sheds light on whether there are conceptual obstacles for IA in DAOs regarding compliance with internationally recognized internal auditing standards and therefore question the overall legality of this type of organization. After an initial analysis of professional and scientific publications as a basis, each IA standard is reviewed for obstacles, benefits, and challenges regarding the respective compliance in a DAO context utilizing an exploratory research method. Because it appears that there may be governance and operational collisions with regard to the strict standards of the Institute of Internal Auditors on the one hand and the conceptual unique setup of blockchain-based DAOs on the other, we evaluate the hypothesis by which standard compliance is impossible and therefore the legality of a DAO in itself may be in question. In addition, we analyze whether and how the use of a DAO can benefit and/or complicate the compliance with each internal auditing standard. This foundational research dissertation may offer guidance on what safeguards DAOs need to implement to comply with certain laws and standards but also addresses policy and standard makers with the assignment to update their rules and offer guidance for implementation. The dissertation may also offer guidance for the mandatory external and internal quality assessments (IIA Standards 1311 and 1312) of internal audit functions in DAOs. Overall, it presents additional insights to related professions like accountants, compliance officers, external auditors, anti-fraud professionals, IT auditors and others while offering a glimpse into what the role of an internal auditor of the future might realistically look like.
Yahya Marei, Adel Almasarwah, Mohammad Al Bahloul, Malik Abu Afifa
Purpose This study aims to investigate the extent to which newly certified public accountants (CPAs) and accounting graduate students possess a comprehensive understanding of cryptocurrencies and the skills they have acquired throughout their education. Design/methodology/approach A qualitative analysis was used through semi-structured interviews to obtain an in-depth insight into cryptocurrencies, which could not be investigated easily through quantitative methods, and to provide an understanding of the context for cryptocurrencies from CPA and non-CPA students' points of view. This was in addition to focusing on understanding the differences between the students' thoughts. Findings This study found that recent accounting graduates and CPA members have the least awareness of cryptocurrencies, likely due to a lack of professors' comprehension or exposure to the concept. However, students involved in forensic courses provided more information about cryptocurrencies compared with other students. Research limitations/implications The data are limited to only a single country. Given that cryptocurrencies are a relatively new notion in accounting, there is an alarming lack of legislation. Further, the authors found that recent accounting graduates and CPAs had the same level of knowledge of cryptocurrencies, most probably due to a lack of exposure during their education and academics' limited understanding of the concept. Practical implications The students' differing answers about cryptocurrencies show differences in their current level of understanding of cryptocurrencies. Originality/value This study has identified that the vast majority of accounting graduates lack adequate knowledge about cryptocurrencies or access to adequate resources, despite understanding the fundamental concepts of cryptocurrency.
Abstract: This research aims to examine the current practices of accounting for bitcoins by reviewing some studies which related to this topic, and thus for achieving the main objective of the study, which is to develop a proposed model to account for bitcoins that unifies accounting practices of bitcoins. The main objective of the study is to develop a proposed model to account for bitcoins that unifies accounting practices of bitcoins. To achieve this objective, the researchers divided the research to include the following: “Introduction” which aimed to gain a holistic view for the research, and then " Literature Review." In this part the researchers clarify the nature, characteristics, pros and cons, and also how the bitcoin system works, through reviewing number of papers, accounting academic journals, professional publications. After that, the researchers reviewed the different current accounting practices for bitcoins, and the efforts of some formal organizations in accounting for bitcoins.Finally, the researchers introduced A proposed framework for unifying the accounting practices for bitcoins; the proposed framework consisted of five main pillars, recognition and classification of bitcoins, measurement of bitcoins and disclosures for bitcoins. The researchers represented a case of financial statements to apply the proposed framework for accounting for bitcoins, and show the effect of the proposed accounting model on the financial statements.