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1 – 10 of over 4000Fawad Ahmad, Michael Eric Bradbury and Ahsan Habib
This paper examines the influence of different types of political connections and political uncertainty on earnings credibility in Pakistan. Based on discernible differences…
Abstract
Purpose
This paper examines the influence of different types of political connections and political uncertainty on earnings credibility in Pakistan. Based on discernible differences, connected firms are grouped into civil connected and military connected firms.
Design/methodology/approach
The authors provide evidence concerning the earnings credibility incentives of groups of political connected firms and report that their incentives are significantly different. The findings remain robust to alternate methods of earnings credibility.
Findings
The findings evidence that civil (military) connected firms report less (more) credible earnings than the control group. High political uncertainty reduces the credibility of earnings. Results for the interaction of political connections and political uncertainty variables are not significant.
Research limitations/implications
The paper investigates just one aspect of Pakistan's political economy, i.e. credibility of earnings; thus, it requires to be cautious on part of readers and policymakers. To reach a clearer conclusion, earnings credibility should be ex amined in the larger context, i.e. in conjunction with rent extractions, etc. A possible extension of the paper can be to investigate the channels of rent extractions used by the two types of connected firms.
Practical implications
The paper has contribution for policymakers as well as users of general purpose financial reports. The findings indicate that the users of general purpose financial reports should be more careful in the use of financial information during political uncertain periods and also of politically connected firms. Furthermore, policymakers should keep the larger context at the forefront while attempting to strengthen the enforcemnet regime.
Originality/value
This paper adds to extant political connections literature by identifying two types of politically connected firms and report that both groups have divergent financial reporting incentives. Furthermore, political uncertainty reduces the credibility of earnings.
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Yeni Priatnasari, Djoko Suhardjanto, Agung Nur Probohudono and Setyaningtas Honggowati
Risk reporting in financial reports has a positive impact on the company and its stakeholders. The purpose of this research is to present a literature review using the…
Abstract
Risk reporting in financial reports has a positive impact on the company and its stakeholders. The purpose of this research is to present a literature review using the bibliometric method with the title we used is Risk Reporting, and the keywords are risk disclosure, risk reporting, stakeholders, and stakeholder theory. Data processing in this chapter uses Publish or Perish (PoP) software and Vos Viewers. This study uses the Google Scholar database. The researcher scanned the journal by using Scimagojr.com to view the journal quartile. Before the search was revised, there were 230 papers from 1991 to 2021 (30 years). Researchers will see the development of risk reporting from several sides, such as the country of origin of the researcher, the type of industry that reports risk, the research methods that have been used so far, and the analysis used for reporting risk.
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Saravanan R., Mohammad Firoz and Sumit Dalal
This study aims to empirically investigate the effect of International Financial Reporting Standards (IFRS) convergence on corporate risk disclosure, with a particular emphasis on…
Abstract
Purpose
This study aims to empirically investigate the effect of International Financial Reporting Standards (IFRS) convergence on corporate risk disclosure, with a particular emphasis on the quantity and coverage of risk information. The research also conducts economic benefit and cost analysis to investigate the economic implications that may arise from the transition to IFRS reporting.
Design/methodology/approach
A content analysis approach is used to measure two broader dimensions of risk disclosure, namely, risk disclosure quantity and risk topic coverage. Furthermore, using firm-fixed effect regression on a sample of 143 Indian-listed companies, this study investigates the variations in these risk disclosure dimensions before (2012–2016) and subsequent to (2017–2021) the convergence with IFRS.
Findings
The empirical results of this research demonstrate that IFRS convergence has led to a significant improvement in firms’ risk disclosure across several dimensions. Particularly, during the post-IFRS period, firms’ usage of risk-related words and sentences has considerably surged in MD&A, Notes and whole annual reports. In addition, upon IFRS convergence, firms’ risk descriptions have become more extensive and evenly distributed across risk topic categories. Moreover, the in-depth benefit and cost analysis revealed that firms reporting under IFRS benefit from decreased cost of equity capital, but they also incur a higher cost of audit fees.
Originality/value
This study contributes to the literature in two ways. First, this is the only study, to the best of the authors’ knowledge, to conduct a broader examination of the impact of mandatory IFRS convergence on corporate risk disclosure, with a major focus on quantity and coverage of risk information. Second, by conducting economic benefit and cost analysis, this study provides novel insights into the critical role of IFRS risk disclosures toward multiple economic outcomes.
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Mubashir Ali Khan, Josephine Tan Hwang Yau, Asri Marsidi and Zeeshan Ahmed
This study aims to examine the effect of corporate risk disclosure on investment efficiency. This study also seeks to contribute to existing literature of corporate risk…
Abstract
Purpose
This study aims to examine the effect of corporate risk disclosure on investment efficiency. This study also seeks to contribute to existing literature of corporate risk disclosure by investigating voluntary and mandatory risk disclosure and its effect on the investment efficiency.
Design/methodology/approach
This study used two measures of corporate risk disclosure, level and quantity of corporate risk disclosure. A content analysis approach is adopted for non-financial Malaysian firms over the period 2010–2018.
Findings
The empirical results show that level of corporate risk disclosure leads toward efficient investment, whereas quantity of corporate risk disclosure causes inefficient investment when firms disclose more voluntary risks. Further, categorizing corporate risk disclosure into mandatory and voluntary risk disclosure, this study finds that voluntary risk disclosure tends to have higher investment inefficiency, while no evidence was found for mandatory risk disclosure.
Originality/value
This paper contributes to narrow stream of research investigating corporate risk disclosure through level and quantity contributing to the understanding of the level and quantity of risk disclosure in determining organizational investment efficiency.
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Isabella Lucut Capras, Monica Violeta Achim and Eugenia Ramona Mara
Companies avoid taxes in a variety of ways and use different methods to do that, one of the most common being earnings management. The purpose of this paper is to investigate…
Abstract
Purpose
Companies avoid taxes in a variety of ways and use different methods to do that, one of the most common being earnings management. The purpose of this paper is to investigate whether companies manipulate their financial data in order to reduce taxes paid.
Design/methodology/approach
We considered a sample of 63 listed Romanian companies for the period 2016–2021. The Beneish model was used for estimating earnings management, and the effective tax rate was used to measure tax avoidance. The analysis was carried out using regression analysis in Stata13 software.
Findings
The findings of the research indicate a negative and statistically significant association between effective tax rate and earnings management, implying that one of the main reasons why companies manipulate their earnings to reduce tax burden and avoid taxes. Moreover, our results show that return on assets (ROA) has a statistically significant negative influence on the effective tax rate. Furthermore, our analysis reveals that firm size, growth, and Big4 audit have no effect on effective tax rate.
Research limitations/implications
Because it analyzes concrete cases using financial data and provides some recommendations for addressing the issue of tax avoidance, this work is useful in advancing both quantitative and qualitative research on this topic. This research is relevant for businesses, governments, regulators, audit professionals and investors.
Originality/value
The study, by analyzing concrete cases using reported financial data, contributes in filling the gap within the literature that results from a lack of scientific research on the relationship between tax avoidance and earnings management, and then it clarifies the nature of the causal connection between them. Moreover, it considers a combination of firm related variables including performance, size and also audit quality.
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Salma Chakroun and Anis Ben Amar
This paper aims to examine the influence of the International Financial Reporting Standards (IFRS) adoption on corporate tax avoidance (CTA). In addition, this study aims to…
Abstract
Purpose
This paper aims to examine the influence of the International Financial Reporting Standards (IFRS) adoption on corporate tax avoidance (CTA). In addition, this study aims to explore whether family ownership moderates the impact of IFRS adoption on CTA.
Design/methodology/approach
The authors used a sample of 1,856 firms from various countries around the world, covering the period between 2010 and 2022. To estimate the proposed econometric models, the authors applied both fixed and random effects regression methods.
Findings
The present findings show that IFRS adoption has a negative impact on CTA, as measured by the effective tax rate and book-tax differences. This negative impact is more pronounced in “common law” countries than in “civil law countries.” Additionally, the authors found that family ownership plays a moderating role by positively affecting the impact of IFRS adoption on CTA.
Practical implications
The findings have practical, regulatory and academic implications for fostering accountability and fairness in taxation. This study suggests that implementing IFRS reduces tax avoidance and emphasizes the need for firms to evaluate the implications of IFRS adoption on their tax-planning strategies. It highlights the importance of aligning financial reporting practices with international standards to enhance transparency and minimize tax avoidance opportunities. The differential impact of IFRS adoption between “common law” and “civil law” countries underscores the role of legal and regulatory frameworks. In addition, family ownership plays a significant role in shaping tax-planning strategies. From an academic perspective, this research provides a foundation for further exploration into the relationship between IFRS adoption and tax avoidance.
Originality/value
The existing literature has predominantly concentrated on examining the effect of IFRS adoption on CTA, and the empirical findings have been inconsistent. This study introduces a novel perspective by considering the moderating influence of family ownership in determining the impact of IFRS adoption on CTA.
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Mariela Carvajal and Steven Cahan
This study examines how bilateral international trade among mandatory International Financial Reporting Standards (IFRS) adopter countries moderates the relation between IFRS…
Abstract
Purpose
This study examines how bilateral international trade among mandatory International Financial Reporting Standards (IFRS) adopter countries moderates the relation between IFRS adoption and firms’ financial reporting quality.
Design/methodology/approach
The authors use data from 2007 to 2015 and focus on publicly listed firms from non-European Union countries that adopted IFRS on a mandatory basis.
Findings
The authors find that the interaction between mandatory IFRS adoption and a country’s bilateral trade with other countries using IFRS is negatively and significantly related to accruals-based earnings management, which is an inverse measure of financial reporting quality. This result is driven by firms in less developed countries. The improvement in accounting quality is for firms located in countries that both fully and partially adopt IFRS. The authors also find a significant and negative coefficient for the relation between real earnings management and the interaction between mandatory IFRS adoption and a country’s bilateral trade with other IFRS countries in the post-global financial crisis period.
Originality/value
Overall, the authors’ results are consistent with the notion that the mandatory adoption of IFRS creates a positive externality where firms improve their accounting quality because increased financial statement comparability means that foreign customers and suppliers can monitor the quality of earnings more easily.
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Ewa Wanda Maruszewska, Małgorzata Niesiobędzka and Sabina Kołodziej
The study aims to investigate the impact of indirectly evoked incentives, in the form of supervisor’s preferences, on the decision about accounting policy regarding depreciation…
Abstract
Purpose
The study aims to investigate the impact of indirectly evoked incentives, in the form of supervisor’s preferences, on the decision about accounting policy regarding depreciation method selection and to examine subsequent post-decision distortion by evaluating the depreciation method.
Design/methodology/approach
The authors conducted two experiments with control and treatment groups, manipulating the supervisor’s indirectly evoked preferences. In Study 2, the authors also measured the evaluation of both depreciation methods to investigate post-decisional distortion regarding the assessment of the depreciation method chosen in a decision task. Study 1 was conducted among 85 accounting students, while Study 2 consisted of 200 accountants.
Findings
Both studies revealed the significant impact of supervisor’s indirectly evoked preferences on accounting policy decisions. Participants who were aware of supervisors’ preferences were more likely to choose the depreciation method that was consistent with those preferences. The authors also found that those participants attached a higher value to the depreciation method, providing evidence that adherence to the supervisor’s preferences results in a distorted assessment of the depreciation methods.
Originality/value
First, this study shows that indirectly evoked supervisors’ preferences may lead to a departure from substantive criteria resulting in low-quality accounting outcomes. Second, the assessment of the depreciation method is inseparable from the situational context, as the evaluation of the depreciation method is interdependent upon the preferences of the choice of a depreciation method and the fulfillment of those preferences.
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Users often struggle to select choosing among similar online services. To help them make informed decisions, it is important to establish a service reputation measurement…
Abstract
Purpose
Users often struggle to select choosing among similar online services. To help them make informed decisions, it is important to establish a service reputation measurement mechanism. User-provided feedback ratings serve as a primary source of information for this mechanism, and ensuring the credibility of user feedback is crucial for a reliable reputation measurement. Most of the previous studies use passive detection to identify false feedback without creating incentives for honest reporting. Therefore, this study aims to develop a reputation measure for online services that can provide incentives for users to report honestly.
Design/methodology/approach
In this paper, the authors present a method that uses a peer prediction mechanism to evaluate user credibility, which evaluates users’ credibility with their reports by applying the strictly proper scoring rule. Considering the heterogeneity among users, the authors measure user similarity, identify similar users as peers to assess credibility and calculate service reputation using an improved expectation-maximization algorithm based on user credibility.
Findings
Theoretical analysis and experimental results verify that the proposed method motivates truthful reporting, effectively identifies malicious users and achieves high service rating accuracy.
Originality/value
The proposed method has significant practical value in evaluating the authenticity of user feedback and promoting honest reporting.
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Domenico Campa, Alberto Quagli and Paola Ramassa
This study reviews and discusses the accounting literature that analyzes the role of auditors and enforcers in the context of fraud.
Abstract
Purpose
This study reviews and discusses the accounting literature that analyzes the role of auditors and enforcers in the context of fraud.
Design/methodology/approach
This literature review includes both qualitative and quantitative studies, based on the idea that the findings from different research paradigms can shed light on the complex interactions between different financial reporting controls. The authors use a mixed-methods research synthesis and select 64 accounting journal articles to analyze the main proxies for fraud, the stages of the fraud process under investigation and the roles played by auditors and enforcers.
Findings
The study highlights heterogeneity with respect to the terms and concepts used to capture the fraud phenomenon, a fragmentation in terms of the measures used in quantitative studies and a low level of detail in the fraud analysis. The review also shows a limited number of case studies and a lack of focus on the interaction and interplay between enforcers and auditors.
Research limitations/implications
This study outlines directions for future accounting research on fraud.
Practical implications
The analysis underscores the need for the academic community, policymakers and practitioners to work together to prevent the destructive economic and social consequences of fraud in an increasingly complex and interconnected environment.
Originality/value
This study differs from previous literature reviews that focus on a single monitoring mechanism or deal with fraud in a broadly manner by discussing how the accounting literature addresses the roles and the complex interplay between enforcers and auditors in the context of accounting fraud.
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