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Article
Publication date: 20 October 2023

Huthaifa Al-Hazaima, Omar Arabiat and Ghassan Maayah

This study aims to examine the association between forensic accounting services (FAS) and the risk of litigation within the context of industrial firms that are publicly traded on…

Abstract

Purpose

This study aims to examine the association between forensic accounting services (FAS) and the risk of litigation within the context of industrial firms that are publicly traded on the Amman Stock Exchange by using the resource-based theory.

Design/methodology/approach

This study uses a data set consisting of 250 firm-year observations from 2017 to 2021, obtained from the annual reports of 50 selected firms. Logistic regression techniques are used to examine the specifics of the investigated relationship.

Findings

The findings strongly suggest that companies that use FAS are more likely to face increased litigation risks. This observation suggests that these firms are subject to a more thorough level of evaluation or scrutiny, which inherently increases their vulnerability to potential risks. The study incorporated several control variables such as firm age, size, profitability and working capital. However, it is noteworthy that the connection between FAS and litigation risk emerged as particularly prominent.

Research limitations/implications

Findings highlight the need for practitioners to tread cautiously with FAS. Although they provide in-depth evaluations, they can also unveil vulnerabilities, leading to increased legal action. Companies should balance the depth of FAS scrutiny against potential legal repercussions, ensuring they harness its benefits without inadvertently raising legal risks.

Originality/value

While most studies have emphasized the impact of forensic accounting on fraud, this paper covers a gap in the literature regarding the impact of FAS on litigation risks. The paper also facilitates the understanding of the correlation between firm characteristics and the likelihood of litigation.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 6 June 2023

Wei Sheng, Zhiyong Niu and Xiaoyan Zhou

The purpose of this paper is to explore the determinants of entrepreneurs’ subjective social status perception (SSP) on firm international behaviors based on the upper echelons…

Abstract

Purpose

The purpose of this paper is to explore the determinants of entrepreneurs’ subjective social status perception (SSP) on firm international behaviors based on the upper echelons theory and social class theory.

Design/methodology/approach

To test the hypotheses, the authors studied a large sample of 10,823 small- and medium-sized private Chinese enterprises from 2006 to 2014.

Findings

The results showed that entrepreneurs with higher status perception prefer international activity and firms have higher export intensity and intention. In addition, the social capital of entrepreneurs and institutional environment amplifies the positive relationship between SSP and international behavior.

Originality/value

This paper contributes to research on the upper echelon of management and extends our understanding of how managerial social characteristics influence international strategic decision-making. Besides, it also contributes to the emerging stream of social status research in international expansion studies and expand researchers’ limited understanding of the effects of social status in business settings.

Details

Chinese Management Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1750-614X

Keywords

Article
Publication date: 31 October 2023

Adriana Cordis

The paper investigates whether political geography, as measured by the degree of alignment of state politicians with the party of the USA President, has an impact on corporate…

Abstract

Purpose

The paper investigates whether political geography, as measured by the degree of alignment of state politicians with the party of the USA President, has an impact on corporate fraud convictions.

Design/methodology/approach

Prior research shows that the degree of alignment between state politicians and the president's political party is positively correlated with measures of earnings management for firms headquartered in the state. Political alignment is conducive to earnings management because it affects a firm's information and enforcement environment by increasing policy risk and promoting lenient regulatory oversight. The paper posits that this environment is also conducive to corporate fraud and tests this hypothesis using pooled ordinary least squares (OLS) and panel regressions with annual state-level data for 2003–2018.

Findings

The paper documents a positive and statistically significant relationship between political alignment and corporate fraud conviction rates by state.

Research limitations/implications

The conclusions are tempered by data limitations. First, the conviction data are available at the state level only. Second, the true level of fraud is inherently unobservable and the conviction data may not reflect the actual number of frauds that are committed.

Practical implications

Fraud examiners might benefit from considering the role of political connectedness in determining fraud risk. Although additional research is needed before making concrete recommendations, the initial indications clearly point to political connections as a potential concern.

Originality/value

The findings build on evidence that political connections influence earnings management. Rather than focusing on direct measures of connectedness, such as lobbying expenditures, the paper examines a plausibly exogenous measure: political geography.

Details

Journal of Applied Accounting Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0967-5426

Keywords

Article
Publication date: 15 September 2023

Rana Taha, Noor Taha and Husam Ananzeh

This study aims to examine the impact of firm indicators on litigation risk in the Jordanian financial sector from 2017 to 2021, where the relationship between firm indicators and…

Abstract

Purpose

This study aims to examine the impact of firm indicators on litigation risk in the Jordanian financial sector from 2017 to 2021, where the relationship between firm indicators and litigation risk in the Jordanian financial sector is a crucial area of research that can help financial institutions understand the factors that increase their probability of litigation risk.

Design/methodology/approach

The sample for this study comprised 92 publicly traded financial firms listed on the Amman Stock Exchange. The study used a quantitative research approach to analyse the relationship between four firm indicators (profitability, firm size, leverage and age) and their impact on litigation risk in the Jordanian financial sector from 2017 to 2021.

Findings

Our findings reveal that firm size has a significant positive impact on litigation risk, whereas profitability was found to have no significant impact on litigation risk. Moreover, the authors found that financial leverage substantially positively impacts litigation risk levels. However, the firm age was found to have no significant impact on litigation risk.

Originality/value

The results provide valuable insights into factors contributing to litigation risk in the Jordanian financial sector and the findings can inform strategic decisions for financial firms as they seek to manage litigation risk and improve financial performance. The study contributes to the existing literature on litigation risk by examining the impact of multiple firm indicators on litigation risk in the context of the Jordanian financial sector.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 3 October 2023

Ruwan Adikaram and Alex Holcomb

In this study, the authors investigate if analysts, as knowledgeable information intermediaries, can correctly identify bank corporate social responsibility (CSR) activities and…

Abstract

Purpose

In this study, the authors investigate if analysts, as knowledgeable information intermediaries, can correctly identify bank corporate social responsibility (CSR) activities and can reliably transmit that information to investors. Hence, the authors specifically explore if analysts perceive and behave differentially in the presence of genuine bank CSR activities (strengths). The authors also analyze if financial markets differentially assess bank CSR strengths. The authors further explore the viability of focusing on analyst and financial markets to validate genuine bank CSR strengths.

Design/methodology/approach

The authors use COMPUSTAT and CRSP for firm and financial data, I/B/E/S for analyst reporting data and MCSI Research KLD for CSR data. The sample consists of 329 distinct banks and 2,525 bank-year observations from 2003 to 2016. The primary CSR score is the total number of CSR strengths less the total number of CSR concerns, across six of the seven dimensions for each firm in each year of the sample (Adjusted CSR Score). In addition, the authors estimate all the analyses with dis-aggregated measures of total CSR strengths and total CSR concerns (Adjusted Total Strength Score).

Findings

The authors find that analysts correctly distinguish and construe bank CSR strengths from CSR concerns. Specifically, bank CSR strengths increase analyst following and forecast accuracy, while decreasing analyst forecast dispersion. The authors further find that bank CSR strengths increase bank market returns. These results are reversed for bank CSR concerns. Additionally, the authors demonstrate that this method using knowledgeable intermediaries can help validate bank CSR strengths.

Research limitations/implications

The sample is limited to US banks and financial markets. The regulatory and information environment is likely to be different from global or emerging markets. However, since banks in many countries aspire to emulate the US banks, these results would be a precursor of banking sectors conditions in emerging markets. Additionally, the availability of data limits the sample to a period that ends in 2016. To the extent that the importance of ESG and CSR concerns has increased in the intervening time, the results may not accurately reflect the current state of the market.

Practical implications

This investigation benefits researchers, customers, banking executives, regulators and activist groups. First, the authors show that in addition to customers, analysts and the financial markets appreciate bank CSR strengths. Second, despite sophisticated financial reporting by banks, analysts correctly distinguish and construe bank CSR strengths. Third, the authors demonstrate a method for bank marketing researchers to validate genuine bank CSR activity, as well as provide additional support for customer related bank CSR outcomes. Fourth, the findings highlight the importance for banks to have high-quality CSR reporting. This might be especially helpful to a bank rebuilding its reputation after a CSR failure. Finally, this investigation using US banks could serve as a precursor for future bank CSR research and help develop CSR reporting guidelines for banks in emerging economies.

Social implications

This investigation benefits researchers, customers, banking executives, regulators and activist groups.

Originality/value

This investigation benefits researchers, customers, banking executives, regulators and activist groups. First, the authors show that in addition to customers, analysts and the financial market appreciates bank CSR strengths. Second, despite sophisticated financial reporting by banks, analysts correctly distinguish and construe bank CSR strengths. Third, the authors demonstrate a method for bank marketing researchers to validate genuine bank CSR activity, as well as provide additional support for customer related bank CSR outcomes. Fourth, the findings highlight the importance for banks to have high-quality CSR reporting. This might be especially helpful to a bank rebuilding its reputation after a CSR failure. Finally, this investigation using US banks could serve as a precursor for future bank CSR research and help develop CSR reporting guidelines for banks in emerging economies.

Article
Publication date: 4 July 2023

Osama EL-Ansary and Aya M. Ahmed

This study aims to analyze how cultural variations impact the relationship between long-term debt use and managerial overconfidence. Investigate into how the relationship between…

Abstract

Purpose

This study aims to analyze how cultural variations impact the relationship between long-term debt use and managerial overconfidence. Investigate into how the relationship between growth prospects and the utilization of long-term debt is moderated by managerial overconfidence. In addition, the research explores the moderating effect of managerial overconfidence on cash flow levels.

Design/methodology/approach

The study used long-term debt as the dependent variable and used generalized method of moments–instrumental variables regression analysis to examine data from 356 firms across 11 Middle East and North Africa (MENA) countries and 5 industries between 2013 and 2021.

Findings

CEO overconfidence moderately boosts the link between long-term debt maturity and growth potential, particularly for firms with limited internal funding. Cultural factors, such as masculinity and uncertainty avoidance, play a significant role in moderating the relationship between managerial overconfidence and debt maturity choices.

Practical implications

To understand the impact of managerial overconfidence on a company’s debt maturity decision, it is essential for boards and shareholders to consider and monitor the CEO’s behavioral traits, particularly for growing companies. Regulators and policymakers must also be wary of the risk of internal control weakening due to overconfident managers, especially in MENA markets.

Originality/value

The authors’ contribution to the literature lies in exploring how managerial overconfidence moderates the agency conflict between shareholders and debtholders in MENA region firms, which has received minimal attention in previous studies. This study expands the knowledge of the impact of managerial overconfidence on emerging economies and provides evidence that national culture plays a vital role in determining debt financing decisions.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 21 July 2023

Natalie Elms and Pamela Fae Kent

The authors investigate the adoption of nomination committees in Australia and identify the managerial power perspective as one explanation for firms not establishing nomination…

Abstract

Purpose

The authors investigate the adoption of nomination committees in Australia and identify the managerial power perspective as one explanation for firms not establishing nomination committees. A positive outcome of establishing a nomination committee from the perspective of board diversity is also examined.

Design/methodology/approach

The authors adopt an archival approach by collecting data for firms listed on the Australian Securities Exchange (ASX) during the period 2010 to 2018. The authors establish the prevalence of nomination committees for small medium and large Australian firms. Regression analyses are used to determine whether the power of the chief executive officer (CEO) influences the adoption of a nomination committee. The association between having nomination committee and board diversity is also analyzed using regression analyses.

Findings

Less than half of firms adopt a nomination committee. Larger firms are more likely to adopt a nomination committee than medium and smaller sized firms. Firms with less powerful CEOs are more likely to adopt a nomination committee. Adoption of a nomination committee is also associated with greater board tenure dispersion and board gender diversity in medium and smaller sized firms.

Originality/value

Evidence on nomination committees provides original research that extends previous research focusing on the audit, risk and remuneration committees and samples restricted to large firms. The nomination committee has an important role to play in the appointment of directors yet limited evidence exists of the adoption rate, explanation for non-adoption and benefits of adoption. The authors add to this evidence.

Details

Journal of Accounting Literature, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0737-4607

Keywords

Article
Publication date: 1 December 2022

Mahdi Salehi, Mohammed Ahmed Jabbar and Saleh Orfizadeh

This study investigates the relationship between management's psychological characteristics (managers' narcissism, overconfidence and managers' myopia) and earnings management in…

Abstract

Purpose

This study investigates the relationship between management's psychological characteristics (managers' narcissism, overconfidence and managers' myopia) and earnings management in the pre-Islamic State of Iraq and Syria (ISIS) and post-ISIS eras.

Design/methodology/approach

A multivariate regression model was used to test the hypotheses. The research hypotheses were tested using a sample of all companies listed on the Iraqi Stock Exchange from 2014 to 2020.

Findings

Findings indicate a positive and significant relationship between managers' narcissism, overconfidence and myopia with accrual and real earnings management. According to the results, the ISIS weakens the relationship between managers' narcissism, managers' overconfidence and managers' myopia with accrual and real earnings management.

Originality/value

Because no study has addressed this issue in Iraq so far, the results of this research can provide helpful information for its users and improve the knowledge and science in this area.

Details

Journal of Facilities Management , vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1472-5967

Keywords

Article
Publication date: 12 December 2023

Peng Ning, Lixiao Geng and Liangding Jia

Drawing on bargaining power and the inequality aversion perspective, this study aims to probe employees’ influence on addressing income inequality between top executives and…

Abstract

Purpose

Drawing on bargaining power and the inequality aversion perspective, this study aims to probe employees’ influence on addressing income inequality between top executives and nonexecutive employees. Meanwhile, it examines the moderating role of employee-related factors and plan attributes.

Design/methodology/approach

This study uses a staggered difference-in-differences design with a propensity scoring match approach and verification of the parallel trend assumption to test the hypotheses.

Findings

The results support the hypothesis that employee stock ownership plans (ESOPs) significantly reduce within-firm income inequality. The negative effect is amplified by both the presence of trade unions and the unemployment rate at the regional level, as well as the duration of the lock-in period and the scale of participants within the stock ownership plan.

Practical implications

This study has implications for income inequality research and ESOP design and provides theoretical support for policymakers and corporate governance.

Originality/value

This study contributes to the literature on income inequality by examining the implementation of ESOPs from the employee perspective. Furthermore, it extends the current literature by investigating the strengthening effects of regional factors and ESOP attributes on the relationship between ESOPs and income inequality. The conclusions provide new empirical evidence to promote the effective implementation of ESOPs by combining internal and external factors.

Details

Chinese Management Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1750-614X

Keywords

Article
Publication date: 1 December 2023

Wan Ahmad Fauzi Wan Husain, Mohamad Reeduan Mustapha, Yudi Fernando and Siti Aisyah Ahmad Zailani

The purpose of this study is to propose a world-class good governance ethics framework that leads to better corporate performance. ethics among managers, executives and members of…

Abstract

Purpose

The purpose of this study is to propose a world-class good governance ethics framework that leads to better corporate performance. ethics among managers, executives and members of the board of directors working in public-listed companies brings grave concern because of the increasing number of criminal acts reported by the Security Commission of Malaysia.

Design/methodology/approach

This study introduces a world-class good governance ethics framework for curbing criminal acts in public-listed companies in Malaysia. This study used a mixed method to gather data, and the methods used are appropriate for answering the research questions based on the World-Class Good Governance Ethics framework.

Findings

The finding of this study reveals high expectations for a corporate organization to improve individual and team performance while undertaking their corporate responsibilities, and a matter of choice, to adopt world-class good governance ethics in their policies and practices.

Practical implications

This study could be a reference for corporate management to regulate policies monitoring management's and employees' conduct at the workplace. This study's theoretical and practical significance would guide the stakeholders in corporate management to regulate governance policies based on the right ethical values and promote personalities with high integrity in management conduct.

Originality/value

This study promotes a world-class good governance ethics framework in curbing criminal acts for better corporate performance. This new framework is formulated based on the concept of a caliph and other essential elements envisaged by the Quranic verses.

Details

Journal of Islamic Accounting and Business Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1759-0817

Keywords

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