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Article
Publication date: 8 February 2024

Md Khokan Bepari, Shamsun Nahar and Abu Taher Mollik

This paper aims to examine the perspectives of auditors, regulators and financial report preparers on the effects of key audit matters (KAMs) reporting on audit effort, fees…

Abstract

Purpose

This paper aims to examine the perspectives of auditors, regulators and financial report preparers on the effects of key audit matters (KAMs) reporting on audit effort, fees, quality and report transparency.

Design/methodology/approach

The authors conducted 21 semi-structured interviews with stakeholders (13 Audit Partners, 5 Chief Financial Officers and 3 regulators) and thematically analysed the interviews. They use the frame of “Paradox of Transparency” to explain the findings.

Findings

Auditors perceive that the overall quality control of their audits has improved both in the planning and execution stages, and such improvement can mostly be attributed to the coercive pressures from professional bodies and regulators. Nevertheless, audit fee remains unchanged. Auditors disclose industry generic items and descriptions of KAMs, sometimes masking the real problem areas of the clients. Even after improving the performative audit quality, transparency of audit reporting has not improved. Issues that warrant going concern qualifications or audit report modifications are now reported as KAMs. Hence, KAMs reporting might make the audit report less transparent.

Practical implications

Localised audit environments and institutions affect the transparency of KAMs reporting. Without attention to corporate governance and auditors’ independence issues, paradoxically, performative improvement in audit quality (due to the KAMs reporting requirement) does not enhance the transparency of audit reports.

Originality/value

To the best of the authors’ knowledge, this study is the first to provide field-level evidence in Bangladesh and other developing countries about the perceptions of auditors, financial report preparers and regulators on the effects of KAMs reporting on audit efforts, fees, quality and report transparency.

Details

Qualitative Research in Accounting & Management, vol. 21 no. 2
Type: Research Article
ISSN: 1176-6093

Keywords

Book part
Publication date: 23 August 2021

Mohammad Nurunnabi

The study aims at reviewing a synthesis of disclosure, transparency, and International Financial Reporting Standards (IFRS) implementation in an attempt to provide directions for…

Abstract

The study aims at reviewing a synthesis of disclosure, transparency, and International Financial Reporting Standards (IFRS) implementation in an attempt to provide directions for future research. Prior research overwhelmingly supports that the IFRS adoption or effective implementation of IFRS will enhance high-quality financial reporting, transparency, enhance the country’s investment environment, and foreign direct investment (FDI) (Dayanandan, Donker, Ivanof, & Karahan, 2016; Gláserová, 2013; Muniandy & Ali, 2012). However, some researchers provide conflicting evidence that developing countries implementing IFRS are probably not going to encounter higher FDI inflows (Gheorghe, 2009; Lasmin, 2012). It has also been argued that the IFRS adoption decreases the management earnings in countries with high levels of financial disclosure. In general, the study indicates that the adoption of IFRS has improved the financial reporting quality. The common law countries have strong rules to protect investors, strict legal enforcement, and high levels of transparency of financial information. From the extensive structured review of literature using the Scopus database tool, the study reviewed 105 articles, and in particular, the topic-related 94 articles were analysed. All 94 articles were retrieved from a range of 59 journals. Most of the articles (77 of 94) were published 2010–2018. The top five journals based on the citations are Journal of Accounting Research (187 citations), Abacus (125 citations), European Accounting Review (107 citations), Journal of Accounting and Economics (78 citations), and Accounting and Business Research (66 citations). The most-cited authors are Daske, Hail, Leuz, and Verdi (2013); Daske and Gebhardt (2006); and Brüggemann, Hitz, and Sellhorn (2013). Surprisingly, 65 of 94 articles did not utilise the theory. In particular, four theories have been used frequently: agency theory (15), economic theory (5), signalling theory (2), and accounting theory (2). The study calls for future research on the theoretical implications and policy-related research on disclosure and transparency which may inform the local and international standard setters.

Details

International Financial Reporting Standards Implementation: A Global Experience
Type: Book
ISBN: 978-1-80117-440-4

Keywords

Open Access
Article
Publication date: 12 June 2023

Amanda Reid, Evan Ringel and Shanetta M. Pendleton

The purpose of this study is to situate information and communications technology (ICT) “transparency reports” within the theoretical framework of corporate social responsibility…

2306

Abstract

Purpose

The purpose of this study is to situate information and communications technology (ICT) “transparency reports” within the theoretical framework of corporate social responsibility (CSR) reporting. The self-denominated transparency report serves a dual purpose of highlighting an ICT company’s socially responsible behavior while also holding government agencies accountable for surveillance and requests for user data. Drawing on legitimacy theory, neo-institutional theory and stakeholder theory, this exploratory study examines how ICT companies are implementing industry-specific voluntary disclosures as a form of CSR.

Design/methodology/approach

A content analysis of ICT voluntary nonfinancial reporting (N = 88) was used to identify motivating principles, the company positioning to stakeholders, the relevant publics and intended audience of these disclosures and the communication strategy used to engage primary stakeholders.

Findings

Key findings suggest that most ICT companies used transparency reporting to engage consumers/users as their primary stakeholders and most used a stakeholder information strategy. A majority of ICT companies signaled value-driven motives in their transparency reports while also positioning the company to stakeholders as a protector of user data and advocate for consumer rights.

Originality/value

This study enriches the literature on CSR communication strategies and reporting practices by extending it to an underdeveloped topic of study: novel voluntary disclosures as CSR activities of prominent ICT companies (i.e. “Big Tech”). These polyphonic reports reflect varied motives, varied positioning and varied stakeholders. For market-leading companies, transparency reporting can serve to legitimize existing market power. And for midsize and emerging companies, transparency reporting can be used to signal adherence to industry norms – set by market-leading companies.

Article
Publication date: 20 February 2023

Laurence Vigneau and Carol A. Adams

This paper aims to examine the existence of a transparency gap between voluntary external sustainability reporting and internal sustainability performance of an organisation…

Abstract

Purpose

This paper aims to examine the existence of a transparency gap between voluntary external sustainability reporting and internal sustainability performance of an organisation arising from the operationalisation of transparency as an instrumental tool.

Design/methodology/approach

This study combined an analysis of a firm’s sustainability report (secondary data) with a qualitative case study data (primary data comprising interviews, meetings and internal documents) to understand how the Global Reporting Initiative (GRI) sustainability reporting guidelines are applied in practice.

Findings

By comparing what is reported with a range of primary case study data, this study finds evidence of transparency gaps, particularly in terms of the quality of measurement of sustainability performance, the materiality of issues covered and the completeness of the report. This study posits that voluntary disclosures following the GRI guidelines (transparency technique) shape the external expression of acceptable corporate behaviour (transparency norm) that is nevertheless at odds with actual behaviour or performance.

Practical implications

The findings indicate the importance of mandatory sustainability reporting requirements that facilitate accountability to all key stakeholders and that are externally assured and enforced. Such requirements might take the form of standards that put boundaries on judgement and address material sustainable development impacts and that are accompanied by implementation guidance. Non-financial assurance practices must be developed to cover adherence to reporting principles and processes.

Social implications

Transparency gaps that result from voluntary disclosure guidelines or standards being used to imply a transparency norm may undermine accountability for the impacts of the organisation and hinder alignment of business models and corporate strategies with sustainable development.

Originality/value

The paper contributes to a theoretical understanding of transparency as a form of self-regulation and has implications for the further development of sustainability reporting standards.

Details

Sustainability Accounting, Management and Policy Journal, vol. 14 no. 4
Type: Research Article
ISSN: 2040-8021

Keywords

Article
Publication date: 15 January 2018

Sakshi Girdhar and Kim K. Jeppesen

The purpose of this paper is to examine the transparency reports published by the Big-4 public accounting firms in the UK, Germany and Denmark to understand the determinants of…

1315

Abstract

Purpose

The purpose of this paper is to examine the transparency reports published by the Big-4 public accounting firms in the UK, Germany and Denmark to understand the determinants of their content within the networks of big accounting firms.

Design/methodology/approach

The study draws on a qualitative research approach, in which the content of transparency reports is analyzed and semi-structured interviews are conducted with key people from the Big-4 firms who are responsible for developing the transparency reports.

Findings

The findings show that the content of transparency reports is inconsistent and the transparency reporting practice is not uniform within the Big-4 networks. Differences were found in the way in which the transparency reporting practices are coordinated globally by the respective central governing bodies of the Big-4. The content of the transparency reports is particularly influenced by the national institutional environment in which the Big-4 member firms operate, thus leading them to introduce practice variation and resulting in cross-national differences.

Practical implications

The study results have important implications for standard setters, regulators and practitioners, as the research provides insights into the variation taking place within the common regulatory frame.

Originality/value

This is the first study to analyze how transparency reporting practices are developed within the networks of Big-4 firms, thereby influencing the content of transparency reports.

Details

Accounting, Auditing & Accountability Journal, vol. 31 no. 1
Type: Research Article
ISSN: 0951-3574

Keywords

Article
Publication date: 5 October 2015

Yi Fu, Elizabeth Carson and Roger Simnett

The purpose of this study is to compare the information disclosed by leading Australian audit firms in their first-time audit firm transparency reports. Australia has mandated the…

5889

Abstract

Purpose

The purpose of this study is to compare the information disclosed by leading Australian audit firms in their first-time audit firm transparency reports. Australia has mandated the preparation and release of transparency reports by audit firms in 2013 to provide better information to stakeholders about audit firms, their governance and their internal governance systems. These reports promote increased transparency regarding issues which are believed to contribute to audit quality.

Design/methodology/approach

The paper takes the form of an archival analysis where the authors summarise the governance and other information for the 21 leading Australian audit firms as disclosed in their first-time 2013 transparency reports.

Findings

The authors find that audit firms meet the minimum transparency report disclosure requirements, but have different approaches to governance in the areas which may impact audit quality. These areas include: the internal quality control systems, independence practices, continuing education and partners’ remuneration structures. The authors identify specific areas where transparency reports may give rise to future research opportunities.

Originality/value

Australia is one of the first countries to require audit firms to publish transparency reports, and this is the first study to examine these reports. By summarising transparency report disclosures, we present a comprehensive picture of how Australian leading audit firms govern and oversee their business activities. This is useful to transparency report preparers, report users and regulators.

Details

Managerial Auditing Journal, vol. 30 no. 8/9
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 30 July 2020

Tae Ho Lee

This study analyzed the explicitness, the salience of ethics and the transparency of messages in firms' social reports based on their significance to strategic corporate social…

Abstract

Purpose

This study analyzed the explicitness, the salience of ethics and the transparency of messages in firms' social reports based on their significance to strategic corporate social responsibility (CSR) communication.

Design/methodology/approach

Drawing on institutional theory, this content analysis investigated 750 social reports from 125 firms for a ten-year period in liberal market economies (LMEs: US, UK), coordinated market economies (CMEs: Germany, Japan) and state-led market economies (SLMEs: France, South Korea).

Findings

First, firms in CMEs showed the highest level of transparency, and in all market economies, an overall trend of increase in the level of transparency was found. Second, firms in SLMEs communicated their CSR activities least explicitly. Third, firms in CMEs showed the lowest salience of ethics.

Originality/value

Useful theoretical as well as practical implications are provided in relation to the institutional perspective to CSR, and cross-national CSR communication.

Details

Corporate Communications: An International Journal, vol. 26 no. 2
Type: Research Article
ISSN: 1356-3289

Keywords

Article
Publication date: 21 January 2022

Mahdi Salehi, Raed Ammar Ajel and Grzegorz Zimon

The present study aims to examine the relationship between corporate governance factors and financial reporting transparency pre and post of ISIS.

1692

Abstract

Purpose

The present study aims to examine the relationship between corporate governance factors and financial reporting transparency pre and post of ISIS.

Design/methodology/approach

A multivariate regression model was used to test the hypotheses for this purpose. The research hypotheses were tested on a sample of 35 companies listed on the Iraqi Stock Exchange from 2012 to 2018 using a multivariate regression model based on panel data technique.

Findings

The results indicate a negative and significant correlation between the board independence, audit committee independence, management team stability and remuneration of the board of directors and financial reporting transparency. In contrast, there is a positive and significant correlation between the board expertise, audit committee expertise and managerial ownership, with financial reporting transparency. Moreover, ISIS has had a direct and significant impact on the correlation between the board of directors’ independence and remuneration with financial reporting transparency. The present study also tested research models using additional methods (such as feasible generalised least squares, ordinary least squares, random effects and T + 1) to obtain better results. The results of these different methods were entirely in line with the main results of the research.

Originality/value

The political and economic instability resulting from the entry of ISIS into Iraq has created severe problems for society’s economic, political, security and performance dimensions. Macroeconomic uncertainty driven by terrorist activities can negatively affect managers’ perceptions of firms’ future performance and result in poor judgments and estimations, significantly impacting business units' financial reporting transparency. Because no study has examined the relationship between corporate governance and financial reporting transparency on the Iraq stock exchange before and after the presence of ISIS, this study examines such a relationship. Although the economic and political situation in Iraq may not be identical to that in other nations, much of the experience in Iraq is anticipated to apply to other countries in the region.

Details

Journal of Financial Reporting and Accounting, vol. 21 no. 5
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 24 April 2013

W. Timothy Coombs and Sherry J. Holladay

The purpose of this paper is to examine how corporate social responsibility (CSR) transparency claims are propagating a belief in a modern panopticon for ensuring responsible…

4372

Abstract

Purpose

The purpose of this paper is to examine how corporate social responsibility (CSR) transparency claims are propagating a belief in a modern panopticon for ensuring responsible corporate behavior. Corporations use transparency claims to cultivate the impression of full disclosure. The paper aims to explore why people believe transparency ensures responsible behavior from corporations as well as the negative effects of this pseudo‐panopticon.

Design/methodology/approach

The paper explores transparency in relation to CSR, CSR reporting, the internet, and activism and describes how their confluence produces pseudo‐panopticon.

Findings

The paper finds that the pseudo‐panopticon allows corporations to claim transparency in CSR communication and for stakeholders to accept that claim. The reality is that a minority of activist stakeholders bear the burden of ensuring true transparency by questioning disclosure.

Social implications

Transparency should be seen as a process, and it fails if activists cannot create public awareness of CSR shortcomings. The challenge is to find ways to make transparency as a process work in a world where apathy and self‐deception, in part facilitated by the pseudo‐panopticon, work against the process.

Originality/value

The paper builds on the process view of transparency by developing its implications for CSR communication. The result is a novel approach to CSR reporting and transparency that contributes to other critical voices concerned about the value and effects of CSR communication.

Details

Corporate Communications: An International Journal, vol. 18 no. 2
Type: Research Article
ISSN: 1356-3289

Keywords

Article
Publication date: 19 October 2012

Muhammad Najib Razali and Yasmin Mohd Adnan

This purpose of this paper is to investigate the current level of transparency based on the customised transparency matrix (TM) amongst the top listed property companies in…

3607

Abstract

Purpose

This purpose of this paper is to investigate the current level of transparency based on the customised transparency matrix (TM) amongst the top listed property companies in Malaysia, based on capital market value. Furthermore, this paper discusses the concept of transparency from the perspective of Malaysian property markets.

Design/methodology/approach

Data for this research were collected from the top 30 property companies in Malaysia through their annual reports and corporate websites. The indicator of transparency was developed based on various literature surveys and other research findings. Using the developed indicators, the study analysed the transparency attributes from TM of the top 30 listed property companies in Malaysia.

Findings

In terms of transparency levels and widely implemented transparency elements, the findings revealed that Malaysian property companies were within a “good level” range.

Research limitations

The research is based on a study of the top 30 listed property companies in Malaysia based on market capital values as at 30th June 2010.

Originality/value

This paper examines the transparency level of property companies in Malaysia based on each company's current annual report. The findings provide some insights and guidelines for the industry as well as academics on the transparency level particularly in Malaysian property business.

Details

Property Management, vol. 30 no. 5
Type: Research Article
ISSN: 0263-7472

Keywords

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