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1 – 10 of 20Yu-Shan Chang, Li-Lin (Sunny) Liu and Dana A. Forgione
The purpose of this paper is to examine whether firms use different earnings management approaches when facing financial difficulties and the effects of industry-specialist…
Abstract
Purpose
The purpose of this paper is to examine whether firms use different earnings management approaches when facing financial difficulties and the effects of industry-specialist auditors in constraining those choices. The empirical results suggest that (1) firms with lower risk of business failure but with stronger incentives to adjust earnings upward tend to use real earnings management (REM) income-increasing approaches while (2) at the same time, using discretionary accruals for income-decreasing earnings management, due to constraints imposed by specialist auditors on the use of accrual-based earnings management (AEM). This is consistent with the findings of Chi et al., and the authors do not find similar evidence for the firms with higher risk of failure. Also, (3) regardless of the level of failure risk, firms turn to REM while interestingly, such REM behavior is effectively curbed by industry-leading specialist auditors (specialist auditors with the highest client market share) on financially distressed firms. These results extend the findings of Chi et al. (2011), suggesting that industry-specialist auditors have different tolerance levels for earnings management approaches by firms with different levels of business failure risk. That is, when auditing clients with higher risk of failure, specialist auditors are more likely to maintain higher audit quality through more stringent audit testing and use of more audit staff time to prevent an occurrence of audit failure.
Design/methodology/approach
The authors examine earnings management behavior across firms in Taiwan with different levels of business failure risk and the effects of audit partner industry specialization in constraining that behavior. Chi et al. (2011) studied low-risk firms with incentives to adjust earnings upward and found firms use REM when the auditors constrain AEM. The authors extend the work of Chi et al. and observe firms with different levels of failure risk.
Findings
The authors find (1) lower risk firms may use discretionary accruals to adjust earnings downward while the authors find no similar evidence for financially distressed firms, (2) lower risk firms may use REM when their industry-specialist auditors curb AEM and (3) the industry leaders among specialist auditors do the same for the financially distressed firms. The results demonstrate the extent to which industry-specialist auditors apply different tolerance levels for earnings management behaviors across firms with different levels of failure risk.
Originality/value
The study contributes to the literature in the following three ways: first, the authors fill a gap in the existing literature by comparing firms with higher risk of business failure to firms with lower risk of business failure to explore the possible difference in the two different kinds of earnings management behavior; second, the authors extend the findings of Chi et al. (2011) and examine whether specialist auditors, when auditing firms with higher risk of business failure, will input more audit effort to constrain their clients' use of REM and third, since business failures have a significant impact on the capital markets and any associated audit failures can have an even greater negative impact on investor confidence, the study provides information useful to auditors and regulators in the formation of salient policy regarding the use of REM by firms experiencing high risk of business failure.
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Fan-Hua Kung, Yu-Shan Chang and Minting Zhou
This paper aims to examine the association between gender composition of joint auditor pairs and the quality of reported financial information. More specifically, the authors…
Abstract
Purpose
This paper aims to examine the association between gender composition of joint auditor pairs and the quality of reported financial information. More specifically, the authors attempt to assess whether and how these gender compositions affect the client firms’ earnings management behavior.
Design/methodology/approach
The authors utilized the unique institutional setting of Taiwan, where joint auditors are required by law. They studied the effect of gender in joint auditor pairs on accrual earnings management and real earnings management to achieve financial reporting objectives.
Findings
Empirical results indicate that engaging a woman as the lead auditor can constrain accrual earnings management, regardless of whether the joint auditor is male or female. The authors also found that all-male signing auditor pairs with industry expertise can significantly reduce accrual earnings management. The authors also documented that all-female signing auditor pairs and auditor industry expertise could drive clients to engage in real earnings management activities as an alternative to accrual earnings management.
Originality/value
The empirical results demonstrate that gender indeed plays a role in the quality of client’s reported financial information. Female auditors in a lead position and male auditors with industry expertise tend to be more successful in delivering better-quality audits.
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Chih Jen Huang, Tsai-Ling Liao and Yu-Shan Chang
– The purpose of this paper is to examine how investors’ valuation of cash holdings is related to firm-level investment.
Abstract
Purpose
The purpose of this paper is to examine how investors’ valuation of cash holdings is related to firm-level investment.
Design/methodology/approach
As prior studies note that holding excess cash serve as a driver to would be over-investing, and that over-investment imposes substantial agency costs on shareholders, the authors focus on the value implications of holding cash in the presence of over-investment from the perspective of shareholders.
Findings
By examining the publicly traded companies on Taiwan stock market, the authors uncover that cash is valued less in firms with over-investment than in those with under-investment and the magnitude of over-investment is negatively related to the marginal value of cash holdings (MVCH). It reveals that investment activities impact the value that shareholders place on cash holdings. Moreover, further tests indicate that higher block holdings and the presence of independent directors on boards can effectively mitigate the negative impact of over-investment on the MVCH.
Practical implications
This paper enhances the understanding of the valuation implications of cash reserves held by firms with over-investment and the effectiveness of governance structures in containing the detrimental effect of investment-related agency costs on the value of holding cash.
Originality/value
This paper provides pioneering evidence that outside investors discount cash assets in over-investing firms to reflect their expectations that they will not receive the full benefit of these assets; and this paper extends the literature on corporate governance by assessing the role of governance mechanisms in reversing the negative relation between over-investment and the MVCH.
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This study aims to investigate whether intellectual capital (IC) and its subcomponents enhance value and improve the profitability of real estate (RE) and infrastructure (INF…
Abstract
Purpose
This study aims to investigate whether intellectual capital (IC) and its subcomponents enhance value and improve the profitability of real estate (RE) and infrastructure (INF) firms in India. In this study, IC is measured through the value-added intellectual coefficient (VAIC) model. The study further extends the VAIC model by incorporating an additional component of social welfare efficiency (SWE).
Design/methodology/approach
The study uses the panel data investigation based on the data of 63 firms (22 RE and 41 INF firms), for a period of 10 years (2008–2017). The dependent variables in the study are return on assets (ROA) and market price to book value ratio (PB), whereas the independent variables are VAIC and its components. The panel is tested for stationarity, heteroscedasticity and multicollinearity problems. Finally, to account for heteroscedasticity and endogeneity, Arellano and Bond's (1991) panel regression estimator with robust estimates are used.
Findings
The findings of the study suggest that IC has a significant influence on the profitability and value of infra firms, whereas capital-employed efficiency (CEE) positively affects the profitability of both RE and INF firms.
Originality/value
The study is an attempt to find the effect of IC and its components on profitability and value of RE and INF firms in India. The author has also extended the VAIC model, which was introduced by Pulic (2000), by adding an additional IC component, i.e. SWE. The study uses Arellano and Bond's (1991) panel regression estimator with robust estimates, which helps produce robust results.
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Gema Albort-Morant, Antonio L. Leal-Rodríguez and Valentina De Marchi
This paper aims to explore in depth how internal and external knowledge-based drivers actually affect the firms’ green innovation performance. Subsequently, this study analyzes…
Abstract
Purpose
This paper aims to explore in depth how internal and external knowledge-based drivers actually affect the firms’ green innovation performance. Subsequently, this study analyzes the relationships between absorptive capacity (internal knowledge-based driver), relationship learning (external knowledge-based driver) and green innovation performance.
Design/methodology/approach
This study relies on a sample of 112 firms belonging to the Spanish automotive components manufacturing sector (ACMS) and uses partial least squares path modeling to test the hypotheses proposed.
Findings
The empirical results show that both absorptive capacity and relationship learning exert a significant positive effect on the dependent variable and that relationship learning moderates the link between absorptive capacity and green innovation performance.
Research limitations/implications
This paper presents some limitations with respect to the particular sector (i.e. the ACMS) and geographical context (Spain). For this reason, researchers must be thoughtful while generalizing these results to distinct scenarios.
Practical implications
Managers should devote more time and resources to reinforce their absorptive capacity as an important strategic tool to generate new knowledge and hence foster green innovation performance in manufacturing industries.
Social implications
The paper shows the importance of encouraging decision-makers to cultivate and rely on relationship learning mechanisms with their main stakeholders and to acquire the necessary information and knowledge that might be valuable in the maturity of green innovations.
Originality/value
This study proposes that relationship learning plays a moderating role in the relationship between absorptive capacity and green innovation performance.
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Fei Li, Jin Chen and Yu-Shan Su
Collaboration with universities is an important innovation strategy for enterprises. However, currently very little research has focused on how such university-industry…
Abstract
Purpose
Collaboration with universities is an important innovation strategy for enterprises. However, currently very little research has focused on how such university-industry collaborative innovation activities should be managed. The paper aims to discuss this issue.
Design/methodology/approach
This paper introduces the university-industry collaborative innovation practices of Zhejiang NHU Company in China. By using a case study as the method, this paper aims to illustrate the mechanism of university-industry collaborative innovation and how to manage the collaborative innovation activities efficiently.
Findings
Zhejiang NHU Company established a university-industry collaborative innovation link through three innovation platforms: the technology R&D center, the ZJU-NHU joint-research center, and the national engineer center. Zhejiang NHU Company manages its collaborative relationships with universities through this innovation network.
Originality/value
NHU Company managed the collaborative relationship efficiently with the institutions, representing an effective degree of university-industry collaborative innovation management.
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Yu-Shan Hsu, Yu-Ping Chen, Margaret A. Shaffer and Flora F.T. Chiang
Drawing on expectancy value theory (EVT), this paper examines knowledge exchange between expatriate and host country national (HCN) dyads to understand whether receivers'…
Abstract
Purpose
Drawing on expectancy value theory (EVT), this paper examines knowledge exchange between expatriate and host country national (HCN) dyads to understand whether receivers' perceptions about senders' motivation to transfer knowledge and perceived value of the knowledge jointly affect receivers' motivation to learn and, in turn, facilitate their knowledge acquisition and sharing.
Design/methodology/approach
Latent moderated structural (LMS) equations were used to analyze data from 107 expatriate–HCN dyads working in the Asia Pacific region.
Findings
In general, whether senders are expatriates or HCNs, only when receivers perceive that (1) knowledge to be transferred is valuable and (2) senders are motivated to transfer, receivers are likely to be motivated to receive knowledge transferred from senders and, in turn, acquire and share knowledge with senders.
Originality/value
This study is one of the first in the expatriate and knowledge transfer literature to address the mixed findings between senders' motivation to transfer and receivers' knowledge acquisition and sharing by drawing on EVT.
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Yu-Shan Su, Zong-Xi Zheng and Jin Chen
Innovation ecosystem is an emerging and popular concept in both academic and industrial circles. It offers a new perspective for enterprise strategy positioning. A business can…
Abstract
Purpose
Innovation ecosystem is an emerging and popular concept in both academic and industrial circles. It offers a new perspective for enterprise strategy positioning. A business can create more value through a healthy innovation ecosystem. The paper aims to discuss these issues.
Design/methodology/approach
In this paper, the authors utilize a new triple-layer core-periphery framework to analyze Insigma Group’s multi-platform collaboration innovation ecosystem, in order to explore the architecture and heterogeneous functions inside an innovation ecosystem.
Findings
The authors illustrate the components and working mechanisms of the four platforms, which function as ideation, entrepreneurship, financing and investment, and innovation, inside Insigma’s innovation ecosystem in detail, and explain how they interact and collaborate toward a shared aim of the whole innovation ecosystem.
Research limitations/implications
The innovation ecosystem is an emerging concept. In this study, the authors combined two existing analytical frameworks of innovation ecosystem, and proposed a triple-layer core-periphery framework, which enable us to analyze the heterogeneity inside an innovation ecosystem.
Practical implications
The authors discussed the role of government and its policies in shaping the innovation ecosystem at the enterprise level.
Originality/value
The authors believe that this paper provides a holistic study of Insigma’s innovation ecosystem. The triple-layer core-periphery framework can be used to study other enterprise innovation ecosystem in the future.
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Ching‐Hsun Chang and Yu‐Shan Chen
The authors aim to apply an “interpretive context – organizational action – outcome” framework to explore the positive effect of green organizational identity on green innovation…
Abstract
Purpose
The authors aim to apply an “interpretive context – organizational action – outcome” framework to explore the positive effect of green organizational identity on green innovation performance. Besides, they would like to verify that both environmental commitment and environmental organizational legitimacy mediate between green organizational identity and green innovation performance.
Design/methodology/approach
The authors utilize a hybrid research method that includes both questionnaire data and public data to test the hypotheses to satisfy the triangulation in methodology. In addition, structural equation modeling (SEM) is used to perform the empirical research.
Findings
The results show that green organizational identity would positively affect green innovation performance. Moreover, green organizational identity could positively influence green innovation performance indirectly via environmental commitment and environmental organizational legitimacy. Firms should increase their green organizational identity, environmental commitment, and environmental organizational legitimacy to enhance their green innovation performance. Furthermore, the authors find out that green organizational identity, environmental commitment, environmental organizational legitimacy, and green innovation performance of small and medium‐sized enterprises (SMEs) are lower than those of large enterprises in Taiwan.
Originality/value
The authors develop a research framework to explore the positive effect of green organizational identity on green innovation and explore the mediation effects of environmental commitment and environmental organizational legitimacy.
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Yu‐Shan Chen and Ching‐Hsun Chang
The purpose of this study is to develop an original framework to explore the influences of green perceived value and green perceived risk on green purchase intentions and to…
Abstract
Purpose
The purpose of this study is to develop an original framework to explore the influences of green perceived value and green perceived risk on green purchase intentions and to discuss the mediation role of green trust.
Design/methodology/approach
This study applies four original concepts – green perceived value, green perceived risk, green trust, and green purchase intentions – to develop an integral model to enhance green purchase intentions. In addition, this research employs an empirical study by means of the questionnaire survey method to verify the hypotheses and to explore its managerial implications. Structural equation modeling (SEM) is applied to verify the research framework.
Findings
The empirical results show that green perceived value would positively affect green trust and green purchase intentions, while green perceived risk would negatively influence both of them. Furthermore, this study demonstrates that the relationships between green purchase intentions and their two antecedents – green perceived value and green perceived risk – are partially mediated by green trust. Hence, investing resources to increase green perceived value and to decrease green perceived risk is helpful to enhance green trust and green purchase intentions.
Originality/value
This study summarizes the literature on green marketing and relationship marketing into a new managerial framework of green purchase intentions. It utilizes four novel constructs – green perceived value, green perceived risk, green trust, and green purchase intentions – to develop an original research framework to enhance green purchase intentions. Although past research has highlighted the relevant issues about purchase intentions, none explores it about green management. Therefore, this paper develops the research framework of green purchase intentions to fill the research gap.
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