Search results

The purpose of this paper is to investigate whether the communication that takes place through the sustainability disclosure (SD) route has an effect on earnings informativeness (EI) of firms in an emerging market.

The sample consists of companies listed on the Colombo Stock Exchange in Sri Lanka, where SD is a new phenomenon and a voluntary reporting initiative. Regression analysis is executed on the panel data to achieve the study objective.

The result reveals a positive association between SD and EI. Sustainability reports may provide useful information that supplements merely financial data, aiding the stakeholders to interpret the financial reporting better. The finding premises that SD enhances EI, communicating value relevant information to capital market participants.

SD does much to reduce capital market participants’ uncertainties, thereby aiding them to assess financial information better.

The findings of the study confirm earlier research findings that indicate a positive association between SD and EI, suggesting that capital market participants are gradually becoming aware of the value relevance of sustainability reports.

This is the first study investigating SD and EI association that is specific to the Sri Lankan context. Owing to the sparse studies done on the SD and EI association, this study should contribute significantly to the existing literature by broadening the geographical coverage.

The main purpose of this study is to examine the disclosure of earnings forecasts in firms' prospectuses to explain investor demands or, in other words, oversubscription rates of Malaysian initial public offerings (IPOs).

Ordinary least squares and robust methods were used to examine cross-sectional data comprising 466 fixed-price IPOs reported for the period from January 2000 to February 2020 on Bursa Malaysia.

The results showed that IPOs with earnings forecasts obtained higher oversubscription rates than those without earnings forecasts. IPOs with earnings forecasts provide value-relevant signals to prospective investors about the good prospects of firms, resulting in an increase in the demand for IPO shares. For the IPO samples listed during the global financial crisis (GFC) period, IPOs with earnings forecasts had negative impacts on the oversubscription rates. These results were robust to quantile methods and the two-stage least squares method.

The research findings provide fresh information for investors regarding the importance of earnings forecasts as a trustworthy signal of a firm’s quality when making share subscription decisions.

The regulator is advised to encourage issuers to include earnings forecasts in their prospectuses since such forecasts help to increase the demand for IPOs.

This study contributes to the literature by offering empirical evidence regarding the signalling impact of earnings forecast disclosures on investor demands for Malaysian IPOs. Moreover, this study provides evidence demonstrating the impact of earnings forecast disclosures on oversubscription rates of Malaysian IPOs during the GFC period.

When financial statements are public, the choice between alternative reporting regimes constitutes a signal that addresses external stakeholders. Generally, the choice of more complex regimes acts as a complement of firms' transparency. However, in the absence of audits, opportunistic behaviors could be incentivized. This study aims to test whether SMEs' choice between alternative accounting regimes is associated with earnings quality.

Drawing on the literature about accounting choices and earnings quality, this study investigates whether the same conclusions are confirmed for SMEs. Using a sample of 4,054 Italian companies and 12,114 observations, it compared four earnings quality proxies of a group of companies that opted for the “Full” rules and those of a subsample of the population of companies that applied the Simplified rules.

The results suggest that the signaling power of accounting rules' choice could lead to wrong conclusions for SMEs. Indeed, a positive relationship emerged (H1) between the choice of the “Full” rules and income smoothing behaviors, while the same choice appears to reduce the probability to disclose SPOS. Moreover, the results suggest that opportunistic behaviors are more frequent for firms that have settled in a “non-cooperative” social environment (H2).

This study could foster research on financial reporting quality in private firms.

Comparing the quality of financial statements drawn up according to two alternative accounting regimes could provide useful suggestions for both users and regulators.

The results contribute to the limited literature on the implications of differential reporting. Finally, it enriches the literature about heterogeneity in accounting quality within private firms.

In 2000, Cañibano et al. published a literature review entitled “Accounting for Intangibles: A Literature Review”. This paper revisits the conclusions drawn in that paper. We also discuss the intervening developments in scholarly research, standard setting and practice over the past 20+ years to outline the future challenges for research into accounting for intangibles.

We conducted a literature review to identify past developments and link the findings to current accounting standard-setting developments to inform our view of the future.

Current intangibles accounting practices are conservative and unlikely to change. Accounting standard setters are more interested in how companies report and disclose the value of intangibles rather than changing how they are determined. Standard setters are also interested in accounting for new forms of digital assets and reporting economic, social, governance and sustainability issues and how these link to financial outcomes. The IFRS has released complementary sustainability accounting standards for disclosing value creation in response to the latter. Therefore, the topic of intangibles stretches beyond merely how intangibles create value but how they are also part of a firm’s overall risk and value creation profile.

There is much room academically, practically, and from a social perspective to influence the future of accounting for intangibles. Accounting standard setters and alternative standards, such as the Global Reporting Initiative (GRI) and European Union non-financial and sustainability reporting directives, are competing complementary initiatives.

Our results reveal a window of opportunity for accounting scholars to research and influence how intangibles and other non-financial and sustainability accounting will progress based on current developments.

Although board interlocking underlying forces are largely hidden, the purpose of this paper is to provide managers, auditors, analysts, regulators and other stakeholders with sociological board interlocking information considering the different backgrounds of their members.

The research sample gathered 1,606 observations from 2010 to 2017. For data analysis, the direct and indirect board interlocking linkages, considering the different backgrounds of board members, established the centrality indicators. Subsequently, the authors used these indicators according to each measured background in the regression models.

The results indicate that the political background of board interlocking members is positively related to real earnings management practices, while the financial background has a mitigating effect on such practices.

The findings suggest that individual skills and interests conveyed across the corporate social network have shaped corporate governance, with distinct impacts on the quality of accounting information.

The authors conclude that both backgrounds could have implications on agency conflicts, increasing (policy) or reducing (financial) information asymmetry between the company and its various stakeholders, which indicates that the authors must consider sociological and not just economic aspects within corporate governance.

The sociological background of individuals is necessary for the congruence of monitoring mechanisms, and consequently, the quality of accounting information.

This study examines the influence of the political and financial background of board interlocking members on real earnings management practices in Brazilian publicly traded companies in the International Financial Reporting Standards post-adoption period.

The present research conducts a thorough review of published literature relevant to earnings management (EM) practices in family firms (FFs), utilizing the Scopus database, intending to identify potential directions for future research.

Through a systematic review, this study focuses on identifying and summarizing trends in publications over the years, the journal outlets, geographical contexts, research methodologies, the temporal evolution of theories and the specific constructs under investigation.

Earlier empirical studies suggest that corporate governance enhances integrity and transparency in FFs, thereby reducing EM practices. Contrarily, compliance with International Financial Reporting Standards (IFRS) seems to offer managers more opportunities for convenient EM rather than restricting such practices. Notably, corporate social responsibility (CSR) practices do not appear to mitigate EM practices consistently. The literature, however, reveals inclusive results and areas requiring deeper exploration for more definitive results. For instance, certain corporate governance mechanisms, such as family-specific social and cultural business characteristics, subjective measures of family businesses, behavioral approaches to family owners' decision-making and directors' personal, psychological and social factors, remain largely untested. Additionally, there is a notable research gap concerning the relationship between IFRS, capital structure and EM.

This study’s contributions lie in its comprehensive literature review, identification of research trends and gaps, and its potential to guide future research endeavors in the domain of EM practices in FFs.

The use of social media tools by companies is common, but the links between the use of multiple social media tools by companies and stock price changes are largely unknown. Therefore, this study aims to analyze the value-relevance of social media activities on Facebook (FB), Instagram (IG), LinkedIn (LI), Twitter (TW) and YouTube (YT).

Stock market data and hand-picked social media data in this study were collected from Finland, a small language area with consistent International Financial Reporting Standards (IFRS) reporting practices, in the expectation of better comparability and lower noise in the data.This study uses correlation, regression and factor analyses for a sample of 105 Finnish public limited companies listed on the Nasdaq Helsinki stock exchange.

This paper finds evidence that social media activity is an important area of analysis and that the activity and popularity of a company in social media are value-relevant variables in forecasting stock prices.

Not all social media activities are necessarily equally important for managers and investors. Focus on visual messages in social media is recommended.

The findings of this study highlight the value-relevance of using multiple visual social media channels, particularly IG and YT. This paper suggests avenues for future research and for analyzing social media information.

The purpose of this paper is to explore the role of independent directors’ diligence in restraining earnings management practices in the Indian context.

It employs a panel data analysis to test the association of earnings management with the diligence of independent directors.

The results suggest that the diligence of independent directors has a significant impact on earnings management. The findings support the agency theory and provide evidence of the role played by the board processes in restricting earnings management.

This study is important for the regulators as it highlights the significance of independent directors’ diligence in producing higher quality financial statements, thereby creating the real economic value of companies. This is the first article that explores the impact of independent directors’ diligence on earnings management practices particularly in the context of an emerging economy, like India in the light of new Companies Act 2013 and revised Clause 49 of the Listing Agreement, 2014 by Securities and Exchange Board of India.

This study aims to identify and compare the measurement models of earnings management (EM) appropriate to the Iranian Islamic banking system. The importance of reported profit figures has motivated business executives, who also perform financial reporting, to manipulate these figures. These measures are referred to as “earnings management,” which negatively influence the quality of reported earnings and financial statements' reliability.

In this study, four methods, namely, Jones (1991), modified Jones (Dechow et al., 1995), Kasznik (1999) and Kothari et al. (2005), were used to measure the EM index in 25 Iranian Islamic banks (IBs) registered with the Tehran Stock Exchange and/or the Central Bank of Iran. The study covered the period 2005–2020. Following the aforementioned methods, this research implemented templates that were repeatedly tested in subsequent studies using accruals to discover EM.

The results show that the Kasznik (1999) model is the preferred and compatible model with the Iranian Islamic banking system's accrual behaviour due to the consistency of the measurement coefficients with theoretical and previous research findings. Therefore, total accruals, including discretionary accruals and non-discretionary accruals, have the most correspondence with (1) property, machinery and equipment; (2) the change in cash flow from operating activities; and (3) the difference of change in revenue (ΔREV) and change in net receivable accounts (ΔREC).

This is the first investigation in the Iranian Islamic banking system. The research contributes to the Iranian Islamic banking system literature on the implements of EM, which could be appealed to in the context of developing countries like Iran. Finally, this study highlights the different EM capabilities in Islamic banking systems similar to the Iranian banking arrangement.