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Article
Publication date: 24 January 2020

Tesfaye Taddese Lemma, Ayalew Lulseged, Mthokozisi Mlilo and Minga Negash

This study aims to examine the impact of political stability and political rights on firm-level earnings (both accrual-based and real) management.

Abstract

Purpose

This study aims to examine the impact of political stability and political rights on firm-level earnings (both accrual-based and real) management.

Design/methodology/approach

The authors develop models that link political stability, political rights, and the interplay between the two and earnings (both accrual-based and real) management. The authors analyze 63,872 firm-year observations of publicly listed, non-financial, firms drawn from 39 countries, for the period 1995 to 2016.

Findings

The authors find that political stability (political rights) attenuates (accentuates) accrual-based earnings management; political rights (political stability) accentuates (have no effect on) real earnings management; and the association between political rights and real earnings management is more pronounced in countries with better political stability.

Practical implications

The findings imply that users of financial statements should take cognizance of a country’s ambient political environment in assessing the potential for earnings management by firms.

Originality/value

No prior research examined the role of political forces in shaping firm-level earnings management behavior in a cross-country setting.

Details

Accounting Research Journal, vol. 33 no. 1
Type: Research Article
ISSN: 1030-9616

Keywords

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Article
Publication date: 16 April 2020

Tesfaye Taddese Lemma, Mehrzad Azmi Shabestari, Martin Freedman, Ayalew Lulseged and Mthokozisi Mlilo

This study aims to investigate the association between corporate carbon risk and debt maturity and the moderating role of voluntary disclosure, within the context of South…

Abstract

Purpose

This study aims to investigate the association between corporate carbon risk and debt maturity and the moderating role of voluntary disclosure, within the context of South Africa, an emerging player in the climate policy debate.

Design/methodology/approach

Based on the insights drawn from agency as well as information asymmetry theories, the authors develop models that link debt maturity with corporate carbon risk and voluntary disclosure and examine data obtained from companies listed on the Johannesburg Securities Exchange (JSE), for the period 2011-2015.

Findings

The findings document that, other things being equal, debt maturity is significantly higher, both statistically and economically, for companies with lower carbon intensity (risk). In addition, high-quality carbon disclosure accentuates the positive association between debt maturity and the inverse of carbon intensity. The results are robust to alternative measures of corporate carbon risk and issues of endogeneity. The findings are consistent with the view that lenders in South Africa use debt maturity as a non-price mechanism to address borrower risk and grant lower carbon risk companies that voluntarily provide higher quality carbon disclosures an even higher access to longer maturity debts; JSE-listed companies could use voluntary carbon disclosure to ease their access to debt with longer maturity.

Practical implications

The findings of this study have important implications to borrowers, pressure groups, policymakers and other stakeholders.

Originality/value

To the best of the authors’ knowledge, this study is the first to document evidence suggesting that lenders in South Africa use debt maturity as a non-price mechanism to address borrower risk.

Details

International Journal of Accounting & Information Management, vol. 28 no. 4
Type: Research Article
ISSN: 1834-7649

Keywords

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Article
Publication date: 2 August 2013

Venkataraman Iyer and Ayalew Lulseged

The primary purpose of this study is to investigate the association between the family status and corporate social responsibility disclosure (sustainability reporting) of…

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Abstract

Purpose

The primary purpose of this study is to investigate the association between the family status and corporate social responsibility disclosure (sustainability reporting) of large US companies.

Design/methodology/approach

The authors gathered data from GRI database as well as from Compustat. They use both univariate and multivariate statistical analyses.

Findings

The authors find that there is no statistically significant difference in the likelihood of sustainability reporting between family and non‐family firms of the S&P 500. They document important associations among the propensity to issue sustainability reports, the level of details of sustainability reports and certain firm‐specific and industry characteristic variables.

Research limitations/implications

This study is focused on S&P 500 firms and may not be generalizable to smaller firms. Differences among family firms such as stock ownership and management control may affect sustainability reporting and are important topics for future research.

Practical implications

Society should be aware of the motivations and incentives that govern sustainability reporting decisions by both family and non‐family firms. The authors show that both family and non‐family companies use voluntary disclosure in general and sustainability reporting in particular as a way of mitigating regulatory, political and litigation costs.

Originality/value

No prior study, to the authors' knowledge, has examined the association between sustainability reporting and the family status of firms. The authors include suggestions for future research in this area and hope that their study will provide motivation and guidance to researchers to study this topic further.

Details

Sustainability Accounting, Management and Policy Journal, vol. 4 no. 2
Type: Research Article
ISSN: 2040-8021

Keywords

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