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By utilizing a large sample of firms during the period 2006–2017, the author determine which types of firms are more likely to go bankrupt. The author shows that over-leveraged firms have significantly higher probability of going bankrupt, which highlight the importance of the concept of optimal corporate capital structure. The author finds that private firms and export-oriented firms experience lower hazard rates. Proposed hazard statistical model highlights that more profitable firms, firms with better liquidity, firms with more tangible assets and larger firms all have statistically higher survival rates. The author finds that bankruptcy rates are the lowest among service firms and the highest in construction industry. Ownership variables indicate that state-owned firms, firms with foreign ownership and firms, owned by holdings, are less likely to fail, all else equal. Finally, the author demonstrates that proposed statistical model successfully predicts the probability of bankruptcy. The mean cumulative hazard function for a group of surviving firms is statistically significantly lower compared to a group of failing firms. In order to survive in a long run, firm’s management should especially be aware of their optimal capital structure and use rather less leverage than going over the sustainable level.

Aims to examine the four different management accounting systems or sets that existed at the Hudson's Bay Company (HBC) during the 1670‐2005 period with Burns and Scapens' institution‐based framework of management accounting change.

A case study was used with comprehensive archival evidence coming mainly from the Hudson's Bay Company Archives (HBCA) and the HBC's private archive for 1670‐1970 and from interviews with retired and existing senior managers at the HBC for 1970‐2005.

The findings indicated that Burns and Scapens' framework was helpful. Institutions did prevent management accounting changes, even when seriously needed. Under certain conditions, institutions do not resist management accounting changes. Six suggestions are provided for extending and refining Burns and Scapens framework.

Although the 325 years of evidence was uniquely rich, it was still a case study of a single firm.

Management accounting is slow to change because of institutions.

Management accounting change is very much path‐dependent. Changes occur in management accounting because of major external changes such as competition and modernization. Also, management accounting changes come from the introduction of taken‐for‐granted external techniques such as budgeting, capital budgeting, and planning.

In this study, we rely on the profitability of EP (earnings‐to‐price ratio) trading rules to infer the quality of earnings. Under the extrapolation hypothesis (Lakonishok, Shleifer, and Vishney 1994), the profitability of an EP trading rule that is based on higher quality earnings (i.e., earnings that are more representative of the fundamental profit generating power of the firm), should have higher return predictability. Among the four specifications of the EP ratio examined, i.e., the conventional earnings‐to‐price, core earnings‐to‐price, gross margin‐to‐price, and ex‐ante earnings‐to‐price, we find that core earnings‐to‐price and gross margin‐to‐price significantly outperform the other two in predicting returns. This result suggests that investors view the earnings components that reflect the fundamental operation of the firm, such as sales, to be of higher quality than the rest. Further, the evidence indicates that an EP trading rule based on gross margin‐to‐price generates an abnormal return not fully explained by the market, size, and book‐to‐market.

Sir George Simpson, the Governor of the Hudson's Bay Company (HBC) from 1821 to his death in 1860, was the subject of numerous biographical works that described various facets of the man including his managerial abilities, literary prowess, physical stamina, abundant energy, extensive art collection and ethnological specimens. Two related aspects of his outstanding management style have been overlooked: the genesis of his management style and where it can be placed in the evolution of management practices during the 19th century.

Primary data from the Hudson's Bay Company archives plus secondary sources.

Simpson's management abilities came from his grammar school education and his apprenticeship to a counting house. More importantly, it can be attributed to his association with his mentor Andrew Wedderburn, his dedication to the HBC, and his high level of physical and intellectual energy. His information intensive management style was also a significant precursor to systematic management, which occurred later in the 19th century.

Future research should examine other examples of the evolution of management during the 19th century, particularly the transition from sub‐unit accountability to systematic management.

The paper emphasizes the importance of managers in making management systems work.

Dynamic predictions of financial distress of the firms have received less attention in finance literature rather than static prediction, specifically in Malaysia. This study, therefore, investigates dynamic symptoms of the financial distress event a few years before it happened to the firms by using neural network method. Cox Proportional Hazard regression models are used to estimate the survival probabilities of Malaysian PN17 and GN3 listed firms. Forecast accuracy is evaluated using receiver operating characteristics curve. From the findings, it shown that the independent directors’ ownership has negative association with the financial distress likelihood. In addition, this study modeled a mix of corporate financial distress predictors for Malaysian firms. The combination of financial and non-financial ratios which pressure-sensitive institutional ownership, independent director ownership, and Earnings Before Interest and Taxes to Total Asset shown a negative relationship with financial distress likelihood specifically one year before the firms being listed in PN 17 and GN 3 status. However, Retained Earnings to Total Asset, Interest Coverage, and Market Value of Debt have positive relationship with firm financial distress likelihood. These research findings also contribute to the policy implications to the Securities Commission and specifically to Bursa Malaysia. Furthermore, one of the initial goals in introducing the PN17 and GN3 status is to alleviate the information asymmetry between distressed firms, the regulators, and investors. Therefore, the regulator would be able to monitor effectively distressed firms, and investors can protect from imprudent investment.

The purpose of this paper is to provide the first empirical assessment of the persistence and predictability of earnings within the Georgian private sector entities.

The sample comprises of all the Georgian private sector entities who, according to the new Law of Georgia on Accounting, Reporting and Auditing (2016), had to submit their audited financial statements by 1 October 2018. Financial data has been officially withdrawn from the Ministry of Finance of Georgia and the descriptive data has been obtained by the use of Link Klipper and ScrapeStorm tools through the official “Reportal” website. The final sample consists of 450 large Georgian private sector entities. The study uses a simple, one-year-lagged earnings auto-regression to detect the persistence and predictability within the next series of earnings. A weighted least square method has been used as a statistical procedure.

The results reveal that current earnings persist within the next year’s series of earnings at less than 25%, while the reliance on current year’s earnings enables us to predict the next year’s earnings only with a chance of 20%. Further analysis has witnessed that cash flows from operations persist at less than 40% and are able of predicting the next year’s cash flows at below 35%. Overall, the properties of earnings and cash flows within the private sector of Georgia are of relatively poor quality, with the latter demonstrating higher properties compared to earnings.

The general finding on a relatively low property of earnings raises potential investors and creditors’ awareness on the valuation-usefulness of provided financial information within the private sector of Georgia. The fact that earnings are significantly less persistent and predictable compared to cash flows from operations, hints on accruals’ problematic functioning. The results presented in this paper should be of interest to a local regulator (SARAS), charged with the responsibility of successfully running a currently ongoing accounting reform of Georgia.

This is the first study that examines the persistence and predictability of earnings and cash flows from operations among the private sector entities of Georgia.

Americans have become increasingly interested in their ethnic heritage in recent years. Assimilated Euro‐Americans, whose ancestors arrived in the New World generations ago, are rediscovering their roots and are enrolling in foreign language classes, taking up folk dancing, learning ethnic cuisine, tracing their genealogical pedigrees, and returning to the religious traditions their parents may or may not have passed on to them. Now it's “in” to be ethnic.

The purpose of this paper is to examine whether audit quality influence real earnings management activities using a sample of UK listed firms that have strong incentives to manage earnings upward through meeting past year’s earnings as a benchmark in the post-adoption period of International Financial Reporting Standards (IFRS).

The authors use a sample of 4,774 firm-year observations of UK listed firms during the period 2005–2018. Univariate and multivariate analyses have been conducted to test the association after controlling for firm characteristics and institutional variables.

The study reports that the presence of Big 4 auditors is significantly and positively related with greater levels of sales and discretionary expenses manipulation. Though the authors do not find any conclusive evidence on production costs manipulation, the aggregated measure of real earnings management shows a significant positive association with the presence of Big 4 auditors.

The study implies that managers who have incentives to manage earnings upward around the UK firms take advantage of the accounting flexibility in defining policies while reducing information asymmetry among the investors to signal better future performance. The approach to detect earnings manipulation as described in the auditing standards fails to limit the managerial use of real activities due to limited scope and unclear guidance. Thus, due to the significant impact on public policies, the results should, therefore, be of interest to the regulators and standard setters.

To the best of the authors’ knowledge, this is the first study that examines the association between audit quality and real earnings management for the UK all-purpose operational firms in sampled data that just meet past year’s earnings as a benchmark in the post-IFRS period.

This paper examines the effect of corporate governance reform on the value relevance of equity book value and earnings by employing the Ohlson’s (1995) Valuation Model, and it is based on the methodology developed by Davis‐Friday et al. (2006). The sample consists of Main Board companies listed on Bursa Malaysia from 1999 to 2001 in order to investigate the effect during and after the issuance of the Malaysian Code on Corporate Governance (MCCG) as a measure of corporate governance reform. The findings generally indicate that equity book value and earnings are value relevant in assisting investors to value firms’ equity. Findings of this study, nonetheless, show that the regulatory change experienced by the country did not have an impact on the valuation of equity book value and earnings. This, thus, suggests that most of the Malaysian companies may not have met the intended purpose of MCCG, but merely conformed to the minimum requirement. In summary, the findings of this study provide evidence that the equity book value and earnings reported in the financial statement is value relevant in valuing Malaysian firms’ equity.