Pub Date : 2023-11-14DOI: 10.1080/09638180.2023.2276215
Beatriz García Osma, Araceli Mora, Jochen Pierk
Transference of knowledge to society hinges on the effective dissemination of research findings. We document a limited societal impact of accounting, as measured by the attention generated by published research in leading journals. This attention significantly trails that generated by other disciplines, like finance or management. Survey evidence suggests dissemination is hindered by a mix of low incentives, lack of training, and limited support provided to academics by their institutions, journals and academic associations. We provide several recommendations that may be useful to improve dissemination.
{"title":"Dissemination of Accounting Research","authors":"Beatriz García Osma, Araceli Mora, Jochen Pierk","doi":"10.1080/09638180.2023.2276215","DOIUrl":"https://doi.org/10.1080/09638180.2023.2276215","url":null,"abstract":"Transference of knowledge to society hinges on the effective dissemination of research findings. We document a limited societal impact of accounting, as measured by the attention generated by published research in leading journals. This attention significantly trails that generated by other disciplines, like finance or management. Survey evidence suggests dissemination is hindered by a mix of low incentives, lack of training, and limited support provided to academics by their institutions, journals and academic associations. We provide several recommendations that may be useful to improve dissemination.","PeriodicalId":11764,"journal":{"name":"European Accounting Review","volume":"24 11","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134991865","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-11-10DOI: 10.1080/09638180.2023.2273968
Kai Demott, Martin Messner
AbstractThe paper examines the co-production of narrative reports in the context of a non-profit innovation network. Prior research on narrative reporting suggests that corporate reports and similar organizational narratives are likely the product of collective efforts of different actors in the backstage. The actual process of (re-)writing such narratives has received little attention, however. In our paper, we examine how the inputs of different individual actors are translated into an organizational narrative. Mobilizing Goffman’s dramaturgical sociology as our main lens of analysis, we highlight different mechanisms of dramaturgical guidance in backstage interactions, and we show how such guidance can have repercussions on the original authors of narratives when they feel like they are losing ownership of ‘their’ stories. Overall, our paper adds to our understanding of the backstage-frontstage dynamics in narrative reporting.Keywords: NarrativesReportingSuccess storiesDramaturgical guidancePsychological ownership AcknowledgementsWe are very grateful to the participants in this study for their time and support of the project. Earlier versions of the paper were presented at the Assembly of the Swedish Research School in Accounting 2018 (Sigtuna), the EDEN Doctoral Colloquium 2018 (Brussels), and the Doctoral Colloquium at ACMAR 2019 (Vallendar). We would like to thank participants at these events for their valuable comments and suggestions. We particularly thank Carlos Larrinaga (editor) and two anonymous reviewers for their very helpful comments throughout the review process.Disclosure statementNo potential conflict of interest was reported by the author(s).Notes1 Note that, while we present our theoretical perspective upfront, this perspective emerged in an abductive manner (i.e. in interaction with our reading of the empirical material), as is typical for many qualitative studies (see Ahrens & Chapman, Citation2006; Lukka, Citation2014).
{"title":"‘Whose Story is it?’: Co-production and Psychological Ownership of Narrative Reports","authors":"Kai Demott, Martin Messner","doi":"10.1080/09638180.2023.2273968","DOIUrl":"https://doi.org/10.1080/09638180.2023.2273968","url":null,"abstract":"AbstractThe paper examines the co-production of narrative reports in the context of a non-profit innovation network. Prior research on narrative reporting suggests that corporate reports and similar organizational narratives are likely the product of collective efforts of different actors in the backstage. The actual process of (re-)writing such narratives has received little attention, however. In our paper, we examine how the inputs of different individual actors are translated into an organizational narrative. Mobilizing Goffman’s dramaturgical sociology as our main lens of analysis, we highlight different mechanisms of dramaturgical guidance in backstage interactions, and we show how such guidance can have repercussions on the original authors of narratives when they feel like they are losing ownership of ‘their’ stories. Overall, our paper adds to our understanding of the backstage-frontstage dynamics in narrative reporting.Keywords: NarrativesReportingSuccess storiesDramaturgical guidancePsychological ownership AcknowledgementsWe are very grateful to the participants in this study for their time and support of the project. Earlier versions of the paper were presented at the Assembly of the Swedish Research School in Accounting 2018 (Sigtuna), the EDEN Doctoral Colloquium 2018 (Brussels), and the Doctoral Colloquium at ACMAR 2019 (Vallendar). We would like to thank participants at these events for their valuable comments and suggestions. We particularly thank Carlos Larrinaga (editor) and two anonymous reviewers for their very helpful comments throughout the review process.Disclosure statementNo potential conflict of interest was reported by the author(s).Notes1 Note that, while we present our theoretical perspective upfront, this perspective emerged in an abductive manner (i.e. in interaction with our reading of the empirical material), as is typical for many qualitative studies (see Ahrens & Chapman, Citation2006; Lukka, Citation2014).","PeriodicalId":11764,"journal":{"name":"European Accounting Review","volume":"61 6","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135092987","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-11-10DOI: 10.1080/09638180.2023.2272622
Dongyue Wang, Leonard Leye Li, Louise Yi Lu, Mark Wilson
AbstractThis study examines the effect of employee health on corporate information production. Utilizing exposure to opioid abuse as the proxy for employee health, we find that firms headquartered in counties of high opioid prescription rate produce significantly less accurate management earnings forecasts. This result is robust to controlling for other dimensions of human capital and to utilizing the effective anti-opioid legislation across states as a plausibly exogenous variation that limits the prescriptions of opioid. The negative effect of opioid abuse is stronger for firms facing higher forecast difficulty, and is mitigated for firms with easier access to opioid treatment, for firms with superior employee welfare policies, and for firms with a corporate social responsibility (CSR) committee. We also show that managers delay earnings announcements and reduce forecast precision amidst high local opioid activity. Finally, we show that investors react less strongly to news in forecasts issued by firms located in high opioid areas, consistent with their recognition of the potential adverse effect of opioid abuse on information production within the firm.Keywords: Opioid crisisManagement forecastsHealth capitalJEL codes: G02J01J30M51 AcknowledgementsWe thank Chen Chen, Neil Fargher, Jeroen Koenraadt (discussant), Gary Monroe, Rencheng Wang, Yangxin Yu and participants in EAA 2022 Annual Conference for their useful comments.Disclosure statementNo potential conflict of interest was reported by the author(s).Data Availability StatementThe data used in this study are available from the public sources identified in the paper.Supplemental Data and Research MaterialsSupplemental data for this article can be accessed on the Taylor & Francis website, doi:10.1080/09638180.2023.2272622.Appendix OA: Discussion of alternate explanations for our main findings.Table A1: Tests of Alternative ExplanationsTable A2: Tests of the Market Reaction to Management ForecastsNotes1 See: https://www2.deloitte.com/us/en/insights/topics/leadership/ceo-role-employee-health-wellness.html.2 The widespread opioid abuse has reached crisis levels in the US, with more than 10 million Americans estimated to misuse opioids annually, resulting in $50 billion in healthcare and criminal justice costs, as well as $32 billion in productivity losses (Florence et al., Citation2021).3 For example, American Addiction Centers (2022) suggests that opioids (e.g., OxyContin, Vicodin, Fentanyl, Xanax and sleeping pills like Ambien) have made significant marks to white-collar professionals as these employees often resort to these pills for stress relief, relaxation, or to get some sleep at night. See: https://americanaddictioncenters.org/workforce-addiction/white-collar.4 In untabulated results, we further explore whether the attributes of the management team and/or workforce attenuate or exacerbate the negative effect of opioid abuse on managerial forecast accuracy. We find that the effect of opio
{"title":"The Opioid Crisis, Employee Health Capital, and Corporate Information Production","authors":"Dongyue Wang, Leonard Leye Li, Louise Yi Lu, Mark Wilson","doi":"10.1080/09638180.2023.2272622","DOIUrl":"https://doi.org/10.1080/09638180.2023.2272622","url":null,"abstract":"AbstractThis study examines the effect of employee health on corporate information production. Utilizing exposure to opioid abuse as the proxy for employee health, we find that firms headquartered in counties of high opioid prescription rate produce significantly less accurate management earnings forecasts. This result is robust to controlling for other dimensions of human capital and to utilizing the effective anti-opioid legislation across states as a plausibly exogenous variation that limits the prescriptions of opioid. The negative effect of opioid abuse is stronger for firms facing higher forecast difficulty, and is mitigated for firms with easier access to opioid treatment, for firms with superior employee welfare policies, and for firms with a corporate social responsibility (CSR) committee. We also show that managers delay earnings announcements and reduce forecast precision amidst high local opioid activity. Finally, we show that investors react less strongly to news in forecasts issued by firms located in high opioid areas, consistent with their recognition of the potential adverse effect of opioid abuse on information production within the firm.Keywords: Opioid crisisManagement forecastsHealth capitalJEL codes: G02J01J30M51 AcknowledgementsWe thank Chen Chen, Neil Fargher, Jeroen Koenraadt (discussant), Gary Monroe, Rencheng Wang, Yangxin Yu and participants in EAA 2022 Annual Conference for their useful comments.Disclosure statementNo potential conflict of interest was reported by the author(s).Data Availability StatementThe data used in this study are available from the public sources identified in the paper.Supplemental Data and Research MaterialsSupplemental data for this article can be accessed on the Taylor & Francis website, doi:10.1080/09638180.2023.2272622.Appendix OA: Discussion of alternate explanations for our main findings.Table A1: Tests of Alternative ExplanationsTable A2: Tests of the Market Reaction to Management ForecastsNotes1 See: https://www2.deloitte.com/us/en/insights/topics/leadership/ceo-role-employee-health-wellness.html.2 The widespread opioid abuse has reached crisis levels in the US, with more than 10 million Americans estimated to misuse opioids annually, resulting in $50 billion in healthcare and criminal justice costs, as well as $32 billion in productivity losses (Florence et al., Citation2021).3 For example, American Addiction Centers (2022) suggests that opioids (e.g., OxyContin, Vicodin, Fentanyl, Xanax and sleeping pills like Ambien) have made significant marks to white-collar professionals as these employees often resort to these pills for stress relief, relaxation, or to get some sleep at night. See: https://americanaddictioncenters.org/workforce-addiction/white-collar.4 In untabulated results, we further explore whether the attributes of the management team and/or workforce attenuate or exacerbate the negative effect of opioid abuse on managerial forecast accuracy. We find that the effect of opio","PeriodicalId":11764,"journal":{"name":"European Accounting Review","volume":"57 5","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135092866","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-11-08DOI: 10.1080/09638180.2023.2273380
Junzi Zhang, Pawel Bilinski, Ivana Raonic, James Ryans
This study examines how enforcement of acquisition disclosure regulation affects investors’ assessment of the transactions’ quality at merger and acquisition (M&A) announcements. Using a novel sample of comment letters on acquisition filings by public companies in China, we document that regulatory requests for disclosure enhancement and clarifications are more common on lower quality transactions obfuscated by weaker disclosure as evidenced by (i) a lower likelihood of the deal closing, and if the deal does close, lower post-deal firm profitability; and, (ii) a greater likelihood of subsequent goodwill impairment. Using entropy balancing matching, we document that transactions that receive comment letters associate with significant negative bidder announcement returns suggesting that regulatory actions reveal new information that aids investors to identify lower quality deals. The negative price effect is greater when comment letters have more acquisition-specific comments, compared to letters with more comments on general accounting and governance issues. Our results showcase that enforcing disclosure compliance in M&A filings aids investors in assessing the quality of M&A transactions at the time when the filings are made public.
{"title":"Enforcing Disclosure Compliance in Mergers and Acquisitions: Evidence from China","authors":"Junzi Zhang, Pawel Bilinski, Ivana Raonic, James Ryans","doi":"10.1080/09638180.2023.2273380","DOIUrl":"https://doi.org/10.1080/09638180.2023.2273380","url":null,"abstract":"This study examines how enforcement of acquisition disclosure regulation affects investors’ assessment of the transactions’ quality at merger and acquisition (M&A) announcements. Using a novel sample of comment letters on acquisition filings by public companies in China, we document that regulatory requests for disclosure enhancement and clarifications are more common on lower quality transactions obfuscated by weaker disclosure as evidenced by (i) a lower likelihood of the deal closing, and if the deal does close, lower post-deal firm profitability; and, (ii) a greater likelihood of subsequent goodwill impairment. Using entropy balancing matching, we document that transactions that receive comment letters associate with significant negative bidder announcement returns suggesting that regulatory actions reveal new information that aids investors to identify lower quality deals. The negative price effect is greater when comment letters have more acquisition-specific comments, compared to letters with more comments on general accounting and governance issues. Our results showcase that enforcing disclosure compliance in M&A filings aids investors in assessing the quality of M&A transactions at the time when the filings are made public.","PeriodicalId":11764,"journal":{"name":"European Accounting Review","volume":"8 4p2","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135340863","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-11-03DOI: 10.1080/09638180.2023.2270655
Ankit Jain
Managers use disclosure tone as a strategic tool to manage investors’ expectations and demand for information. I provide evidence that investors’ actions can, in turn, exercise a disciplining effect on tone management. Using exogenous relaxation in the short-selling constraints from Regulation-SHO and employing the difference-in-differences design on a propensity-score matched sample, I find that short-selling pressure reduces tone management. Greater short- selling pressure results in less optimism in tone unrelated to fundamentals, and in disclosures about the future rather than the past. Moreover, this reduction in tone management is stronger for firms with higher short-selling constraints pre-Regulation-SHO and for those with overoptimistic and overconfident managers.
{"title":"Disclosure Tone and Short-Selling Pressure: Evidence from Regulation-SHO","authors":"Ankit Jain","doi":"10.1080/09638180.2023.2270655","DOIUrl":"https://doi.org/10.1080/09638180.2023.2270655","url":null,"abstract":"Managers use disclosure tone as a strategic tool to manage investors’ expectations and demand for information. I provide evidence that investors’ actions can, in turn, exercise a disciplining effect on tone management. Using exogenous relaxation in the short-selling constraints from Regulation-SHO and employing the difference-in-differences design on a propensity-score matched sample, I find that short-selling pressure reduces tone management. Greater short- selling pressure results in less optimism in tone unrelated to fundamentals, and in disclosures about the future rather than the past. Moreover, this reduction in tone management is stronger for firms with higher short-selling constraints pre-Regulation-SHO and for those with overoptimistic and overconfident managers.","PeriodicalId":11764,"journal":{"name":"European Accounting Review","volume":"29 4","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135818175","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-11-03DOI: 10.1080/09638180.2023.2260844
Wen-Hsin Chang, Wen-Hsin Hsu
AbstractThis study examines the effect of SFAS 161, Disclosures about Derivative Instruments and Hedging Activities, on stock price informativeness. FASB issued SFAS 161, effective in 2008, to provide investors with an enhanced understanding of the objectives and implications of firms’ use of derivatives and hedging activities. Our primary goal is to examine whether SFAS 161 facilitates the dissemination of firm-specific information to the market and thus increases stock price informativeness. Using a U.S. sample covering fiscal-years 2001–2018, this study employs a difference-in-difference research design and identifies the treatment group (derivatives users) by conducting a textual analysis of the firm’s derivatives disclosures in the 10-K reports. The results show that for firms that engage in derivatives activities, stock price informativeness increases after the adoption of SFAS 161. We further find that the positive association between SFAS 161 adoption and stock price informativeness is more pronounced for firms with more readable derivatives disclosures. The results suggest that enhanced readability in derivative disclosures play an important role in reducing the information processing costs for investors.Keywords: SFAS 161Stock price informativenessDerivativesReadability Disclosure statementNo potential conflict of interest was reported by the author(s).Notes1 https://www.bis.org/statistics/about_derivatives_stats.htm?m=26392 The FASB has issued the following statements related to the accounting for derivatives: statements No.52, No.80, No.105, No.107, No.119, No.133, No.138, No.139, No.155, and No.161.3 Under SFAS 133, a derivative may be designated as (i) a fair value hedge, a hedge of the exposure to changes in the fair value of a recognized asset or liability, or of an unrecognized firm commitment; (ii) a cash flow hedge, a hedge of the exposure to variability in the cash flows of a recognized asset or liability, or of a forecasted transaction; or (iii) a foreign currency hedge, a hedge of the foreign currency exposure of an unrecognized firm commitment (foreign currency fair value hedge), available-for-sale security (foreign currency fair value hedge), a forecasted transaction (foreign currency cash flow hedge), or net investment in a foreign operation.4 Using a method similar to that of Guay (Citation1999) and Donohoe (Citation2015), the keyword search flagged all annual reports and searched for specific terms over the fiscal years 2004-2013: forward contract, option contract, futures contract, rate swap, swap agreement, currency exchange contract, foreign exchange contract, derivative instrument, and hedging instrument.5 In Eq. (2), we also exclude current, lagged, and lead value-weighted weekly industry returns of financial sectors for a robustness check.6 We also use the 5-year period before adoption and the 5-year period after adoption for robustness tests. The results remain the same.7 In robustness tests, we include industry f
{"title":"Derivatives Disclosures and Stock Price Informativeness","authors":"Wen-Hsin Chang, Wen-Hsin Hsu","doi":"10.1080/09638180.2023.2260844","DOIUrl":"https://doi.org/10.1080/09638180.2023.2260844","url":null,"abstract":"AbstractThis study examines the effect of SFAS 161, Disclosures about Derivative Instruments and Hedging Activities, on stock price informativeness. FASB issued SFAS 161, effective in 2008, to provide investors with an enhanced understanding of the objectives and implications of firms’ use of derivatives and hedging activities. Our primary goal is to examine whether SFAS 161 facilitates the dissemination of firm-specific information to the market and thus increases stock price informativeness. Using a U.S. sample covering fiscal-years 2001–2018, this study employs a difference-in-difference research design and identifies the treatment group (derivatives users) by conducting a textual analysis of the firm’s derivatives disclosures in the 10-K reports. The results show that for firms that engage in derivatives activities, stock price informativeness increases after the adoption of SFAS 161. We further find that the positive association between SFAS 161 adoption and stock price informativeness is more pronounced for firms with more readable derivatives disclosures. The results suggest that enhanced readability in derivative disclosures play an important role in reducing the information processing costs for investors.Keywords: SFAS 161Stock price informativenessDerivativesReadability Disclosure statementNo potential conflict of interest was reported by the author(s).Notes1 https://www.bis.org/statistics/about_derivatives_stats.htm?m=26392 The FASB has issued the following statements related to the accounting for derivatives: statements No.52, No.80, No.105, No.107, No.119, No.133, No.138, No.139, No.155, and No.161.3 Under SFAS 133, a derivative may be designated as (i) a fair value hedge, a hedge of the exposure to changes in the fair value of a recognized asset or liability, or of an unrecognized firm commitment; (ii) a cash flow hedge, a hedge of the exposure to variability in the cash flows of a recognized asset or liability, or of a forecasted transaction; or (iii) a foreign currency hedge, a hedge of the foreign currency exposure of an unrecognized firm commitment (foreign currency fair value hedge), available-for-sale security (foreign currency fair value hedge), a forecasted transaction (foreign currency cash flow hedge), or net investment in a foreign operation.4 Using a method similar to that of Guay (Citation1999) and Donohoe (Citation2015), the keyword search flagged all annual reports and searched for specific terms over the fiscal years 2004-2013: forward contract, option contract, futures contract, rate swap, swap agreement, currency exchange contract, foreign exchange contract, derivative instrument, and hedging instrument.5 In Eq. (2), we also exclude current, lagged, and lead value-weighted weekly industry returns of financial sectors for a robustness check.6 We also use the 5-year period before adoption and the 5-year period after adoption for robustness tests. The results remain the same.7 In robustness tests, we include industry f","PeriodicalId":11764,"journal":{"name":"European Accounting Review","volume":"30 20","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135818448","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-11-01DOI: 10.1080/09638180.2023.2268677
Vasiliki Athanasakou, Martin Walker
We develop a measure of management’s withholding of bad news (NBF – net bad flows) based on the relative lumpiness of negative daily abnormal stock returns in the fiscal period. We present an extensive set of tests that support the construct validity of NBF as a measure of management’s bad news withholding. Being calculable for listed companies using daily stock return data, NBF can complement direct scores of corporate disclosures when assessing the overall quality of corporate financial communication. We also compare the properties of NBF with the properties of measures of stock price crash risk. We find that NBF outperforms traditional crash risk measures in capturing bad news withholding. Re-estimating the crash risk measures using daily instead of weekly stock returns yields more powerful proxies for bad news withholding that are more closely related to NBF.
{"title":"A Measure of Management’s Withholding of Bad News","authors":"Vasiliki Athanasakou, Martin Walker","doi":"10.1080/09638180.2023.2268677","DOIUrl":"https://doi.org/10.1080/09638180.2023.2268677","url":null,"abstract":"We develop a measure of management’s withholding of bad news (NBF – net bad flows) based on the relative lumpiness of negative daily abnormal stock returns in the fiscal period. We present an extensive set of tests that support the construct validity of NBF as a measure of management’s bad news withholding. Being calculable for listed companies using daily stock return data, NBF can complement direct scores of corporate disclosures when assessing the overall quality of corporate financial communication. We also compare the properties of NBF with the properties of measures of stock price crash risk. We find that NBF outperforms traditional crash risk measures in capturing bad news withholding. Re-estimating the crash risk measures using daily instead of weekly stock returns yields more powerful proxies for bad news withholding that are more closely related to NBF.","PeriodicalId":11764,"journal":{"name":"European Accounting Review","volume":"41 6","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135271200","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-10-23DOI: 10.1080/09638180.2023.2270002
Sebastian Kronenberger
AbstractThis study examines the impact of the interaction between firms' accounting choices and auditors' audit effort choices on audit pricing. In a multi-period model, I focus on a central feature of accounting: reversing accruals. I find that initial low-balling, defined as lower audit fees than audit costs, arises independently from the direction of accruals, but increases with more conservatism in the first engagement period. The reason is that a conservative accruals strategy implies understated earnings today and overstated earnings in the future, which creates a higher investor demand for auditing services in future periods. The incumbent auditor can satisfy this future demand better than any competitor, because the first-period learning cost is sunk. Thus, conservatism enhances the competitive advantage of the incumbent and increases the future quasi-rent, which is used for a higher initial low-balling discount. I further show implications of the auditor-firm interaction for fee-cutting, a common proxy for low-balling, and the frequency of modified audit opinions, a common proxy for audit quality. Thus, my model provides a theoretical foundation for the connection between high low-balling discounts, accounting accruals, and audit quality.Keywords: Low-ballingFee-cuttingAudit qualityAccounting accruals AcknowledgmentsAccepted by Robert F. Göx. I thank Christopher Bleibtreu, Ralf Ewert, Qi Gao, Yasmin Hoffmann, Bill Kinney, Thomas Kourouxous, Sandra K. Kronenberger, Peter Krenn, Volker Laux, Paul Newman, Elisabeth Plietzsch, Stefan Schantl, Thomas Simon, Dirk Simons, Alfred Wagenhofer, Anna Waldner, and participants of the 12th Workshop on Accounting and Economics in Tilburg, the 39th EAA Annual Congress in Maastricht, the 83th VHB Annual Congress, the 12th EARNet Symposium Komma and seminar participants at the University of Magdeburg for helpful comments. I acknowledge funding from the Austrian Science Fond (FWF), Project W 1229.Disclosure statementNo potential conflict of interest was reported by the author(s).Notes1 Over the total time period, the auditor never earns rent because it is used to attract the engagement in the first period. Therefore, it is called quasi-rent.2 See also Kanodia and Mukherji (Citation1994), Lee and Gu (Citation1998), Chan (Citation1999), Zhang (Citation1999), and Simons (Citation2011).3 See also Göx and Wagenhofer (Citation2009, Citation2010), Nan and Wen (Citation2014), and Caskey and Laux (Citation2017).4 Further studies include Gul et al. (Citation2009), Ghosh and Lustgarten (Citation2006) and Ettredge and Greenberg (Citation1990).5 In addition, Barua et al. (Citation2020) provide evidence that audit fee studies are often subject to a systematic bias because only the succeeding auditor's fee must be mandatorily disclosed. The study shows that the fee discount often disappears after adjusting for the bias.6 To economize on notation, I drop the time index on the economic state, the accounting signal, and the
摘要本研究考察了会计师事务所会计选择与审计师审计努力选择之间的交互作用对审计定价的影响。在多期模型中，我关注会计的一个核心特征:应计项目的反转。我发现，最初的低摊付(定义为审计费用低于审计成本)独立于应计项目的方向产生，但在第一个审计业务期间随着更保守性的增加而增加。原因是，保守的应计收益策略意味着低估了今天的收益，高估了未来的收益，这使得投资者对未来期间的审计服务产生了更高的需求。现任审计师比任何竞争对手都能更好地满足这一未来需求，因为第一阶段的学习成本是沉没的。因此，保守性增强了现任者的竞争优势，并增加了未来的准租金，用于更高的初始低价折扣。我进一步展示了审计公司之间的互动对削减费用的影响，这是低报价的常见代表，以及修改审计意见的频率，这是审计质量的常见代表。因此，我的模型为高、低摊销折扣、会计应计项目和审计质量之间的联系提供了理论基础。关键词:低瞒报费用;审计质量;会计应计项目;我要感谢Christopher Bleibtreu、Ralf Ewert、Qi Gao、Yasmin Hoffmann、Bill Kinney、Thomas Kourouxous、Sandra K. Kronenberger、Peter Krenn、Volker Laux、Paul Newman、Elisabeth Plietzsch、Stefan Schantl、Thomas Simon、Dirk Simons、Alfred Wagenhofer、Anna Waldner以及参加第12届蒂尔堡会计与经济学研讨会、第39届EAA年会、第83届VHB年会的与会者。第12届EARNet专题讨论会Komma和在马格德堡大学的研讨会参与者进行有益的评论。我感谢奥地利科学基金会(FWF) w1229项目的资助。披露声明作者未报告潜在的利益冲突。注1在整个期间内，注册会计师从未赚取租金，因为租金在第一期用于吸引审计业务。因此称为准租参见Kanodia和Mukherji (Citation1994)、Lee和Gu (Citation1998)、Chan (Citation1999)、Zhang (Citation1999)和Simons (Citation2011)参见Göx and Wagenhofer (Citation2009, Citation2010)， Nan and Wen (Citation2014)， Caskey and Laux (Citation2017)进一步的研究包括Gul et al. (Citation2009)， Ghosh and Lustgarten (Citation2006)， Ettredge and Greenberg (Citation1990)此外，Barua等人(Citation2020)提供的证据表明，审计费用研究往往受到系统性偏见的影响，因为只有后续审计师的费用必须被强制披露。研究表明，在调整了偏差后，费用折扣往往会消失为了节省符号，我在经济状况、会计信号和审计意见上省略了时间指标。因此，θt,h=θh， θt,l=θl, St,h=Sh, St,l=Sl, Rt,h=Rh, Rt,l= rl业主经理已经以最有利的方式设计了分配，不能再改进了正如我在第5节中讨论的那样，只要贷款人和审计师理性地预测报告激励，并且在不同时期之间存在差异，本文的结果就成立。这包括业主经理在每个期间选择应计项目的设置对于区间Et∈[0,1]，fθh(Et)=1−(1−Et)2和fθl(Et)=1−Et2，图2使用沿c = 0.5的对称分布。一个中立的会计制度使经济收入和会计收入保持一致。在不对称分布中，fθh(Et)的概率质量向左移动，但仍然满足上述所有假设，中性会计系统将意味着相对于经济收入高估会计收入假设的这一方面对模型结果并不重要。可变启动成本也可以随着审计工作的增加而减少;例如，当审计团队成员每天都变得更快时，同一任务的重复次数就会更多。如第3.3节所示，只要在职者对审计竞争对手具有竞争优势，研究结果就成立，这与第二阶段的审计质量有关P1(θh | Rl) = p∫0 cfθh (E1) dE1p∫0 h (E1) dE1 + cfθ(1−p)(∫0 l (E1) dE1 + cfθ∫c1fθl (E1) qE1dE1) andP2(θh | Rl) = p∫01−cfθh (E2) dE2p∫01−cfθh (E2)德+(1−p)(∫01−cfθl (E1) dE1 +∫1−c1fθl (E2) qE2dE2)。我假设第二阶段的学习成本在第一阶段也以最小的审计工作量(qt=0)沉没。例如，由于费用谈判过程，双方已经彼此熟悉。结果不取决于学习的程度(详见3.3节)本节的一个隐含假设是，现任审计员在第二期被重新雇用。在第3.3节中，我表明这是最优的平衡。 以修改审计意见的频率表示的预期审计质量在第4.15节中进行了讨论。无论是否发生会计错误，事务所都会重新雇用在职人员。收益的实现和错误的发现发生在第二阶段之后。然而，即使考虑到实现，在职者仍然为公司提供更高的净值，因为所有审计师都尽其所知行事(他们如实报告)，而差异的存在仅仅是因为学习成本。Hennes等人(Citation2014)支持这些简化，发现客户在重述后保留审计师，特别是在转换成本很高的情况下。在他们的样本中，重述后的审计师流失率仅为16.2%，由客户发起的解雇仅占所有重述案件的10.7%。因此，即使在重述之后，保留审计师也是一种常见的做法我假定该公司仍与现任审计员在一起，以防冷漠完整表述见附录，命题1.18的证明M. DeFond和Zhang (Citation2014)概述了使用FMAO或持续经营意见(这是sec备案文件中唯一一种修改意见)作为审计质量代理的研究，见表3。这一措施在我的研究中特别有用，因为文献表明，较高的FMAO可以捕获审计师的独立性(M. DeFond & Zhang, Citation2014, p. 2879)。审计质量的一个直接度量是条件概率P1(Rl|Sh)，它需要审计过程本身的信息，例如审计小时数。本研究得到奥地利科学基金[W 1229]的支持。
{"title":"Accounting Accruals, Audit Quality, and Audit Pricing","authors":"Sebastian Kronenberger","doi":"10.1080/09638180.2023.2270002","DOIUrl":"https://doi.org/10.1080/09638180.2023.2270002","url":null,"abstract":"AbstractThis study examines the impact of the interaction between firms' accounting choices and auditors' audit effort choices on audit pricing. In a multi-period model, I focus on a central feature of accounting: reversing accruals. I find that initial low-balling, defined as lower audit fees than audit costs, arises independently from the direction of accruals, but increases with more conservatism in the first engagement period. The reason is that a conservative accruals strategy implies understated earnings today and overstated earnings in the future, which creates a higher investor demand for auditing services in future periods. The incumbent auditor can satisfy this future demand better than any competitor, because the first-period learning cost is sunk. Thus, conservatism enhances the competitive advantage of the incumbent and increases the future quasi-rent, which is used for a higher initial low-balling discount. I further show implications of the auditor-firm interaction for fee-cutting, a common proxy for low-balling, and the frequency of modified audit opinions, a common proxy for audit quality. Thus, my model provides a theoretical foundation for the connection between high low-balling discounts, accounting accruals, and audit quality.Keywords: Low-ballingFee-cuttingAudit qualityAccounting accruals AcknowledgmentsAccepted by Robert F. Göx. I thank Christopher Bleibtreu, Ralf Ewert, Qi Gao, Yasmin Hoffmann, Bill Kinney, Thomas Kourouxous, Sandra K. Kronenberger, Peter Krenn, Volker Laux, Paul Newman, Elisabeth Plietzsch, Stefan Schantl, Thomas Simon, Dirk Simons, Alfred Wagenhofer, Anna Waldner, and participants of the 12th Workshop on Accounting and Economics in Tilburg, the 39th EAA Annual Congress in Maastricht, the 83th VHB Annual Congress, the 12th EARNet Symposium Komma and seminar participants at the University of Magdeburg for helpful comments. I acknowledge funding from the Austrian Science Fond (FWF), Project W 1229.Disclosure statementNo potential conflict of interest was reported by the author(s).Notes1 Over the total time period, the auditor never earns rent because it is used to attract the engagement in the first period. Therefore, it is called quasi-rent.2 See also Kanodia and Mukherji (Citation1994), Lee and Gu (Citation1998), Chan (Citation1999), Zhang (Citation1999), and Simons (Citation2011).3 See also Göx and Wagenhofer (Citation2009, Citation2010), Nan and Wen (Citation2014), and Caskey and Laux (Citation2017).4 Further studies include Gul et al. (Citation2009), Ghosh and Lustgarten (Citation2006) and Ettredge and Greenberg (Citation1990).5 In addition, Barua et al. (Citation2020) provide evidence that audit fee studies are often subject to a systematic bias because only the succeeding auditor's fee must be mandatorily disclosed. The study shows that the fee discount often disappears after adjusting for the bias.6 To economize on notation, I drop the time index on the economic state, the accounting signal, and the","PeriodicalId":11764,"journal":{"name":"European Accounting Review","volume":"50 2","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135366952","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-09-29DOI: 10.1080/09638180.2023.2239865
Harvey Nguyen, Mia Hang Pham, Cameron Truong
Employing firm-level work from home (WFH) suitability derived from the U.S. universe job postings, we investigate whether rating agencies and debt holders incorporate WFH suitability in their risk assessments. We document that firms with higher WFH suitability have higher credit ratings and lower costs of debt. Our results are robust to different fixed effect estimations, sampling methods, and controls. We identify two ways that WFH suitability translates into higher credit ratings: high WFH suitability is associated with lower future cash flow volatility and lower default risk. Overall, our study suggests that WFH suitability is an important determinant of credit risk assessments and that firms should see flexible work arrangements as an effective strategy in their crisis management planning.
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Pub Date : 2023-09-14DOI: 10.1080/09638180.2023.2254351
Jan Bebbington, Matias Laine, Carlos Larrinaga, Giovanna Michelon
We reflect upon how European Accounting Review has conceived of environmental accounting (and to some extent social/sustainability accounting work) over its 30-year history, with the aim of discussing ways in which environmental accounting research can further develop, both within and beyond this journal. After outlining the broader social and ecological context from which environmental accounting has emerged (and noting that this context is evolving in substantive ways), we provide an overview of the types of research published in EAR. We combine these elements to identify three themes that we argue are critical for the direction of future research: the financial materiality of ecological issues and the impact this has on risk; how environmental accounting practices are constructed; and how a new relationship between nature and society may affect accounting practices. We finally conclude by envisioning a future of environmental accounting research that dovetails with the sustainability ambitions that can be draw from an examination of the detailed targets that underpin the Sustainable Development Goals.
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