Search results

Research has shown evidence of the use of impression management strategies in corporate disclosures as a means of presumably tempering and swaying investors’ perceptions. These impression management strategies include shifts in the tone used when providing disclosures. However, recent research also provides evidence that such techniques can have a contrary effect when the tone of the message appears to be “too good to be true.” This study explores how the use of optimism and certainty in the Management Discussion and Analysis (MD&A) portion of the annual report affects nonprofessional investors’ investment decisions – a class of investors known to heavily rely on the MD&A portion of annual reports. We theorize a bifurcated effect where optimism and certainty have a positive and direct effect on investor willingness to invest, but at the same time optimism and certainty have a negative indirect effect on willingness to invest that is mediated through decreased perceptions of disclosure credibility. The results provide evidence supporting such a bifurcated effect from the use of tone in management disclosures.

This study provides experimental evidence on whether and how management's use of self-promotion, as a type of proactive impression management strategies in its disclosures, influences nonprofessional investors’ judgments and decisions. The results show that management's use of self-promotion influences nonprofessional investors so that investors (1) expect management's future performance to be better and (2) are likely to invest more in the company. These positive effects are more prominent when management's credibility is perceived to be high than when it is low. The findings of this study provide implications for both practice and research.

Part IV provides readers with the extant requirements for the application of materiality to recognition, measurement, presentation, and disclosure in the financial statements. This part also includes a detailed critical review of the recent Practice Statement on materiality, the FASB’s proposed ASU on the notes and the amendments to the Conceptual Framework proposed by the IASB and the FASB.

The part expands to issues that are typical of Management Commentary, including the SEC guidance on materiality in Management Discussion and Analysis.

It informs about the complexities and subtle differences between financial statements and bookkeeping and the different standards of reasonableness versus materiality.

A section moves from materiality to material misstatements and covers the application of materiality in auditing.

Another section goes in depth on internal control over financial reporting, showing the linkages between materiality and risk appetite and risk tolerance and the related application guidance.

Part V analyzes the details of how to assess materiality. It first tackles qualitative versus quantitative criteria and the role of professional judgment. It then analyzes the selection of quantitative threshold, to expand to the choice of benchmarks. It contrasts the whole financial statements with subaggregates, line items, and components.

Specific sections contrast IASB, FASB, SEC, and other guidance on materiality applied to comparative information, interim reporting, and segment reporting.

The section on estimates mingles complex guidance coming from accounting, auditing, and internal control over financial reporting to explain how the management can improve its assessment of materiality concerning estimates.

After explaining the techniques to move from individual to cumulative misstatements, the part tackles verification ex post, and finally summarizes the intricacies of whether immaterial misstatements are permissible and their consequences.

This study uses an experimental approach to examine how the perceptions and decisions of prospective nonprofessional investors are influenced by risk disclosures in the Management Discussion and Analysis (MD&A). The between-subjects experiment used 157 MBA students as nonprofessional investors. The participants were given a firm's financial statements. In addition, the experimental group received the section on risk in the MD&A, whereas the control group did not receive any part of the MD&A. The participants were then asked to make several investment assessments and a final investment decision. The results show that the information included in the risk section of the MD&A has a significant negative effect on perceptions of the firm's future performance, a significant positive influence on perceptions of the stock's risk, and a marginally significant negative effect on the investment decision. The effect on the investment decision is mediated by respondents' perceptions of the firm's future performance and stock risk. By providing evidence on the effect of risk disclosures on nonprofessional investors' investment decision-making process, this study can help professional bodies and national market regulators understand how some market participants react to risk information provided under their regulations. In fact, the results indicate that there is little to be gained by firms voluntarily providing these risk disclosures. This would seem to support the fact that disclosure of risk information needs to be mandated by market regulators.

The objective of this study is to investigate how country risk, different political actions from the government and bureaucratic behavior influence the activities in industry supply chains (SCs) in emerging markets. The main objective of this study is to investigate the influence of these external stakeholders’ elements to the demand-side and supply-side drivers and barriers for improving competitiveness of Ready-Made Garment (RMG) industry in the way of analyzing supply chain. Considering the phenomenon of recent change in the RMG business environment and the competitiveness issues this study uses the principles of stakeholder and resource dependence theory and aims to find out some factors which influence to make an efficient supply chain for improving competitiveness. The RMG industry of Bangladesh is the case application of this study. Following a positivist paradigm, this study adopts a two phase sequential mixed-method research design consisting of qualitative and quantitative approaches. A tentative research model is developed first based on extensive literature review. Qualitative field study is then carried out to fine tune the initial research model. Findings from the qualitative method are also used to develop measures and instruments for the next phase of quantitative method. A survey is carried out with sample of top and middle level executives of different garment companies of Dhaka city in Bangladesh and the collected quantitative data are analyzed by partial least square-based structural equation modeling. The findings support eight hypotheses. From the analysis the external stakeholders’ elements like bureaucratic behavior and country risk have significant influence to the barriers. From the internal stakeholders’ point of view the manufacturers’ and buyers’ drivers have significant influence on the competitiveness. Therefore, stakeholders need to take proper action to reduce the barriers and increase the drivers, as the drivers have positive influence to improve competitiveness.

This study has both theoretical and practical contributions. This study represents an important contribution to the theory by integrating two theoretical perceptions to identify factors of the RMG industry’s SC that affect the competitiveness of the RMG industry. This research study contributes to the understanding of both external and internal stakeholders of national and international perspectives in the RMG (textile and clothing) business. It combines the insights of stakeholder and resource dependence theories along with the concept of the SC in improving effectiveness. In a practical sense, this study certainly contributes to the Bangladeshi RMG industry. In accordance with the desire of the RMG manufacturers, the research has shown that some influential constructs of the RMG industry’s SC affect the competitiveness of the RMG industry. The outcome of the study is useful for various stakeholders of the Bangladeshi RMG industry sector ranging from the government to various private organizations. The applications of this study are extendable through further adaptation in other industries and various geographic contexts.