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The paper examines contingent liabilities' effect on the firm's dividend decisions.

Fixed-effects regression and logit model results estimate the influence of contingent liabilities on firms' dividend decisions using a sample of 2,288 firm-year observations of S&P 500 firms from 2012 until 2022. Robustness checks and results from the 2SLS model further support the authors’ findings.

The results show that contingent liabilities negatively affect dividend payment decisions. This analysis further demonstrates that the stated effect of contingent liabilities on dividend decisions is more substantial for firms with financing deficits and those with above-industry-average corporate governance scores.

There needs to be more systematic conceptual reason for measuring uncertainty for firms and its influence on dividend decisions. Future research should use other measures of firm uncertainty to examine the relation of the firm's uncertainty with dividend decisions.

The authors suggest that contingent liabilities create uncertainty for future cash flows, influence a firm's agency costs and provide credible signals on a firm's prospects to the market. The findings support existing literature that measurable firm-specific variables significantly influence a firm's dividend decisions. The results are robust for an alternative explanation.

By investigating the impact of the influence of contingent liabilities on dividends, the authors extend research on dividend decisions and attempt to provide insights into a firm's dividend decisions by incorporating an off-the-balance sheet item (contingent liabilities) as a significant predictor for dividend decisions.

This study aims to investigate disclosure of asbestos-related liabilities in corporate accounts and counter-accounts to examine whether and how accounting contributes to corporate accountability for asbestos-contaminated products.

This study uses the Goffmanesque perspective on impression management to examine instances of concealed asbestos-related liabilities in corporate accounts vis-à-vis the revealing of such liabilities in counter-accounts.

The findings show counter-accounts provide significant information on liabilities originating from the exposure of employees and consumers to asbestos. By contrast, the malleability of accounting tools enables companies to eschew accounting disclosures. While the frontstage positive performance of companies served an impression management role, their backstage concealing actions enabled companies to cover up asbestos-related liabilities. These companies used three categories of mechanisms to avoid disclosure of asbestos-related liabilities: concealing via a “cloak of competence”, impression management via epistemic work and a silent strategy of concealment frontstage with strategic reorganisation backstage.

This study has policy relevance as regulators need to consider the limits of corporate disclosures as an accountability tool. The findings may also initiate academic and practitioner conversations about accounting standards for long-term liabilities.

This study highlights the strategies companies use both frontstage and backstage to avoid disclosing asbestos-related liabilities. Through analysis of accounts and counter-accounts, this study identifies the limits of accounting as an accountability tool regarding asbestos-induced diseases and deaths.

An intractable effect of revenue and expense recognition based on tax regulation and accounting rules is unresolved and may be manageable only by reducing the value of deferred taxes. Therefore, in this study, the authors examined the relationship between the International Accounting Standard 12 (IAS 12) and deferred income taxes associated with tax and accounting rules.

The authors used a large sample of balanced data from 144 firms across 1992–2019. To mitigate the problem of superfluous results, the authors used the same number of firms and years for pre- and post-IAS 12 periods. The authors employed robust econometric estimations to establish the impact of IAS 12 on deferred tax.

The regression results show that deferred tax assets decreased significantly, whereas deferred tax liabilities increased significantly, in the post-IAS 12 period. These contrasting results imply that IAS 12 implementation has increased conservatism and prudence in financial reporting. However, the authors find that the increase in deferred tax assets post-IAS 12 is value destructive, suggesting that its implementation has unintended consequences. The results are robust to alternative measurements and econometric identification strategies.

While prior studies have explored topics such as deferred tax measurement and the impact of income and expense recognition, the authors specifically analyzed how IAS 12 affects deferred taxes and their effect on the market valuation. The authors find that certain accounting standards may not be relevant to the capital market.

We study the potential effects of pension underfunding on corporate investment, financial constraints and improved employee bonding using 10 Pacific-Basin countries (including the United States, Australia, and eight Asian countries) at heterogeneous economic development stages and different regulatory environments. We document that corporate pensions are significantly underfunded in most countries of our sample in the period of 2001–2017, when interest rates were ultralow in most countries. In addition, firms from countries with stronger employee protection and more generous retirement benefits tend to show higher levels of underfunding in their defined benefit (DB) pension plans. To the extent of pension underfunding imposing constraints on corporate investment, we find that firms in these countries can face more constraints on investment when their pension is underfunded.

This study aims to investigate window dressing as practiced by commercial banks in Kuwait, using monthly aggregate balance sheet data covering the period January 1993 to December 2017.

This study applies the structural time series model to decompose an observed time series into unobserved components based on monthly data covering January 1993 to December 2017 on the consolidated balance sheet of commercial banks in Kuwait.

The empirical results indicate that Kuwaiti commercial banks indulge in upward window dressing to boost size and liquidity. This kind of behaviour is indicated by a statistically significant rise in assets under the control of banks in December, followed by a statistically significant decline in January. The operation is funded by borrowing, leading to a December rise and a January fall in foreign and other liabilities, which are also under the control of commercial banks.

This study uses a novel methodology to detect window dressing based on the seasonal behaviour of balance sheet items. This study suggests a unified framework for the motives, targets, types and consequences of window dressing and how they are related.

The purpose of this study is to examine accountants’ application of principles-based accounting standards to a lawsuit contingency recognition scenario and the potential role that accounting work experience plays in mitigating accountants’ aggressive financial reporting.

This study presents a 2 × 2 between-subjects experiment with accounting experience (measured as high vs low) and contingency type (asset vs liability) as independent variables and accountants’ lawsuit contingency conservatism likelihood judgments and US$ recognition recommendations as the dependent variables.

Consistent with expectations, findings indicate that more experienced accountants are more likely to recognize liabilities and items that decrease income and less likely to recognize assets and items that increase income than their less experienced counterparts. Accountants also recommended recognizing lower (higher) mean US$ amounts for assets (liabilities), as expected. Supplemental analyses show a significant moderated-mediated effect whereby the interactive effect of contingency type and accounting experience on individuals’ US$ recognition recommendations is partially mediated through the nature of the conservatism judgment.

The finding that less experienced accountants report more aggressively than more experienced accountants when applying a principles-based standard supports the call for using judgment frameworks in imprecise standard settings and suggests that firms may want to ensure that accountants with adequate work experience are on hand as U.S. generally accepted accounting principles become more principles-based over time.

To the best of the authors’ knowledge, this study is the first to examine the impact of accounting work experience on the application of principles-based accounting standards and the mitigation of aggressive financial reporting. Our supplemental analyses also identify the nature of the conservatism judgment as a mediating mechanism which partially explains more experienced accountants’ US$ asset and liability recognition recommendations.

This study aims to examine the implementation of International Financial Reporting Standards (IFRS) in Saudi Arabia. It investigates how the adoption of IFRS has affected four critical areas in the financial statements of publicly listed companies: profit and loss statement, balance sheet, cash flow statement and retained equity statement in Saudi Arabia. The paper also explores the essential factors/drivers that influence the adoption of IFRS and its implication in Saudi Arabia.

Data was obtained from Saudi Stock Exchange (Tadawul) listed companies from eleven industries in Saudi Arabia. This cross-sectional study analyses critical financial data across eleven distinctive industries. To identify the impact of adopting IFRS, the researchers use a paired t-test to evaluate seven key elements of financial statements underlying the critical areas: non-current asset, current asset, total assets, shareholders equity, non-current liability, current liability and total liability. The sample captures cross-sectional data from well-developed global industries in Saudi Arabia, pre- and post-implementation of IFRS. Thus, the analysis of the sample data gives a representative picture of the population of the Saudi Arabian industry.

The results reveal significant differences between GAAP and IFRS reporting standards in the measurement, recognition and classification of non-current assets and liabilities. The differences are expressed in the variance between the GAAP and IFRS. Specifically, the differences between GAAP and IFRS demonstrated by the t-value are significant and reliable (respectively, 5.3 and 4.1). Additionally, the t-value is validated by the p-value, which in both was significant.

The outcomes of this research will benefit accounting information users, practitioners, researchers and regulators. Since Saudi Arabia’s policymakers have mandated the full adoption of IFRS in financial reporting, the study contributes to the adoption of IFRS practices throughout the Saudi industry. Adopting full IFRS standards requires widespread IFRS expertise to cope with the transition.

This study advances research into the perennial issues associated with changes in reporting towards IFRS standards, especially in Saudi Arabia. The contribution to theory and practice enters new and fruitful areas.

The aim of this study is to analyse the factors that contribute to the disclosure of relational liabilities (RLs) of the US companies.

The study uses content analysis to examine the disclosure of RLs in annual reports of the US companies listed on the Nasdaq-100 index from 2013 to 2015.

The study finds a positive correlation between the disclosure of RLs and gender diversity of the board of directors as well as the education level of the CEO. By contrast, the disclosure of RLs is negatively associated with the age of the CEO. Companies in knowledge-intensive industries also tend to disclose more information about their RLs than those in other industries.

This study focuses on the determinants of RLs, whereas previous research has mainly examined the positive impact of voluntary disclosure of intellectual capital on financial performance. The main objective of this study is to shed light on the factors that influence the disclosure of RLs.

The amount of current assets and the structure of their financing within working capital management define the level of risk, liquidity and profitability of any company. This chapter identifies the type of working capital investment and financing policies and reveals their influence on the financial performance of Czech firms.

The type of investment policy was defined, based on the structure of current assets and the working capital-to-sales ratio, followed by the share of different liabilities in assets, used to determine the financing policy. The Orbis database provided the chapter with indexes of manufacturing, agricultural, construction and trade companies for the period of 2012–2021.

The results obtained revealed the liquidity and financial independence of all selected industries. Flexible investment and conservative financing policies in agriculture were accompanied by low profitability. The decrease of the working capital-to-sales ratio and the attraction of the current debts for assets financing provided a higher return on assets in the manufacturing, agricultural and trade sectors.

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.