Journal of Accounting and Finance

Fintechs and Banking: A Note on Neobank Risks

Jason Brown — 2025-01-26

The fintech industry has made rapid inroads into banking in the last several years. Pundits tout that it will improve efficiencies while giving consumers broader choices in developing their banking portfolios. Others posit that it will erode bank profitability and that its success is tied to monetary policy. Our research focuses on an overlooked aspect of fintech: neobanks, sometimes called a challenger bank, that allow customer access to apps and software that streamline online and mobile banking. This paper will cover a brief history of fintechs, fintech advantages, and finally, discuss some of the risks of neobanking.

Humor in the Classroom: An Introvert’s Perspective and Implementation

Adam Y.C Lei — 2025-01-26

Being humorous in the classroom seems particularly challenging to an introvert who needs time alone and is usually not perceived as outgoing. We offer the experience of an introverted finance faculty member on using humor in the classroom over the past two decades. We emphasize the weaknesses and strengths of an introvert, and how they shape the humor strategies and attempts of the faculty member. We provide examples of “educational” jokes that the faculty member used in his attempts to make it more interesting in the classroom and to engage students. Student feedback on the attempted humor is overwhelmingly positive.

Valuation Considerations of Stock Based Compensation: A Case Study of Semiconductor Firms

Russell Engel — 2025-01-26

Equity research analysts and investors remain divided on the treatment of stock-based compensation (SBC) in firm valuation, particularly in discounted cash flow (DCF) and earnings multiples techniques. Many firms and analysts exclude SBC, viewing it as a non-cash expense, while others argue this leads to overvaluation. SBC usage is especially high in the tech sector. This study examines five large semiconductor firms, analyzing SBC levels, its treatment in adjusted earnings, and its impact on share dilution, valuation multiples, and free cash flow calculations. Findings indicate that SBC treatment significantly affects valuation, particularly within the semiconductor industry.

Evaluating Technical Trading Strategies in US Stocks: Insights From Data-Snooping Test

Yifei Wang — 2025-01-29

Our comprehensive evaluation examines the in-sample and out-of-sample effectiveness of technical trading strategies for Apple Computer Inc (AAPL), Microsoft Corp (MSFT), and Nvidia Corp (NVDA) over the period from January 2000 to December 2022. Utilizing advanced methods such as reality checks and stepwise tests, we address the potential data-snooping bias—a scenario where apparently profitable strategies might arise by chance rather than through genuine predictive accuracy. Despite rigorous analytical techniques, our findings indicate an inability to identify any technical trading strategies that yield consistent profits in both the in-sample and out-of-sample periods. Further analysis, with a specific cutoff established in February 2016 and incorporating corrections for data snooping, consistently demonstrates the unprofitability of these strategies. This highlights a significant challenge in financial markets: the intrinsic difficulty in identifying technical trading strategies that can consistently produce profitable outcomes over time. Our conclusions underscore the complexities inherent in technical analysis and the substantial obstacles in deriving actionable insights for stock market trading based on technical trading frameworks.

Historical Development of Taxation From Ancient Times to Modern Day: Implications for the Future

David Kerr — 2025-01-26

This study examines the history of taxation, specifically how taxation was used over the centuries by major world civilizations. This study provides a comprehensive review of past and more recent studies, spanning the full length of tax history using a quasi-empirical approach, thereby offering a unique contribution to the academic literature. Theoretical foundations include Adam Smith’s Canons of Taxation, benefit theory, ability theory, and tax assignment theory. Implications are drawn for the future of taxation. Findings suggest that various forms of taxation played a critical role in amassing resources necessary to build and sustain world empires and republics. Implications are that this will continue. Excessive taxation was included as a factor in the downfall of some empires. World history might have taken a notably different direction without the revenues accumulated via taxation. Results will interest tax policy makers, academic tax researchers, law professors, and others concerned with the historicity of taxation. Results can also be used by accounting and legal educators.

Alternative Retirement and Estate Planning Strategies since the Elimination of the Stretch IRA

Shari Lawrence — 2025-02-04

In 2019, US Congress passed the SECURE Act with the intent of helping taxpayers save for retirement. This Act included a change to the Internal Revenue Code Section 401, which eliminated the Stretch IRA by capping the number of years for distributions from inherited IRAs. The new regulations state that if the inherited IRA has a non-spouse beneficiary the distributions cannot exceed ten years, which drastically reduces the ability to use the IRA to transfer, and extend, wealth to one’s heirs while minimizing taxes.

This study examines the impact of the passage of IRC Section 401 on those actively planning to utilize a Stretch IRA for their retirement and estate planning. Specifically, alternative scenarios are presented as the authors compare the future value of IRA accounts under the old regulations to values under the new regulations. The results indicate that individuals wanting to their leave retirement accounts to heirs should consider converting accounts to a Roth IRA as Roth IRA conversion is the optimal outcome for multigenerational wealth transfer.