Search results

Researchers are continually trying to find reliable fraud indicators (e.g., Beasley, 1996) and some are working on building fraud prediction models (e.g., Spathis, 2002) to aid auditors in fraud detection. With this same goal of predicting fraud in mind, the purpose of this study is to explore the potential of qualitative fraud risk indicators. Content analysis is used in analyzing the Management's Discussion and Analysis (MDA) section of the annual report to identify potential indicators of deception to increase the likelihood of fraud detection in a timelier manner than current quantitative models.

By examining asynchronous communication contained in annual reports for companies required by the SEC to restate their financial statements, patterns of key linguistic characteristics were identified and compared to those used by companies not required to restate. Findings evidence significant differences on several dimensions. Using language cues for detection of deception has the advantage over quantitative methods of providing a more timely method of determining deception. Quantitative models often cannot detect deception until the effects are validated by financial impairment.

Implications of the findings suggest that qualitative methods of deception detection may provide an earlier, and thus more useful, method of the detection of fraud. The results of this study should provide stakeholders with a set of indicators to aid in identifying misstated information. This approach is also one that can be generalized to other written documents used to predict fraudulent communication.

This research provides accounting-ethics authors and administrators with a benchmark for accounting-ethics research. While Bernardi and Bean (2010) considered publications in business-ethics and accounting’s top-40 journals this study considers research in eight accounting-ethics and public-interest journals, as well as, 34 business-ethics journals. We analyzed the contents of our 42 journals for the 25-year period between 1991 through 2015. This research documents the continued growth (Bernardi & Bean, 2007) of accounting-ethics research in both accounting-ethics and business-ethics journals. We provide data on the top-10 ethics authors in each doctoral year group, the top-50 ethics authors over the most recent 10, 20, and 25 years, and a distribution among ethics scholars for these periods. For the 25-year timeframe, our data indicate that only 665 (274) of the 5,125 accounting PhDs/DBAs (13.0% and 5.4% respectively) in Canada and the United States had authored or co-authored one (more than one) ethics article.

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.

This study investigates the efficiency of value relevance and faithful representation when stock market price derivates from its firm value to the investigated IT companies listed in FTSE Taiwan 50. The empirical investigation reveals one financial indicators: Return on equity (ROE) has explanatory ability among seven financial indicators, earnings per share (EPS), book value (BV), dividend yield (Div.), price–earnings ratio (P/E), ROE, return on assets (ROA), and return on operating asset (ROOA) to both sampled companies, United Microelectronics Corporation, UMC, (2303) and Taiwan Semiconductor Manufacturing Company Limited, TSMC, (2330). Furthermore, the empirical results indicate that the higher order moments, skewness and kurtosis, of price deviation do not provide a reliable prediction or explanatory power for stock price trends.

Given the continuing growth in both the complexity and severity of cyber risk, a fundamental rethink of cyber risk management has become an issue of paramount importance, particularly as insurance firms are now providing both cyber risk management services and cyber risk insurance coverage. In this study, we set out to provide analyses of the prevailing cyber risk levels in various industries using the “Chronology of Data Breaches” database and then go on to assess the overall benefits of cyber risk insurance coverage. Our results reveal that compared to other industries, insurance firms exhibit superior cyber risk management. Regardless of internal and external cyber risk, insurance companies retain the lowest cyber losses. We further provide evidence to show that cyber risk insurance policies alone cannot effectively cover the potentially extreme cyber risk losses for most industries. However, the situation can be improved by implementing cyber risk management services provided by insurance firms. Insurance firms may need to provide an efficient cyber risk management system to lower the frequency and severity of extreme events.

This chapter discusses and investigates the sustainability reporting across different sectors. The first section discusses and investigates the relationship between sustainability reporting and primary sector's performance (Agriculture and Food Industries Sector and Energy Sector). The second section discusses and investigates the relationship between sustainability reporting and secondary sector's performance (Manufacturing Sector). The final section discusses and investigates the relationship between sustainability reporting and tertiary sector's performance (Banks and Financial Services Sector, Retail Sector, Telecommunication and Information Technology Sector, and Tourism Sector).