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Open Access
Article
Publication date: 3 October 2023

Mario Daniele

When financial statements are public, the choice between alternative reporting regimes constitutes a signal that addresses external stakeholders. Generally, the choice of more…

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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).

Research limitations/implications

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

Practical implications

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

Originality/value

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.

Details

Journal of Applied Accounting Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0967-5426

Keywords

Open Access
Article
Publication date: 31 October 2022

Raghdaa Ali Ismail, Osama Zaki and Heba Abou-El-Sood

This paper aims to provide a systematic review of literature pertaining to how executive behavioral characteristics relate to financial reporting decisions.

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Abstract

Purpose

This paper aims to provide a systematic review of literature pertaining to how executive behavioral characteristics relate to financial reporting decisions.

Design/methodology/approach

The authors review 44 papers published between 2001 and 2021 in top journals that are nested in leading business, economic and accounting journals.

Findings

Through the systematic review, the authors provide a framework for the emergence of narcissism and how it relates to decision making and hence, firm performance. Additionally, this paper identifies different measures of measuring narcissism with their pros and cons and suggest that different measures lead to different outcomes in prior literature.

Originality/value

The study contributes to a growing stream of research on executives' attributes influence on decision making. The authors recommend that future research may focus more on the chief financial officer (CFO) role as the majority of literature in CEO based. Additionally, the authors suggest that different settings may moderate the outcomes, and the authors propose that future research may be conducted to show how the regulatory environment affects or moderates narcissism effect.

Details

Journal of Humanities and Applied Social Sciences, vol. 5 no. 2
Type: Research Article
ISSN: 2632-279X

Keywords

Open Access
Article
Publication date: 10 July 2017

Nan Hu, Rong Huang, Xu Li and Ling Liu

Existing literature in experimental accounting research suggests that accounting professionals and people with accounting backgrounds tend to have a lower level of moral reasoning…

12497

Abstract

Purpose

Existing literature in experimental accounting research suggests that accounting professionals and people with accounting backgrounds tend to have a lower level of moral reasoning and ethical development. Motivated by these findings, this paper aims to examine whether chief executive officers (CEOs) with accounting backgrounds have an impact on firms’ earnings management behavior and the level of accounting conservatism.

Design/methodology/approach

The authors classify CEOs into those with and without accounting backgrounds using BoardEx data. Using discretionary accruals from several different models, they do not find that CEOs with accounting backgrounds are more likely to engage in income-increasing accruals. However, the authors find that CEOs with accounting backgrounds exhibit lower levels of conservatism, proxied by C-scores and T-scores (Basu, 1997). This finding suggests that CEOs with accounting backgrounds recognize bad news more quickly than good news, consistent with the accounting principle of “anticipating all losses but anticipating no gains”.

Findings

The authors show that firms whose CEOs have accounting backgrounds exhibit lower levels of accounting conservatism. However, these firms do not exhibit higher levels of income-increasing discretionary accruals. This study documents the impact of CEOs’ educational backgrounds on firms’ accounting choices and confirms prior findings in experimental accounting research using large sample archival data.

Originality/value

This paper is the first study that investigates the impact of CEOs’ accounting backgrounds on firms’ financial reporting policy. The findings may have some policy implications. If accounting backgrounds of CEOs can make a significant difference on firms’ behavior, it is reasonable to make CEOs accountable for the quality of financial reporting. This paper is one of the first to empirically test inferences drawn by experimental accounting research. There has been a gap between archival and experimental accounting studies. The authors propose that interesting research questions can be addressed by filling in such a gap.

Details

Journal of Centrum Cathedra, vol. 10 no. 1
Type: Research Article
ISSN: 1851-6599

Keywords

Open Access
Article
Publication date: 30 November 2023

Domenico Campa, Alberto Quagli and Paola Ramassa

This study reviews and discusses the accounting literature that analyzes the role of auditors and enforcers in the context of fraud.

1563

Abstract

Purpose

This study reviews and discusses the accounting literature that analyzes the role of auditors and enforcers in the context of fraud.

Design/methodology/approach

This literature review includes both qualitative and quantitative studies, based on the idea that the findings from different research paradigms can shed light on the complex interactions between different financial reporting controls. The authors use a mixed-methods research synthesis and select 64 accounting journal articles to analyze the main proxies for fraud, the stages of the fraud process under investigation and the roles played by auditors and enforcers.

Findings

The study highlights heterogeneity with respect to the terms and concepts used to capture the fraud phenomenon, a fragmentation in terms of the measures used in quantitative studies and a low level of detail in the fraud analysis. The review also shows a limited number of case studies and a lack of focus on the interaction and interplay between enforcers and auditors.

Research limitations/implications

This study outlines directions for future accounting research on fraud.

Practical implications

The analysis underscores the need for the academic community, policymakers and practitioners to work together to prevent the destructive economic and social consequences of fraud in an increasingly complex and interconnected environment.

Originality/value

This study differs from previous literature reviews that focus on a single monitoring mechanism or deal with fraud in a broadly manner by discussing how the accounting literature addresses the roles and the complex interplay between enforcers and auditors in the context of accounting fraud.

Details

Journal of Accounting Literature, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0737-4607

Keywords

Open Access
Article
Publication date: 22 November 2019

Jakob Thomä, Michael Hayne, Nikolaus Hagedorn, Clare Murray and Rebecca Grattage

To comply with the adopted Paris Agreement, global finance flows must be measured against climate scenarios consistent with possible pathways towards limiting global warming to…

1847

Abstract

Purpose

To comply with the adopted Paris Agreement, global finance flows must be measured against climate scenarios consistent with possible pathways towards limiting global warming to 2°C or less. For this, there must be proven and accepted accounting principles for assessing financial plans of climate relevant actors against climate models. As there are a variety of data sources describing the financial plans of relevant actors, these principles must accommodate a variety of reported information, while still yielding relevant metrics to different stakeholders. The paper aims to discuss these issues.

Design/methodology/approach

A set of accounting principles tested by governments, financial supervisory bodies and both institutional investors and mangers, covering global-listed equity and corporate bond investment is described.

Findings

The application illustrates that a common set of accounting principles can act across both asset classes and provide relevant metrics to multiple stakeholders.

Research limitations/implications

The principles require data of varying quality and are ultimately unverified. Thus, the definitive quality of the output metrics is uncertain and is yet to be characterized. The principles are yet to be applied to the credit market as the information is seldom publicly available, but it too plays an important role in the required market transition and therefore must be incorporated into these guiding principles of analysis.

Practical implications

The principles allow for standardised assessment of financial flows of equity and corporate debt with global climate scenarios.

Originality/value

It illustrates the acceptance of a common set of accounting principles that is relevant across different actors and asset classes and summarizes the principles underlying the first climate finance scenario analyses.

Details

Journal of Applied Accounting Research, vol. 20 no. 4
Type: Research Article
ISSN: 0967-5426

Keywords

Content available
Book part
Publication date: 23 July 2020

Abstract

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-83867-402-1

Open Access
Article
Publication date: 28 July 2020

Protap Kumar Ghosh, Ranajit Kumar Bairagi and Abinash Mondal

The study aims to investigate whether the adoption of IFRS could ensure ultimate intercompany comparability of operating performance in terms of uniformity in the application of…

3403

Abstract

Purpose

The study aims to investigate whether the adoption of IFRS could ensure ultimate intercompany comparability of operating performance in terms of uniformity in the application of accounting methods and reporting style.

Design/methodology/approach

Using content analysis on 125 annual financial statements of 25 companies from five industries listed on the Dhaka Stock Exchange in Bangladesh, this study reports that only the sole adoption and application of principle based IFRS cannot ensure ultimate intercompany comparability of financial reports.

Findings

The findings document that the adoption of IFRS cannot ensure the application of same accounting methods as well as way of presentations which is a precondition of greater comparability of operating performance of competitive firms. The methodological and reporting direction through local regulatory agencies alongside maximum compliance with principle based IFRS can enhance intercompany comparability of financial reports in the same industry.

Originality/value

This study tries to manifest that sole adoption cum implementation of IFRS could not ensure ultimate intercompany comparability of operating performance within the same industry and urges to conduct further research to find out the ways to do so.

Details

Asian Journal of Accounting Research, vol. 5 no. 2
Type: Research Article
ISSN: 2443-4175

Keywords

Content available
Article
Publication date: 19 April 2013

108

Abstract

Details

Pacific Accounting Review, vol. 25 no. 1
Type: Research Article
ISSN: 0114-0582

Keywords

Open Access
Article
Publication date: 28 September 2018

Cristian Baú Dal Magro, Roberto Carlos Klann and Vanessa Edy Dagnoni Mondini

CEOs’ (chief executive officer) term of office may explain discretionary accruals as a result of opportunistic behavior arising during certain periods of the term of office…

Abstract

Purpose

CEOs’ (chief executive officer) term of office may explain discretionary accruals as a result of opportunistic behavior arising during certain periods of the term of office. Therefore, CEOs, in their early years of office, have incentives to report results that meet market expectations. In turn, CEOs in their senior year may be motivated to use discretionary accruals to gain private benefits. In this scenario, corporate governance mechanisms play an important role in monitoring relationships. Hence, the purpose of this study is to verify the influence of monitoring mechanisms on the relationship between CEOs’ term of office and discretionary accruals.

Design/methodology/approach

Descriptive statistics, multiple cross-sectional regression to estimate the accruals and regression of panel data to test the hypotheses were used. The sample comprised 195 companies listed on BM&FBovespa.

Findings

The results indicated that CEOs’ long term of office has a negative impact on the level of discretionary accruals, and thus, Brazilian CEOs with a longer term of office tend to establish a certain reputation in the stock market. On the other hand, it is concluded that CEOs’ intentions, in the first years of term, are positively related to the use of accruals and that the monitoring mechanisms can minimize these CEOs’ opportunistic practices.

Originality/value

The results broaden the literature on corporate governance, pointing that different systems of variable remuneration may influence CEOs’ willingness to manage results in their last year of term.

Details

RAUSP Management Journal, vol. 53 no. 4
Type: Research Article
ISSN: 2531-0488

Keywords

Open Access
Article
Publication date: 31 May 2017

Sarah Yuliarini, Ku Nor Izah Bt Ku Ismail and Tantri Bararoh

Environmental Accounting (EA) practices have developed rapidly in some countries and have a positive impact on their organizations. Sustainability report (SR) as an indicator of…

1055

Abstract

Environmental Accounting (EA) practices have developed rapidly in some countries and have a positive impact on their organizations. Sustainability report (SR) as an indicator of EA practices helps company gain a better reputation and it is set by management. However, some ASEAN countries including Indonesia do not have relevant accounting standards on the environment. EA practice is still not widely known in Indonesia, although, internationally there have been standards that provide guidelines for aspect of the environment such as the Global Reporting Initiative (GRI). Another aspect in GRI is remuneration. Remuneration is part of personnel cost which is a motivation about the positive effects of EA practices to disclose management concern. This research introduces a tool to evaluate a remuneration structure and the consistency of EA practices in the Sustainability Report.

Details

Asian Journal of Accounting Research, vol. 2 no. 1
Type: Research Article
ISSN: 2459-9700

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