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Open Access
Article
Publication date: 18 March 2020

Stefano Azzali and Tatiana Mazza

The purpose of this paper is to analyze the effects of financial restatements (FRs) on the likelihood of the top management team (TMT) dismissal. It investigates the effects of…

1579

Abstract

Purpose

The purpose of this paper is to analyze the effects of financial restatements (FRs) on the likelihood of the top management team (TMT) dismissal. It investigates the effects of types of FRs [corrective note and reissuance of financial statement (RFS)], of FR severity and of FR related to international financial reporting standards (IFRSs) easy or difficult-to-estimate.

Design/methodology/approach

The authors hand-collect: data about 96 FRs from the Italian public oversight board documents; chief executive officer (CEO) name, chairman name, year of the financial statement under investigation, total assets and operating income, from their financial statement. The authors use multivariate regression to test the effects of FRs on the probability of TMT dismissal.

Findings

The authors find that the RFS leads to a higher likelihood of chairman dismissal. A greater magnitude of misrepresentation on income statements, and FRs, which decrease net income, increase the likelihood of CEO dismissal. Difficult-to-estimate IFRSs increases the likelihood of CEO dismissal.

Originality/value

FRs are significant determinants of the CEO/chairman dismissal. The authors show that FRs directly involving shareholders (RFS) have negative consequences on the chairman of the board of directors, while the CEO is more affected by FRs that involve technical factors (FR severity or financial statement associated with difficult-to-estimate IFRSs).

Details

Corporate Governance: The International Journal of Business in Society, vol. 20 no. 3
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 27 August 2024

Tatiana Mazza and Stefano Azzali

This study aims to investigate the stakeholders’ (employers and students) involvement in economics and management programs quality assurance in Italian universities from the…

Abstract

Purpose

This study aims to investigate the stakeholders’ (employers and students) involvement in economics and management programs quality assurance in Italian universities from the external audit perspective.

Design/methodology/approach

The research tests if employers are positively associated with the coherence between program objectives and job prospects, and if student involvement is positively associated with student orientation, tutorship and flexibility for specific types of students (differently abled students and working students). Based on data from the Italian Agency for Quality Assurance (ANVUR) in Italian universities, this study selects a sample of 44 bachelor and master university programs.

Findings

When a program coordinator assures coherence between competencies included in the study plan and job prospect, the employers’ involvement in the plan and management of the program increases and becomes more effective. High-quality services regarding student orientation, tutorship and flexibility for specific types of students increase the students’ involvement in university governance.

Originality/value

Findings contribute to literature extending the stakeholder theory in universities, better specifying how employers and students may play a key role in improving the quality assurance of teaching activities.

Details

Quality Assurance in Education, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0968-4883

Keywords

Open Access
Article
Publication date: 25 February 2022

Alice Medioli, Stefano Azzali and Tatiana Mazza

Prior literature shows that income shifting is widely performed by multinational groups, but no research as yet has studied alignment between controlling and minority interests on…

1718

Abstract

Purpose

Prior literature shows that income shifting is widely performed by multinational groups, but no research as yet has studied alignment between controlling and minority interests on tax avoidance in multinational groups with high ownership concentration. This study aims to analyze the effect of high ownership concentration on cross-jurisdictional tax-motivated income shifting.

Design/methodology/approach

To test the hypotheses, this study focuses on European multinational groups. Data are collected on European parent firms and each subsidiary. The model considers the natural logarithm of profit before tax and tax incentive.

Findings

Findings show that subsidiaries shift income for tax avoidance purposes. The alignment of shareholders’ interests and ownership concentration leads to higher levels of tax avoidance through subsidiaries’ infra-group transactions. High ownership concentration decreases the influence of minority interests and allows parent company shareholders to choose a tax avoidance strategy more freely.

Practical implications

The results suggest that taxation levels need to be harmonized to reduce the incentive for tax avoidance and the incentive of governments to reduce their statutory tax rate, to shift profits inwards and reduce outward flow. Without international coordination, this approach may lead to the unevenness of legislative frameworks around the world, and bring significant disadvantages for some countries, influencing economic growth and business development.

Originality/value

This study extends prior findings showing that tax-motivated income shifting as a method of tax avoidance in European multinational groups is stronger in groups with high levels of ownership concentration. This means that managers have the incentive to shift income between subsidiaries for tax and ownership benefits in favor of the parent company’s shareholders and against minority interests.

Details

Management Research Review, vol. 46 no. 1
Type: Research Article
ISSN: 2040-8269

Keywords

Open Access
Article
Publication date: 17 June 2020

Alice Medioli, Stefano Azzali and Tatiana Mazza

Although tax-motivated income shifting has been widely explored, no studies have as yet analyzed the association between ownership structure and management decisions about income…

Abstract

Purpose

Although tax-motivated income shifting has been widely explored, no studies have as yet analyzed the association between ownership structure and management decisions about income shifting. The ownership structure of multinational groups is characterized by different levels of minority interests, and our aim is to establish whether income shifting is explained by the aim of expropriation of minorities, as well as taxation avoidance.

Design/methodology/approach

We collect data on a sample of European parent companies located in five countries and their foreign subsidiaries, and run a multivariate regression based on the Huizinga and Laeven (2008) model.

Findings

Our results support the idea of minority expropriation, finding evidence of ownership-motivated income shifting. We also find that the level of minority protection affects ownership-motivated income shifting, and that, when both are present, expropriation is statistically significant.

Research limitations/implications

Although the study looks at a wide range of subsidiaries, a limitation may be that it examines only firms having parent companies in five European countries. Further research would overcome this limitation and extend the literature and take into account other income-shifting contextual variables. Our results may lead regulators to pay more attention to the protection of minority interests.

Practical implications

This research offers insights to companies and investors, and should help them to make better-informed decisions and evaluate the best contexts for investments.

Originality/value

This study enriches the literature on income shifting by revealing that it can be caused by factors other than the desire to avoid taxation. It suggests that ownership structure is crucial.

Details

Management Decision, vol. 58 no. 12
Type: Research Article
ISSN: 0025-1747

Keywords

Open Access
Article
Publication date: 28 July 2022

Tatiana Mazza, Stefano Azzali and Andrey Simonov

This study aims to examine whether national industry expertise in Italy is more dominant than local expertise. Prior studies from Australia, USA and UK show that audit fees for…

1582

Abstract

Purpose

This study aims to examine whether national industry expertise in Italy is more dominant than local expertise. Prior studies from Australia, USA and UK show that audit fees for industry experts are priced at a higher premium at the local level than the national level. These countries have voluntary audit firm rotation, while Italy has mandatory audit firm rotation (MAFR). The authors predict that Italy has a stronger national than local level of industry expertise, to better retain and transfer industry expertise.

Design/methodology/approach

The authors compare audit fee premiums of national industry experts to local levels, using quantitative (multivariate tests) and qualitative (interviews) methodology.

Findings

Using hand-collected audit fees, the authors find that the audit fee premium for industry expertise is greater at the national level than the local level. The authors find corroborating results with audit hours. To provide further support, the authors conduct analysis for a neighboring country that does not have audit firm rotation. Using hand-collected data from Germany, the authors find that audit fee premiums from national industry expertise are no different from local industry expertise.

Originality/value

The present study study has theoretical and practical implications, for European Union countries, which recently adopted MAFR and for countries considering adoption in the future.

Details

Managerial Auditing Journal, vol. 38 no. 2
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 30 September 2014

Tatiana Mazza, Stefano Azzali and Luca Fornaciari

This paper aims to test the positive relationship between audit quality (AQ) of outsourced information technology controls (ITC) and information technology audit quality (ITAQ)…

2422

Abstract

Purpose

This paper aims to test the positive relationship between audit quality (AQ) of outsourced information technology controls (ITC) and information technology audit quality (ITAQ).

Design/methodology/approach

Factor analysis, ordinary least squares (OLS) regressions and simulations.

Findings

Scoping and planning phases of the audit cycle account for about 69 per cent of ITAQ. The AQ of outsourced ITC is strongly and directly related to ITAQ. Improvement of AQ of outsourced ITC may be achieved through evaluation of control design and operating effectiveness by service auditor as well as direct evaluation by the client in service provider location.

Research limitations/implications

Sample size and input items in factor analysis.

Practical implications

Companies and auditors could improve ITAQ through a better organization of the scoping and planning activities; they could also improve the AQ of outsourced ITC using direct evaluation in the service provider location supplemented with service auditor reports. Regulators could refine or change laws and frameworks to take into account the factors of ITAQ and the methodology of evaluation of outsourced ITC.

Originality/value

Private data collected by questionnaire. The measures of ITAQ and the OLS model could be tested in future research, in countries with different frameworks and regulations related to AQ, different weight of outsourced information technology and other characteristics related to clients, service providers and service auditors.

Details

Managerial Auditing Journal, vol. 29 no. 9
Type: Research Article
ISSN: 0268-6902

Keywords

Content available
Article
Publication date: 30 September 2014

Alan Kilgore

6857

Abstract

Details

Managerial Auditing Journal, vol. 29 no. 9
Type: Research Article
ISSN: 0268-6902

Abstract

Details

Secrets of Working Across Five Continents: Thriving Through the Power of Cultural Diversity
Type: Book
ISBN: 978-1-80043-011-2

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