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Neural Networks: Is it hermeneutic?

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  • Rama Prasad Kanungo

    (Asian Accounting, Finance & Business Research Unit, CARBS)

Abstract

This paper proposes a synoptic methodology to evaluate the determinants of audit fees by utilising Neural Networks. First, a brief discussion is presented to highlight the significant application of Neural Network in the areas of financial management; second the framework of proposed methodology has been outlined to examine the implication of audit fees on target sample. The underlying rational of this paper is to establish NNs as a diagnostic tool to assess the effect of audit fees on firms, which indeed warrants further empirical investigation. The importance of NNs emerges from the fact that if external and internal audit fees can be disseminated by employing this methodology which is perceived more significantly robust than other econometric models, then accounting standards can be improved.

Suggested Citation

  • Rama Prasad Kanungo, 2004. "Neural Networks: Is it hermeneutic?," Experimental 0403003, EconWPA.
  • Handle: RePEc:wpa:wuwpex:0403003 Note: Type of Document - pdf; pages: 10
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    References listed on IDEAS

    as
    1. Plott, Charles R & Sunder, Shyam, 1982. "Efficiency of Experimental Security Markets with Insider Information: An Application of Rational-Expectations Models," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 663-698, August.
    2. Plott, Charles R & Sunder, Shyam, 1988. "Rational Expectations and the Aggregation of Diverse Information in Laboratory Security Markets," Econometrica, Econometric Society, pages 1085-1118.
    3. McClelland, Gary H & Schulze, William D & Coursey, Don L, 1993. "Insurance for Low-Probability Hazards: A Bimodal Response to Unlikely Events," Journal of Risk and Uncertainty, Springer, vol. 7(1), pages 95-116, August.
    4. Vernon L. Smith, 1962. "An Experimental Study of Competitive Market Behavior," Journal of Political Economy, University of Chicago Press, pages 322-322.
    5. Holt, Charles A & Langan, Loren W & Villamil, Anne P, 1986. "Market Power in Oral Double Auctions," Economic Inquiry, Western Economic Association International, vol. 24(1), pages 107-123, January.
    6. Charles R. Plott & Jorgen Wit & Winston C. Yang, 2003. "Parimutuel betting markets as information aggregation devices: experimental results," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), pages 311-351.
    7. Vernon L. Smith, 1964. "Effect of Market Organization on Competitive Equilibrium," The Quarterly Journal of Economics, Oxford University Press, vol. 78(2), pages 181-201.
    8. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, pages 263-291.
    9. Forsythe, Robert & Lundholm, Russell, 1990. "Information Aggregation in an Experimental Market," Econometrica, Econometric Society, vol. 58(2), pages 309-347, March.
    10. Franklin W Nutter, 1994. "The Role of Government in the United States in Addressing Natural Catastrophes and Environmental Exposures," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 19(3), pages 244-256, July.
    11. Charles R. Plott & Jorgen Wit & Winston C. Yang, 2003. "Parimutuel betting markets as information aggregation devices: experimental results," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), pages 311-351.
    12. Dean O'Hare, 1994. "The Need for Insurers to Change," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 19(3), pages 357-364, July.
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    More about this item

    Keywords

    Neural Networks and Audit Fee;

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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