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Article
Publication date: 7 September 2010

Ioannis Tsalavoutas and Lisa Evans

The paper aims to explore the impact of the transition to International Financial Reporting Standards (IFRS) on Greek listed companies' financial statements with a focus…

Abstract

Purpose

The paper aims to explore the impact of the transition to International Financial Reporting Standards (IFRS) on Greek listed companies' financial statements with a focus on net profit, shareholders' equity, gearing and liquidity. It also seeks to examine any differences in the impact across the sub‐samples of companies with Big 4 and non‐Big 4 auditors.

Design/methodology/approach

In line with recent literature, the paper employs Gray's comparability index. The sample consists of 238 Greek companies, representing 75 per cent of the companies listed on the Athens Stock Exchange at the end of March 2006.

Findings

Implementation of IFRS had a significant impact on financial position and reported performance as well as on gearing and liquidity ratios. On average, impact on shareholders' equity and net income was positive while impact on gearing and liquidity was negative. Only companies with non‐Big 4 auditors faced significant impact on net profit and liquidity. They also faced a significantly greater impact on gearing than companies with Big 4 auditors. A large number of companies with material negative changes is identified, suggesting that transition to IFRS and the fair value option does not necessarily result in higher shareholders' equity figures. Many companies provided inadequate transitional disclosures. This is significantly related to auditor size.

Practical implications

The findings suggest that reporting quality has improved under the new accounting regime, especially for companies with non‐Big 4 auditors.

Originality/value

Prior literature indicates that the impact revealed in companies' reconciliation statements can have significant effects on users' decision making. On that basis, the study can stimulate future research and is relevant to standard setters and regulators.

Details

Managerial Auditing Journal, vol. 25 no. 8
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 1 June 2000

Venancio Tauringana and Steve Clarke

Small companies with a turnover of up to £90,000 have been exempted from a compulsory audit since 1994. This paper is an investigation of why some small companies chose to…

Abstract

Small companies with a turnover of up to £90,000 have been exempted from a compulsory audit since 1994. This paper is an investigation of why some small companies chose to continue with the audit whilst others abandoned it. The basic hypothesis of the paper is that a major reason why some small companies continue to be audited is to help control the conflict of interests among managers, shareholders, and outside creditors. Based on this analysis, the probability that a company will be audited voluntarily are predicted to increase as company size and gearing ratio increase, and to decrease as managerial share ownership and liquidity ratios increase. Univariate and multivariate tests were applied to the data of 92 small independent companies randomly selected from the Companies House CD‐ROM database. The results from the two tests support the hypothesised effects of managerial share ownership, company size (turnover), and gearing ratio. There is no support for the company size (total assets) and liquidity ratio effects.

Details

Managerial Auditing Journal, vol. 15 no. 4
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 1 March 2002

Kamal Naser, Khalid Al‐Khatib and Yusuf Karbhari

Over the last decade, Jordanian Authorities and Government adopted several far‐reaching measures aimed at improving its investment environment. These measures included the…

Abstract

Over the last decade, Jordanian Authorities and Government adopted several far‐reaching measures aimed at improving its investment environment. These measures included the introduction of International Accounting Standards (IASs) in 1990, amendment of the Companies Act in 1997 and amendments to Investment Promotion Law in 1998. This study specifically provides empirical evidence on changes in the depth of corporate disclosure after introducing IASs. In addition, the relationship between the depth of corporate disclosure and company's attributes is investigated. The outcome of the analysis reveals a slight improvement in the depth of disclosure after the introduction the IASs. The depth of disclosure seems to be associated with corporate size, audit firm status, liquidity, gearing, and profitability.

Details

International Journal of Commerce and Management, vol. 12 no. 3/4
Type: Research Article
ISSN: 1056-9219

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Article
Publication date: 24 February 2012

Hany Elzahar and Khaled Hussainey

The purpose of this paper is to contribute to the existing disclosure literature by examining the determinants of narrative risk information in the interim reports for a…

Abstract

Purpose

The purpose of this paper is to contribute to the existing disclosure literature by examining the determinants of narrative risk information in the interim reports for a sample of UK non‐financial companies.

Design/methodology/approach

This study uses the manual content analysis to measure the level of risk information in interim report narrative sections prepared by 72 UK companies. It also uses the ordinary least squares regression analysis to examine the impact of firm‐specific characteristics and corporate governance mechanisms on narrative risk disclosures.

Findings

The empirical analysis shows that large firms are more likely to disclose more risk information in the narrative sections of interim reports. In addition, the analysis shows that industry activity type is positively associated with levels of narrative risk disclosure in interim reports. Finally, the analysis shows statistically insignificant impact of other firm‐specific characteristics (liquidity, gearing, profitability, and cross‐listing) and corporate governance mechanisms on narrative risk disclosure.

Practical implications

The study's findings have practical implications. It informs investors about the characteristics of UK companies that disclose risk information in their interim reports. For example, the findings show that narrative risk disclosures are affected by firm size and industry type rather than firms' risk levels (e.g. financing risk measured by the gearing ratio or liquidity risk measured by lower liquidity ratios). Practical implications for managers from these findings are that, in order to keep investors satisfied, companies with high levels of financing and liquidity risks should look at investors' demands for risk disclosure. This will help investors when making their investment decisions.

Originality/value

The determinants of narrative risk disclosure in interim reports have not been explored so clearly in prior research and, therefore, this paper is the first of its kind to examine this research issue for a sample of UK companies.

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Article
Publication date: 4 November 2014

Lyton Chithambo and Venancio Tauringana

– The purpose of this paper is to investigate the relationship between company-specific factors and the extent of greenhouse gas (GHG) disclosures.

Abstract

Purpose

The purpose of this paper is to investigate the relationship between company-specific factors and the extent of greenhouse gas (GHG) disclosures.

Design/methodology/approach

The study is based on a sample of 210 FTSE 350 companies and uses the disclosure index to quantify GHG disclosures made in the annual reports, sustainability reports and web sites in 2011. Ordinary least squares regression is employed to model the relationship between the company-specific factors and the extent of GHG disclosures.

Findings

The results indicate that company size, gearing, financial slack and two industries (consumer services and industrials) are significantly associated with GHG disclosures while profitability, liquidity and capital expenditure are not. When the authors disaggregate GHG disclosures into qualitative and quantitative, the results suggest that the effect of some company factors differ depending on the type of GHG disclosures.

Research limitations/implications

The study is cross-sectional. A longitudinal study is necessary to understand the dynamics of GHG disclosures as firms may change their disclosure policy as the importance of GHG increases. The results imply that policy makers need to take into account certain company-specific factors when formulating policy aimed at improving GHG disclosures.

Originality/value

The results add evidence to the growing body of research focusing on the relationship between company-specific factors and GHG disclosure. The study also provides evidence that the effect of some company-specific factors on GHG disclosures differ depending on whether the GHG disclosures are quantitative or qualitative.

Details

Journal of Applied Accounting Research, vol. 15 no. 3
Type: Research Article
ISSN: 0967-5426

Keywords

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Book part
Publication date: 4 December 2018

Indranarain Ramlall

Abstract

Details

The Corporate, Real Estate, Household, Government and Non-Bank Financial Sectors Under Financial Stability
Type: Book
ISBN: 978-1-78756-837-2

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Article
Publication date: 1 March 2006

Malcolm Smith, Anita Jamil, Yang Chik Johari and Syahrul Ahmar Ahmad

The obfuscation hypothesis suggests that under‐performing firms will tend to obscure the meaning of their corporate narratives by deliberately adopting a textual…

Abstract

Purpose

The obfuscation hypothesis suggests that under‐performing firms will tend to obscure the meaning of their corporate narratives by deliberately adopting a textual complexity, most readily apparent through poor readability and the use of unnecessarily difficult language. This paper seeks to add to the literature in the area by comparing the textual complexity of corporate narratives, notably the chairman's statement, of main board and second board companies on the Bursa Malaysia (formerly known as the Kuala Lumpur Stock Exchange), with their financial performance, and also to examine the impact of company size, board membership and degree of statutory regulation on the readability of corporate narratives.

Design/methodology/approach

Following the existing literature this paper uses readability as a proxy for textual complexity, in addition to more direct measures, and seeks to examine relationships between textual complexity and various measures of financial performance.

Findings

The findings suggest that there are significant relationships between corporate language and financial performance, but that these are not consistent with the obfuscation hypothesis.

Originality/value

The findings are consistent with the suggestion that increased regulation and statutory monitoring of disclosures are associated with improved readability of narrative. They do not provide support for the obfuscation hypothesis.

Details

Asian Review of Accounting, vol. 14 no. 1/2
Type: Research Article
ISSN: 1321-7348

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Article
Publication date: 7 August 2017

Lyton Chithambo and Venancio Tauringana

The purpose of this paper is to investigate whether four corporate governance mechanisms (board size, non-executive directors, ownership concentration and directors’ share…

Abstract

Purpose

The purpose of this paper is to investigate whether four corporate governance mechanisms (board size, non-executive directors, ownership concentration and directors’ share ownership) influence the extent of greenhouse gas (GHG) disclosure.

Design/methodology/approach

The study uses a mixed-methods approach based on a sample of 62 FTSE 1,000 firms. Firstly, the authors surveyed the senior management of 62 UK-listed firms in the FTSE 1,000 index to determine whether the corporate governance mechanisms influence their GHG disclosure decisions. Secondly, the authors used ordinary least squares (OLS) regression to model the relationship between the corporate governance mechanisms and GHG disclosure scores of the 62 firms.

Findings

The survey and OLS regression results both suggest that corporate governance mechanisms (board size and NEDs) do not influence GHG disclosures. However, the results of the two approaches differ, in that the survey results suggest that corporate governance mechanisms (ownership concentration and directors’ share ownership) do not influence the extent of GHG disclosure, while the opposite is true with the OLS regression results.

Research limitations/implications

The sample size of 62 firms is small which could affect the generalisability of the study. The mixed results mean that more mixed-methods approach is needed to improve the understanding of the role of corporate governance in GHG disclosures.

Originality/value

The use of mixed-methods to examine whether corporate governance mechanisms determine the extent of GHG voluntary disclosure provides additional insights not provided in prior studies.

Details

Corporate Governance: The International Journal of Business in Society, vol. 17 no. 4
Type: Research Article
ISSN: 1472-0701

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Article
Publication date: 1 February 1984

Leslie Chadwick

Some retail companies are so preoccupied with the business of selling that they tend to forget how their own company's performance compares with those of others. In this…

Abstract

Some retail companies are so preoccupied with the business of selling that they tend to forget how their own company's performance compares with those of others. In this article Leslie Chadwick looks at four specific ratios — profitability, asset utilisation, liquidity and gearing, in three retail sectors — department stores, High Street traders and Home Improvements and DIY.

Details

Retail and Distribution Management, vol. 12 no. 2
Type: Research Article
ISSN: 0307-2363

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Article
Publication date: 1 March 2006

Abeyratna Gunasekarage and David M. Power

This paper seeks to examine the long‐run financial and return performance of UK companies which are grouped according to whether or not they have changed their dividends…

Abstract

Purpose

This paper seeks to examine the long‐run financial and return performance of UK companies which are grouped according to whether or not they have changed their dividends and earnings. Prior research has been conducted using US data and they are limited to extreme dividend changes such as dividend initiations and omissions. They have also arrived at contradicting results; some report a drift in performance, while others document evidence of mean reversion in performance. The current paper hopes to resolve this conflict using data for a large sample of UK firms which disclosed more general changes in dividends and earnings.

Design/methodology/approach

The aims of the paper are addressed using a stock market‐based study of share price performance and a detailed analysis of company performance based on financial ratios. These analyses are conducted from five years before to five years after the announcement of dividend/earnings news.

Findings

At the time of the announcements, share returns tend to be positive (negative) where companies have increased (decreased) the dividend and earnings. There is also evidence to suggest that the stock market has anticipated some of this news in the preceding 12 months. However, the dividend/earnings news does not appear to act as a signal of long‐term future company performance; companies which cut this dividend and reported lower earnings achieved the largest excess returns over the next five years. A similar mean‐revealing pattern existed in the financial ratios. Finally, most of the future long‐term share performance was attributable to the earnings rather than to the dividend news.

Research limitations/implications

The main implication of this research is that current dividend/earnings news is not a good guide to future company performance. Indeed, it is these firms which cut their dividends along with reporting a reduction of earnings which achieve excellent results over a subsequent five‐year period. Of course, there are a number of limitations with the research; it draws on data from two previous studies, looks only at the UK and does not consider sophisticated models of investors' expectations with regard to dividend and earnings information.

Originality/value

The main contribution of this paper is the long‐run analysis of UK company performance following joint dividend‐earnings announcements. The analysis is comprehensive in that it considers both stock market performance as well as financial ratio performance for a period of up to five years following the dividend‐earnings news. Thus, it should be of interest to most UK investors as well as to financial managers with large quoted firms. Academics will also be interested in the results since they shed some light on an existing debate in the literature.

Details

Managerial Finance, vol. 32 no. 3
Type: Research Article
ISSN: 0307-4358

Keywords

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