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Output per worker varies significantly from one country to another. Why? Our analysis shows that differences in earnings opacity are important sources of this variation. Earnings opacity is a measure that reflects how little information there is in a firm's earnings number about its true, but unobservable, economic performance. According to our results, a high‐productivity country has the accounting quality associated with low earnings opacity. Results further suggest that the quality of accounting in general, and low earnings opacity in particular helps a country by stimulating the accumulation of human and physical capital and by raising its total factor productivity.

This study aims to investigate the opacity of bank assets because of the International Financial Reporting Standard (IFRS) 9 implementation. It highlights that the Asian-Pacific countries’ banking industries are experiencing economic volatility. In other words, it examines information asymmetries because of the standards requiring a mechanistic treatment. Thus, this focuses on the tragedy of the commons (ToTC) caused by the implementation of the standard.

This research selects a sample of banking firms in the Asia-Pacific region from 2010 to 2021. Furthermore, it examines the impacts of IFRS 9’s implementation on earnings forecasts and share-return conveyances. This research first uses the OLS regression for examining the bank assets’ opacities, which may affect future earnings and information conveyancing. Second, it arranges these opacities, earnings and stock returns with the 2-SLS regression to find the staging associations because of hierarchical relevances.

This study finds that bank assets’ opacity is caused by a standard’s implementation, which is a ToTC, and this study signifies its first occurrence. Simultaneously, it recognises an information asymmetry because of the implemented procedural calculation mandated by the standard. Furthermore, these opacities affect future earnings and information conveyancing that inherited information asymmetries, which have affected them as the second ToTC. Finally, current and future earnings as a consequent impact of asset opacity are recursively associated with stock return conveyancing as the third ToTC.

This study demonstrates hierarchical information about bank asset opacities, starting by recognising and measuring them in financial statements. Then, these recognised and measured asset opacities are associated with current and future earnings, ending on the ordinarily and staged influencing of stock return conveyancing. Moreover, it reveals hierarchical information in the direct-ordinarily and staged associations among bank asset opacities, earnings and return conveyances. Thus, these associations are valid and occur because of the mandates of the standard’s measurement.

The purpose of this paper is to identify and test the determinates of earnings opacity internationally. The determinates are hypothesized to be the elements of social, economic and accounting order in each of the 34 countries of the study.

A sample of 34 countries’ data was collected and data estimation and several statistical and correlations were performed.

Earnings opacity internationally is negatively related to the levels of economic freedom and quality of life, and positively related to rule of law, economic growth and level of corruption. Further, the findings are surprising that the level of disclosure, the number of auditors per 100,000 inhabitants and the adoption of international accounting standards (as elements of the accounting order) are not significantly related to earnings opacity internationally. It is the social and economic climate rather than the technical accounting climate that is at the core of the lack of accounting quality in general and earnings opacity in particular.

Elements of accounting order do not seem to affect earnings opacity as much as social and economic characteristics. It is the economic and the social context rather than the technical that explicates better the level of accounting quality in general and the level of earnings opacity in particular in a given country. Earnings opacity is higher as a result of higher rule of law, economic growth and level of corruption, and lower as result of higher level of economic freedom and quality of life.

This paper examines how accounting quality, as measured by earnings opacity, affects the stock market wealth effect, which in turn is shown to be linked to economic growth. Stock market wealth effect is negatively affected by earnings opacity. The data also indicate that the exogenous component of the stock market wealth effect — the component defined by earnings opacity‐ is positively associated with economic growth. The direct effect of earnings opacity on economic growth is, as expected negative, but insignificant.

The purpose of this paper is to investigate the relationship between corporate governance and earnings opacity in China.

Two corporate governance mechanisms form the basis of the analysis: 1) the board of directors and 2) the external audit function. OLS regression analysis is employed on a large sample from 2000 to 2014 with 20,235 firm-year observations.

Corporate governance is found to be associated with reduced levels of earnings opacity for Chinese listed companies. Furthermore, the association between corporate governance and reduced levels of earnings opacity strengthened after the implementation of various key reforms.

Chinese regulators are advised to proceed with caution as not all Western approaches to corporate governance are transferrable to the Chinese setting.

This study contributes to the literature by analyzing broad latent constructs of corporate governance in addition to individual observable dimensions in order to reveal that various key reforms have been successful in strengthening the link between governance and reporting quality for Chinese listed companies.

The paper explores the impact of the quality of accounting in a given country, as measured by an index of earnings opacity, on the country's level of corruption. The results of a regression of corruption on earnings opacity for a sample of 34 countries show significant relationships between the level of corruption and the level of earnings opacity after controlling for economic development, human development, size of government and economic freedom.

The study examines the impact of uncertainty on bank opacity while particularly taking into account the moderating role of market structures.

Using a sample of Vietnamese banks from 2007 to 2019, the paper measures uncertainty at the disaggregate level of the banking sector through the dispersion of bank shocks and capture bank opacity from the perspective of bank earnings management based on discretionary loan loss provisions. The authors apply both structural and non-structural proxies of bank competition/concentration to better explore the role of market structures. Empirical regressions are conducted using the fixed effect regressions with Driscoll–Kraay standard errors and the two-step system generalized method of moments (GMM) technique, and then verified by the least squares dummy variable corrected (LSDVC) estimator.

Bank earnings opacity is less severe in periods of higher uncertainty. Further analysis documents that the negative impact of uncertainty on bank earnings opacity is stronger when the level of bank competition increases or when bank market power decreases.

The finding highlighting the conditioning role of market structures is entirely novel in the uncertainty-bank opacity literature. Moreover, in providing additional evidence on the significant impact of uncertainty on bank opacity, while prior related studies explore economic policy uncertainty, the authors utilize micro uncertainty in banking that exhibits enormous superiority.

The purpose of this paper is to evaluate the influence of the informational environment on the relevance of accounting information in companies traded in stock exchanges of emerging markets.

For this purpose, the authors calculated indicators based on figures derived from the financial statements and variables that sought to capture the influence of the economic and institutional environment. The sample consisted of publicly traded companies from 20 countries classified as emerging by Standard & Poors. Macroeconomic information was obtained through the International Country Risk Guide database. The analysis period ranged from 2004 to 2013, excluding missing data, variables considered as outliers, besides the exclusion of data from companies that presented negative equity.

It was observed that the financial variables presented signs consistent with the literature, except for the price-to-book variable and the asset change variable. The inclusion of variables related to the accounting informational environment offered evidence that the more opaque the accounting environment in the country, the lesser the ability of the profits to portray the variations of stock returns. The variable that captured the adoption of international standards was consistent with expectations, i.e. the adoption of international standards would increase the quality of accounting information, showing a positive signal. Moreover, the variable aggressiveness of the earnings was statistically significant and negative, consistent with the literature.

The variables earnings smoothing and aversion to losses did not show the expected behaviour though, highlighting the possible limitations of these proxies used to capture the opacity of the earnings.

When institutional moderators were included, it was observed that the adoption of the IFRS standards positively affected the relationship, which is more relevant when the accounting figures were under its aegis. Recently, countless nations’ transition to international accounting standards has been justified by the need to use high-quality reporting standards. The research sought to contribute to strengthen this dimension, presenting evidence that the dummy variable included to capture the adoption of international standards had a positive effect on the relationship.

This paper attempts to investigate the effect of corruption on the real and accrual earnings management of target firms in the process of mergers and acquisitions.

The sample includes target firms from the European area that participate in mergers or acquisitions announced during 2010–2020. The preliminary empirical part estimates the level of earnings management during the period two years before the deal's announcement to identify whether the sample follows the manipulation behavior that the literature suggests for target firms. The primary empirical analysis focuses on the impact of corruption on real and accrual-based earnings management proxies, employing regression models and two alternative proxies for corruption. The existing literature points out that the combination of low levels of corruption and an integrated legal system reduces earnings manipulation.

The findings provide strong evidence for systematic downwards accounting manipulation practices, whereas the findings for real earnings management are not significant. The findings of the main empirical part show that corruption is positively associated with accrual-based manipulation and negatively related to real earnings management. In essence, in economies with a high level of transparency, managers adopt the manipulation of operating activities as a less detectable practice of earnings management instead of engaging in accounting procedures.

This study contributes to the literature highlighting the diversification of these firms' manipulation strategies according to the national level's corruption status.

This paper aims to examine the association between earnings quality and firm-specific return volatility for a large sample of Japanese manufacturing firms.

This archival research uses idiosyncratic volatility and asynchronicity as two analogous proxies for firm-specific return volatility to investigate its association with earnings quality.

Using idiosyncratic volatility and asynchronicity as two comparable proxies for firm-specific return volatility, the author finds contradictory results. The author relates this contradiction to another debate in accounting and finance literature about whether firm-specific return volatility captures firm-specific information or noise. Initially, the author obtains conflicting results because the systematic risk, one of the components of asynchronicity, is highly correlated with earnings quality. After controlling for the systematic risk, the author finds that higher earnings quality is associated with lower firm-specific return volatility. This finding is consistent with the noise-based explanation of firm-specific return volatility. The author also separates earnings quality into an innate component driven by economic fundamentals and a discretionary component driven by managerial discretionary behavior and finds that both components have significant impact on firm-specific return volatility but the innate component has significantly stronger effect than the discretionary component.

This is the first research study presenting evidence on the association between earnings quality and firm-specific return volatility in the Japanese setting. The findings of this paper are likely to contribute to the resolution of a well-known debate on whether firm-specific return volatility captures more firm-specific information being impounded in stock prices or noise in stock prices.