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This study aims to investigate the motivations behind the issuance of financial instruments with characteristics of equity (FICE), economic consequences associated with their issuance and accounting classifications based on a value-relevance approach.

Using a sample of 169 financial and nonfinancial firms from 10 jurisdictions that adopted International Financial Reporting Standards, the authors use a difference-in-differences econometric approach.

The findings reveal that FICE issuers are more leveraged companies with higher costs of equity and, in some cases, lower effective tax rates. This evidence corroborates the hypothesis that issuers of FICEs seek to increase their book values of equity (accounting treatment as equity) and, simultaneously, generate deductible expenses for tax purposes (tax treatment as liability).

This finding suggests that market participants do not treat these instruments as regular equity but rather as quasi-equity. The findings suggest that a binary classification of FICE as debt or equity may not be the accounting treatment that best represents the underlying economic substance of these contracts. Furthermore, this study reinforces the IASB indication regarding to increase the FICE disclosure to allow stakeholders to better understand the economic essence of these bonds.

This study assesses the economic outcomes and market evaluation of a specific type of FICE that has not been previously studied, which is similar to the examples provided by the IASB in their materials on the subject.

This study aims to present a model for detecting and predicting creative accounting in companies listed on the Tehran Stock Exchange (TSE).

The authors conduct this research in three stages. First, the authors review the literature to determine the dimensions, components, indicators and techniques of creative accounting. Second, the authors conduct semi-structured interviews with experts using the fuzzy Delphi technique to obtain screening and reach a consensus. Finally, the authors develop a model to predict creative accounting by classifying the financial statements of the sample companies into two groups based on the use or non-use of creative accounting techniques, measuring the indicators determined in the previous stage, running various machine learning algorithms and choosing the superior algorithm.

The results indicate the usefulness of accounting information for detecting and predicting creative accounting and the relevance of several financial attributes as important predictors. The results also indicate the superiority of extremely randomized trees over other algorithms in predicting creative accounting and suggest that the primary purpose of creative accounting in Iran is earnings management. Contrary to the political cost hypothesis, large Iranian companies use creative accounting to inflate profits.

The present research also has several limitations that must be considered, and caution must be exercised in interpreting and generalizing the findings as specified in the revised manuscript.

This study’s implications are significant for policymakers, standard-setters and practitioners. By recognizing the detrimental effects of creative accounting on financial transparency within companies, policymakers can address existing gaps in accounting standards to minimize the potential for earnings manipulation. Consequently, strengthening internal and external mechanisms related to a firm’s financial performance becomes achievable. The study provides evidence of the need for audit firms to recognize the importance of creative accounting and consider creative accounting in their audit plans to prevent insufficient or even misleading disclosure by companies that extensively use creative accounting practices in their financial reporting. Moreover, knowledge of creative accounting techniques can help auditors assess audit and detection risks and serve as a valuable guide for reducing audit costs and improving audit quality.

Given that creative accounting practices distort the true or real accounting results, curbing creative accounting practices reduces corporate failures and could lead to the reduction of job losses and other social consequences.

This study uses a unique database in Iran to determine a model for predicting creative accounting using a mixed-method methodology, qualitative and quantitative, to identify creative accounting techniques and run various machine learning algorithms.

This study aims to describe and empirically explore a new method for bank anti-money laundering (AML) systems using machine learning models. Current automated money laundering detection systems are notorious for flagging many false positives, causing bank employees to spend unnecessary time manually checking transactions that do not constitute money laundering. Decreasing the number of false positives can free up resources for investigating money laundering.

This study uses unique bank data on small- and medium-sized enterprises (SMEs) to examine how various client risk classification models can predict future suspicious transactions. This study explores various sources of client risk data and machine-learning approaches.

Client risk classification models can accurately predict suspicious future transactions. Adding accounting data and credit score information to client risk classification dramatically improves accuracy. This makes it easier to balance the risk of missing suspicious transactions with the need to reduce the number of false positives.

The suggested approach with readily available data sources and a focus on classifying client risk in a dynamic model can help banks significantly improve their efficiency by targeting their AML efforts toward the riskiest clients.

To the best of the authors’ knowledge, this study is the first to empirically explore machine learning in client risk classification, document how machine learning in client risk classification can significantly reduce false positives by incorporating novel, but readily available sources, such as credit risk and accounting data.

There are variations in religious social norms and legal environments around the world. In this paper, we aim to examine the interaction between variations in religious social norms and legal environments on real activities manipulations and expense misclassification using a global sample of 63 countries. Our inquiry is motivated by a paucity of research on the interaction between legal environment and religion on earnings management practices in an international setting.

This study draws on a global sample of 63 countries to examine the effect of variations in religious social norms and legal environments on the trade-off between expense misclassification and real activities earnings management practices. Firm-specific financial data come from Global Compustat. Religion data are obtained from World Values Surveys of the World Bank. We obtain legal environment scores from the International Country Risk Guide.

Findings suggest that the interaction between law and religion serves as constraints on both classification shifting and real activities manipulation around the world. We find that religion strengthens the weak legal environment and the strong legal environment strengthens the weak religious environment to decrease both real activities manipulation and classification shifting when law and religion interact in an international setting. Therefore, our results contradict Zang's (2012) earnings management trade-off evidence. Again, our results contradict Malikov et al.’s (2018) evidence that mandatory International Financial Reporting Standards (IFRS) adoption is associated with increased real activities manipulation.

The study is limited to 63 countries limiting the generalizability of the findings.

This study provides novel evidence and shows that there is a link between law and religion. The interaction between law and religion decreases expense misclassification and real activities manipulation. We contribute that the interaction between religion and law benefits firms and increases shareholder value as real activities manipulation decreases. Therefore, strengthening the legal environment will complement religion, IFRS and other monitoring mechanisms put in place to mitigate unethical expense misclassification and real activities earnings manipulation around the world.

This study investigates the motivations and consequences of classification shifting from cost of sales to research and development (R&D) in high-technology industries.

This study conducts a multivariate analysis using logistic and ordinary least squares regression methods on panel data of high-technology firms for the period 1988–2012 to examine the effect of R&D classification shifting on gross margin benchmarks and future performance.

The results show that R&D classification shifting increases the likelihood of meeting or beating gross margin benchmarks. They also show that firms engaged in R&D classification shifting exhibit lower future R&D productivity, stock returns, and operating performance. The findings indicate that the short-term benefits of achieving gross margin benchmarks are offset by the long-term negative impact of R&D misclassification.

This paper provides insights that can help regulators develop clearer guidelines for the appropriate classification of R&D costs.

Moving beyond the core earnings management paradigm, this study demonstrates the use of R&D classification shifting as a tool to manipulate gross profits and R&D in high-technology industries. Most prior studies focused on the determinants of R&D classification shifting, while few investigated the impact of the practice. The findings in this study provide initial evidence of the consequences of R&D classification shifting for future R&D productivity and firm performance in high-tech industries. Using five methods, this study also validates R&D classification shifting and addresses the alternative explanation of R&D overinvestment.

This paper aims to develop a framework for the bioaccounting measurement of environmental assets based on natural wealth sustainability. Specifically, this paper proposes a theoretical structure for qualitative and quantitative organization-level assessments of the existence and circulation of water, air, wildlife, flora, soil and subsoil resources.

This research used an inductive method with a qualitative and quantitative approach. The authors postulate a systemic and comprehensive bioaccounting measurement of environmental assets, including heterogeneous and homogeneous methods and quantitative and qualitative valuations of the resources that comprise environmental assets.

The authors describe a theoretical structure for the bioaccounting measurement of environmental assets based on the sustainability of natural wealth through heterogeneous and homogeneous measurement methods and show how to integrate these assets through an homogeneous method.

The development of this general theoretical structure will require the integration of theoretical, conceptual and technical developments from multiple disciplines. The authors hope that the scientific community will evaluate and study this proposal for faster progress towards its practical implementation in organizations.

The authors structured the bioaccounting measurements, which are presented individually for each class of environmental assets. Each of these assets requires subcategories (accounts, subaccounts and resources) and recognition/measurement units. Environmental value units (EVUs) are used to standardize the plurality of measurement units.

This study aims to develop a maturity model designed for assessing the current state of digitization in accounting firms.

The authors have developed this index where the maturity levels are defined from the life cycle theory. For the items of a maturity measure, the authors have adopted a multimethodological approach. That approach allows to identify 27 measurement items to cover the three dimensions of audit, reporting and taxation.

This research proposes a diagnostic tool specific to accounting firms. The authors have tested this index in the Tunisian context. The results show that there are two types of accounting firms. This study found the first firm in the embryonic phase and the other in the growth phase. This points out the active role of Tunisian accounting firms in technology integration.

This study highlights the integration of technology in the accounting field. Specifically, it aims to address technology management in accounting firms by measuring the degree of digitization of accounting firms. This research projects the use of information technologies (artificial intelligence, cloud, big data, etc.) in auditing, reporting and taxation.

On a practical level, this research provides an organizational diagnostic tool to assess the status of their accounting firms in terms of digitization. This will motivate practitioners to make frequent assessments, thus contributing to continuous improvement toward digitization.

The theoretical foundation of this research is based on the theory of the life cycle of technologies. This study is using this theory to identify and describe the current phase of the organization. And that is by indicating the overall scores on the technological capabilities of the accounting firms.

The purpose of this study is to explore how the South African government has used accounting technologies to manage the pervasive issue of racial inequality.

Premised on Foucault’s notion of governmentality, we conducted a qualitative case study. Publicly available archival data are used to determine the extent to which accounting techniques have helped to shape policy responses to racial inequality.

We show that accounting techniques and calculations give visibility to the problems of government and help design a programme to solve racial inequality. The lived experiences and impacts of racism in the workplace have been problematised, turned into statistics, and used to rationalise the need for ongoing government intervention in solving the problem. These processes underpin the development of the scorecard system, which measures the contributions firms have made towards minimising racial inequalities.

This study augments the existing body of Foucauldian literature by illustrating how power dynamics can be counteracted. We show that in governmental processes, accounting can exhibit a dual role, and these roles are not always subordinate to the analysis of political realities. The case of B-BBEE reveals the unintended consequences of utilising accounting to control the conduct of individuals or groups.

The research aims to identify the promising outlines of IFRS 4.0, where these standards will ensure the digital competitiveness of the economy and entrepreneurship. The authors systematize international experience with reference to the World Bank's statistics for 2022 and develop an econometric model that mathematically describes the cause-and-effect relationships of the IFRS 4.0 application. The model showed that an increase in the degree of information disclosure in corporate reporting ensures the inflow of investment, growth of high-tech exports, and the development of domestic high-tech industries (i.e., strengthens the digital competitiveness of the economy and entrepreneurship). The author's main conclusion is that IFRS 4.0 should provide for investment accounting and reflection of financial instruments for developing the digital economy for these standards to ensure the digital competitiveness of the countries and enterprises applying them. As for theoretical significance, this research, for the first time, proposes a promising outline of IFRS 4.0, with which these standards will ensure the digital competitiveness of the economy and entrepreneurship. That is, they will be applicable and highly effective in an Industry 4.0 environment. The managerial significance is that the author's recommendations on the development, implementation, and application of IFRS 4.0 will improve current corporate accounting and reporting practices in Industry 4.0. The practical significance is disclosed in perspective of IFRS 4.0 application in Uzbekistan proposed control values of target indicators, which can be used in drawing up a road map for strengthening the digital competitiveness of the economy and entrepreneurship of Uzbekistan.

Cryptoassets are a diverse category of digital assets that rely on blockchain technology. They encompass various categories, such as cryptocurrencies, utility tokens, security tokens, tokenized assets and securities, and stablecoins. Cryptocurrencies are decentralized digital units of value that enable secure and transparent transactions. Utility tokens provide access to specific services or products within a blockchain network. Security tokens offer rights and entitlements similar to traditional securities, representing ownership in real-world assets or participation in investment opportunities. Tokenized assets and securities are digital representations of tangible or intangible assets, allowing for fractional ownership and enhanced liquidity. Stablecoins are blockchain-based digital assets designed to maintain a stable value, often pegged to fiat currencies or physical assets. This chapter examines each category's characteristics, benefits, and risks; explores their implementations and current applications in the fintech ecosystem; and discusses relevant regulations and future development opportunities.