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This paper examines the influence of different types of political connections and political uncertainty on earnings credibility in Pakistan. Based on discernible differences, connected firms are grouped into civil connected and military connected firms.

The authors provide evidence concerning the earnings credibility incentives of groups of political connected firms and report that their incentives are significantly different. The findings remain robust to alternate methods of earnings credibility.

The findings evidence that civil (military) connected firms report less (more) credible earnings than the control group. High political uncertainty reduces the credibility of earnings. Results for the interaction of political connections and political uncertainty variables are not significant.

The paper investigates just one aspect of Pakistan's political economy, i.e. credibility of earnings; thus, it requires to be cautious on part of readers and policymakers. To reach a clearer conclusion, earnings credibility should be ex amined in the larger context, i.e. in conjunction with rent extractions, etc. A possible extension of the paper can be to investigate the channels of rent extractions used by the two types of connected firms.

The paper has contribution for policymakers as well as users of general purpose financial reports. The findings indicate that the users of general purpose financial reports should be more careful in the use of financial information during political uncertain periods and also of politically connected firms. Furthermore, policymakers should keep the larger context at the forefront while attempting to strengthen the enforcemnet regime.

This paper adds to extant political connections literature by identifying two types of politically connected firms and report that both groups have divergent financial reporting incentives. Furthermore, political uncertainty reduces the credibility of earnings.

The purpose of this paper is to focus on exploring the mutual impact of accounting conservatism and corporate social responsibility (CSR).

To empirically assess the theoretical arguments the authors estimate a simultaneous equations system for accounting conservatism and corporate social responsibility determination by two-stage least squares in a sample of 175 firms listed on the Tehran Stock Exchange (TSE) for the period 2009–2019.

The results of the present study showed that accountability in companies listed on the TSE has led to an increase in the use of conservative practices. Therefore arguably, companies that seek CSR activities are more conservative in preparing and presenting financial reports. Also, companies that engage in conservative practices for the benefit of stakeholders are better able to implement CSR activities to meet stakeholder obligations. These results show a two-way relationship between CSR and accounting conservatism.

According to the results obtained from this study and the elimination of conservatism from the qualitative features of financial reporting in International Accounting Standards, it is recommended for the trustees and authorities of national accounting standards to decide whether this qualitative feature is effective or not.

Furthermore, the findings of this study suggest that the application of corporate social responsibility theories calls for more inquiry.

This study aims to examine whether and how the experience of specialized external governance mechanisms mandated by the Employee Retirement Income Security Act of 1974 – the actuary and auditor – affect pension plan funding.

This study uses data from annual pension plan regulatory reports (Form 5500), Form 10-K filings, Form DEF 14A filings (company proxy statements) and publicly available data sources. The hand-collected data include information related to the pension plan’s actuary and auditor and various pension plan data disclosed in the company’s financial statement footnotes.

The author finds that more experienced actuaries and auditors are associated with better funded pension plans, especially when the company has higher financial risk or lower board independence. Additional analyses indicate that companies with more experienced actuaries and pension plan auditors are more likely to make higher annual pension plan contributions and hold fewer Level 3 fair value assets.

The dearth of pension plan governance research generally focuses on whether and how internal governance mechanisms affect pension plan funding. To the best of the author’s knowledge, this is the first empirical study of the relationship between external pension plan governance mechanisms and pension plan funding.

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.

The purpose of this study is to examine how lenders alter their behavior when faced with real earnings management.

This study uses the incremental R-square approach as in Kim and Kross (2005) to examine how much lenders rely on income statement and balance sheet ratios as the degree of real earnings management increases.

As real earnings management affects mostly the income statement, the authors find that lenders rely less on income statement ratios in making credit decisions in the presence of real earnings management. The authors also find that lenders do not alter their reliance on balance sheet ratios when faced with real earnings management.

This paper is the first to study how lenders alter their reliance on financial statements in making credit decisions in the presence of real earnings management. The findings of this paper could help the regulators set standards to improve the usefulness of financial statements. The findings of this paper could also help practitioners (borrowers and lenders) understand how real earnings management affects credit decisions.

The purpose of this research is to examine the impact of audit committee financial experts on the risk of financial corruption in public companies.

A time-lagged, matched-pairs sample of 352 corporations was utilized to test the study's hypotheses (176 financially corrupt firms plus 176 compliant firms). To uncover financially corrupt firms, 2,895 Accounting and Auditing Enforcement Releases from the Securities and Exchange Commission were thoroughly evaluated.

The results show that financial experts on audit committees generally increased financial corruption. However, the impact was reversed when audit committees had three or more financial experts, showing that having at least three financial experts reduced financial corruption.

The study's findings call into question the long-held practice of appointing at least one financial expert to audit committees. This study offers a novel approach to improve corporate oversight and reduce financial corruption by having at least three financial experts on audit committees.

Companies avoid taxes in a variety of ways and use different methods to do that, one of the most common being earnings management. The purpose of this paper is to investigate whether companies manipulate their financial data in order to reduce taxes paid.

We considered a sample of 63 listed Romanian companies for the period 2016–2021. The Beneish model was used for estimating earnings management, and the effective tax rate was used to measure tax avoidance. The analysis was carried out using regression analysis in Stata13 software.

The findings of the research indicate a negative and statistically significant association between effective tax rate and earnings management, implying that one of the main reasons why companies manipulate their earnings to reduce tax burden and avoid taxes. Moreover, our results show that return on assets (ROA) has a statistically significant negative influence on the effective tax rate. Furthermore, our analysis reveals that firm size, growth, and Big4 audit have no effect on effective tax rate.

Because it analyzes concrete cases using financial data and provides some recommendations for addressing the issue of tax avoidance, this work is useful in advancing both quantitative and qualitative research on this topic. This research is relevant for businesses, governments, regulators, audit professionals and investors.

The study, by analyzing concrete cases using reported financial data, contributes in filling the gap within the literature that results from a lack of scientific research on the relationship between tax avoidance and earnings management, and then it clarifies the nature of the causal connection between them. Moreover, it considers a combination of firm related variables including performance, size and also audit quality.

This study aims to examine the effects of product market competition (PMC) on analysts’ earnings forecast attributes, particularly forecast accuracy and dispersion. The authors also investigate whether investor protection moderates the relationship between PMC and forecast attributes.

The sample covers 49,578 firm-year observations from 38 countries. This study uses an ordinary least squares regression, a Heckman two-stage regression and an instrumental two-stage least squares regression.

This study finds that PMC is associated with higher forecast accuracy and lower dispersion. The results also show that investor protection enhances the effect of PMC on forecast accuracy and dispersion. These findings imply that countries with strong investor protection have a better information environment, as exhibited by the stronger relationship between PMC and analysts’ forecast properties.

The findings highlight the importance of strong governance mechanisms in both the country and industry environments. Policymakers, including government agencies and financial regulators, can leverage these insights to formulate regulations that promote competition, ensure investor protection and facilitate informed investment decisions.

This study advances our understanding of how PMC affects analysts’ earnings forecast attributes. In addition, it pioneers evidence of the moderating role of investor protection in the relationship between PMC and forecast attributes.

This paper aims to contribute to the debate over the desirability of introducing an accrual-based accounting system in the public sector by examining whether accrual-based accounting information is superior to cash-based information in the context of public sector entities.

This paper applies a quantitative research method to assess the degree of smoothness and relevance of the accrual components of income recorded by 302 entities of the Italian National Health Service (INHS) over the period 2014–2020.

The analysis reveals that net income is smoother than cash flows as a summary measure of economic results and that accounting for accruals improves the predictability of future cash flows. However, the authors' novel disaggregation of accrual accounts reveals that those accounts that contribute the most to making income smoother than cash flows – noncurrent assets and liabilities – are also those that contribute the least to predicting future cash flows.

The disaggregation of accrual accounts allows to identify the sources of the informational benefits of accrual accounting, and to document the existence of an informational “trade-off” between smoothness and relevance in the context of public sector entities.

This paper aims to examine the influence of the International Financial Reporting Standards (IFRS) adoption on corporate tax avoidance (CTA). In addition, this study aims to explore whether family ownership moderates the impact of IFRS adoption on CTA.

The authors used a sample of 1,856 firms from various countries around the world, covering the period between 2010 and 2022. To estimate the proposed econometric models, the authors applied both fixed and random effects regression methods.

The present findings show that IFRS adoption has a negative impact on CTA, as measured by the effective tax rate and book-tax differences. This negative impact is more pronounced in “common law” countries than in “civil law countries.” Additionally, the authors found that family ownership plays a moderating role by positively affecting the impact of IFRS adoption on CTA.

The findings have practical, regulatory and academic implications for fostering accountability and fairness in taxation. This study suggests that implementing IFRS reduces tax avoidance and emphasizes the need for firms to evaluate the implications of IFRS adoption on their tax-planning strategies. It highlights the importance of aligning financial reporting practices with international standards to enhance transparency and minimize tax avoidance opportunities. The differential impact of IFRS adoption between “common law” and “civil law” countries underscores the role of legal and regulatory frameworks. In addition, family ownership plays a significant role in shaping tax-planning strategies. From an academic perspective, this research provides a foundation for further exploration into the relationship between IFRS adoption and tax avoidance.

The existing literature has predominantly concentrated on examining the effect of IFRS adoption on CTA, and the empirical findings have been inconsistent. This study introduces a novel perspective by considering the moderating influence of family ownership in determining the impact of IFRS adoption on CTA.