Search results

This study aims to examine how new regulation changes for the auditor’s report, so-called key audit matters (KAMs), influence tax avoidance.

This study uses data from firms listed on the Omani capital market over the period 2012–2019 and analyzes these data using pooled panel data regression with a robust standard error. It uses two common proxies for tax avoidance and two measures for the KAMs disclosure requirement.

This study finds a sharp decrease in the effective tax rate following the introduction of KAMs disclosure and the issuance of more KAMs in audit reports. This result is supported by several robustness checks. In an additional analysis, the authors observe interesting results, indicating that real earnings management mediates this association, while the audit committee plays a moderating role. The authors do not find a moderating effect of Big4 on this association, but find discrepancies within the Big4 firms in relation to this moderating effect.

The results of this study indicate that although the introduction of the KAMs disclosure requirement may have positive consequences, it may also lead to unintended negative consequences. This conclusion has not been comprehensively reported in literature.

As the comparability concept has recently garnered increased attention of policymakers and standard setters in the sustainability reporting (SR) arena, this paper aims to provide a reflexive viewpoint of this concept in this context.

To inform the authors’ viewpoint and disentangle the concept of comparability into different facets, the authors review policymakers’ and standard setters’ (including the Global reporting initiative) comparability principles, as well as relevant studies in the field. To provide insights into the different ways in which the comparability facets can be approached, the authors use multi-perspective reflexive practices and focus on the multiple purposes that reporting can serve. To empirically animate the authors’ reflection on the facets, the authors analyse the sustainability disclosures of two Italian banks over three years.

This study reveals that three facets form valuable starting points for extending the understanding of the meanings the comparability concept can carry in the SR arena. These facets are materiality and comparability, benchmarking/monitoring and comparability and operationalisation and comparability.

This study is intended to elicit policymakers’ and standard setters’ thoughts on the role of comparability and its complexities in SR.

By taking a critical and reflexive approach, the authors encourage policymakers and standard setters to reconsider the comparability principle, so it effectively embeds the accountability purpose of SR.

In this paper, the authors propose three facets for disentangling the concept of comparability.

The purpose of this study is to examine whether the required disclosure and the high frequency of key audit matters (KAMs) are likely to moderate the effect of higher credit risk on earnings quality.

This study uses 15,106 Taiwanese firm-year observations to explore the relationship between earnings quality and credit risk during the 2011 to 2020 period. We use the two-stage least squares method to test whether the presence of KAM disclosures moderated the association between earnings quality and credit risk and also to examine whether higher KAM frequency moderates the association between earnings quality and credit risk.

Our results provide evidence that the presence of a KAM disclosure requirement moderates the impact of firms with higher credit risk on earnings quality. In addition, there is significant evidence that the higher the frequency of KAM disclosures the greater the moderation impact that is found.

This research investigates whether the disclosure and high frequency of KAMs moderates the effect of credit riskiness on earnings quality. This study improves our understanding of whether more KAMs disclosures would improve earnings quality of firms with higher credit risk. In addition, we also use Beneish M-SCORE, as an alternative earnings quality proxy, to reinforce our empirical results. This markedly differentiates this paper from other studies.

The purpose of this paper is to construct an investment account holders' transparency and disclosure (IAH-T&D) index based on the new and revised accounting standard for investment accounts of the Accounting and Auditing Organization for Islamic Financial Institutions Standards (AAOIFI) (2020). It also aims to measure and compare the compliance level with IAH-T&D over years and between countries.

This study uses the content analysis method to analyze the content of 270 annual reports across 30 Islamic banks (IBs) in 10 Middle East and North Africa countries during the period from 2010 to 2019.

This study introduces a new IAH-T&D index which consists of 27 items representing four categories: investment accounts disclosure (11 items), incentive earnings disclosure (1 item), allocations and reserve disclosure (4 items) and general requirements for disclosure (11 items). The analysis shows that the level of IAH-T&D is 51%. The level of compliance varies over the years and across countries.

To the best of the authors’ knowledge, this is the first study that offers an original self-constructed-T&D index that could enhance future research related to determinants and consequences of IAH-T&D practice in IBs.

This study aims at investigating banks’ compliance with the disclosure requirements of Basel III in two emerging market economies, namely, the United Arab Emirates (UAE) and India. This study also examines the impact of economic factors on the extent of disclosures.

The authors compare the Basel disclosure practices between UAE and Indian listed banks and have used panel data regression models to investigate the compliance and level of reporting based on three market variables, namely, size, leverage and profitability of listed banks.

After examining Basel reporting for each of three categories of independent factors, size was found to be the predominant factor influencing the Basel disclosures, followed by profitability and degree of financial leverage. It is prudent for all the banks irrespective of size to capitalize on themselves with an intent to tide over the frequent economic crises and prevent every economic crisis from becoming a full-blown financial crisis.

The findings suggest that there is an urgent need for a high level of concerted action in the context of listed banks in the selected emerging market nations to direct more resources to ensure full compliance with Basel III. The findings inform practitioners in emerging countries of compliance and plan expanded future applications. Investors should consider the BASEL compliance level of Banks before parking their funds in the bank’s stocks. The banks having a higher degree of compliance are expected to be safer than their counterparts having lower Basel compliance.

Many previous studies have examined the implementation of Basel III in general. This study is specific in assessing the compliance with disclosure requirements as prescribed by Pillar III of the Basel norms. To the best of the authors’ knowledge, this is the first research to compare market discipline in emerging markets. Existing studies have either assessed the level of compliance in one individual or similar types of markets. However, this study made a pioneering attempt to compare two different countries in the same category (emerging markets).

This paper aims to empirically examine the impact of mandatory CSR disclosure on the CEO pay performance sensitivity.

Using the mandatory requirement of CSR disclosure as an exogenous shock, the authors compare the changes in CEO pay performance sensitivity for treatment firms with control firms through a difference-in-difference (DiD) approach.

The authors find that mandatory CSR disclosure enhances CEO pay performance sensitivity. The results also show that monitoring CEO power is a conduit through which mandatory CSR disclosure affects CEO pay performance sensitivity. The positive impact is more profound in firms with a powerful CEO, i.e. one who is politically well-connected, holds dual roles as both CEO and Chairman, and/or has had a long tenure. Furthermore, the increased CEO pay performance sensitivity after the mandate is prominent among state-owned enterprises (SOEs) only.

The findings of this paper have implications for other economies with similar institutional backgrounds as China. Although the mandatory CSR disclosure does not require firms to spend on CSR investment, the mandatory CSR disclosure alters firm behaviour, and mitigates agency problems.

This paper contributes to the studies on the impact of CSR disclosure on firms' behaviour. To the authors' knowledge, this is the first study to examine the effects of mandatory CSR disclosure on CEO pay performance sensitivity using the quasi-natural experiment settings.

This study investigates the consequences of the key audit matter (KAM) disclosure requirement by considering two salient audit proxies: audit fees and audit report lag. This investigation is relevant because most auditors worldwide are required to expand their audit report including discussion on key matters faced in the audit engagement. However, the emerging literature on the implications of KAM is inconclusive.

Using a distinctive dataset of 601 year-observations for firms listed on the Omani capital market over 2012–2019, this study employs pooled panel data regression with robust standard error.

Results indicate that auditors increased their fees considerably during the period of KAM but substantially shortened audit report lag. Conversely, using the KAM period as a sample, the authors find marginal or insignificant evidence for the effect of the number of KAM on both proxies. In additional analyses, this study shows that entity-level risk KAM is associated with higher fees and shorter audit report lag, while KAM related to account-level risk does not have the same effect. Interestingly, it is observed that KAM disclosure is strongly associated with higher fees and high-quality audit even when the auditors issue their report in a shorter time.

This study contributes to the limited research examining the consequences of KAM in emerging markets. It is also the first to show that KAM is associated with shorter audit report lag.

Risk information provides information to enable stakeholders to make informed decisions about a company. Corporate communications should be readable and unbiased so as not to hamper disclosure usefulness. This study assesses whether risk disclosures in the integrated reports are readable and unbiased.

The readability and narrative tone of South African listed companies' risk and risk management disclosures as disclosed in their integrated reports are analysed using automated software for the Top 40 JSE listed companies from 2015 to 2019.

The results show that risk and risk management disclosures are unreadable and lack any improvement in readability during the period. Additionally, these disclosures are biased toward narrative tones signalling communality and certainty.

The study adds to the literature on the readability of corporate reports, by focussing on the readability and narrative tone of risk and risk management disclosures during a period of increased scrutiny over the content of such disclosures. Also, by analysing risk disclosure and risk management disclosure separately, and by performing trend analysis to determine whether requirement changes related to content (specifically King IV) affect readability and narrative tones.

Integrated reporting enhances the meaningfulness of non-financial information, but whether this enhancement is progressive or regressive from a sustainability perspective is unknown. This study aims to examine the influence of the Integrated Reporting (<IR>) Framework on the disclosure of financial- and impact-material sustainability-related information in integrated reports.

Using a disclosure index constructed from the Global Reporting Initiative’s G4 Guidelines and UN Sustainable Development Goals, the authors content analysed integrated reports of 40 companies from the International Integrated Reporting Council’s Pilot Programme Business Network published between 2015 and 2017. The content analysis distinguished between financial- and impact-material sustainability-related information.

The extent of sustainability-related disclosures in integrated reports remained more or less constant over the study period. Impact-material disclosures were more prominent than financial material ones. Impact-material disclosures mainly related to environmental aspects, while labour practices-related disclosures were predominantly financially material. The balance between financially- and impact-material sustainability-related disclosures varied based on factors such as industry environmental sensitivity and country-specific characteristics, such as the country’s legal system and development status.

The paper presents a unique disclosure index to distinguish between financially- and impact-material sustainability-related disclosures. Researchers can use this disclosure index to critically examine the nature of sustainability-related disclosure in corporate reports.

This study offers an in-depth understanding of the influence of non-financial reporting frameworks, such as the <IR> Framework that uses a financial materiality perspective, on sustainability reporting. The findings reveal that the practical implementation of the <IR> Framework resulted in sustainability reporting outcomes that deviated from theoretical expectations. Exploring the materiality concept that underscores sustainability-related disclosures by companies using the <IR> Framework is useful for predicting the effects of adopting the Sustainability Disclosure Standards issued by the International Sustainability Standards Board, which also emphasises financial materiality.

Despite an emphasis on financial materiality in the <IR> Framework, companies continue to offer substantial impact-material information, implying the potential for companies to balance both financial and broader societal concerns in their reporting.

While prior research has delved into the practices of regulated integrated reporting, especially in the unique context of South Africa, this study focuses on voluntary adoption, attributing observed practices to intrinsic company motivations. To the best of the authors’ knowledge, it is the first study to explicitly explore the nature of materiality in sustainability-related disclosure. The research also introduces a nuanced understanding of contextual factors influencing sustainability reporting.

This paper aims to examine sites of dissonance or consensus between global investor responses to the draft standards, International Financial Reporting Standards S1 (IFRS) (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures), issued by the International Sustainability Standards Board (ISSB).

A thematic content analysis was used to capture investor views expressed in their comment letters submitted in the consultation period (March to July 2022) in comparison to the ex ante position (issue of draft standards, March 2022) and ex post summary feedback (ISSB staff papers, September 2022) of the ISSB.

There was investor consensus in support of the ISSB and the development of the draft standards. However, there were sites of dissonance between investors and the ISSB, notably regarding the basis and focus of reporting (double or single/financial materiality and enterprise value); definitional clarity; emissions reporting; and assurance. Incrementally, the research further highlights that investors display heterogeneity of opinion.

The ISSB standards will provide a framework for future sustainability reporting. This research highlights the significance of such reporting to investors through their responses to the draft standards. The findings reveal sites of dissonance in the development and alignment of draft standards to user needs. The views of investors, as primary users, should help inform the development of sustainability-related standards by a global standard-setting body apposite to current policy and future reporting requirements, and their usefulness to users in practice.

To the best of the authors’ knowledge, this paper makes an original contribution to the comment letter literature, hitherto focused on financial reporting with a relative lack of investor engagement. Using thematic analysis, sites of dissonance are examined between the views of investors and the ISSB on their development of sustainability reporting standards.