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1 – 10 of 202Justyna Fijałkowska, Dominika Hadro, Enrico Supino and Karol M. Klimczak
This study aims to explore the intelligibility of communication with stakeholders as a result of accrual accounting adoption. It focuses on changes in the use of visual forms and…
Abstract
Purpose
This study aims to explore the intelligibility of communication with stakeholders as a result of accrual accounting adoption. It focuses on changes in the use of visual forms and the readability of text that occurred immediately after the adoption of accrual accounting in performance reports of Italian public universities.
Design/methodology/approach
The authors collect the stakeholder section of performance reports published before and after accrual accounting adoption. Then, the authors use manual and computer-assisted textual analysis. Finally, the authors explore the data using principal component analysis and qualitative comparative analysis.
Findings
This study demonstrates that switching from cash to accrual accounting provokes immediate changes in communication patterns. It confirms the significant reduction of readability and increase in visual forms after accruals accounting adoption. The results indicate that smaller universities especially put effort into increasing intelligibility while implementing a more complex accounting system. This study also finds a relation between the change in readability and the change in visual forms that are complementary, with the exception of several very large universities.
Practical implications
The findings underline the possibility of neutralising the adverse effects of accounting reform associated with its complexity and difficulties in understanding by the use of visual forms and attention to the document’s readability.
Originality/value
This paper adds a new dimension to the study of public sector accounting from the external stakeholder perspective. It provides further insight into the link between accrual accounting adoption and readability, together with the use of visual forms by universities.
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This study compares the motives of holding cash between developed (Australian) and developing (Malaysian) financial markets.
Abstract
Purpose
This study compares the motives of holding cash between developed (Australian) and developing (Malaysian) financial markets.
Design/methodology/approach
For the period 2006–2020, the t-test, fixed-effect and generalised method of moment (GMM) model have been applied to a sample of 1878 (1,165 Australian and 713 Malaysian) firms.
Findings
The empirical results reveal that firms in developed financial markets hold higher cash compared to the developing financial markets. The findings confirm that motives to hold cash differ between developed and developing financial markets. The GMM findings further show that cash holdings (CH) in Australia are higher due to higher ratios of cash flow, research and development (R&D) and return on assets (ROA), and lower due to larger dividend payments. In the Malaysian market, however, cash flows and R&D are ineffectual, ROA falls and dividend payments rise CH.
Practical implications
The study helps managers, practitioners and investors understand that firms' distinct economic, institutional, accounting and financial environments are important. To attain the desired outcomes, they must thus comprehend and consider these considerations while developing suitable liquidity strategies.
Originality/value
To the authors' best knowledge, this is the initial research demonstrating how varied cash motives and their ramifications are in developed and developing financial markets. Therefore, this study identifies the importance that CH motives varied among financial markets and that findings from a particular market cannot be generalised to other markets because of the market and financial structural variations.
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Luca Menicacci and Lorenzo Simoni
This study aims to investigate the role of negative media coverage of environmental, social and governance (ESG) issues in deterring tax avoidance. Inspired by media…
Abstract
Purpose
This study aims to investigate the role of negative media coverage of environmental, social and governance (ESG) issues in deterring tax avoidance. Inspired by media agenda-setting theory and legitimacy theory, this study hypothesises that an increase in ESG negative media coverage should cause a reputational drawback, leading companies to reduce tax avoidance to regain their legitimacy. Hence, this study examines a novel channel that links ESG and taxation.
Design/methodology/approach
This study uses panel regression analysis to examine the relationship between negative media coverage of ESG issues and tax avoidance among the largest European entities. This study considers different measures of tax avoidance and negative media coverage.
Findings
The results show that negative media coverage of ESG issues is negatively associated with tax avoidance, suggesting that media can act as an external monitor for corporate taxation.
Practical implications
The findings have implications for policymakers and regulators, which should consider tax transparency when dealing with ESG disclosure requirements. Tax disclosure should be integrated into ESG reporting.
Social implications
The study has social implications related to the media, which act as watchdogs for firms’ irresponsible practices. According to this study’s findings, increased media pressure has the power to induce a better alignment between declared ESG policies and tax strategies.
Originality/value
This study contributes to the literature on the mechanisms that discourage tax avoidance and the literature on the relationship between ESG and taxation by shedding light on the role of media coverage.
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Paula Gomes dos Santos and Fábio Albuquerque
This paper aims to assess the factors that may explain the International Public Sector Accounting Standards (IPSAS) convergence, considering Hofstede’s cultural dimensions as the…
Abstract
Purpose
This paper aims to assess the factors that may explain the International Public Sector Accounting Standards (IPSAS) convergence, considering Hofstede’s cultural dimensions as the theoretical reference for the cultural approach proposed. Additional factors include countries’ contextual and macroeconomic characteristics.
Design/methodology/approach
Logistic and probit regression models were used to identify the factors that may explain the IPSAS (fully or adapted) use by countries, including 166 countries in this assessment (59 for those whose cultural dimensions are available).
Findings
The findings consistently indicate collectivism and indebtedness levels as explanatory factors, providing insights into cultural dimensions along with macroeconomic characteristics as a relevant factor of countries’ convergence to IPSAS.
Research limitations/implications
There are different levels of IPSAS convergence by countries that were not considered. This aspect may hide different countries’ characteristics that may explain those options, which could not be distinguished in this paper.
Practical implications
As a result of this paper, the International Public Sector Accounting Standards Board may gain insights that can be applied within the IPSAS due process to overcome the main challenges when collaborating with national authorities to achieve a high level of convergence. This analysis may include how to accommodate countries’ cultural differences as well as their contextual and macroeconomic characteristics.
Social implications
There is a trend of moving toward accrual-based accounting standards by countries. Because the public sector embraces a new culture following the IPSAS path, it is relevant to assess if there are cultural factors, besides contextual and macroeconomic characteristics, that may explain the countries’ convergence to those standards.
Originality/value
To the best of the authors’ knowledge, this is the first cross-country analysis on the likely influence of cultural dimensions on IPSAS convergence as far as the authors’ knowledge.
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Ashutosh Dash and Rahul Pramani
The primary objectives of the case study are to get the participants exposed to the issues of working capital which even profitable companies face on a day-to-day basis; give the…
Abstract
Learning outcomes
The primary objectives of the case study are to get the participants exposed to the issues of working capital which even profitable companies face on a day-to-day basis; give the participants an understanding of how to balance the, at times, conflicting objectives of increasing profits and sales through favorable credit terms; and expose them to the impact of increase in inventory levels and average collection period on margins in a period of slow growth. They will also learn about the concept of factoring and its uses.
Case overview/synopsis
The case study is about a group of companies engaged in education, steel fabrication and oil businesses owned by a single proprietor. The company was based in Fatehnagar which was part of Hyderabad district in the state of Telangana, India, and the case study traces the origins of the group from 1960s to 2021. The group was invested the surplus cash flows from the oil business to initiate and expand other businesses during this period. The economic downturn due to the COVID-19 pandemic had hit the company, particularly its oldest business – Noble Chemical Agency. The oil business was facing issues related to its growth and profitability, and the uncertainty around COVID-19-related restrictions had only augmented the fears of the management. The case study looks at issues and the dilemma which the owner of the company faced. The case study highlights various issues related to working capital management, especially related to receivables management and inventory levels faced by businesses during the slow-growth phase. It demonstrates how working capital management issues, if not resolved in time, can lead to insolvency of even a successful company with a sound business model.
Complexity academic level
The case study is meant for teaching in postgraduate management programs (Master of Business Administration and Postgraduate Diploma in Management) in the following courses: corporate finance/financial management course in the first year (the case study should be taught towards the end of the course); and management accounting courses in first year (the case study should be positioned in the middle of these courses). The case study can also be used to highlight issues related to working capital and small business management in a Management Development Programme (MDP) course for “Finance fundamentals for non-finance executives”.
Supplementary materials
Teaching notes are available for educators only.
Subject code
CSS 1: Accounting and finance.
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Musa Ghazwani, Ibrahim Alamir, Rami Ibrahim A. Salem and Nedal Sawan
This study aims to examine the impact of corporate governance (CG) on anti-corruption disclosure (A-CD), paying particular attention to the FTSE 100. Notably, it examines how…
Abstract
Purpose
This study aims to examine the impact of corporate governance (CG) on anti-corruption disclosure (A-CD), paying particular attention to the FTSE 100. Notably, it examines how board and audit committees’ characteristics affect the quantity and quality of anti-corruption disclosure.
Design/methodology/approach
Data from FTSE 100 firms, spanning the period from 2014 to 2020, were analysed using the regression of the Poisson fixed effect and GEE analyses.
Findings
The findings show that gender diversity, audit committee expertise and the independence of the audit committee are positively associated with both quantity and quality of anti-corruption disclosure. Notably, no statistically significant relationships were identified between anti-corruption disclosure and factors such as board size, role duality or board meetings.
Research limitations/implications
The findings provide valuable insights for decision-makers and regulatory bodies, shedding light on the elements that compel UK companies to enhance their anti-corruption disclosure and governance protocols to alleviate corruption and propel efforts towards ethical behaviour.
Originality/value
This study makes a notable contribution to the sparse body of evidence by examining the influence of board and audit committee attributes on anti-corruption disclosure subsequent to the implementation of the UK Bribery Act in 2010. Specifically, to the best of the authors’ knowledge, this study assesses for the first time the impact of board and audit committee mechanisms on both the quantity and quality of anti-corruption disclosure.
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This research draws on drive reduction theory and mental accounting theory to understand how the prospect of reselling used items can influence consumer feelings of consumption…
Abstract
Purpose
This research draws on drive reduction theory and mental accounting theory to understand how the prospect of reselling used items can influence consumer feelings of consumption guilt and impact their willingness to purchase new products.
Design/methodology/approach
We conducted two studies with between-subjects designs to explore this relationship. In Study 1, we examined the correlation between consumers' perceived guilt and their willingness to buy a new product, considering their awareness of the product’s resale potential. Study 2 delved into the aspect of reselling a similar old product already owned by the consumer.
Findings
The findings suggest three key insights. First, consumers' awareness of resale potential significantly affects their guilt perception and purchasing decisions. Second, the resale reference price (RRP) can decrease guilt perception but increase the intention to buy a new product. Lastly, when consumers are aware of the resale value of a previously owned product that is similar to the desired new product, the effect of the RRP on their purchasing intent is mediated by consumer guilt.
Originality/value
This research fills a theoretical gap by empirically exploring the emotional motivations behind consumer resale behavior. It presents a novel perspective on how resale activities can shape feelings of guilt and impact purchasing decisions. This offers important implications for understanding the dynamics of consumer behavior in the second-hand market.
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Mohamed Chakib Kolsi, Ahmad Al-Hiyari and Khaled Hussainey
Corporate social responsibility (CSR) has gained great attention among regulators, stock market authorities, and firms' stakeholders for many decades. In this chapter, we first…
Abstract
Corporate social responsibility (CSR) has gained great attention among regulators, stock market authorities, and firms' stakeholders for many decades. In this chapter, we first review the main regulations, standards, and laws issued by UAE federal authorities namely the Company Commercial Law of 2015, the Abu Dhabi Stock Exchange (ADX) disclosure guidance of 2019, Abu Dhabi Sustainability Week, and UAE CSR platform. Second, we present a summary of the empirical research on CSR issues in UAE context, namely in the following four fields: (1) CSR determinants both at the micro and macro levels, (2) CSR measures in the three pillars (environmental, social, and governance), (3) the impact of CSR policy and practices on financial performance/market value, (4) and the role of some mediating/moderating variables such as leadership and board gender diversity. Results show greater compliance to CSR standards among different industries and institutions but heterogenous empirical findings in the four explored fields. While there is crucial alignment with both social and environmental standards as evidenced by numerous empirical studies, additional efforts should be deployed to highlight the governance pillar through firms' discretionary reporting. Our survey provides useful directives and outcomes as it portrays both legal aspects coupled with some empirical evidence of CSR issues in the UAE context. Our study helps corporations to comply with local standards on sustainability reporting and highlights the potential economic benefits and advantages for firms adopting CSR strategy. Furthermore, it can be considered as the cornerstone for regulatory bodies in the United Arab Emirates when issuing/enhancing new standards/rules on CSR practices.
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This study aims to explore the moderating effects of strategy on the relationship between working capital management (WCM) and profitability.
Abstract
Purpose
This study aims to explore the moderating effects of strategy on the relationship between working capital management (WCM) and profitability.
Design/methodology/approach
A data sample of 72,444 firm-year observations of US-listed firms during 2000–2020 was used. The research hypotheses were tested using a panel regression analysis and an appropriate research instrument that signifies a firm’s strategic positioning.
Findings
The prospecting (defending) strategy has a decreasing (increasing) moderating effect on the relationship between WCM and profitability. The empirical findings are not affected by the level of earnings management, the presence of motives to meet earnings targets or the intensity of unreported intangible assets. Additionally, the reported empirical results remain robust within the context of propensity score matching regression analysis, in the presence of nonlinear effects of WCM on profitability, when alternative measures of WCM are used, and between firms with an increase or decrease in future profitability or different levels of efficiency on net WCM investments.
Research limitations/implications
This study may stimulate future research exploring the moderating effects of various variables on the relationship between WCM and operating performance.
Practical implications
The findings highlight the importance of strategy for improving the performance evaluation of WCM policies and the prediction accuracy of the consequences of a strategy on short-term operating performance.
Originality/value
Prior empirical research has documented either a negative or positive relationship between WCM and profitability, which implies the presence of moderating effects of various factors. This study provides empirical evidence of the moderating effects of strategy on the relationship between WCM and profitability.
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The current study uses an advanced machine learning method and aims to investigate whether auditors perceive financial statements that are principles-based as less risky. More…
Abstract
Purpose
The current study uses an advanced machine learning method and aims to investigate whether auditors perceive financial statements that are principles-based as less risky. More specifically, this study aims to explore the association between principles-based accounting standards and audit pricing and between principles-based accounting standards and the likelihood of receiving a going concern opinion.
Design/methodology/approach
The study uses an advanced machine-learning method to understand the role of principles-based accounting standards in predicting audit fees and going concern opinion. The study also uses multiple regression models defining audit fees and the probability of receiving going concern opinion. The analyses are complemented by additional tests such as economic significance, firm fixed effects, propensity score matching, entropy balancing, change analysis, yearly regression results and controlling for managerial risk-taking incentives and governance variables.
Findings
The paper provides empirical evidence that auditors charge less audit fees to clients whose financial statements are more principles-based. The finding suggests that auditors perceive financial statements that are principles-based less risky. The study also provides evidence that the probability of receiving a going-concern opinion reduces as firms rely more on principles-based standards. The finding further suggests that auditors discount the financial numbers supplied by the managers using rules-based standards. The study also reveals that the degree of reliance by a US firm on principles-based accounting standards has a negative impact on accounting conservatism, the risk of financial statement misstatement, accruals and the difficulty in predicting future earnings. This suggests potential mechanisms through which principles-based accounting standards influence auditors’ risk assessments.
Research limitations/implications
The authors recognize the limitation of this study regarding the sample period. Prior studies compare rules vs principles-based standards by focusing on the differences between US generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS) or pre- and post-IFRS adoption, which raises questions about differences in cross-country settings and institutional environment and other confounding factors such as transition costs. This study addresses these issues by comparing rules vs principles-based standards within the US GAAP setting. However, this limits the sample period to the year 2006 because the measure of the relative extent to which a US firm is reliant upon principles-based standards is available until 2006.
Practical implications
The study has major public policy suggestions as it responds to the call by Jay Clayton and Mary Jo White, the former Chairs of the US Securities and Exchange Commission (SEC), to pursue high-quality, globally accepted accounting standards to ensure that investors continue to receive clear and reliable financial information globally. The study also recognizes the notable public policy implications, particularly in light of the current Chair of the International Accounting Standards Board (IASB) Andreas Barckow’s recent public statement, which emphasizes the importance of principles-based standards and their ability to address sustainability concerns, including emerging risks such as climate change.
Originality/value
The study has major public policy suggestions because it demonstrates the value of principles-based standards. The study responds to the call by Jay Clayton and Mary Jo White, the former Chairs of the US SEC, to pursue high-quality, globally accepted accounting standards to ensure that investors continue to receive clear and reliable financial information as business transactions and investor needs continue to evolve globally. The study also recognizes the notable public policy implications, particularly in light of the current Chair of the IASB Andreas Barckow’s recent public statement, which emphasizes the importance of principles-based standards and their ability to address sustainability concerns, including emerging risks like climate change. The study fills the gap in the literature that auditors perceive principles-based financial statements as less risky and further expands the literature by providing empirical evidence that the likelihood of receiving a going concern opinion is increasing in the degree of rules-based standards.
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