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Book part
Publication date: 16 September 2022

Lovinska Liudmyla and Kucheriava Maria

Introduction: In the context of globalisation processes, the necessity to create appropriate information support for management decisions at various levels becomes…

Abstract

Introduction: In the context of globalisation processes, the necessity to create appropriate information support for management decisions at various levels becomes increasingly important: at the international, national and enterprise levels. The source of such data is financial reporting. The last leads to increase attention from key users (investors, lenders, other users) to the reliability and quality of financial reporting data. The study of scientific literature and best foreign practices made it possible to identify problems of the theoretical, organisational and methodological background of preparing high-quality financial statements and their assessment, particularly the lack of a unified interpretation of the financial reporting quality concept. The necessity to identify a theoretical basis for assessing financial reporting quality has led to the relevance of this study.

Aim: Scientific substantiation and improvement of theoretical provisions of methodology development for financial reporting quality assessment.

Methods used within the study are the following: Analysis, synthesis, operational approach, bibliographic analysis, generalisation.

Findings: The application of an operational approach to the formulation of the definition of financial reporting quality has made it possible to create the basis for its assessment. This approach involves descriptions of the principles of clarity and uniformity. The authors define the concept of ‘financial reporting quality’, formulating the theoretical principles for financial reporting assessment as the process of establishing compliance of financial statements with a specific list of qualitative characteristics.

Details

The New Digital Era: Other Emerging Risks and Opportunities
Type: Book
ISBN: 978-1-80382-983-8

Keywords

Article
Publication date: 18 October 2022

Amitav Saha

This paper presents a systematic literature review, including content and bibliometric analyses, of the impact of a crisis on financial reporting quality. In addition…

Abstract

Purpose

This paper presents a systematic literature review, including content and bibliometric analyses, of the impact of a crisis on financial reporting quality. In addition, this review identifies emerging research themes and provides future directions.

Design/methodology/approach

The adopted systematic literature review approach finds 29 highly cited articles on the effect of a crisis on financial reporting quality, with an additional seven studies for analysis identified in a review of emerging literature.

Findings

This study consolidates prior research findings on financial reporting quality during a crisis under four major themes: (1) earnings quality and its determinants; (2) audit quality around a crisis; (3) conservatism, valuation effects and corporate governance; and (4) financial stability and regulations. Mixed and inconclusive findings are documented for most themes, suggesting that this literature is still in its infancy and that room exists for further theoretical refinement.

Practical implications

The study's findings potentially have important ramifications for managers, standard setters, government regulators and policymakers. By highlighting examples of changes in firms' reporting practices during a crisis, the study provides a context in which to understand the influence or potential influence of the current coronavirus (COVID-19) pandemic on firms' financial reporting practices.

Originality/value

To the best of the author's knowledge, this is the first study to systematically review and synthesise prior research findings on the quality of financial reporting during economic crises. The study identifies many unexplored research areas regarding crises, with possible direct implications for financial reporting practices. The impact of these issues needs to be carefully considered and understood, with the current coronavirus pandemic demonstrating that firms have the opportunity to compromise ethical aspects of their decisions as they experience pressure to maximise profits.

Details

Journal of Accounting Literature, vol. 44 no. 2/3
Type: Research Article
ISSN: 0737-4607

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Book part
Publication date: 26 October 2020

Resat Aydin, Ferhat D. Zengul, Jose Quintana and Bunyamin Ozaydin

Purpose – The numbers of health care transparency initiatives are increasing. Despite the growing availability of quality data, there seems to be a shortage of evidence…

Abstract

Purpose – The numbers of health care transparency initiatives are increasing. Despite the growing availability of quality data, there seems to be a shortage of evidence about the effects and effectiveness of such initiatives. The aim of this systematic review is to document the effects of transparency, defined as the public release of quality performance data, on hospital care outcomes.

Design/methodology/approach – Through a review of the literature, we chose 46 keywords to use in our searches and focused on empirical studies published in English between 2010 and 2015. The use of combinations of these keywords in searches of four databases (PubMed, Scopus, Web of Science, and the Cochrane Library) generated 13,849 publications. The removal of duplicates and exclusion of studies that were not empirical or not relevant to transparency and quality resulted in 39 studies to be reviewed.

Findings – Our review of the literature confirmed the growth of health care transparency efforts, led by the United States, and found mixed results regarding the effects of transparency on hospital care outcomes. For example, mortality, the most frequently researched performance measure (n = 15), exhibited this mixed pattern by having studies showing a reduction (n = 4), increase (n = 1), mixed findings (n = 4), and no significant relationship (n = 6) as a result of public release. We also found a limited number of articles related to unintended consequences of public reporting. When compared with earlier systematic reviews, there seems to be a trend in the reduction of unintended consequences. Therefore, we recommend exploration of this potential trend in future studies empirically.

Practical Implications – The research findings summarized in this systematic review can be used to understand the results of existing transparency efforts and to develop future transparency initiatives that may better enhance hospital quality performance.

Originality/value – This is the latest and most comprehensive systematic review summarizing the effects of transparency of quality metrics on hospital care outcomes.

Book part
Publication date: 21 October 2020

Annkatrin Mies and Peter Neergaard

In 2014, the European Union (EU) adopted the non-financial reporting Directive (2014/95/EU) making the disclosure of certain non-financial topics mandatory for large…

Abstract

In 2014, the European Union (EU) adopted the non-financial reporting Directive (2014/95/EU) making the disclosure of certain non-financial topics mandatory for large listed companies. They are required to report on policies, actions and outcomes regarding their environmental impact, social and employee matters, impact on human rights and corruption. Denmark introduced mandatory corporate social responsibility (CSR) reporting already in 2009, while Germany had no specific legislation on CSR reporting before 2017. Some authors allege that regulation positively impacts CSR reporting, while others argue that the voluntary nature of CSR reporting is essential (Romolini, Fissi, & Gori, 2014). Critics of mandatory reporting claim that non-financial reporting should develop bottom-up, as mandatory one-size-fits-all solutions are inappropriate given the differences among companies (ICC, 2015). The aim of this chapter is to evaluate the effect of legislation on reporting quality by comparing Denmark with a long tradition for mandatory reporting and Germany introducing mandatory rather recently. However, a rich body of literature exists on factors impacting CSR reporting other than legislation. These are among others: firm size, ownership structure, industrial sector and culture (Hahn & Kühnen, 2013.)

The chapter applies a content analysis of 150 CSR reports from German and Danish listed companies between 2008 and 2017 from four different industrial sectors. The chapter finds that mandatory reporting improves overall report quality by lifting the quality floor, yet, without lifting the quality ceiling. Size is important as improvements in reporting are largest in small and medium-sized companies. Companies in environmentally sensitive sectors tend to disclose more relevant environmental information than companies in less sensitive sectors. Both culture and ownership structure has a moderating effect on report quality.

Details

Governance and Sustainability
Type: Book
ISBN: 978-1-80043-151-5

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Article
Publication date: 15 August 2022

Vincent Tawiah and Hela Borgi

This paper aims to examine the effect of eXtensible Business Reporting Language (XBRL) adoption on financial reporting quality at the country-level (developing and…

Abstract

Purpose

This paper aims to examine the effect of eXtensible Business Reporting Language (XBRL) adoption on financial reporting quality at the country-level (developing and developed countries).

Design/methodology/approach

This study uses data from 98 developed and developing countries between 2005 and 2018. This study collected data from various sources such as the World Economic Forum, World Development Indicators, World Governance Indicators and XBRL website.

Findings

The results show that XBRL is associated with an increased financial reporting quality. However, the relationship is stronger in developing countries than in developed countries. This study also finds that the results remain the same after accounting for years of XBRL experience and the effect of accounting globalisation. The results are consistent with the assumption that XBRL-formatted financial statements improve information efficiency through increased searching efficiency, quality of display and comparability. The results are robust to alternative econometric modifications such as controlling for country, year effects and endogeneity.

Practical implications

The results can potentially assist the XBRL promoters and regulators in expeditiously assessing the benefits of XBRL and advocating its adoption by many countries. The findings offer more motivations for regulators around the world to mandate this new filing standard format.

Originality/value

This study contributes to the literature by providing empirical evidence on the consequences of XBRL at the country level. This study provides evidence on an important question of whether the XBRL, new information technology in the accounting field, can play a useful role in improving financial reporting.

Details

Accounting Research Journal, vol. 35 no. 6
Type: Research Article
ISSN: 1030-9616

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Book part
Publication date: 22 July 2021

Oyerogba Ezekiel Oluwagbemiga

The main objective of this study is to investigate whether adoption of International Financial Reporting Standards (IFRS) improve the quality of financial reporting in…

Abstract

The main objective of this study is to investigate whether adoption of International Financial Reporting Standards (IFRS) improve the quality of financial reporting in Nigeria. Financial reporting quality was measured in terms of fundamental qualitative characteristics such as relevance and faithful representation and enhancing qualitative characteristics such as understandability, comparability, verifiability, and timeliness as contained in the conceptual framework. The study was conducted on a sample of 162 companies listed on the Nigerian Stock Exchange. A compound measurement tool in form of an index was developed to comprehensively assess the quality of financial reporting based on information disclosed in the financial statement of the selected companies. From both univariate and multivariate analysis, I found strong evidence suggesting that accounting standard used in the preparation of financial statement have significant influence on the quality of financial report of the reporting entity. The result persists for all the three models (overall financial reporting quality, fundamental, and enhancing qualitative characteristics) tested in this analysis. The result also revealed that apart from firm age and firm growth, most of the firm-specific variables investigated have statistically significant influence on the financial reporting quality.

Article
Publication date: 30 June 2022

Arash Arianpoor and Zahra Sahoor

This study aims to mainly explore the impact of business strategy and annual reports readability on financial reporting quality in Tehran Stock Exchange (TSE).

Abstract

Purpose

This study aims to mainly explore the impact of business strategy and annual reports readability on financial reporting quality in Tehran Stock Exchange (TSE).

Design/methodology/approach

The sample comprised 160 companies listed in TSE from 2014 to 2020. Five proxies (including two accounting-based attributes and two market-based attributes) were used to measure financial reporting quality. In this study, cost leadership and differentiation strategies were considered and Fog index was used to measure the annual report readability.

Findings

The results showed that in all methods of calculating financial reporting quality, cost leadership strategy, differentiation strategy and annual report readability had a positive and significant impact on financial reporting quality. Also, only at the high level of the differentiation strategy, the annual reports readability influenced financial reporting quality. In addition, at all levels of high and low annual report readability, cost leadership strategy affected financial reporting quality, but only in companies with a high annual report readability, the differentiation strategy affected financial reporting quality. Only for companies with a low readability, the annual report readability affected financial reporting quality.

Originality/value

To the best of the authors’ knowledge, no study had examined the impact of business strategy and annual report readability on financial reporting quality at the core of the present study. Furthermore, little was known about the strategic choices made in Iran. So, the research filled this gap in TSE. This study provided insights for policymakers to enhance the readability and reduce the complexity of annual reports.

Details

Journal of Asia Business Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1558-7894

Keywords

Article
Publication date: 28 April 2022

Kwadjo Appiagyei, Hadrian Geri Djajadikerta and Saiyidi Mat Roni

This study aims to examine the relationship and effect of integrated reporting (IR) quality on sustainability performance and explore the relationships and effects of…

Abstract

Purpose

This study aims to examine the relationship and effect of integrated reporting (IR) quality on sustainability performance and explore the relationships and effects of corporate governance mechanisms on IR quality and sustainability performance.

Design/methodology/approach

Partial least squares structural equation modelling (PLS-SEM) was used in a longitudinal study by following the steps in Roemer’s Evolutionary Model on a sample of listed companies on the Johannesburg Stock Exchange (JSE) in South Africa for a period from 2011 to 2016.

Findings

This study finds board effectiveness and external audit quality to be important determinants of IR quality. It also observes a strong effect of the IR quality on sustainability performance.

Originality/value

This study contributes by using and analysing a longitudinal data set from JSE, currently the only capital market globally requiring the mandatory IR application since 2010.

Details

Meditari Accountancy Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2049-372X

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Article
Publication date: 10 June 2021

Olayinka Erin and Alex Adegboye

This study aims to examine the impact of corporate attributes on integrated reporting quality of top 100 listed firms in South Africa.

Abstract

Purpose

This study aims to examine the impact of corporate attributes on integrated reporting quality of top 100 listed firms in South Africa.

Design/methodology/approach

With a sample of the top 100 listed firms in South Africa, this paper drew insights from the legitimacy and stakeholder theory to examine the impact of corporate attributes on integrated reporting quality. This paper measured integrated reporting quality based on the International Integrated Reporting Council framework of 2013. Corporate attributes were determined taking into consideration three broad perspectives (board committee attributes, firm attributes and audit committee attributes). This paper analyzed the data using content analysis, ordered probit regression and logistic regression method.

Findings

Results indicate that board committee attributes, firm attributes and audit committee attributes have a positive and significant relationship with integrated reporting quality. Additional analysis reveals that external assurance contributes to the quality of integrated reporting. The findings empirically revealed that most South African firms have intensified efforts toward the quality and full disclosure of integrated reporting framework.

Research limitations/implications

The study was limited to a sample size of 100 firms, which is country-specific, however, it sets the tone for future empirical research on the subject matter. This study provides an avenue for future research in the area of corporate attributes and integrated reporting quality in other emerging countries, especially other African countries.

Practical implications

The result of this study provides practical implications in the areas of good corporate governance, corporate reporting and integrated reporting. The empirical approach used in this study emphasizes the need for corporate organizations to introduce integrated reporting practices into their reporting cycle. The finding implies that non-compliance with integrated reporting by corporate organizations may have an adverse effect on corporate growth, corporate sustainability and corporate reputation in the long run.

Originality/value

The work extends prior research on the subject of integrated reporting in South Africa. Also, this study broadens the application of legitimacy and stakeholder theory in influencing corporate organizations to disclose relevant information that could aids stakeholders’ interest.

Details

Journal of Financial Reporting and Accounting, vol. 20 no. 3/4
Type: Research Article
ISSN: 1985-2517

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Article
Publication date: 31 August 2012

Ester Gras‐Gil, Salvador Marin‐Hernandez and Domingo Garcia‐Perez de Lema

The purpose of this paper is to examine the relationship between a firm's internal audit function (IAF) and the quality of its financial reporting. Since regulations on…

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Abstract

Purpose

The purpose of this paper is to examine the relationship between a firm's internal audit function (IAF) and the quality of its financial reporting. Since regulations on corporate governance were introduced, numerous national and international bodies have emphasized the fundamental role of the IAF in the financial reporting process, especially since it generally leads to higher quality reporting.

Design/methodology/approach

The paper uses questionnaires sent to internal audit directors of Spanish banks.

Findings

Banks with high quality financial reporting have greater collaboration between internal and external auditors in the annual audit. Greater involvement of internal audit in reviewing financial reporting leads to improved quality financial reporting.

Research limitations/implications

Besides the usual caveats of survey research, there are limitations to this study. First, the problem of response bias may exist. Second, the 66 per cent survey response rate may mean that respondents have larger or better‐developed internal audit functions, affording them more opportunity or motivation to respond to the survey. Hence, the results obtained through the survey may not be generalizable to non‐respondents.

Practical implications

The findings are relevant for bank regulators, management, boards of directors, and investors. In the current discussion on transparency, integrity and quality of financial reporting, these findings help define the issues.

Originality/value

Previous empirical studies analyse the quality of financial reporting with actors in the corporate governance mosaic (board of directors, audit committee and external audit), but they do not do so directly with the IAF. This paper extends prior banking literature that analyses quality financial reporting along with other variables, but not internal audit.

Details

Managerial Auditing Journal, vol. 27 no. 8
Type: Research Article
ISSN: 0268-6902

Keywords

1 – 10 of over 196000