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Article
Publication date: 23 March 2022

Manish Bansal

The study aims at examining the relationship between the forms of misclassification practices, namely expense shifting and revenue shifting. In particular, the study aims at…

Abstract

Purpose

The study aims at examining the relationship between the forms of misclassification practices, namely expense shifting and revenue shifting. In particular, the study aims at identifying the form of shifting that has been preferred by firms to meet the industry average profitability.

Design/methodology/approach

Core earnings and operating revenue expectation models are used to measure expense shifting and revenue shifting, respectively. The panel fixed-effects models are used to control for unobserved heterogeneity across industries and time.

Findings

Based on a sample of Bombay Stock Exchange-listed firms, the author finds that firms prefer expense shifting over revenue shifting to meet industry average profitability, implying that firms choose the shifting tool based on the relative advantage. Further, the findings deduced from the empirical results demonstrate that firm life cycle and mandatory adoption of International Financial Reporting Standards (IFRS) moderates the relationship between shifting forms and industry average profitability. However, the negative impact of IFRS on shifting practices is found to be less pronounced among BigN audit firms.

Originality/value

The study is among the pioneering attempt to document the substitution relationship between shifting forms. It is the first study that examines a form of classification shifting, where gross profit and core earnings both change as an effect of misclassification.

Details

South Asian Journal of Business Studies, vol. 13 no. 1
Type: Research Article
ISSN: 2398-628X

Keywords

Article
Publication date: 21 March 2024

Maria Inês Sá, Paulo Leite and Maria Carmo Correia

This paper aims to investigate not only the performance of Portuguese mutual funds investing in domestic and international equities but also which fund characteristics, such as…

Abstract

Purpose

This paper aims to investigate not only the performance of Portuguese mutual funds investing in domestic and international equities but also which fund characteristics, such as age, size, family size, expense ratios and flows, influence future performance.

Design/methodology/approach

Fund performance is evaluated over the 2005–2022 period by a robust six-factor model, while the impact of fund characteristics on performance is assessed by a set of fixed-effects panel data regressions with two-way cluster-robust standard errors.

Findings

The results show that, while funds investing in domestic equities predominantly exhibit neutral performance, most international equity funds have significantly negative alphas. The authors document a negative and statistically significant relationship between fund age and performance for all fund categories. Total expense ratios have an inverse relationship with domestic equity fund performance but do not impact the performance of international equity funds significantly. Though fund flows have a neutral effect on performance across the overall period, they are important determinants of both domestic and international funds’ performance in more recent years.

Originality/value

The authors contribute to the literature by carrying out a comprehensive analysis, based on recent and robust methodologies, of the impact of mutual fund characteristics on the future performance of Portuguese equity funds. The research findings serve as a premise for advising investors on how to choose the top-performing funds.

Details

Studies in Economics and Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1086-7376

Keywords

Article
Publication date: 1 March 2024

Abongeh A. Tunyi, Geofry Areneke, Tanveer Hussain and Jacob Agyemang

This study proposes a novel measure for management’s horizon (short-termism or myopia vs long-termism or hyperopia) derived from easily obtainable firm-level accounting and stock…

Abstract

Purpose

This study proposes a novel measure for management’s horizon (short-termism or myopia vs long-termism or hyperopia) derived from easily obtainable firm-level accounting and stock market performance data. The authors use the measure to explore the impact of managements’ horizon on firms’ investment efficiency.

Design/methodology/approach

The authors rely on two commonly used but uncorrelated measures of management performance: accounting performance (return on capital employed, ROCE) and stock market performance (average abnormal return, AAR). The authors combine these measures to develop a multidimensional framework for performance, which classifies firms into four groups: efficient (high accounting and high market performance), poor (low accounting and low market performance), myopic (high accounting and low market performance) and hyperopic (low accounting and high market performance). The authors validate this framework and deploy it to explore the relationship between horizon and firms’ investment efficiency.

Findings

In validation tests, the authors show that management myopia (hyperopia) explains firms’ decision to cut (grow) research and development investments. Further, as expected, myopic (hyperopic) firms are associated with significantly more (less) accrual and real earnings management. The empirical tests on the link between horizon and investment efficiency suggest that myopic managers cut new investments while their hyperopic counterparts grow the same. Ultimately, the authors find that myopia (hyperopia) exacerbates(mitigates) the over-investment of free cash flow problem.

Originality/value

The authors introduce a framework for assessing management’s horizon using easily obtainable measures of performance. The framework explains inconsistencies in prior empirical research using different measures of performance (accounting versus market). The authors demonstrate its utility by showing that the measure explains decisions around research and development investment, earnings management and firm investments.

Details

Review of Accounting and Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1475-7702

Keywords

Article
Publication date: 28 February 2024

Mushahid Hussain Baig, Jin Xu, Faisal Shahzad and Rizwan Ali

This study aims to investigate the association of FinTech innovation (FinTechINN) and firm performance (FP) by considering the role of knowledge assets (KA) as a causal mechanism…

Abstract

Purpose

This study aims to investigate the association of FinTech innovation (FinTechINN) and firm performance (FP) by considering the role of knowledge assets (KA) as a causal mechanism underlying the FinTechINN – FP association.

Design/methodology/approach

In this study, the authors consider panel data of 1,049 Chinese A-listed firm and construct a structural model for corporate FinTech innovation, knowledge assets and firm performance while considering endogeneity issues in analyses over the period of 2014–2022. The modified value added intellectual capital (VAIC) and research and development (R&D) expenses are used as a proxy measure for knowledge assets, considering governance and corporate performance measures.

Findings

According to the findings of this study FinTech innovation (FinTechINN) has a positive significant effect on firm performance. Particularly; the findings disclose that FinTech innovations has a link with knowledge assets, FinTech innovations indirectly affects firm performance, and the association between FinTech innovation and firm performance is partially mediated by knowledge assets (MVAIC and R&D expenses).

Originality/value

Rooted in the dynamic capability and resource-based view, this study pioneers an empirical exploration of the association of FinTech innovation with firm performance. Moreover, it introduces the novel dimension of knowledge assets (on firm-level), acting as a mediating factor with in this relationship.

Details

International Journal of Innovation Science, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1757-2223

Keywords

Article
Publication date: 1 December 2023

Romildo Silva, Rui Pedro Marques and Helena Inácio

The purpose of this study is to identify the possible efficiency gains in using tokenization for the execution of public expenditure on governmental investments.

Abstract

Purpose

The purpose of this study is to identify the possible efficiency gains in using tokenization for the execution of public expenditure on governmental investments.

Design/methodology/approach

Through design science research methodology, the exploratory research produced a tokenized prototype in the blockchain, through the Ernst and Young OpsChain traceability solution, allowing automated processes in the stages of public expense. A focus group composed of auditors from the public sector evaluated the possibility of improving the quality of information available in the audited entities, where the tokens created represent and register the actions of public agents in the blockchain Polygon.

Findings

The consensus of the experts in the focus group indicated that the use of tokenization could improve the quality of the information, since the possibility of recording the activities of public agents in the metadata of the tokens at each stage of the execution of the expenditure allows the audited entities the advantages of the information recorded on the blockchain, according to the following ranking: first the immutability of audited data, followed by reliability, transparency, accessibility and efficiency of data structures.

Originality/value

This research makes an empirical contribution to the real use of tokenization in blockchain technology to the public sector through a value chain in which tokens were created and moved between the wallets of public agents to represent, register and track the operations regarding public expense execution.

Details

International Journal of Accounting & Information Management, vol. 32 no. 1
Type: Research Article
ISSN: 1834-7649

Keywords

Open Access
Article
Publication date: 5 December 2023

Simon Lundh, Karin Seger, Magnus Frostenson and Sven Helin

The purpose of this study is to identify the norms that underlie and condition the decisions made by preparers of financial reports.

Abstract

Purpose

The purpose of this study is to identify the norms that underlie and condition the decisions made by preparers of financial reports.

Design/methodology/approach

This interview-based study illustrates how financial report preparers engage in behaviors linked to the perception of recognition and measurement of internally generated intangible assets by important stakeholders. All of the companies included in the study adhere to International Financial Reporting Standards when creating their consolidated financial statements. The participants selected for the study are involved in accounting decisions related to research and development in accordance with International Accounting Standard (IAS) 38.

Findings

The authors identify the normative assumptions underlying the recognition and measurement of internally generated intangibles, which are based on concerns of consistency, credibility and reasonableness. The authors find that the normative basis for legitimacy in financial accounting is primarily related to cognitive legitimacy and is not of a moral or pragmatic nature.

Originality/value

The study reveals that recognition and measurement of internally generated intangibles in financial accounting relate to legitimacy. The authors identify specific norms that form the basis of this legitimacy, namely, consistency, credibility and reasonableness. These identified norms serve as constraints, mitigating the risk of judgment misuse within the IAS 38 framework for earnings management.

Details

Qualitative Research in Accounting & Management, vol. 21 no. 2
Type: Research Article
ISSN: 1176-6093

Keywords

Article
Publication date: 14 September 2023

Hang Thi Ngo and Ha Ngan Duong

This study explores the impacts of Covid-19 on the performance of firms operating in different industries, and further discovers suspected impacting channels through which…

Abstract

Purpose

This study explores the impacts of Covid-19 on the performance of firms operating in different industries, and further discovers suspected impacting channels through which Covid-19 is significantly associated with firm performance.

Design/methodology/approach

A dataset of 402 listed firms from 2017Q1 to 2021Q4 is proceeded with high dimensional fixed effect (firm-quarter fixed effects) models and difference-in-difference models supported by propensity score matching. A thorough robustness testing procedure with a falsification test with a hypothetical event is applied.

Findings

The study asserts that the pandemic has remarkably hurt the businesses in industries that are more vulnerable to the coronavirus and governmental response policies. Adding to the confirmation of sales and expense channels, new channels – competition and short-term receivables –through which the negative impact of the pandemic is passed on firms is also examined.

Originality/value

First, this study is to be the first comprehensively investigate and affirm the varying impact of Covid-19 on the business performance of listed firms from different industries in Vietnam, providing additional insight into this research field in Vietnam and emerging economies. Second, the authors examine possible channels paving the way for the impact of Covid-19 on firms' performance and especially explore new channels associated with competition and short receivables. Third, the findings help to form the recommendations for Vietnamese firms, and the study could be replicated for other emerging countries under other similar infectious diseases-driven crises.

Peer review

The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-02-2023-0072

Details

International Journal of Social Economics, vol. 51 no. 4
Type: Research Article
ISSN: 0306-8293

Keywords

Article
Publication date: 5 February 2024

Vishnu K. Ramesh

This study aims to examine the role of economic political uncertainty (EPU) on various corporate policies, namely, cash reserves, investment, capital structure and operating…

Abstract

Purpose

This study aims to examine the role of economic political uncertainty (EPU) on various corporate policies, namely, cash reserves, investment, capital structure and operating activities of Indian listed firms.

Design/methodology/approach

To assess the influence of policy-related uncertainties, the author uses the India-specific EPU news-based index constructed by Baker et al. (2016) as a proxy for policy uncertainties. This study uses data from listed Indian firms spanning the period 2003 to 2019. The author uses panel regression models with firm-fixed effects to analyze the impact of EPU on corporate policies, including cash reserves, leverage and CAPEX, while considering key control variables.

Findings

In response to heightened EPU, firms tend to increase their cash reserves, curtail their investment activities and favour secured financing options. Notably, this study aligns with the “real options” framework, demonstrating that firms with substantial investment irreversibility significantly reduce their capital expenditures during periods of elevated EPU. Additionally, the results reveal that rising EPU corresponds to heightened borrowing costs and increased operating expenses for firms.

Originality/value

In contrast to prior research that predominantly investigated the impact of EPU on the decisions of listed firms in developed markets, this study delves into the role of EPU on corporate policies among listed firms in India. This focus is particularly relevant, given the significant policy changes that have transpired in the Indian business landscape in recent years.

Details

Indian Growth and Development Review, vol. 17 no. 1
Type: Research Article
ISSN: 1753-8254

Keywords

Article
Publication date: 29 November 2023

Thomas Korankye

Research shows that having student loan debt in retirement is associated negatively with life satisfaction, suggesting that student debt is a bane of retiree well-being. The…

Abstract

Purpose

Research shows that having student loan debt in retirement is associated negatively with life satisfaction, suggesting that student debt is a bane of retiree well-being. The rationale for this study is to determine the factors related to owing student debt in retirement, given the adverse effects on the well-being of retired households.

Design/methodology/approach

The study utilizes pooled cross-sectional data from the 2015 and 2018 U.S. National Financial Capability Study. The empirical analysis uses a sample of retired Americans aged 65 years and older (N = approximately 8,000) and estimates two-block logistic regression models to examine the effects of demographic, socioeconomic and behavioral factors on student loan indebtedness in retirement. A sensitivity analysis is performed for the subsample of retirees holding student debt for their children's education. Statistical interpretations use odds ratios.

Findings

The findings indicate that financial literacy, age, homeownership and high subjective financial knowledge are associated with a low likelihood of holding student loan debt in retirement. However, being Black, having postsecondary education, having difficulty covering expenses, having financially dependent children, having high-risk preferences and spending more than income increase the likelihood of holding student debt in retirement. The ensuing discussion will assist financial planners and educators identify practical ways to shape decisions regarding student loan debt in retirement.

Research limitations/implications

The amount of student loan debt is unavailable in the dataset for analysis. One cannot infer causal relations from the study. The factors examined do not reflect the time the student loan was obtained.

Originality/value

The study focuses on the determinants of student loan indebtedness among retired Americans rather than young adults or older adults on the verge of retirement. The paper enhances the understanding of student loan holdings in the decumulation phase of the life cycle. Many US individuals have low retirement savings from which they draw a retirement income. The more the student debt burdens on retired Americans, the greater the likelihood of outliving their resources and experiencing poverty.

Details

Managerial Finance, vol. 50 no. 4
Type: Research Article
ISSN: 0307-4358

Keywords

Article
Publication date: 12 September 2023

Maxence Postaire and François-Régis Puyou

This research interrogates how the construction of narratives and accounting forecasts contributes to managing the emotional state of actors involved in reporting meetings by…

Abstract

Purpose

This research interrogates how the construction of narratives and accounting forecasts contributes to managing the emotional state of actors involved in reporting meetings by promoting discourses of hope in their organization's future, mitigating their anxiety. This study shows how narratives are built from multiple antenarratives and accounting forecasts, which restore and strengthen organizational actors' commitment to their organizations. This study contributes to a better understanding of the role played by narratives and accounting documents in mitigating organizational members' anxiety.

Design/methodology/approach

Over eight months, an interventionist research design method gave one of the authors the opportunity to record discussions held during reporting meetings in a business incubator. These recordings captured the production of narratives and forecasts in these meetings.

Findings

This study shows how the production of multiple antenarratives and accounting forecasts helps organizational actors who attend reporting meetings mitigate the anxiety triggered by disappointing performance figures and restore collective discourses full of hope for the organization's future. This case highlights how personal antenarratives and successive versions of accounting forecasts contribute to restoring a collective commitment to a failing organization.

Originality/value

This study refines current understanding of the under-explored links between accounting forecasts, narratives and anxiety management. The study provides insight into how accounting practices contribute to the production of narratives that successfully restore organizational members' commitment to working for a failing organization. The study also exemplifies the original insights gained from interventionist research protocols.

Details

Accounting, Auditing & Accountability Journal, vol. 37 no. 3
Type: Research Article
ISSN: 0951-3574

Keywords

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