This paper uses the relationship between a going-concern modified audit opinion and client bankruptcy as an audit quality indicator to investigate factors that could affect audit quality. The setting is important because, although stakeholders often view bankruptcies without a preceding going-concern opinion as evidence of impaired auditor independence, there could be various reasons behind them. Using a matched sample of bankrupt and nonbankrupt clients, this paper finds that the relationship is less positive when auditors are nonspecialists, allow more income-increasing discretionary accruals, or receive higher audit fees. These results suggest that auditors provide lower audit quality when they lack sufficient industry knowledge, are less conservative, or are more reliant on audit fees. Data Availability: Data are publicly available from the sources identified in the paper.
{"title":"The Effect of Tenure, Specialization, Conservatism, and Fees on the Relationship between Going-Concern Opinions and Client Bankruptcy","authors":"K. Lai","doi":"10.2308/api-2022-005","DOIUrl":"https://doi.org/10.2308/api-2022-005","url":null,"abstract":"\u0000 This paper uses the relationship between a going-concern modified audit opinion and client bankruptcy as an audit quality indicator to investigate factors that could affect audit quality. The setting is important because, although stakeholders often view bankruptcies without a preceding going-concern opinion as evidence of impaired auditor independence, there could be various reasons behind them. Using a matched sample of bankrupt and nonbankrupt clients, this paper finds that the relationship is less positive when auditors are nonspecialists, allow more income-increasing discretionary accruals, or receive higher audit fees. These results suggest that auditors provide lower audit quality when they lack sufficient industry knowledge, are less conservative, or are more reliant on audit fees.\u0000 Data Availability: Data are publicly available from the sources identified in the paper.","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48160914","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Brian E. Daugherty, Denise Dickins, M. Pitman, Wayne Tervo
If academic accounting research is not of interest to practicing accountants and regulators, public interest wanes, the academy becomes an echo chamber of its own ideas, and researchers risk relevancy and financial support. To provide insight about the obstacles perceived to reduce the likelihood that accounting academics will publish practice-relevant research in academic journals, we sent a survey to more than 5,600 US accounting faculty members. Based on 567 survey responses, we identify eight obstacles that the survey respondents believe reduce the likelihood they will publish practice-relevant research. The most frequently reported obstacle is that academic journal editors are not interested in publishing practice-related research (77 percent of survey respondents). We also provide evidence that the more academics interact with practitioners, the more likely they are to conduct and publish practice-relevant academic research. Recommendations and observations are included to help address the identified obstacles.
{"title":"Perceived Obstacles to Conducting and Publishing Practice Relevant Academic Accounting Research","authors":"Brian E. Daugherty, Denise Dickins, M. Pitman, Wayne Tervo","doi":"10.2308/api-2022-011","DOIUrl":"https://doi.org/10.2308/api-2022-011","url":null,"abstract":"If academic accounting research is not of interest to practicing accountants and regulators, public interest wanes, the academy becomes an echo chamber of its own ideas, and researchers risk relevancy and financial support. To provide insight about the obstacles perceived to reduce the likelihood that accounting academics will publish practice-relevant research in academic journals, we sent a survey to more than 5,600 US accounting faculty members. Based on 567 survey responses, we identify eight obstacles that the survey respondents believe reduce the likelihood they will publish practice-relevant research. The most frequently reported obstacle is that academic journal editors are not interested in publishing practice-related research (77 percent of survey respondents). We also provide evidence that the more academics interact with practitioners, the more likely they are to conduct and publish practice-relevant academic research. Recommendations and observations are included to help address the identified obstacles.","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2022-11-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49133585","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine the relation between progressive tax rates, income inequality, and state income tax collections. We provide evidence that states with more progressive tax rate structures have higher tax collections. We then show an enhanced relation for states that enacted more stringent COVID-19 restrictions, which increased income inequality. Finally, we find that restrictions were more severe in states with more progressive tax rates. Our evidence sheds light on the inherent conflict between progressive tax structures and income inequality – income inequality increasing policies result in higher tax collections with a progressive tax system even though the latter aims to address income inequality.
{"title":"The Inherent Conflict Between Progressive Tax Rates and Income Inequality: Lessons from COVID-19 Restrictions","authors":"N. Goldman, Stephen J. Lusch, Gil Sadka","doi":"10.2308/api-2022-006","DOIUrl":"https://doi.org/10.2308/api-2022-006","url":null,"abstract":"We examine the relation between progressive tax rates, income inequality, and state income tax collections. We provide evidence that states with more progressive tax rate structures have higher tax collections. We then show an enhanced relation for states that enacted more stringent COVID-19 restrictions, which increased income inequality. Finally, we find that restrictions were more severe in states with more progressive tax rates. Our evidence sheds light on the inherent conflict between progressive tax structures and income inequality – income inequality increasing policies result in higher tax collections with a progressive tax system even though the latter aims to address income inequality.","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2022-08-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47329989","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Brett A. Rixom, Jessica M. Rixom, Sonja E. Pippin, J. Wong
This study examines public perceptions of potential overseers charged with ensuring that relief packages are distributed to the intended audience. In an experiment, we assess perceptions of trustworthiness and fraud reduction ability between government and public accounting firm employees in the context of relief package oversight. While actual ability is important, public perceptions of overseer ability is also essential for relief packages to be fully effective. We find that people, regardless of their political party affiliation, rate public accounting firm employees as more trustworthy and better able to reduce fraud than government employees. For government oversight, participant political party affiliation influences perceptions of employee ability and is mediated by general trust in government. These findings suggest public accounting firms are a viable alternative to increase public perceptions that relief packages are distributed effectively. Initial evidence suggests educating the public on the role of career government employees may raise public opinion.
{"title":"Contrasting Public Perceptions of Government versus Certified Public Accounting Firm Oversight of Relief Packages","authors":"Brett A. Rixom, Jessica M. Rixom, Sonja E. Pippin, J. Wong","doi":"10.2308/api-2020-019","DOIUrl":"https://doi.org/10.2308/api-2020-019","url":null,"abstract":"This study examines public perceptions of potential overseers charged with ensuring that relief packages are distributed to the intended audience. In an experiment, we assess perceptions of trustworthiness and fraud reduction ability between government and public accounting firm employees in the context of relief package oversight. While actual ability is important, public perceptions of overseer ability is also essential for relief packages to be fully effective. We find that people, regardless of their political party affiliation, rate public accounting firm employees as more trustworthy and better able to reduce fraud than government employees. For government oversight, participant political party affiliation influences perceptions of employee ability and is mediated by general trust in government. These findings suggest public accounting firms are a viable alternative to increase public perceptions that relief packages are distributed effectively. Initial evidence suggests educating the public on the role of career government employees may raise public opinion.","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-08-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43367913","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Jean-François Henri, Marc Journeault, Michelle Rodrigue
We examine how managers orchestrate their eco-control package in reaction to different perceived environmental stakeholder pressures. Using survey data from Canadian manufacturing firms, our results show that environmental pressures perceived from societal stakeholders have a greater influence on the integration of environmental objectives into strategic planning than pressures perceived from business stakeholders. This suggests that business stakeholders act as a force that mostly maintains the scope of strategic environmental orientations, while societal stakeholders act as a force that mostly expands the scope of strategic orientations by stimulating further consideration of environmental issues as strategic objectives. The integration of environmental objectives in strategic planning stimulates a domino effect within the eco-control package, where the adaptation of strategic objectives leads to greater mobilization of other eco-controls. This domino effect represents successive effects among components of the eco-control package, revealing how stakeholder pressures play a role in stimulating multi-layered changes in eco-control mobilization.
{"title":"THE DOMINO EFFECT OF PERCEIVED STAKEHOLDER PRESSURES ON ECO-CONTROLS","authors":"Jean-François Henri, Marc Journeault, Michelle Rodrigue","doi":"10.2308/api-2020-015","DOIUrl":"https://doi.org/10.2308/api-2020-015","url":null,"abstract":"We examine how managers orchestrate their eco-control package in reaction to different perceived environmental stakeholder pressures. Using survey data from Canadian manufacturing firms, our results show that environmental pressures perceived from societal stakeholders have a greater influence on the integration of environmental objectives into strategic planning than pressures perceived from business stakeholders. This suggests that business stakeholders act as a force that mostly maintains the scope of strategic environmental orientations, while societal stakeholders act as a force that mostly expands the scope of strategic orientations by stimulating further consideration of environmental issues as strategic objectives. The integration of environmental objectives in strategic planning stimulates a domino effect within the eco-control package, where the adaptation of strategic objectives leads to greater mobilization of other eco-controls. This domino effect represents successive effects among components of the eco-control package, revealing how stakeholder pressures play a role in stimulating multi-layered changes in eco-control mobilization.","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-07-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41802325","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We investigate a phenomenon documented in Patten (2005) and Chen et al. (2014) regarding the overstatement of projections of future environmental capital expenditures (ECE) by firms operating in environmentally sensitive industries. Given that overstatement of ECE seems to be a common practice within these industries, we use an experimental design to examine whether two factors – an overstatement industry norm and/or a legitimacy threat – impact the likelihood of managers making higher ECE projections. Our results show participants are more likely to choose higher ECE projections in the presence relative to the absence of an overstatement industry norm. However, in contrast to expectations, the presence of a legitimacy threat was not significantly associated with higher projected spending. These findings provide additional understanding of what may drive managers’ behavior regarding environmental disclosure decisions.
{"title":"Industry Norm, Legitimacy Threats, and Managerial Decision-Making: An Experimental Investigation of Environmental Capital Expenditure Projections","authors":"Wioleta Olczak, Dennis M. Patten","doi":"10.2308/API-2020-009","DOIUrl":"https://doi.org/10.2308/API-2020-009","url":null,"abstract":"We investigate a phenomenon documented in Patten (2005) and Chen et al. (2014) regarding the overstatement of projections of future environmental capital expenditures (ECE) by firms operating in environmentally sensitive industries. Given that overstatement of ECE seems to be a common practice within these industries, we use an experimental design to examine whether two factors – an overstatement industry norm and/or a legitimacy threat – impact the likelihood of managers making higher ECE projections. Our results show participants are more likely to choose higher ECE projections in the presence relative to the absence of an overstatement industry norm. However, in contrast to expectations, the presence of a legitimacy threat was not significantly associated with higher projected spending. These findings provide additional understanding of what may drive managers’ behavior regarding environmental disclosure decisions.","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43098167","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
A large body of diversity literature examines outcomes associated with specific dimensions of board diversity, such as gender or racial diversity. This paper provides descriptive evidence on inputs to board diversity by analyzing the language contained in diversity disclosures of companies listed on the 2019 Dow Jones Industrial Average. Our analyses demonstrate that the concept of diversity is vast, has different meanings to different audiences, and continues to evolve. In addition, we investigate whether the language used in the disclosures reflects actual diversity for the boards in our sample. Based on our analyses, we discuss potential normative implications, regulatory insights, and limitations related to the disclosures, and highlight avenues for future research. This study will be of interest to researchers and practitioners evaluating how diversity impacts board performance, as well as practitioners and regulators defining, implementing, and/or assessing diversity policies in the hiring process.
{"title":"The Variety of Diversity Considerations in the Director-Nomination Process: Evidence from the Dow 30","authors":"Marc Cussatt, M. K. Harris, Fangjun Xiao","doi":"10.2308/API-2020-010","DOIUrl":"https://doi.org/10.2308/API-2020-010","url":null,"abstract":"A large body of diversity literature examines outcomes associated with specific dimensions of board diversity, such as gender or racial diversity. This paper provides descriptive evidence on inputs to board diversity by analyzing the language contained in diversity disclosures of companies listed on the 2019 Dow Jones Industrial Average. Our analyses demonstrate that the concept of diversity is vast, has different meanings to different audiences, and continues to evolve. In addition, we investigate whether the language used in the disclosures reflects actual diversity for the boards in our sample. Based on our analyses, we discuss potential normative implications, regulatory insights, and limitations related to the disclosures, and highlight avenues for future research. This study will be of interest to researchers and practitioners evaluating how diversity impacts board performance, as well as practitioners and regulators defining, implementing, and/or assessing diversity policies in the hiring process.","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-05-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44603757","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Eco-efficiency has been used in the private sector as a measure of how resources are used to produce environmental outcomes. In these instances, eco-efficiency has a reported signaling effect that increases value for stakeholders. In the public sector, research suggests that increased spending on social goods at the national (country) level results in reduced emissions with the resulting effect of an improved environment. This study extends previous research by applying eco-efficiency to the public sector in a significantly different public entity, county government, and by linking spending on social goods (input) and emissions (output) to a direct outcome of measurable economic value to individual citizens, single-family housing prices, for 66 Florida counties during the years 2005-2014. Results obtained show a positive and significant relationship between eco-efficiency and single-family housing prices. The results suggest that county-level eco-efficiency may be an important element to be included in external reports to citizens.
{"title":"Assessing the Relevance of County-Level Eco-Efficiency to Single-Family Housing Prices","authors":"Ouadie Akaaboune, Ross Quarles, Royce D. Burnett","doi":"10.2308/api-19-008","DOIUrl":"https://doi.org/10.2308/api-19-008","url":null,"abstract":"Eco-efficiency has been used in the private sector as a measure of how resources are used to produce environmental outcomes. In these instances, eco-efficiency has a reported signaling effect that increases value for stakeholders. In the public sector, research suggests that increased spending on social goods at the national (country) level results in reduced emissions with the resulting effect of an improved environment. This study extends previous research by applying eco-efficiency to the public sector in a significantly different public entity, county government, and by linking spending on social goods (input) and emissions (output) to a direct outcome of measurable economic value to individual citizens, single-family housing prices, for 66 Florida counties during the years 2005-2014. Results obtained show a positive and significant relationship between eco-efficiency and single-family housing prices. The results suggest that county-level eco-efficiency may be an important element to be included in external reports to citizens.","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-05-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47621936","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Annika Beelitz, Charles H. Cho, Giovanna Michelon, Dennis M. Patten
A growing number of studies use a dichotomous variable indicating the presence of a standalone CSR report to capture impacts of CSR disclosure. Our concern is that, without considering differences in the information provided, such an approach could lead to incorrect inferences regarding those impacts. Accordingly, we extend prior research by examining whether, similar to differences in environmental disclosure, the mere presence of a standalone CSR report mitigates negative market reactions at times of regulatory cost exposure. We focus on the 2011 Fukushima Daiichi disaster and a sample of international utilities with nuclear power generation. Controlling for other factors related to social and regulatory cost exposures, we find only the environmental disclosures appear to reduce negative market effects. We thus argue that, in exploring the impacts of CSR disclosure, researchers need to carefully consider, beyond just the presence of a CSR report, differences in the extent of information being provided.
{"title":"Measuring CSR Disclosure when Assessing Stock Market Effects","authors":"Annika Beelitz, Charles H. Cho, Giovanna Michelon, Dennis M. Patten","doi":"10.2308/API-2020-017","DOIUrl":"https://doi.org/10.2308/API-2020-017","url":null,"abstract":"A growing number of studies use a dichotomous variable indicating the presence of a standalone CSR report to capture impacts of CSR disclosure. Our concern is that, without considering differences in the information provided, such an approach could lead to incorrect inferences regarding those impacts. Accordingly, we extend prior research by examining whether, similar to differences in environmental disclosure, the mere presence of a standalone CSR report mitigates negative market reactions at times of regulatory cost exposure. We focus on the 2011 Fukushima Daiichi disaster and a sample of international utilities with nuclear power generation. Controlling for other factors related to social and regulatory cost exposures, we find only the environmental disclosures appear to reduce negative market effects. We thus argue that, in exploring the impacts of CSR disclosure, researchers need to carefully consider, beyond just the presence of a CSR report, differences in the extent of information being provided.","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-02-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46335360","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The purpose of this study is to examine the determinants of online availability and the ease of accessibility of U.S. municipality, county, school district, and special district audited financial statements. Using a sample of local governments that prepared 2017 audited financial statements, we find that certain forms of oversight by voters, auditors, and states are positively associated with the availability of audited financial statements. Our descriptive analysis also suggests that smaller governments, special districts, and school districts, many of which cover vast constituency populations, are lagging behind their municipality and county counterparts in online financial reporting. Our multivariate results suggest that as legislative/oversight bodies and citizens consider the potential benefits of additional forms of local government oversight, they should consider our findings that greater oversight is positively associated with the availability of local government audited financial statements.
{"title":"Online Availability and Accessibility of Local Government Financial Statements: Is the Public Interest Being Served?","authors":"Beth Y. Vermeer, Alan K. Styles","doi":"10.2308/apin-52579","DOIUrl":"https://doi.org/10.2308/apin-52579","url":null,"abstract":"\u0000 The purpose of this study is to examine the determinants of online availability and the ease of accessibility of U.S. municipality, county, school district, and special district audited financial statements. Using a sample of local governments that prepared 2017 audited financial statements, we find that certain forms of oversight by voters, auditors, and states are positively associated with the availability of audited financial statements. Our descriptive analysis also suggests that smaller governments, special districts, and school districts, many of which cover vast constituency populations, are lagging behind their municipality and county counterparts in online financial reporting. Our multivariate results suggest that as legislative/oversight bodies and citizens consider the potential benefits of additional forms of local government oversight, they should consider our findings that greater oversight is positively associated with the availability of local government audited financial statements.","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45851117","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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