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Accounting scandals and earnings management problems at large firms such as Global Crossing and Enron have resulted in lots of wealth loss not only to corporate investors but also led tremendous damage to societies. Hence, policymakers and academic researchers have started to explore mechanisms to prevent improprieties in financial reporting and further enhance firm value. Using data from United States (US)-listed companies between 2000 and 2018, this article explores the effect of ex-military executives on earnings quality, the role of financial analysts in their interplay and the firm value implication of earnings quality driven by ex-military executives.

This study employs a firm fixed-effects model to validate the main conjecture and adopts the weighted least squares, Granger causality analysis, instrumental variable approach, propensity score matching, entropy balancing approach and dynamic system Generalized Method of Moments (GMM) estimator to address robustness and endogeneity issues.

Authors reveal that companies run by ex-military senior executives exhibit lower levels of accruals-based and real earnings management than those without. The effect of management military leadership on constraining earnings management is more prominent for companies with low analyst coverage, suggesting that the military experience of executives could be a substitute for external monitoring. Authors also find that these ethical managers alleviate the negative impact of earnings management on firm value and that companies managed by these managers exhibit higher firm performance.

This study highlights the importance of the intrinsic motivation behind the effect of military experience on senior managers' personalities and offers essential stakeholder-related implications regarding the effect of military experience. The military experience of senior managers helps facilitate the attainment of broader corporate governance and economic objectives.

This article adds new insights to the literature on the role of managerial military experience in decision-making processes, financial reporting outcomes and firm performance by employing the upper echelons and imprinting theoretical perspectives.

This paper aims to explore current trends in how companies disclose climate-related risks and opportunities in their financial statements. As part of the authors’ analysis, they examine: whether forward-looking assumptions and judgements are typically considered in reporting climate-related risks/opportunities; whether there are differences in the reporting practices of firms in carbon-intensive industries versus non-carbon-intensive industries; and whether negative media reports have an influence on the levels of disclosure a firm makes.

The authors chose content analysis as their methodology and examined the financial statements published by firms listed on the UK’s FTSE 100 between 2016 and 2020. This analysis is framed by Suchman’s three dimensions of legitimacy, being pragmatic, cognitive and moral.

Climate-related disclosures in the notes and financial accounts of these firms did increase over the period. Yet, overall, the level the disclosures was inadequate and the quality was inconsistent. From this, the authors conclude that pragmatic legitimacy is not a particularly strong driving factor in compelling organisations to disclose climate-related information. The firms in carbon-intensive industries do provide greater levels of disclosure, including both qualitative and quantitative (monetary) content, which is consistent with cognitive legitimacy. However, from a moral legitimacy perspective, this study finds that firms did not adapt responsively to negative media coverage as a way of reflecting their accountability to broader public norms and values. Overall, this analysis suggests that regulatory enforcement and a systematic reporting framework with adequate guidance is going to be critical to developing transparent climate-related reporting in future.

This paper contributes to existing studies on climate-related disclosures, which have mainly examined the ‘front-half’ of annual reports. Conversely, this study aims to shed light on these practices in the “back-half” of these reports, exploring the underlying reasons for reporting climate-related risks and opportunities in financial accounts. The authors’ insights into the current disclosure practices make a theoretical contribution to the literature. Practitioners can also draw on these insights to improve how they report on climate-related risks and opportunities in their financial statements.

Prior research shows that co-opted directors adversely impact many corporate outcomes, yet little is known about these directors' impact on CSR performance. The authors investigate whether and how co-opted boards affect the firm's CSR score and component CSR scores.

The authors use panel regression models to investigate this study's research questions and address endogeneity concerns using the system generalized method of moments (system GMM) and a quasi-natural experiment.

The authors report new evidence showing that co-opted boards negatively impact CSR performance based on the CSR score. Results identify board characteristics that accentuate or moderate the effect of co-option on the CSR score and show that board independence, the presence of women on the board, and CEO duality positively and significantly impact the CSR score. These findings are robust across alternative measures of co-option and in the results of models addressing endogeneity concerns. An extended analysis utilizing CSR component scores reveals a significant negative impact of co-option on the environment component score using various measures of co-option and on employee relations, product quality, and human rights component scores using selected measures of co-option.

Findings have implications for board structuring and composition for firms aiming at improving their CSR score.

The study provides new evidence on the impact of co-opted boards on CSR performance. The results help inform stakeholders such as policymakers, executives and directors, shareholders, and capital market participants on how board composition affects socially responsible activities and performance and identify CSR component areas that require attention.

The purpose of this article is to synthesize the topics, conceptualizations and measurements of value-based management (VBM) and to suggest a research agenda covering its next evolution as sustainable governance.

The authors conducted a systematic literature review of 80 seminal studies published between 1979 and 2022. The authors synthesized the studies by their conceptualizations of VBM in an inductively developed framework.

The authors find that scholars explore diverse topics related to VBM with a prevailing focus on shareholder primacy. There is a paucity of studies that focus on the integration of shareholder maximization and stakeholder management practices. The authors explain which studies will form a promising foundation for advanced research on sustainable governance that will reach beyond current VBM research.

The authors' research agenda addresses new future topics on conflicting goals within and between shareholder groups, offers specific suggestions for using new research methods and untapped data sources for VBM and paves the way to substantially extend the boundaries of the firm in VBM research to include stakeholders, strategic alignment and new sustainability measures.

This paper examines the moderating effect of good corporate governance on the association between internal information quality and tax savings.

This study uses a quantitative approach. It employs an Australian sample of analysis composed of 1,295 firm-year observations from the period 2017 to 2021. Data relating to corporate governance are hand-collected from the annual reports.

Based on the result of the analysis, this study demonstrates that the interaction between corporate governance and quality of internal information is positively associated with tax savings. Superior corporate governance is critical in activating the effect of internal information quality on tax savings. This finding is robust to a battery of robustness checks and additional tests.

This examination utilizes only publicly traded companies from one developed country.

For the company management, an effective governance structure must be at the top because it will determine the development of all other areas. This study emphasizes the need to continuously improve the effectiveness of corporate governance practices. For long-term investors, an important indicator that can be considered in assessing the “safety” of a company’s tax strategy is its corporate governance aspects. For regulators, this study is expected to assist regulators in creating a more adequate corporate governance implementation and disclosure package to be implemented by corporations in the future.

This study provides new evidence on a crucial construct that can strengthen the relationship between internal information quality and tax savings.

The authors provide a general framework of behavior under asymmetric information and develop indices of diligence, objectivity and quality by an analyst and analyst firm about a studied firm, and relate them to the accuracy of its forecasts. The authors test the associations of these indices with time.

The test of Public Information versus Non-Public Information Models provides the index of diligence, which equals one minus the p-value of the Hausman Specification Test of Ordinary Least Squares (OLS) versus Two Stage Least Squares (2SLS). The test of Objectivity versus Non-Objectivity Models provides the index of objectivity, which equals the p-value of the Wald Test of zero coefficients versus non-zero coefficients in 2SLS regression of the earnings forecast residual. The exponent of the negative of the standard deviation of the residuals of the analyst forecast regression equation provides the index of analytical quality. Each index asymptotically equals the Bayesian ex post probability, by the analyst and analyst firm about the studied firm, of the relevant behavior.

The authors find that ex post accuracy is a statistically and economically significant increasing function of the product of the indices of diligence, objectivity and quality by the analyst and analyst firm about the studied firm, which asymptotically equals the Bayesian ex post joint probability of diligence, objectivity and quality. The authors find that diligence, objectivity, quality and accuracy did not improve with time.

There has been no previous work done on the systematic and objective characterization and joint analysis of diligence, objectivity and quality of analyst forecasts by an analyst and analyst firm for a studied firm, and their relation with accuracy. This paper puts together the frontiers of various disciplines.

Using a qualitative grounded theory approach, this study explores the methods experienced external auditors use to detect fraudulent financial reporting (FFR) during standard audits.

Semi-structured interviews were conducted with 24 experienced external auditors to explore the methods they used to detect FFR successfully during standard external audits.

The authors find 58 methods used for FFR detection, out of which the following methods are frequently used and help in detecting more than one type of FFR: (1) specific analytical procedures, (2) positive confirmation, (3) understanding of the client's business and industry, (4) the inspection of specific documents, (5) a detailed analysis of the audit client's anti-fraud controls and (6) investigating tip-offs from suppliers, employees and customers.

Based on the grounded theory approach, the authors theorise that auditors must return to the basics and focus on specific audit procedures highlighted in this study for effective fraud detection.

The study provides practical guidance, including 58 methods used in audit practice to detect FFR. This knowledge can improve auditors' skills in detecting material misstatements due to fraud. Besides, analytical procedures and positive confirmation helped external auditors in this study detect all forms of FFR, yet they are overlooked in the external audit practice. Therefore, audit firms should emphasise the significance of these audit procedures in their professional audit training programmes. Audit regulators should advise auditors to consider positive confirmation instead of negative confirmation in financial audits to increase the likelihood of FFR detection. Moreover, audit standards (ISA 240 and SAS 99) should explicitly require auditors to conduct a detailed analysis of the client's anti-fraud controls.

This is the first study to identify actual, effective methods used by external auditors in detecting FFR during the ordinary course of an audit.

In 2018, the International Financial Reporting Standard 9-Financial Instruments became mandatory, effectively changing the underlying accounting principles of financial instruments. This paper systematically reviews the academic literature on the implementation effects of IFRS 9, providing a coherent picture of the state of the empirical literature on IFRS 9.

The study thrives on a systematic review approach by analyzing existing academic studies along the following three broad categories: adoption and implementation, impact on financial reporting, and risk management and provisioning. The study concludes by providing research prospects to fill the identified gaps.

We document data-related issues, forecasting uncertainties and the interaction of IFRS 9 with other regulatory standards as implementation challenges encountered. Also, we observe cross-country heterogeneity in reporting quality. Furthermore, contrary to pre-implementation expectations, we find improvement in risk management. This suggests that despite the complexities of the new regulatory standard on financial instruments, it appears to be more successful in achieving the intended objective of enhancing better market discipline and transparency rather than being a regulatory overreach.

As the literature on IFRS 9 is burgeoning, we provide state-of-the-art guidance and direction for researchers with a keen interest in the economic significance and implications of IFRS 9 adoption. The study identifies gaps in the literature that require further research, specifically, IFRS 9 adoption and firm’s hedging activities, IFRS 9 implications on non-financial firms. Lastly, existing studies are mostly focused on Europe and underscore the need for more research in under-researched jurisdictions, particularly in Asia and Africa. Also, to standard setters, policymakers and practitioners, we provide some insight to aid the formulation and application of standards.

The purpose of this study is to examine the impact of mandatory corporate social responsibility (CSR) spending on firm value in the Indian context.

Using firm-level data over the period 2012–2017, this study uses the difference-in-differences (DID) technique combined with matching to control for potential endogeneity of the decision to comply with the CSR Act since the Act in its current form is applicable as a comply-or-explain obligation.

The results of this study suggest that mandatory CSR spending has a positive and statistically significant impact on firm value. These results remain robust to alternative econometric techniques such as regression discontinuity design (RDD) and randomization inference test as well as to alternative empirical specifications. Furthermore, the study demonstrates that the positive effect of CSR spending on firm value is more pronounced for firms with higher information asymmetry problem and lower institutional holdings.

This study explicitly considers the “comply-or-explain” flexibility option, in terms of spending on CSR, provided to Indian firms for the initial two to three years and investigates whether spending on CSR helps firms enhance their firm value. The study also finds that the positive effect of CSR spending on firm value is more pronounced for firms with higher information asymmetry problems and lower institutional holdings.

Machine learning (ML), and deep learning in particular, is gaining traction across a myriad of real-life applications. Portfolio management is no exception. This paper provides a systematic literature review of deep learning applications for portfolio management. The findings are likely to be valuable for industry practitioners and researchers alike, experimenting with novel portfolio management approaches and furthering investment management practice.

This review follows the guidance and methodology of Linnenluecke et al. (2020), Massaro et al. (2016) and Fisch and Block (2018) to first identify relevant literature based on an appropriately developed search phrase, filter the resultant set of publications and present descriptive and analytical findings of the research itself and its metadata.

The authors find a strong dominance of reinforcement learning algorithms applied to the field, given their through-time portfolio management capabilities. Other well-known deep learning models, such as convolutional neural network (CNN) and recurrent neural network (RNN) and its derivatives, have shown to be well-suited for time-series forecasting. Most recently, the number of papers published in the field has been increasing, potentially driven by computational advances, hardware accessibility and data availability. The review shows several promising applications and identifies future research opportunities, including better balance on the risk-reward spectrum, novel ways to reduce data dimensionality and pre-process the inputs, stronger focus on direct weights generation, novel deep learning architectures and consistent data choices.

Several systematic reviews have been conducted with a broader focus of ML applications in finance. However, to the best of the authors’ knowledge, this is the first review to focus on deep learning architectures and their applications in the investment portfolio management problem. The review also presents a novel universal taxonomy of models used.