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Article
Publication date: 16 September 2013

Dhiaa Shamki and Azhar Abdul Rahman

The paper aims to examine the influence of financial disclosure (FD) level and time on the value relevance of earnings, book value, and cash flows relative to three share…

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1683

Abstract

Purpose

The paper aims to examine the influence of financial disclosure (FD) level and time on the value relevance of earnings, book value, and cash flows relative to three share price proxies, namely average annual share price, annual closing share price, and share price after a three-month period following the financial year-end for Jordanian companies.

Design/methodology/approach

The paper employs price model to examine the influence of FD level and time on the value relevance of three accounting variables relative to three share price proxies for 91 Jordanian companies (consisting of 5,460 observations) within 2004-2009.

Findings

Relative to three share price proxies, the findings proved that FD level and time have a significant influence on the value relevance of book value, but not for cash flows. Also, FD level and time have a significant influence on the value relevance of earnings relative to annual closing share price, while they are not relative to share price after a three-month period following the financial year-end. FD time has a significant influence on the value relevance of earnings relative to the average annual share price. Annual closing share price is the most reliable in indicating value relevance of accounting information.

Originality/value

The paper confirms that there is a shift away from earnings towards book value as the basis for firm valuation. Market participants might be able to conclude the firm value through the value relevance of accounting information influenced by company's FD.

Details

Education, Business and Society: Contemporary Middle Eastern Issues, vol. 6 no. 3/4
Type: Research Article
ISSN: 1753-7983

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Article
Publication date: 22 January 2020

Marian H. Amin, Ehab K.A. Mohamed and Ahmed Elragal

The purpose of this paper is to investigate corporate financial disclosure via Twitter among the top listed 350 companies in the UK as well as identify the determinants of…

Abstract

Purpose

The purpose of this paper is to investigate corporate financial disclosure via Twitter among the top listed 350 companies in the UK as well as identify the determinants of the extent of social media usage to disclose financial information.

Design/methodology/approach

This study applies an unsupervised machine learning technique, namely, Latent Dirichlet Allocation topic modeling to identify financial disclosure tweets. Panel, Logistic and Generalized Linear Model Regressions are also run to identify the determinants of financial disclosure on Twitter focusing mainly on board characteristics.

Findings

Topic modeling results reveal that companies mainly tweet about 12 topics, including financial disclosure, which has a probability of occurrence of about 7 percent. Several board characteristics are found to be associated with the extent of Twitter usage as a financial disclosure platform, among which are board independence, gender diversity and board tenure.

Originality/value

The extensive literature examines disclosure via traditional media and its determinants, yet this paper extends the literature by investigating the relatively new disclosure channel of social media. This study is among the first to utilize machine learning, instead of manual coding techniques, to automatically unveil the tweets’ topics and reveal financial disclosure tweets. It is also among the first to investigate the relationships between several board characteristics and financial disclosure on Twitter; providing a distinction between the roles of executive vs non-executive directors relating to disclosure decisions.

Details

Online Information Review, vol. 44 no. 1
Type: Research Article
ISSN: 1468-4527

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Article
Publication date: 10 June 2020

Brendan O'Dwyer and Jeffrey Unerman

This paper problematizes TCFD (Task Force on Climate-related Financial Disclosures) reporting in a way that demonstrates areas where academic research can contribute…

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2637

Abstract

Purpose

This paper problematizes TCFD (Task Force on Climate-related Financial Disclosures) reporting in a way that demonstrates areas where academic research can contribute towards realizing the transformative potential of this unique form of sustainability accounting in its early stages of development.

Design/methodology/approach

The paper proposes a number of research agendas for impactful interdisciplinary research into new forms of corporate reporting of sustainability risks, opportunities and dependencies.

Findings

There are several major challenges that both reporting corporations and investors need to address in realizing the potential of TCFD style risks, opportunities and dependencies reporting. Key among these is developing new practices of climate-related scenario analysis and reporting.

Practical implications

There is potential for many different academic research studies to provide solid evidence in helping improve the practical impact of TCFD style sustainability reporting. These impacts may assist in moving corporate policies and actions towards zero carbon.

Originality/value

This is the first agenda-setting paper that addresses the need for, and opportunities of, academic research into TCFD reporting and its potential to transform corporate accounting and reporting of sustainability.

Details

Accounting, Auditing & Accountability Journal, vol. 33 no. 5
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 30 July 2018

Hong Kim Duong, Michael Schuldt and Giorgio Gotti

The purpose of this paper is to investigate the impact of investor sentiment on timely loss recognition by examining a sample of firms for the period 1988-2015.

Abstract

Purpose

The purpose of this paper is to investigate the impact of investor sentiment on timely loss recognition by examining a sample of firms for the period 1988-2015.

Design/methodology/approach

The authors use the accruals-based model of Ball and Shivakumar (2005) and a sentiment measure in their primary analysis. Supporting analyses include an extension of Simpson (2013) using an abnormal accruals analysis with subsamples of firms with bad news, the use of a Khan and Watts (2009) quarter firm-level measure of conservatism and an investigation of the monitoring role played by financial analysts.

Findings

The study finds that managers strategically report more losses in high sentiment periods than in low sentiment periods. This loss timing behavior results in an average 37.8 per cent increase in the acceleration of loss recognition. This study additionally finds a negative correlation between investor sentiment and abnormal accruals when managers are reporting bad news, and that a greater number of financial analysts following a firm curtails managers’ acceleration of loss recognition in high sentiment periods.

Originality/value

This study contributes to the corporate disclosure literature by showing that managers strategically recognize losses, and such behavior is more prevalent in high sentiment periods. Managers take advantage of prevailing investor sentiment to accelerate losses in high sentiment periods to mitigate market penalties from reporting bad news.

Details

Review of Accounting and Finance, vol. 17 no. 3
Type: Research Article
ISSN: 1475-7702

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Article
Publication date: 1 June 2021

Muhammad Azizul Islam, Shamima Haque, Sharon Henderson, Michael John Jones and Homaira Semeen

This study aims to investigate whether United Kingdom (UK)-based companies have changed their voluntary disclosures on curbing the bribery of foreign officials in response…

Abstract

Purpose

This study aims to investigate whether United Kingdom (UK)-based companies have changed their voluntary disclosures on curbing the bribery of foreign officials in response to the UK Bribery Act 2010, and if so whether and how such disclosure changes substantively reflected allegations of bribery of foreign officials by news media.

Design/methodology/approach

By using the notions of institutional pressure and decoupling and applying content and thematic analysis, the authors examined, in particular, disclosures on curbing bribery by the largest 100 companies listed on the London Stock Exchange in periods before and after the Bribery Act (2007–2012). News media reports covering incidents of bribery of foreign officials and related corporate disclosures before and after the Act were thoroughly examined to problematise corporate anti-bribery disclosure practices.

Findings

The study finds a significant change in disclosure on curbing bribery before and after the enactment of the UK Bribery Act, consistent with the notion of institutional coercive pressure. However, decoupling is also found: organisations' disclosures did not substantively reflect incidents of bribing foreign public officials, mostly from underprivileged developing nations.

Research limitations/implications

This study acknowledges a limitation stemming from using media reports that focus on bribery incidents in identifying actual cases or incidents of bribery. As some of the incidents identified from news media reports appeared to be allegations, not convictions for bribery, companies could have defensible reasons for not disclosing some aspects of them.

Practical implications

Regulators should think why new or more regulations without substantive requirement are not helpful to curb corporate decoupling and injustice. The regulators should address the crisis that multinational companies (MNCs) being suppliers of bribery are much more harmful for the underprivileged communities in developing nations. Accordingly, this paper provides practical insights into how stakeholders ought to critically interpret MNCs' accounts of their involvement in bribery.

Originality/value

This study contributes to the accounting literature by problematising MNCs' operations in underprivileged countries. The findings suggest that not only public officials in developing countries as creators of bribery but also Western-based MNCs as the suppliers of bribery contribute to perpetuating unethical practices and injustices to the underprivileged communities in developing countries. This research is imperative as this is one of the first known studies that provides evidence of the actions including disclosure-related actions companies have taken in response to the UK Bribery Act.

Details

Accounting, Auditing & Accountability Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 20 April 2020

Jagan Krishnan, Jayanthi Krishnan and Sophie Liang

The Dodd–Frank Act of 2010 exempts small, non-accelerated filers from compliance with Sarbanes–Oxley Act (SOX) Section 404b internal control audits. However, these firms…

Abstract

Purpose

The Dodd–Frank Act of 2010 exempts small, non-accelerated filers from compliance with Sarbanes–Oxley Act (SOX) Section 404b internal control audits. However, these firms are required to comply with other internal control regulations, namely, SOX Sections 302 and 404a, starting in 2002 and 2007, respectively. A small number of these firms also voluntarily adopted (and sometimes dropped) Section 404b during 2004-2010. The purpose of this study is to investigate the impact of a series of internal control regulations introduced by SOX on the financial reporting quality of small firms.

Design/methodology/approach

The research design for this study is empirical. Using unsigned and signed discretionary accruals as measures of financial reporting quality, the authors compare the financial reporting quality for adopters and non-adopters across four regulation regimes over the period 2000-2010: PRESOX, SOX 302, SOX 404a and SOX 404b.

Findings

The results indicate that most of the adopters and non-adopters benefited from SOX 302 and 404a compared with the PRESOX period. However, only the non-adopters gained incrementally when moving from SOX 302 to SOX 404a. Also, Section 404b benefited firms with material weaknesses, as well as firms without material weaknesses that had the lowest reporting quality, in the PRESOX period.

Research limitations/implications

This study helps inform the important policy debate on whether to increase the threshold that is used for the SOX 404b exemption. It shows incremental benefits for firms that adopted Section 404b audits, even when they were complying with Section 302 and Section 404a. Consequently, extending the exemption to more companies would result in a loss of the reporting quality benefit of 404b.

Originality/value

This study contributes to the literature by focusing exclusively on non-accelerated filers and by examining differences across four regulation regimes over a long window compared to prior studies. It provides evidence that the financial reporting benefit of SOX 404b is not transitional, but rather extends for a few years even after some firms discontinued the 404b audits.

Details

Review of Accounting and Finance, vol. 19 no. 2
Type: Research Article
ISSN: 1475-7702

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Article
Publication date: 1 December 1998

Sheikh F. Rahman

This paper presents the results of a complex but challenging investigation into the global power play at the United Nations (UN) over the issue of international accounting…

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3462

Abstract

This paper presents the results of a complex but challenging investigation into the global power play at the United Nations (UN) over the issue of international accounting regulation. It specifically attempts to explain why the host developing nations of most transnational corporations (TNCs), despite controlling a significant majority vote at the UN and thus possessing the necessary “political” power, conspicuously failed to impose their accounting disclosure agenda on the TNCs and on the (minority) developed nations. The political concept of power is used in examining the accounting standard setting process at the UN, in the context of regulatory reforms of the TNCs. While alternative models of power are considered, Robert Dahl’s decision‐oriented pluralistic model was adopted in the study because it proved to be the most consistent with the events, objectives and the empirical data presented. The research findings indicate that organized pressures from the TNCs, co‐ordinated under the joint forum of the International Chamber of Commerce (ICC) and the International Organisation of Employers (IOE), coupled with the economic and diplomatic manoeuvring of the developed market economy nations, had succeeded in overriding the rule of “one‐nation‐one‐vote” and securing a de facto veto over the majority view at the UN. The pioneering efforts of the UN in setting international reporting standards had been curbed and frustrated through the construction and use of such “veto” by the minority representation.

Details

Accounting, Auditing & Accountability Journal, vol. 11 no. 5
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 1 May 2003

Aneirin Sioˆn Owen

This paper examines the relationship between UK accounting firm mergers and increases in profit margins enjoyed by large UK accounting firms. Cowling’s monopoly capitalism…

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2199

Abstract

This paper examines the relationship between UK accounting firm mergers and increases in profit margins enjoyed by large UK accounting firms. Cowling’s monopoly capitalism model provides the theoretical framework. The empirical parts of this paper draw on a number of quantitative sources, including the fees and staff numbers disclosed by UK accounting firms, official salary data and salary survey data. Correlation is used to show that the accounting firm data is a reliable source of evidence. The data are then used to construct an indicator of concentration, merger impact on concentration, and an indicator of big firm profit margins. Regression is used to estimate the close positive relationship between concentration and profit margins. The results confirm Cowling’s hypothesis that mergers lead to increases in profits. This paper complements Hanlon’s “commercialisation of accounting” thesis by providing an alternative theoretical framework for examining accounting firms and by bringing quantitative sources of evidence to bear.

Details

Accounting, Auditing & Accountability Journal, vol. 16 no. 2
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 21 June 2021

Peter Buell Hirsch

This study aims to examine recent developments in climate change solutions to determine their impact on corporate reputation.

Abstract

Purpose

This study aims to examine recent developments in climate change solutions to determine their impact on corporate reputation.

Design/methodology/approach

This paper is a review of recent literature and commentary on corporate and governmental climate change initiatives.

Findings

It is likely that as climate change initiatives move further from voluntary to compliance status, the reputational value of environmental responsibility for corporate reputation will diminish.

Research limitations/implications

There are no verifiable objective metrics to validate the opinions expressed.

Practical implications

Companies may reconsider the reputational “real estate” they devote to environmental issues and invest more effort in other social areas.

Social implications

The shift predicted may cause more companies to turn their reputational attention more emphatically to employees and communities.

Originality/value

The author is not aware of any work in evaluating the reputational impact of greater regulatory focus on climate change disclosure and compliance.

Details

Journal of Business Strategy, vol. 42 no. 4
Type: Research Article
ISSN: 0275-6668

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Article
Publication date: 4 April 2017

Prem W.S. Yapa, Sarath L. Ukwatte Jalathge and Pavithra Siriwardhane

This paper aims to examine the tensions amongst the audit firms operating in Sri Lanka with the introduction of open economic policies in early 1980s and its impact to the…

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1088

Abstract

Purpose

This paper aims to examine the tensions amongst the audit firms operating in Sri Lanka with the introduction of open economic policies in early 1980s and its impact to the auditing profession.

Design/methodology/approach

Using a qualitative approach, this study consists of in-depth interviews, documentary review and critical interpretation supported by the perspectives of globalisation, digitalisation and neo-liberalism.

Findings

The findings indicate that the main reasons for the tension between audit firms (local and international) have been the conflict of interests on the market share. While global pressures on International Standards of Auditing created more opportunities for international audit firms to capture a wider market with the support of the state, the local audit firms apparently lost their market and experienced tension created by staff. Evidence shows the negative impact of globalisation on the open economic policies and the local audit market.

Research limitations/implications

The findings of this research will be useful for policymakers in revising auditing practices to ensure healthy corporate governance. Only 25 interviews were conducted; hence, the results may not be a holistic representation of the audit environment in Sri Lanka.

Originality/value

This study is significant, as the business capital has surged into Sri Lankan market as a result of the ongoing international agencies-led economic reforms. Such reforms have emphasised the transparency and accountability.

Details

Managerial Auditing Journal, vol. 32 no. 4/5
Type: Research Article
ISSN: 0268-6902

Keywords

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