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This study focuses on a survey of chief financial officers (CFOs) in public firms in Japan concerning the following six points: the importance of the definition earnings quality; higher quality earnings; the determinants of earnings quality; prevalence, magnitude, and motivation of earnings management; accounting that influences earnings quality; and misrepresenting of earnings. The results are following: first, Japanese CFOs define earnings quality as earnings accurately reflecting economic reality, earnings accurately reflecting the results of operations, and earnings backed by cash flows, earnings sustainability, recurring, and consistent, and earnings reflecting long-term trend importance. Second, Japanese firms consider earnings that reflect consistent reporting choices over time as higher quality. They do not consider that earnings having accruals that are eventually realized as cash flow as higher earnings quality. Third, Japanese CFOs indicate that 30% of earnings quality is impacted by firm characteristics such as firm’s business model, industry, and macroeconomic conditions. Surprisingly, the influence of the board of directors is greater than the impact of their internal controls. Fourth, as for the determinants of earnings quality, CFOs consider that more than 70% of Japanese CFOs do not allow the discretion and that accounting standards limit their ability to report higher earning quality. Fifth, Japanese CFOs consider that higher earnings are influenced by accounting principles such as policies that match expenses with revenues and policies that rely on fair value accounting as much as possible. Sixth, CFOs themselves predict that 50% of Japanese firms use discretions and that they use 20% of earnings per share (EPS). Since there is inside and outside pressure to hit earnings benchmarks, Japanese firms possess the motivation to use earnings to misrepresent economic performance, Japanese managers see a red flag when generally accepted accounting principle’s earnings do not correlate with cash flow from operations.

Purpose – The overall purpose of this study is to investigate whether literacy levels and external user-pressure by the Uganda Revenue Authority affect the perceived quality of accounting information of Ugandan SMEs.

Design/methodology/approach – A postal questionnaire survey of 98 SMEs drawn from Kampala, Uganda was undertaken. Ordinary Least Squares (OLS) regression was used to determine whether literacy levels and external user-pressure affect the quality of accounting information controlling for firm size, accounting qualification and firm age.

Findings – The findings suggest that literacy levels and external user-pressure influence the perceived quality of accounting information. Accounting qualification and firm age were also found to be positively associated with the quality of accounting information. However, there is no significant relationship between firm size and quality of accounting information.

Originality/value – The study provides evidence of the effect of literacy and external user-pressure on the quality of accounting information in a developing country where such evidence does not currently exist.

Implications – Since accounting information is important for economic growth, the Ugandan government needs to spend more resources to improve the literacy especially among the SMEs. The Uganda Revenue Authority also needs to maintain pressure on SMEs to improve the quality of information provided by SMEs since such information is important for assessing tax payable.

The study aims at reviewing a synthesis of disclosure, transparency, and International Financial Reporting Standards (IFRS) implementation in an attempt to provide directions for future research. Prior research overwhelmingly supports that the IFRS adoption or effective implementation of IFRS will enhance high-quality financial reporting, transparency, enhance the country’s investment environment, and foreign direct investment (FDI) (Dayanandan, Donker, Ivanof, & Karahan, 2016; Gláserová, 2013; Muniandy & Ali, 2012). However, some researchers provide conflicting evidence that developing countries implementing IFRS are probably not going to encounter higher FDI inflows (Gheorghe, 2009; Lasmin, 2012). It has also been argued that the IFRS adoption decreases the management earnings in countries with high levels of financial disclosure. In general, the study indicates that the adoption of IFRS has improved the financial reporting quality. The common law countries have strong rules to protect investors, strict legal enforcement, and high levels of transparency of financial information. From the extensive structured review of literature using the Scopus database tool, the study reviewed 105 articles, and in particular, the topic-related 94 articles were analysed. All 94 articles were retrieved from a range of 59 journals. Most of the articles (77 of 94) were published 2010–2018. The top five journals based on the citations are Journal of Accounting Research (187 citations), Abacus (125 citations), European Accounting Review (107 citations), Journal of Accounting and Economics (78 citations), and Accounting and Business Research (66 citations). The most-cited authors are Daske, Hail, Leuz, and Verdi (2013); Daske and Gebhardt (2006); and Brüggemann, Hitz, and Sellhorn (2013). Surprisingly, 65 of 94 articles did not utilise the theory. In particular, four theories have been used frequently: agency theory (15), economic theory (5), signalling theory (2), and accounting theory (2). The study calls for future research on the theoretical implications and policy-related research on disclosure and transparency which may inform the local and international standard setters.

We analyze the quality of accounting information reported by public firms in Latin America and United States of America.

To reach our objective, an exploratory and descriptive research was developed. To analyze the dimensions of accounting information quality, the operational model present in literature were applied which assess the persistence in earnings (Dechow & Schrand, 2004), the level of conservatism (Ball & Shivakumar, 2005), accounting earnings management (Pae, 2005) and accruals quality measurement (Dechow & Dichev, 2002), in a sample composed of publicly traded companies in the markets of Latin America and the North America (represented by USA), totaling 2,526 companies, from 2005 to 2011.

Our results evidenced that financial reporting of Latin-American companies are less conservative (except for Brazilian companies) and has similar level of earnings management in comparison to the North-American ones. Concerning to the quality of accruals it was observed that there are significant differences especially related to accruals of Brazilian companies.

Our results suggest differences in the quality of accounting information, originated by the economic environment where the company is inserted. So, investors must be careful when they are comparing firms between these markets, because the results were different for some cases, which may lead the investors to make misallocation of his resources.

We expanded previous literature by the use of various proxies for accounting quality, comparing firms on emerging markets with the major capital market (USA), and the crises period of time.

The purpose of the study is to present evidence on the International Financial Reporting Standards (IFRS) adoption and earnings quality relationship on an emerging country context focusing on firm characteristics.

To measure loss avoidance, the earnings distribution approach is followed. Data includes all the nonfinancial firms listed on the Borsa İstanbul (BIST) for the period covering 1998–2010. The sample is divided into subsegments according to size and leverage, considering the potential impact of different financial reporting incentives. Furthermore, mandatory and voluntary adopters are examined separately.

The results indicate lower loss aversion in the post-IFRS period. Furthermore, we found that incentives dominate accounting standards in determining financial reporting quality. The decrease in loss aversion after IFRS adoption is more significant for large firms compared to small firms, low leverage firms compared to high leverage firms, and for mandatory IFRS adopter firms compared to voluntary IFRS adopters.

Research provides inconsistent evidence on the relationship between IFRS adoption and earnings quality. Turkey represents an interesting environment to test the impact of IFRS adoption, as the Turkish accounting system has followed a historical path from a Continental European accounting system to an Anglo-Saxon accounting system. The current Turkish accounting system exhibits features of both these systems. Additionally, IFRS adoption was optional in 2003 and mandatory in 2005 in line with EU regulations, and the changes in the reporting environment are supported by the regulatory developments and institutional changes in Turkey.

Prior research identified conflicts in implementing performance measurement systems that include both financial and non-financial measures. Attempts to incorporate non-financial measures, for example, balanced scorecards (BSCs), have shown short-term success, only to be replaced with systems that rely on financial measures. We develop a theoretical model to explore evaluators’ choice and use of the most important performance measurement criterion among financial and non-financial measures.

Our model links participants’ prior evaluation experiences with their attitudes about relative accounting qualities and with their choice of the most important performance measure. This choice subsequently affects their evaluation judgments of managers who perform differentially on financial versus non-financial measures.

Experimental testing of our structural equation model indicates that it meets the accepted goodness of fit criteria. We conclude that experience has an influence on choice of performance measures and on decision heuristics in making such evaluations. We suggest that an “experience gap” must be considered when deciding which performance metrics to emphasize in scorecards or similar performance reports. We analyzed four accounting qualities, importance, relevance, reliability, and comparability and found that importance, relevance, and reliability have strong effects on how managers prioritize and use accounting measures.

We conducted our study in a controlled, experimental setting, including participants with diverse experiences. We provide direct evidence of participants’ experience and attitudes about the relative accounting qualities of financial and non-financial measures which we link to their choice of the most important performance measure. We link this choice to their performance evaluations.

Purpose: We examined whether the five-service quality dimensions described by SERVQUAL (SQ) and SERVPERF (SP) are consistent with perceived dimensions of management accounting (MA) service quality and we compared responses from users and providers.

Design/methodology/approach: We surveyed experienced providers and users of MA services to learn their perceptions and expectations of accounting service quality using SQ/SP adapted to an MA context. We used principal components analysis (PCA) to investigate service quality dimensions.

Findings: Participant responses identified three dimensions of MA service quality. There was a high degree of correspondence in dimensions of service quality between users and providers, but with notable differences in service priorities. A performance-only (SP) approach seems to provide a better measure of overall service quality than performance minus expectations (SQ).

Research limitations/implications: Participants self-selected to participate. Respondents were not matched by organization. The SQ/SP instrument may not capture important organization specific attributes. Our approach may serve as a guide for future studies of accounting service quality.

Practical implications: SP may be more useful to managers who wish to evaluate overall service quality. SQ may be more useful to identify specific gaps between user perceptions and expectations. SQ/SP assessments may help to improve the quality of MA service delivery and provider-user communications.

Originality/value: This is the first empirical study to our knowledge that reports on MA service quality dimensions using both the SQ and SP instruments. This study investigated perceptions and expectations of MA service users and providers. Our sample is a cross-section of experienced professionals.

Mandatory auditor firm rotation (mandatory rotation) has been a controversial issue in the United States for many decades. Mandatory rotation has been considered at various times as a means of improving auditor independence. For example, in the United States, the Public Company Accounting Oversight Board (PCAOB) has considered mandatory rotation as a solution to the independence problem (PCAOB, 2011) and the European Parliament approved legislation that will require mandatory rotation in the near future (Council of European Union, 2014). The concept of implementing a mandatory rotation policy has been encouraged by some constituents of audited financial statements and rejected by other constituents of audited financial statements. Although there are apparent pros and cons of such a policy, the developmental process of such a policy in this country has not necessarily been an open-democratic, objective process. Universal mandatory rotation may or may not be the ideal solution; however, an open-democratic, objective process is needed to facilitate the development of a solution that considers the needs of all major stakeholders of audited financial statements – not simply accounting firms and public companies, but also investors. The purpose of this paper is to critically examine key issues relating to mandatory rotation and to encourage and stimulate future research and ongoing dialogue regarding this issue, in spite of efforts by certain constituents to silence the issue. This paper provides an overview of the various reasons, including practical, theoretical, political, and self-motivated reasons, why a mandatory rotation policy has not been implemented in the United States in order to address the potential conflict of interest between the auditor and client. This paper will also discuss how some deliberations of mandatory rotation have been flawed. The paper concludes with a summary of key issues along with two approaches for regulators, policy makers, and academics to consider as ways to improve the process and address auditor independence. The authors are not advocating for any specific solution; however, we are advocating for a more objective, unified approach and for the dialogue regarding auditor rotation to continue.

The main objective of this study is to investigate whether adoption of International Financial Reporting Standards (IFRS) improve the quality of financial reporting in Nigeria. Financial reporting quality was measured in terms of fundamental qualitative characteristics such as relevance and faithful representation and enhancing qualitative characteristics such as understandability, comparability, verifiability, and timeliness as contained in the conceptual framework. The study was conducted on a sample of 162 companies listed on the Nigerian Stock Exchange. A compound measurement tool in form of an index was developed to comprehensively assess the quality of financial reporting based on information disclosed in the financial statement of the selected companies. From both univariate and multivariate analysis, I found strong evidence suggesting that accounting standard used in the preparation of financial statement have significant influence on the quality of financial report of the reporting entity. The result persists for all the three models (overall financial reporting quality, fundamental, and enhancing qualitative characteristics) tested in this analysis. The result also revealed that apart from firm age and firm growth, most of the firm-specific variables investigated have statistically significant influence on the financial reporting quality.