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1 – 10 of 718Su Li, Tony van Zijl and Roger Willett
Prior studies have found that managers adjust operational activities to tackle climate risk. However, the effects of climate risk on accounting practices are largely ignored in…
Abstract
Purpose
Prior studies have found that managers adjust operational activities to tackle climate risk. However, the effects of climate risk on accounting practices are largely ignored in the literature. This paper investigates whether and how climate risk influences managers’ decision-making on the level of accounting conservatism and explains the results based on two competing channels: valuation demand and contracting demand.
Design/methodology/approach
Using firm level climate risk measures, we build a modified Basu (1997) model to conduct our econometric tests. In the baseline model, we use earnings before extraordinary items as the dependent variable, referred to as the earnings model. We control for different levels of fixed effect to identify the shocks of climate risk and mitigate potential concerns on endogeneity and bias in the model. A series of robustness tests provide supporting evidence for our baseline results and our explanation.
Findings
Using a sample of 35,832 firm-year observations on listed US firms over the period 2002 to 2019, we find that the perception of climate risk drives managers to choose the less conservative accounting policies. We conclude that the results are consistent with the valuation demand explanation but inconsistent with the contracting demand explanation.
Originality/value
The study provides additional evidence on how managers respond to climate risk by adjusting their corporate polices, specifically accounting policies. Our findings contradict the results of prior studies. We explain our results from a unique perspective. Overall, the study provides valuable insights for academics, investors, managers and policymakers.
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Eric Owusu Boahen and Emmanuel Constantine Mamatzakis
There are variations in religious social norms and legal environments around the world. In this paper, we aim to examine the interaction between variations in religious social…
Abstract
Purpose
There are variations in religious social norms and legal environments around the world. In this paper, we aim to examine the interaction between variations in religious social norms and legal environments on real activities manipulations and expense misclassification using a global sample of 63 countries. Our inquiry is motivated by a paucity of research on the interaction between legal environment and religion on earnings management practices in an international setting.
Design/methodology/approach
This study draws on a global sample of 63 countries to examine the effect of variations in religious social norms and legal environments on the trade-off between expense misclassification and real activities earnings management practices. Firm-specific financial data come from Global Compustat. Religion data are obtained from World Values Surveys of the World Bank. We obtain legal environment scores from the International Country Risk Guide.
Findings
Findings suggest that the interaction between law and religion serves as constraints on both classification shifting and real activities manipulation around the world. We find that religion strengthens the weak legal environment and the strong legal environment strengthens the weak religious environment to decrease both real activities manipulation and classification shifting when law and religion interact in an international setting. Therefore, our results contradict Zang's (2012) earnings management trade-off evidence. Again, our results contradict Malikov et al.’s (2018) evidence that mandatory International Financial Reporting Standards (IFRS) adoption is associated with increased real activities manipulation.
Research limitations/implications
The study is limited to 63 countries limiting the generalizability of the findings.
Originality/value
This study provides novel evidence and shows that there is a link between law and religion. The interaction between law and religion decreases expense misclassification and real activities manipulation. We contribute that the interaction between religion and law benefits firms and increases shareholder value as real activities manipulation decreases. Therefore, strengthening the legal environment will complement religion, IFRS and other monitoring mechanisms put in place to mitigate unethical expense misclassification and real activities earnings manipulation around the world.
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Irfana Rashid and Aashiq Hussain Lone
Organic food consumption has received great attention due to the increase in consumer environmental and health concerns. This study intends to analyse how customers' green…
Abstract
Purpose
Organic food consumption has received great attention due to the increase in consumer environmental and health concerns. This study intends to analyse how customers' green purchasing intentions for organic food are affected by internal factors of attitude and health consciousness and external factors of social norms and environmental concern, as well as how green trust operates as a moderator between green purchase intention and actual purchase.
Design/methodology/approach
A quantitative research methodology was employed in this study. The data (n = 323) were gathered via a self-administered questionnaire. The respondents, who were current purchasers of organic food, were chosen through a purposive sampling technique. Data were analysed using exploratory factor analysis and structural equation modelling with the aid of IBM SPSS 25.0 and AMOS 25.
Findings
The results reveal that customers' green purchase intention for organic products is positively influenced by internal factors (attitude and health consciousness) and external factors (social norms and environmental concern). This study also shows the moderating effect of green trust on intention and action, demonstrating the necessity of building green trust among customers to diminish green purchasing inconsistency.
Practical implications
The study's results have ramifications for producers of organic goods, merchants and market oversight organizations. Establishing a viable strategy while considering customers' concerns about health and the environment is necessary. The formulated strategy must target specific customer niches, therefore strengthening customers' trust in and understanding of organic food items, which will in turn diminish green purchasing inconsistency in the organic industry.
Originality/value
This study contributes to the existing literature by extending the Theory of Planned Behaviour model to organic food consumption and by visualizing how various factors (internal, external and green trust) affect a consumer's inclination to make organic food purchases. The authors added to the empirical evidence that green trust plays a crucial role in stimulating green buying intentions into behaviour and ultimately diminishing green purchasing inconsistency.
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Moniruzzaman Sarker, Siti Munerah, Angie Teh Yinyi, Nafisa Kasem and Imranul Hoque
This paper aims to understand consumption values buying from informal retail markets (i.e., street vendor retailing). It also explores why consumers prefer daily necessary goods…
Abstract
Purpose
This paper aims to understand consumption values buying from informal retail markets (i.e., street vendor retailing). It also explores why consumers prefer daily necessary goods from the informal compared to the formal retail market (such as supermarkets, retail chain outlets and e-commerce).
Design/methodology/approach
Employing the qualitative research approach, this study collected data from nine respondents in two areas in Malaysia. Data were collected using semi-structured interviews and analysed using the thematic analysis technique. Only representative verbatim codes were presented under five themes of consumption value theory.
Findings
Consumers are triggered by the convenience, ease, and exclusive products (conditional value), friendly and known relationship with informal sellers, as well as the availability of some particular food items (emotional value) and lower price and freshness of groceries (functional value) while buying from informal compared to formal retail vendor.
Research limitations/implications
This study provides knowledge implications to the consumption value theory. Functional, emotional, and conditional values are the dominant components of purchase behaviour in informal compared to formal retail channels. Social values are common, whereas epistemic value is more substantial in formal retailing.
Practical implications
Findings are helpful for informal retail businesses to understand consumers' buying behaviour. Informal retail owners should ensure that commodities are fresh, highly affordable and available in the local communities. Building a friendly relationship with consumers would be a key to the success of this retail sector.
Social implications
Authorities should support informal sellers to set up mobile retail stores in residential areas. This effort would offer greater convenience to both parties in informal businesses and ensure informal sellers' financial and social well-being.
Originality/value
Despite the widespread acceptance of buying goods from informal retail vendors, research on consumption value in informal retailing is largely overlooked. Previous research primarily deals with formal market phenomena due to their size and economic contribution. Consequently, current literature lacks an understanding of why consumers prefer to buy from informal retail vendors for their daily groceries when the formal retail channel could fulfil similar needs. Using a qualitative research design, this research uncovers consumers' buying motives from informal compared to formal vendors.
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Milos Bujisic, Vanja Bujisic, Haragopal Parsa, Anil Bilgihan and Keyin Li
Hospitality firms aim to increase their profits by implementing a variety of marketing activities, including using decoy pricing to provide alternative choices for consumers…
Abstract
Purpose
Hospitality firms aim to increase their profits by implementing a variety of marketing activities, including using decoy pricing to provide alternative choices for consumers. Decoys are relatively higher-priced offerings that signal lower value than the other offerings in the consideration set. The purpose of this research is to investigate the influence of decoy pricing on consumer choices across various contexts in the foodservice and hotel industries.
Design/methodology/approach
Across the pilot and four main studies, the current research employs a sequential exploratory mixed-method design to investigate the influence of decoy pricing in the foodservice and lodging industries. The qualitative part of this research was based on two focus groups, followed by a pilot study and four main study experiments.
Findings
The results show that decoy pricing escalates consumers’ choices of more expensive product bundles in both restaurant and hotel cancellation policy contexts. However, decoy pricing does not increase the selection of more expensive hotel product bundles.
Originality/value
While decoy pricing has been utilized as an effective revenue maximization strategy for product placement in retail stores, less is known about how promotional advertisements with decoy offers influence hotel and restaurant customers to choose more costly options. Specifically, this is the first study that explores whether decoy pricing and product/service bundling can encourage customers to select more expensive offers in hotel and restaurant contexts, considering the types of hospitality bundles that may limit this effect.
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Michelle Jayman and Naomi Field
School-based social and emotional learning (SEL) programmes aim to improve pupils’ decision-making, emotional regulation and social skills. A body of international evidence has…
Abstract
School-based social and emotional learning (SEL) programmes aim to improve pupils’ decision-making, emotional regulation and social skills. A body of international evidence has demonstrated the effectiveness of this type of early intervention for improving both mental health and educational outcomes. Nonetheless, if evidence of a programme’s effectiveness is to be usefully applied, educators need to know not only what works but how, and this is the theme of the chapter. Clearly, collaboration and consultation with teachers are essential to properly develop school-based provision. This case study introduces the Book of Beasties SEL intervention (which is based on a mental wellness card game and linked wellbeing activities) and charts its implementation in a primary school setting. Challenges and facilitators associated with embedding the programme are considered through the first-hand reflections of a primary school teacher who was also the delivery agent. Practical recommendations for a smooth and effective implementation, as well as pitfalls to avoid, are provided and can be applied to a local setting.
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Rangson Chirakranont and Olimpia C. Racela
After reading and discussing this case study, students will be able to explain the concept of diffusion of innovation and predict how the passion fruit-infused vinaigrette (PFIV…
Abstract
Learning outcomes
After reading and discussing this case study, students will be able to explain the concept of diffusion of innovation and predict how the passion fruit-infused vinaigrette (PFIV) might spread throughout the Thai market; analyze the market environment for condiments in Thailand and identify specific opportunities that Preedha Vinchit and her team should consider for the successful launch of the PFIV; interpret both qualitative and quantitative data gathered by the new product development (NPD) team and discuss its implications for the product’s market strategy and development; and critique the initial launch plan proposed by Krit Anon, suggest practical strategies and calculate the break-even point necessary to meet the project’s financial goals.
Case overview/synopsis
During July 2023, Vinchit, product marketer at the Thani Food Institute (TFI), faced a critical decision regarding the launch of the APFIV. Developed from TFI’s patented passion fruit peel powder, the PFIV offered functional benefits and addressed the sustainable use of passion fruit resources. As COVID-19 restrictions eased, TFI’s board of advisors anticipated a successful market entry for PFIV. Anon, culinologist and chef behind PFIV’s formulation, expressed keen interest in launching it independently with a startup investment of THB 500,000 (US$14,388). Vinchit, with market research and home-use test results indicating positive consumer reception in hand, contemplated whether to proceed with a launch plan of TFI’s design or endorse Anon’s entrepreneurial venture. Critical considerations included market viability, strategic partnerships, target demographics and marketing strategies encompassing pricing, distribution and promotional campaigns. The decision hinged on maximizing PFIV’s market potential amidst Thailand’s robust condiment consumption and growing health awareness.
Complexity academic level
This case study can be used in undergraduate and graduate courses in entrepreneurship, food product development, marketing strategy, market research and innovation on topics including NPD, opportunity identification, concept testing, consumer research analysis, marketing strategy formulation, business/financial analysis and launch strategies. This case study may be more useful in the middle or later parts of a course or module when an instructor is focusing on any or all stages of the NPD process and the strategic decisions, particularly for aspiring entrepreneurs with limited resources. Additionally, students should have developed at least some preliminary understanding of qualitative and quantitative research methods. This case study has been very effective in demonstrating various organizational processes and decision-making tools, which allow students to apply strategy frameworks and systematically evaluate several alternatives.
Supplementary materials
Teaching notes are available for educators only.
Subject code
CSS 3: Entrepreneurship.
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Thuy Tran and Trung K. Do
The purpose of this study is to examine the effect of terrorist attacks on tax avoidance. Further, the authors identify the possible channel leading to our main result and examine…
Abstract
Purpose
The purpose of this study is to examine the effect of terrorist attacks on tax avoidance. Further, the authors identify the possible channel leading to our main result and examine the role of social pressure.
Design/methodology/approach
Data pertaining to terrorist attacks within the USA are procured from the Global Terrorism Database. The final sample consists of 45,524 firm-year observations from 1993 to 2017. The methodology uses ordinary least squares regressions.
Findings
The authors find that firms located in close proximity to terrorist attacks (i.e. impact firms) significantly decrease their tax avoidance practices after the attacks. The authors further find that these impact firms are willing to pay more taxes post attack when their headquarters are located in higher social capital regions.
Originality/value
Studies have mainly focused on the macroeconomic effects of terrorism, and only recently have researchers shifted their focus to firm-level impacts. The authors provide strong evidence that extends the second line of the literature by exploring corporate tax activities attributed to terrorist events.
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Yu Zhou, Jiaxin Liu and Dongliang Lei
This paper aims to investigate whether the two dominant financial reporting regimes, US Generally Accepted Accounting Principles (US GAAP) and International Financial Reporting…
Abstract
Purpose
This paper aims to investigate whether the two dominant financial reporting regimes, US Generally Accepted Accounting Principles (US GAAP) and International Financial Reporting Standards (IFRS), are associated with audit pricing and audit report lags.
Design/methodology/approach
In 2007, the US SEC eliminated the requirement for foreign registrants to reconcile their financial statements to US GAAP from IFRS. In this post-reconciliation setting in the USA, the authors use panel ordinary least square regressions to examine a sample of foreign firms cross-listed in the USA reporting under IFRS and US domestic firms reporting under US GAAP during the fiscal year 2007–2019.
Findings
The authors find that the firms reporting under IFRS have longer audit report lags than firms reporting under US GAAP. In addition, the authors find that firms reporting under IFRS pay higher audit fees than their US GAAP counterparts. The results are robust after controlling for the firm- and country-specific characteristics as well as using propensity-score matching.
Originality/value
To the best of the authors’ knowledge, this study is the first to provide empirical evidence that the differences between the two reporting regimes are associated with auditor behavior, possibly through additional audit efforts and audit complexity associated with auditing the principle-based IFRS relative to the rule-based US GAAP.
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Ning Du, Jeffrey Byrne, Robert Knisley, Dwayne Powell and James Valentine
This study aims to examine how financial analysts evaluate other comprehensive income (OCI) information with a focus on the information content and economic substance of OCI gain…
Abstract
Purpose
This study aims to examine how financial analysts evaluate other comprehensive income (OCI) information with a focus on the information content and economic substance of OCI gain and loss.
Design/methodology/approach
This study conducted a 2 × 2 between-subject experiment by manipulating profitability (net profit or net loss) and OCI (OCI gain or loss). A total of 103 equity research analysts participated in the experiment.
Findings
The results show that when the company suffers a net loss, the presence of unrealized gain in OCI appears to cause concern for analysts, in that they assigned a lower valuation to the OCI gain company than the OCI loss company. However, in the cases where the company is profitable, analysts appeared to respond to the direction of OCI (i.e. gain or loss) and incorporated the directional information in their valuation judgment.
Originality/value
The experimental results complement prior archival research on OCI valuation. This study extends prior work on OCI’s decision usefulness, improves understanding of the impact of OCI on firm valuation and contributes to the ongoing debate about whether OCI is viewed as a performance measure. The findings indicate that the effect of OCI gains or losses is most pronounced when the company experiences a loss. During such instances, analysts may interpret a combination of net loss and OCI gain as a potential indicator of earnings management opportunities. Consequently, they may perceive it as a signal of deteriorating future financial performance.
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