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Article
Publication date: 25 October 2022

Md Mahmudul Hasan, Md Safayat Hossain and Giorgio Gotti

This study aims to examine whether and how managerial ability is associated with the relation between product market competition and earnings management. The authors argue that…

Abstract

Purpose

This study aims to examine whether and how managerial ability is associated with the relation between product market competition and earnings management. The authors argue that high-ability managers may moderate the underlying relations in both directions, and they are likely to trade off relative costs between accrual-based earnings management (AEM) and real earnings management (REM).

Design/methodology/approach

This study uses ordinary least square regressions to examine the association of managerial ability on the relations between product market competition and earnings management. The paper follows prior literature to measure managerial ability, product market competition and earnings management.

Findings

This study shows empirical evidence that high-ability managers in high-competition industries are likely to engage in AEM but less likely to engage in REM. These findings overall indicate that high-ability managers in high-competition industries trade-off between different forms of earnings management based on their relative costliness and choose the one that is relatively less costly.

Practical implications

This study has important practical implications as the findings identify situations when important stakeholders, such as the board of directors and investors, may take precautions to prevent managers’ opportunistic behaviors. The findings of this study also might be helpful for firms when it comes to selecting managers. The findings may provide some input to the firms in considering the risks and benefits trade-offs of recruiting a high versus low-ability manager in a more or less competitive environment.

Originality/value

The findings of this study show new insight into how managerial ability moderates the relation between product market competition and different types (i.e. accrual-based and real activity-based) of earnings management.

Details

Review of Accounting and Finance, vol. 21 no. 5
Type: Research Article
ISSN: 1475-7702

Keywords

Open Access
Article
Publication date: 13 December 2021

Hong Kim Duong, Marco Fasan and Giorgio Gotti

Previous literature provides mixed evidence about the effectiveness of a code of ethics in limiting managerial opportunism. While some studies find that code of ethics is merely…

3603

Abstract

Purpose

Previous literature provides mixed evidence about the effectiveness of a code of ethics in limiting managerial opportunism. While some studies find that code of ethics is merely window-dressing, others find that they do influence managers' behavior. The present study investigates whether the quality of a code of ethics decreases the cost of equity by limiting managerial opportunism.

Design/methodology/approach

In order to test the hypothesis, the authors perform an empirical analysis on a sample of US companies in the 2004–2012 period. The results are robust to a battery of robustness analyses that the authors performed in order to take care of endogeneity.

Findings

Empirical results indicate that a higher quality code of ethics is associated with a lower cost of equity. In other words, firms with a more comprehensive code of ethics and better-designed implementation procedures limit managerial opportunism and pay a lower cost of equity because they are perceived by investors to be less risky.

Research limitations/implications

Practical implications

Social implications

Originality/value

The authors contribute to the literature in two ways. First, by looking at the market reaction to the code of ethics, thus capturing all its indirect possible benefits and second, by measuring not only the existence but also the quality of a code of ethics. Based on the results, policymakers may choose to further promote codes of ethics as an effective corporate governance mechanism.

Details

Management Decision, vol. 60 no. 13
Type: Research Article
ISSN: 0025-1747

Keywords

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

Keywords

Article
Publication date: 19 September 2019

Giorgio Mion and Angelo Bonfanti

Higher education institutions draw up codes of ethics, but in several countries there are no standards to follow. Most universities have autonomy and can freely draw up their…

Abstract

Purpose

Higher education institutions draw up codes of ethics, but in several countries there are no standards to follow. Most universities have autonomy and can freely draw up their codes of ethics in terms of structure and content. The purpose of this paper is to understand the main ethics issues that universities identify in their codes of ethics and what activities they implement to respond to these issues toward appropriate educational management of their institutions in ethical terms.

Design/methodology/approach

This study was performed through content analysis of codes of ethics of Italian public universities (64 codes), and may be considered a single in-depth case study. The main ethics issues and related activities were inductively codified in relation to the research purpose. The four constitutive aspects of business ethics (individual, managerial, organizational and societal ethics) proposed by Melé were chosen as the framework to investigate the main ethical needs and related activities implemented by universities to respond to these ethical issues.

Findings

This research has identified nine main ethical issues and related activities that contribute to guarantee the ethical compliance of universities under the four interrelated aspects different individual behaviors, managerial initiatives, organization strategies and responsibilities toward society. The analysis shows some relevant differences among Italian universities that have important implications in the ethical vision of academic communities and of managerial role in universities.

Practical implications

The research can help managers of higher education institutions to identify the main ethical issues to draw up codes of ethics and to formulate consistent development strategies that are able to improve the conditions of collaboration, work and productive participation in activities for all members of academic communities.

Originality/value

To the best of the authors’ knowledge, this is one of the first studies that connect codes of ethics and higher education. This research brings to light the main ethical issues and related activities that universities can consider to orient their strategic choices toward the public interest as well as educational management improvement.

Details

International Journal of Educational Management, vol. 33 no. 7
Type: Research Article
ISSN: 0951-354X

Keywords

Article
Publication date: 21 February 2024

Moh'd Anwer AL-Shboul

This paper aims to analyze the relationships between human resource supply chain management (HRSCM), corporate culture (CC) and the code of business ethics (CBE) in the MENA…

Abstract

Purpose

This paper aims to analyze the relationships between human resource supply chain management (HRSCM), corporate culture (CC) and the code of business ethics (CBE) in the MENA region.

Design/methodology/approach

In this study, the author adopted a quantitative approach through an online Google Form survey for the data-gathering process. All questionnaires were distributed to the manufacturing and service firms that are listed in the Chambers of the Industries of Jordan, Saudi Arabia, Morocco and Egypt in the MENA region using a simple random sampling method. About 567 usable and valid responses were retrieved out of 2,077 for analysis, representing a 27.3% response rate. The sample unit for analysis included all middle- and senior-level managers and employees within manufacturing and service firms. The conceptual model was tested using a hypothesis-testing deductive approach. The findings are based on covariance-based analysis and structural equation modeling (SEM) using PLS-SEM software. The author performed convergent validity and discriminant validity tests, and bootstrapping was also applied.

Findings

The empirical results display a significant and positive association between HRSCM and the CBE. The CC and the CBE tend to be positively and significantly related. Therefore, HRSCM can play a key role in boosting and applying the CBE in firms. For achieving the firm purposes, more attention to the HR personnel should be paid to implement the CBE. The high importance of the CBE becomes necessary for both the department and the firm.

Practical implications

Such results can provide insightful information for HR personnel, managers and leaders to encourage them to develop and maintain an effective corporate code of conduct within their organizations.

Originality/value

This paper tries to explore the linkages between HRSCM, CC and CBE in the Middle East region due to the lack of research available that analyzes the relationship between them. Not only that, but it also offers great implications for Middle Eastern businesses.

Details

Journal of Information, Communication and Ethics in Society, vol. 22 no. 1
Type: Research Article
ISSN: 1477-996X

Keywords

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