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Book part

Lei Dong, Bernard Wong-On-Wing and Gladie Lui

Management has considerable discretion over how to present and announce earnings components that are either unusual or infrequent, but not both (hereafter referred to as…

Abstract

Purpose

Management has considerable discretion over how to present and announce earnings components that are either unusual or infrequent, but not both (hereafter referred to as special items). In this study, we study the independent and joint effects of the accounting presentation format of, and the level of announcement prominence given to income-decreasing special items on investors’ judgments about the persistence of declining earnings.

Methodology/approach

Our study uses a 3 (format) × 2 (prominence) between-subjects design. In the experiment, participants act as proxies for nonprofessional investors to assess the persistence of a hypothetical firm’s declining earnings and make investment decisions.

Findings

Our results suggest that investors’ judgments are influenced by accounting presentation format and the level of announcement prominence. With respect to format, both classification and disaggregation affect investors’ assessment of earnings persistence. In addition, the degree of prominence given to an income-decreasing special item, albeit self-serving and not audited, introduces additional influence beyond that of accounting presentation format. In particular, we find that announcement prominence has a greater effect when the special item is aggregated with other operating expenses than when the special item is presented under the two other alternatives.

Research implications

Our study contributes to the literature by demonstrating that presentation format and announcement prominence both have significant impact on investors’ judgments and decisions, and that their effects are interactive. Our results also indicate that future research can possibly gain better insight if it considers the accounting attributes of the special items in addition to their economic attributes.

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-78560-977-0

Keywords

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Article

João L.F.R. Fragoso, Rúben M.T. Peixinho, Luís M.S. Coelho and Inna C.S. Paiva

The purpose of this paper is to discuss the most relevant issues related to the impact of financial restatements in the dynamics of financial markets and identify several…

Abstract

Purpose

The purpose of this paper is to discuss the most relevant issues related to the impact of financial restatements in the dynamics of financial markets and identify several research gaps to be investigated in future research.

Design/methodology/approach

The methodology is based on a systematic review of the literature described by Tranfield et al. (2003). The final sample includes 47 academic papers published from 1996 to 2019.

Findings

Papers in this domain discuss three main topics: how the market prices the announcement of a financial restatement; how financial restatements affect the announcing firm’s cost of capital and how financial restatements affect firms’ reputation. There are several issues to explore in future research, including whether financial restatements affect the dynamics of financial markets in Europe, whether the market fully and promptly assimilates the information content of a restatement, the role of financial analysts’ information disclosures in this process or how regulators may improve the way they provide investors with timely information about firms’ restating problems.

Research limitations/implications

There is always some degree of subjectivity in the definition of the keywords, search strings and selection criteria in a systematic review. These are all important aspects, as they delimitate the scope of the study and define the sample of papers to be reviewed.

Practical implications

The answers to the research questions identified in this paper may provide regulators with information to improve financial accounting and reporting standards and strengthen investors’ confidence in accounting information and the dynamics of financial markets.

Originality/value

This paper systematically reviews the relevant literature exploring the connection between financial restatements and the dynamics of financial markets. It contributes to the academic community by identifying several research questions that may impact the theory and practice related to accounting quality and capital markets.

Details

Meditari Accountancy Research, vol. 28 no. 6
Type: Research Article
ISSN: 2049-372X

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Article

Dawid Szutowski

Open innovation is of crucial importance for all companies operating in the economics of widely distributed knowledge. However, the effects of its disclosure remain…

Abstract

Purpose

Open innovation is of crucial importance for all companies operating in the economics of widely distributed knowledge. However, the effects of its disclosure remain largely uncharted in the case of service companies. Therefore, the purpose of this paper is to measure the impact of open innovation announcements on the market value (MV) of service enterprises.

Design/methodology/approach

The research covered 398 open innovation announcements released by service companies. It was conducted in the whole of the European Union in the period February 2011-December 2016. The data were analysed in the short and long term with the use of event-study and buy-and-hold methods.

Findings

The results indicated the significant positive effect of open innovation disclosure in both short and long term. At the same time, the market was not able to immediately fully value the information in the short run and tended to overestimate the positive effect of the innovation announced. No significant leakage and dissemination effects were observed prior to the announcement. There was no significant difference in the magnitude of positive and negative reactions to the releases.

Practical implications

From the point of view of business practice the research proved the benefits of information disclosure and supported the long-term planning. From the investors’ viewpoint, it signalled the small risk of significant fluctuations resulting from aggressive trading prior to the announcement and unwinding part of the acquired position afterwards.

Originality/value

The paper attempts to fulfil the research gap on the impact of the announcements on open innovation on the MV of companies.

Details

European Journal of Innovation Management, vol. 21 no. 1
Type: Research Article
ISSN: 1460-1060

Keywords

Abstract

Details

Mastering Business for Strategic Communicators
Type: Book
ISBN: 978-1-78714-503-0

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Article

Frank Crowther and Michael Gaffney

Describes Australian teachers′ perceptions of their professionaldevelopment needs if they are to be successful in implementing emergingnational priorities. Also describes…

Abstract

Describes Australian teachers′ perceptions of their professional development needs if they are to be successful in implementing emerging national priorities. Also describes some of the outcomes of a nationwide research project that was conducted with representatives of professional teacher associations in May 1993. Discusses key questions such as: what are Australian teachers′ immediate needs in relation to effective implementation of emerging national priorities in school education? What are teachers′ perceptions of “best practices” in professional development? Concludes that Australia′s teachers will support the further development and implementation of national priorities provided that a range of professional needs can be met. Announcement of the $60 million National Professional Development Program (NPDP) suggests cause for optimism in this respect.

Details

International Journal of Educational Management, vol. 8 no. 4
Type: Research Article
ISSN: 0951-354X

Keywords

Content available

Abstract

Details

Journal of Integrated Care, vol. 27 no. 4
Type: Research Article
ISSN: 1476-9018

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Article

Tony Tinker

Computer based accounting information systems (AIS) have been a major force behind the current wave of corporate downsizing and reengineering (Deloitte & Touche LLP…

Abstract

Computer based accounting information systems (AIS) have been a major force behind the current wave of corporate downsizing and reengineering (Deloitte & Touche LLP, 1996). While greater economy and competitiveness is typically associated with these changes, conventional AIS literature usually eschews a counter‐hypothesis: that this new technology may also degrade both the quality and quantity of work, and therefore people’s working lives. The advent of Accounting, Management, and Information Technologies in 1991, with an espoused aim of “critically analyzing the relationships among our information systems designs, the qualities of our social and economic life, and our practices of management and control” (Boland and O’Leary, 1991, p. 2) presents a major opportunity to redress this deficiency. This paper reviews the journal’s inaugural issue and ancillary literature to assess its likely contribution. This literature is found to lack a sufficient appreciation of the social and historical context of AIS developments and thus compromises the new journal’s ability to achieve its espoused aims. The paper calls for a better understanding of the upheavals currently under way in the accounting workplace and ways in which AIS technology (and ethnographers) may compound these instabilities. A different kind of ethnographic research is called for: one capable of recognizing the dysfunctionalities of AIS‐induced downsizing and restructuring, and more politically and socially self‐aware of AIS agency in social and technological change.

Details

Accounting, Auditing & Accountability Journal, vol. 11 no. 1
Type: Research Article
ISSN: 0951-3574

Keywords

Content available
Article

Jean Paul Simon

This paper aims to clarify the notion of artificial intelligence (AI), reviewing the present scope of the phenomenon through its main applications. It aims at describing…

Abstract

Purpose

This paper aims to clarify the notion of artificial intelligence (AI), reviewing the present scope of the phenomenon through its main applications. It aims at describing the various applications while assessing the markets, highlighting some of the leading industrial sectors in the field. Therefore, it identifies pioneering companies and the geographical distribution of AI companies.

Design/methodology/approach

The paper builds upon an in-depth investigation of public initiatives focusing mostly on the EU. It is based on desk research, a comprehensive review of the main grey and scientific literature in this field.

Findings

The paper notes that there is no real consensus on any definition for this umbrella term, that the definition does fluctuate over time but highlights some of the main changes and advances that took place over the past 60 years. It stresses that, in spite of the hype, on both the business and consumer sides, the demand appears uncertain. The scope of the announced disruptions is not easy to assess, technological innovation associated with AI may be modest or take some time to be fully deployed. However, some companies and regions are leading already in the field.

Research limitations/implications

The paper, based on desk research, does not consider any expert opinions. Besides, the scientific literature on the phenomenon is still scarce (but not the technical one in the specific research sectors of AI). Most of the data come from consultancies or government publications which may introduce some bias, although the paper gathered various, often conflicting viewpoints.

Originality/value

The paper gives a thorough review of the available literature (consultancies, governments) stressing the limitations of the available research on economic and social aspects. It aims at providing a comprehensive overview of the major trends in the field. It gives a global overview of companies and regions.

Details

Digital Policy, Regulation and Governance, vol. 21 no. 3
Type: Research Article
ISSN: 2398-5038

Keywords

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Article

Richard J. Parrino

This article examines the first action by the US Securities and Exchange Commission to enforce the “equal-or-greater-prominence” requirement of its rules governing the…

Abstract

Purpose

This article examines the first action by the US Securities and Exchange Commission to enforce the “equal-or-greater-prominence” requirement of its rules governing the presentation by SEC-reporting companies, in their SEC filings and earnings releases, of financial measures not prepared in accordance with generally accepted accounting principles (GAAP).

Design/methodology/approach

This article provides an in-depth analysis of the equal-or-greater-prominence rule and the SEC’s enforcement posture in the context of the SEC’s concern that some companies present non-GAAP financial measures in a manner that inappropriately gives the non-GAAP measures greater authority than the comparable GAAP financial measures.

Findings

Although the appropriate use of non-GAAP financial measures can enhance investor understanding of a company’s business and operating results, investors could be misled about the company’s GAAP results by disclosures that unduly highlight non-GAAP measures. The SEC’s enforcement action signals a focus on the manner in which companies present non-GAAP financial measures as well as on how they calculate the measures.

Originality/value

This article provides expert guidance on a major SEC disclosure requirement from an experienced securities lawyer.

Details

Journal of Investment Compliance, vol. 20 no. 4
Type: Research Article
ISSN: 1528-5812

Keywords

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Article

Carolyn Wirth, Jing Chi and Martin Young

Investor access to timely, financial resource consent information is problematic, consequently the purpose of this paper is to investigate the economic importance of New…

Abstract

Purpose

Investor access to timely, financial resource consent information is problematic, consequently the purpose of this paper is to investigate the economic importance of New Zealand resource consent announcements to the stock exchange.

Design/methodology/approach

The authors apply event study methodology and cross‐sectional rank regression using a sample of resource consent announcements from 1993 to 2007.

Findings

Evidence of excess return volatility is found both on and before resource consent announcement dates. The results show that stock market reactions to resource consent announcements are positive for news of successes and negative for news of setbacks. Uncertainty associated with resource consent announcements appears to contribute to a delayed negative market response. In contrast, price reactions to announcements of resource consent success are immediate and significantly positive only when the news is concurrently disseminated via the media.

Research limitations/implications

The findings imply that resource consent announcements are newsworthy and provide valuable information to the stock market regarding future regulatory compliance costs. Media dissemination is suggested to play an important role in the price‐adjustment process for news of resource consent successes. Given the increasing prominence of environmental compliance issues, the authors suggest that more informative disclosures regarding the types of consent(s) sought, the dollar value of expected compliance costs, expected time to gain consent, project investment costs and consent conditions imposed, would better assist investors to assess the economic impact of firm capital expenditures.

Originality/value

This study adds evidence to the literature on the role of environmental disclosures in disseminating information and reducing information asymmetry and offers suggestions to enhance the informativeness of environmental disseminations.

Details

Pacific Accounting Review, vol. 23 no. 3
Type: Research Article
ISSN: 0114-0582

Keywords

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