Search results

The purpose of this study is to introduce a matching function approach to analyze matching in financial reporting.

The matching function is first analyzed analytically. It is specified as a multiplicative Cobb-Douglas-type function of three categories of expenses (labor expense, material expense and depreciation). The specified matching function is solved by the generalized reduced gradient method (GRG) for 10-year time series from 8,226 Finnish firms. The coefficient of determination of the logarithmic model (CODL) is compared with the linear revenue-expense correlation coefficient (REC) that is generally used in previous studies.

Empirical evidence showed that REC is outperformed by CODL. CODL was found independent of or weakly negatively dependent on the matching elasticity of labor expense, positively dependent on the material expense elasticity and negatively dependent on depreciation elasticity. Therefore, the differences in matching accuracy between industries emphasizing different expense categories are significant.

The matching function is a general approach to assess the matching accuracy but it is in this study specified multiplicatively for three categories of expenses. Moreover, only one algorithm is tested in the empirical estimation of the function. The analysis is concentrated on ten-year time-series of a limited sample of Finnish firms.

The matching function approach provides a large set of important information for considering the matching process in practice. It can prove a useful method also to accounting standard-setters and other specialists such as managers, consultants and auditors.

This study is the first study to apply the new matching function approach.

This study investigates the effect of managerial ability on labor productivity by analyzing various methods in the firm-year panel data of listed firms in South Korea from 2002 to 2019. Managerial ability was analyzed using the measurement method of Demerjian et al. (2012), while labor productivity was analyzed using value-added and sales. The authors find that managerial ability has a positive effect on labor productivity. In other words, the productivity of employees improves with the appointment of a manager with higher abilities. The study’s findings suggest that firms should consider managerial ability as a means of improving labor productivity.

This paper evaluates the effects of tax incentives on business innovation in Brazil that were established by Law 11,196/05 (the “Fiscal Incentives Law”) to test whether they have had a positive impact on beneficiary firms' innovation input and output and on their performance.

The policy impacts are estimated using microdata on 13,706 firms available in the 2008 and 2011 editions of the Brazilian Innovation Survey (PINTEC) and by applying propensity score matching with difference-in-differences.

The results suggest a positive and statistically significant impact of the policy on research and development (R&D) expenditures (average of approximately US$ 264,000 in 2011), the number of research staff (average of five researchers) and total employment (approximately 5% of the beneficiary firms' mean size). However, no impact was found on the overall spending on innovative activities, the percentage of sales and exports from new products, net revenue or net revenue per employee.

The findings provide empirical support in favor of tax incentives as a policy tool to boost business innovation in the country. However, the absence of significant effects on innovative activities expenditures and on most indicators of innovation output and firms' performance reveals shortcomings of the policy that need to be addressed.

The study complements and advances the findings of previous studies by assessing policy impact on total innovative activities expenditures and on innovation output and firm performance.

The objective of this work is to demonstrate the relationships between the two main processes of research and development (R&D) activities: the knowledge generation phase (KPP) and the knowledge commercialization, or transfer, phase (KCP), in a sector that is intensive in this type of activity, such as the pharmaceutical sector. In addition, within the framework of the general objective of this work, the authors propose two other objectives: (1) make advances in network efficiency measurement models, and (2) determine the factors associated with efficiency in the KPP and in the KCP in companies of the pharmaceutical sector in Spain.

A Network Data Envelopment Analysis (NDEA) model (Färe and Grosskopf, 2000) with categorical variables (Lee et al., 2020; Yeh and Chang, 2020) has been applied, and a sensitivity analysis of the obtained results has been performed through a DEA model of categorical variables, in accordance with the work of Banker and Morey (1986), to corroborate the results of the proposed model. The sample is made up of 77 companies in the pharmaceutical sector in Spain.

The results obtained point to a greater efficiency of pharmaceutical companies in the KPP, rather than in the KCP. Furthermore, the study finds that 1) alliances between companies have been the accelerating factors of efficiency in the KCP (but patents have slowed this down the most); 2) the quality of R&D and the number of R&D personnel are the factors that most affect efficiency in the KPP; and 3) the quality of R&D again, the benefits obtained and the position in the market are the factors that most affect efficiency in the KCP.

The authors have not found studies that show whether the efficiency obtained by R&D-intensive companies in the KPP phase is related to better results in terms of efficiency in the KCP phase. No papers have been found that analyse the role of alliances between R&D-intensive companies and patents, as agents that facilitate efficiency in the KCP phase, covering the gap in the research on both problems. Notwithstanding, this work opens up a research path which is related to the improvement of network efficiency models (since it includes categorical variables) and the assessment of the opinions of those who are responsible for R&D departments; it can be applied to decision-making on the aspects to improve efficiency in R&D-intensive companies.

This paper analyzes the productivity effects of structural capital such as research and development (R&D) and organizational capital (OC). Innovation work also produces innovation-labor-biased technical change (IBTC) and knowledge spillovers. Analyses use full register-based dataset of Finnish firms for the period 1994–2014 from Statistics Finland.

Intangibles are derived from the labor costs of innovation-type occupations using linked employer-employee data. The approach is consistent with National Accounting and offered as one method in OECD (2010) and applied in statistical offices, e.g. in measuring software. The EU 7th framework Innodrive project 2008–2011 extended this method to cover R&D and OC.

Methodology is implementable at firm-level and offers way to link personnel reporting to intangible assets. The OC-IBTC as well as total resources allocated to OC are relevant for productivity growth. The R&D stock is relatively higher but R&D-IBTC is smaller than OC-IBTC. Public policy should, besides technology policy, account for OC and OC-IBTC and related knowledge spillovers in the industries that are most important among the SMEs (low market-share-firms).

The data are based on remote access to Statistics Finland; the data cannot be disseminated.

Intangible assets are measured from innovation work that encompasses not only R&D work. IBTC is proxied in production function estimation by relative compensations on IA work. The non-competing nature of IAs is captured by IA knowledge spillovers. The sample sizes are much higher than in earlier studies on horizontal knowledge spillovers (such as for SMEs,) thus bringing additional generality to the results.

The purpose of this study is to identify the norms that underlie and condition the decisions made by preparers of financial reports.

This interview-based study illustrates how financial report preparers engage in behaviors linked to the perception of recognition and measurement of internally generated intangible assets by important stakeholders. All of the companies included in the study adhere to International Financial Reporting Standards when creating their consolidated financial statements. The participants selected for the study are involved in accounting decisions related to research and development in accordance with International Accounting Standard (IAS) 38.

The authors identify the normative assumptions underlying the recognition and measurement of internally generated intangibles, which are based on concerns of consistency, credibility and reasonableness. The authors find that the normative basis for legitimacy in financial accounting is primarily related to cognitive legitimacy and is not of a moral or pragmatic nature.

The study reveals that recognition and measurement of internally generated intangibles in financial accounting relate to legitimacy. The authors identify specific norms that form the basis of this legitimacy, namely, consistency, credibility and reasonableness. These identified norms serve as constraints, mitigating the risk of judgment misuse within the IAS 38 framework for earnings management.

In 2000, Cañibano et al. published a literature review entitled “Accounting for Intangibles: A Literature Review”. This paper revisits the conclusions drawn in that paper. We also discuss the intervening developments in scholarly research, standard setting and practice over the past 20+ years to outline the future challenges for research into accounting for intangibles.

We conducted a literature review to identify past developments and link the findings to current accounting standard-setting developments to inform our view of the future.

Current intangibles accounting practices are conservative and unlikely to change. Accounting standard setters are more interested in how companies report and disclose the value of intangibles rather than changing how they are determined. Standard setters are also interested in accounting for new forms of digital assets and reporting economic, social, governance and sustainability issues and how these link to financial outcomes. The IFRS has released complementary sustainability accounting standards for disclosing value creation in response to the latter. Therefore, the topic of intangibles stretches beyond merely how intangibles create value but how they are also part of a firm’s overall risk and value creation profile.

There is much room academically, practically, and from a social perspective to influence the future of accounting for intangibles. Accounting standard setters and alternative standards, such as the Global Reporting Initiative (GRI) and European Union non-financial and sustainability reporting directives, are competing complementary initiatives.

Our results reveal a window of opportunity for accounting scholars to research and influence how intangibles and other non-financial and sustainability accounting will progress based on current developments.

This paper examines the relationship between poison pills, real earnings management and initial public offering (IPO) failure.

The authors sampled 2,997 IPO firms that went public during 1993-2015.

The authors find that IPO firms manipulate earnings upward using real earnings management. The authors also find that IPO firms exhibiting a higher level of real earnings management have a higher probability of IPO failure. In addition, the authors find that weak shareholders' governance is positively associated with IPO failure.

These results suggest that poor governance structures in failed firms open the door to manipulating real activities and increasing operational risk.

The study findings are of most significant interest to potential investors and other stakeholders affiliated with a firm going public, an auditor, an underwriter, the lawyers who consult with the firm and employees or executives who might consider joining that firm.

Independent directors are important corporate decision participants and makers. Based on the Chinese cultural background, this paper interprets the listing order of independent directors as independent directors’ status, exploring their influence on the corporate research and development (R&D) behavior.

This paper studies A-share listed firms in China from 2008 to 2018 as the sample. The main method is ordinary least square (OLS) regression. We also use other methods to deal with endogenous problems, such as the firm fixed effect method, change model method, two-stage instrumental variable method, and Heckman two-stage method.

(1) Higher independent directors’ status attribute to more effective exertion of supervision and consultation function, and positively enhance the corporate R&D investment. The increase of the independent director’ status by one standard deviation will increase the R&D investment by 4.6%. (2) The above effect is more influential in firms with stronger traditional culture atmosphere, higher information opacity and higher performance volatility. (3) High-status independent directors promote R&D investment by improving the scientificity of R&D evaluation and reducing information asymmetry. (4) The enhancing effect of independent director’ status on R&D investment is positively associated with the firm’s patent output and market value.

This paper contributes to understanding the relationship between the independent directors’ status and their duty execution from an embedded cultural background perspective. The findings of the study enlighten the improvement of corporate governance efficiency and the healthy development of the capital market.

The authors propose and test a theoretical framework that develops and analyzes precursors to firm acquisitions to determine if acquirers differ from other firms.

The authors use longitudinal, archival data from a sample of the largest firms in the global pharmaceutical industry from 1991 to 2012 with 1,327 firm-year observations.

The authors integrate prior research to show that the firm characteristics involving (1) R&D investment, (2) prior experience and (3) network centrality influence the likelihood that a firm will complete an acquisition.

In contrast to research focusing on the performance of acquiring firms, the authors show that firm characteristics predict acquisition activity by highlighting that acquiring firms differ from other firms. The authors also develop how network synergies can be realized by acquirers that have information advantages from more central network positions.