In this study, we examine two questions: (1) whether financial statement aggressiveness related to tax accounts is associated with the likelihood of having tax-related misstatements in the financial statements, and (2) whether the disclosure of the need to restate prior years' financial statements for a tax-related reason influences tax-related financial statement aggressiveness related to tax accounts in the fiscal year of announcement. Recent evidence of an increase in the rate of tax-related accounting restatements motivates these questions. In this study, we find empirical evidence suggesting that tax-related financial statement aggressiveness is positively associated with the likelihood of having tax-related misstatements in the financial statements. We also find that in the year in which the need to restate prior years' financial statements is announced, companies with tax-related misstatements in their financial statements appear to be less tax-related financial statement aggressive compared to the control group.
{"title":"Financial Statement Aggressiveness Related to Tax Accounts and Tax-Related Accounting Misstatements","authors":"Hughlene A. Burton, Paul N. Tanyi","doi":"10.2308/apin-52544","DOIUrl":"https://doi.org/10.2308/apin-52544","url":null,"abstract":"\u0000 In this study, we examine two questions: (1) whether financial statement aggressiveness related to tax accounts is associated with the likelihood of having tax-related misstatements in the financial statements, and (2) whether the disclosure of the need to restate prior years' financial statements for a tax-related reason influences tax-related financial statement aggressiveness related to tax accounts in the fiscal year of announcement. Recent evidence of an increase in the rate of tax-related accounting restatements motivates these questions. In this study, we find empirical evidence suggesting that tax-related financial statement aggressiveness is positively associated with the likelihood of having tax-related misstatements in the financial statements. We also find that in the year in which the need to restate prior years' financial statements is announced, companies with tax-related misstatements in their financial statements appear to be less tax-related financial statement aggressive compared to the control group.","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":"42542663","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 was to analyze data collected from public accountants and students to assess differences in their perceived stakeholder and stockholder views. Paired-sample t-tests indicated that both public accountants and senior accounting students had a propensity to support the stakeholder view whereas non-accounting senior business students' perception of the stakeholder view was not significantly different from their perception of the stockholder view. One-way ANOVA results indicated that public accountants' perception of the stakeholder view was significantly higher than that of senior accounting students and both groups had significantly higher perceptions of the stakeholder view than non-accounting senior business students. On the other hand, non-accounting senior business students' perception of the stockholder view was significantly higher than that of both public accountants and senior accounting students. Furthermore, senior accounting students' perception of the stockholder view was significantly higher than that of public accountants.
{"title":"Public Accountants, Senior Accounting Students, and Non-Accounting Senior Business Majors: Comparing their Perception of Corporate Ethics and Social Responsibility","authors":"Adam S. Maiga","doi":"10.2308/APIN-52388","DOIUrl":"https://doi.org/10.2308/APIN-52388","url":null,"abstract":"\u0000 The purpose of this study was to analyze data collected from public accountants and students to assess differences in their perceived stakeholder and stockholder views. Paired-sample t-tests indicated that both public accountants and senior accounting students had a propensity to support the stakeholder view whereas non-accounting senior business students' perception of the stakeholder view was not significantly different from their perception of the stockholder view. One-way ANOVA results indicated that public accountants' perception of the stakeholder view was significantly higher than that of senior accounting students and both groups had significantly higher perceptions of the stakeholder view than non-accounting senior business students. On the other hand, non-accounting senior business students' perception of the stockholder view was significantly higher than that of both public accountants and senior accounting students. Furthermore, senior accounting students' perception of the stockholder view was significantly higher than that of public accountants.","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":"46638720","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}
Section 302 of the Sarbanes-Oxley Act requires public companies to maintain platforms for employees to report questionable practices anonymously. Technological advancements have now enabled many firms to incorporate technology into their whistleblowing platforms. An online platform is often promoted as a medium that offers more anonymity than the traditional phone platform. Furthermore, developments in artificial intelligence have enhanced the creation of virtual agents, which can run 24/7/365 at a low cost. Using an experimental paradigm, this study found no significant difference in perceived anonymity between online reporting and phone reporting. The phone platform attracted more reporting intention when a live agent handled reports because witnesses feel more support when talking to a live agent over the phone. However, the witnesses were more likely to report to an online platform when a virtual agent handled the reports because witnesses believed that it is more efficient and provides greater control while reporting. Data Availability: Please contact the author.
{"title":"Technology Advancements for Whistleblowing Reporting Platforms and Employees' Decision to Blow the Whistle","authors":"Lei Gao","doi":"10.2308/api-2020-001","DOIUrl":"https://doi.org/10.2308/api-2020-001","url":null,"abstract":"\u0000 Section 302 of the Sarbanes-Oxley Act requires public companies to maintain platforms for employees to report questionable practices anonymously. Technological advancements have now enabled many firms to incorporate technology into their whistleblowing platforms. An online platform is often promoted as a medium that offers more anonymity than the traditional phone platform. Furthermore, developments in artificial intelligence have enhanced the creation of virtual agents, which can run 24/7/365 at a low cost. Using an experimental paradigm, this study found no significant difference in perceived anonymity between online reporting and phone reporting. The phone platform attracted more reporting intention when a live agent handled reports because witnesses feel more support when talking to a live agent over the phone. However, the witnesses were more likely to report to an online platform when a virtual agent handled the reports because witnesses believed that it is more efficient and provides greater control while reporting.\u0000 Data Availability: Please contact the author.","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-10-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47327081","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}
This study aims to shed light on the determinants and consequences of the revolving door at the Securities and Exchange Commission (SEC). While revolvers may be good monitors due to their SEC experience and, thus, continuously create benefits for the economy (“schooling”), it is possible that they exploit their insights into the enforcement process and private connections to undermine enforcement (“regulatory capture”). Using a newly created dataset of revolvers who moved from the SEC to company boards, this study shows that not all revolvers are appointed for the same reasons and create the same benefits for their new employers. I demonstrate that those revolvers most closely involved in the enforcement process are associated with fewer future enforcement actions, while accounting quality does not improve. Contrarily, external revolvers seem to use their monitoring and advising duties to improve accounting quality. Data Availability: The newly created dataset is available in the Online Appendix; all other data sources are cited in the text.
{"title":"The SEC's Revolving Door: Insights from Boards of Directors","authors":"Juliane Wutzler","doi":"10.2308/api-19-005","DOIUrl":"https://doi.org/10.2308/api-19-005","url":null,"abstract":"\u0000 This study aims to shed light on the determinants and consequences of the revolving door at the Securities and Exchange Commission (SEC). While revolvers may be good monitors due to their SEC experience and, thus, continuously create benefits for the economy (“schooling”), it is possible that they exploit their insights into the enforcement process and private connections to undermine enforcement (“regulatory capture”). Using a newly created dataset of revolvers who moved from the SEC to company boards, this study shows that not all revolvers are appointed for the same reasons and create the same benefits for their new employers. I demonstrate that those revolvers most closely involved in the enforcement process are associated with fewer future enforcement actions, while accounting quality does not improve. Contrarily, external revolvers seem to use their monitoring and advising duties to improve accounting quality.\u0000 Data Availability: The newly created dataset is available in the Online Appendix; all other data sources are cited in the text.","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-09-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43148054","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}
Our experiment, with 106 practicing auditors, tests whether audit judgments are influenced by client CSR performance, individual auditors' views of CSR, and auditors' perceptions of client risk induced by CSR performance. Results indicate auditor judgments are less (more) conservative for clients with positive (negative) environmental performance. We find that client risk assessments mediate the link between environmental performance and account-level judgments. In contrast, results indicate that socially-oriented performance has no overall significant influence on audit judgments in our experiment. Overall, our results indicate that different dimensions of CSR and the salience of the CSR issue can have differential effects on audit judgments. Data Availability: Data available upon request.
{"title":"The Influence of Client Corporate Social Responsibility Performance Information on Auditor Judgments","authors":"L. Hickman, J. Côté, D. Sanders, T. Weber","doi":"10.2308/api-19-006","DOIUrl":"https://doi.org/10.2308/api-19-006","url":null,"abstract":"\u0000 Our experiment, with 106 practicing auditors, tests whether audit judgments are influenced by client CSR performance, individual auditors' views of CSR, and auditors' perceptions of client risk induced by CSR performance. Results indicate auditor judgments are less (more) conservative for clients with positive (negative) environmental performance. We find that client risk assessments mediate the link between environmental performance and account-level judgments. In contrast, results indicate that socially-oriented performance has no overall significant influence on audit judgments in our experiment. Overall, our results indicate that different dimensions of CSR and the salience of the CSR issue can have differential effects on audit judgments.\u0000 Data Availability: Data available upon request.","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-09-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48002713","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 find a negative relationship between aggregate CSR scores and the probability that firms restated financial statements over the period 1991–2012. We then break that period into three sub-periods in order to determine whether the relationship holds for all three sub-periods. During the sub-periods of 1991–2001 and 2002–2005, the negative CSR score-restatement probability relationship holds. The negative relationship disappears in the 2006–2012 sub-period. Additional analyses indicate CSR scores are significantly higher in the 2006–2012 sub-period, suggesting the disappearance of the relationship between aggregate CSR scores and financial statement quality may relate to changes in CSR assessments and the CSR reporting environment. Our findings update the literature linking CSR scores and financial reporting quality and identify the need for further research as to the reasons the link between these constructs disappeared.
{"title":"Corporate Social Responsibility and Financial Reporting Quality: Evidence from Restatements","authors":"Yi‐Hung Lin, H. Huang, Mark Riley, Chih-Chen Lee","doi":"10.2308/api-19-010","DOIUrl":"https://doi.org/10.2308/api-19-010","url":null,"abstract":"\u0000 We find a negative relationship between aggregate CSR scores and the probability that firms restated financial statements over the period 1991–2012. We then break that period into three sub-periods in order to determine whether the relationship holds for all three sub-periods. During the sub-periods of 1991–2001 and 2002–2005, the negative CSR score-restatement probability relationship holds. The negative relationship disappears in the 2006–2012 sub-period. Additional analyses indicate CSR scores are significantly higher in the 2006–2012 sub-period, suggesting the disappearance of the relationship between aggregate CSR scores and financial statement quality may relate to changes in CSR assessments and the CSR reporting environment. Our findings update the literature linking CSR scores and financial reporting quality and identify the need for further research as to the reasons the link between these constructs disappeared.","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-07-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42143170","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}
Research suggests that following several high-profile accounting scandals and the passage of SOX legislation in 2002, firms substituted real earnings management strategies for accrual manipulation. However, the broader implications of this tradeoff from a public policy and financial oversight perspective are not well understood. Consistent with our expectations, we find that abnormal operating decisions are less informative about future ROA in the post-SOX period. We also find that the increase in real earnings management negatively impacts firm value, but investors appear slow to recognize and price the myopic behavior. We do not observe a corresponding increase in the quality of discretionary accruals after SOX, but market mispricing of abnormal accruals essentially disappears, consistent with greater investor scrutiny. Although the shift away from accrual manipulation to real earnings management should result in less distortion of underlying economic events, the net effect appears to be value destroying for the average firm. Data Availability: Data are publicly available from sources identified in the paper. JEL Classifications: G32; G38; M41; M48.
{"title":"The Economic Effects of Earnings Management Pre- and Post-SOX","authors":"Terry W. Mason, Richard M. Morton","doi":"10.2308/API-19-012","DOIUrl":"https://doi.org/10.2308/API-19-012","url":null,"abstract":"\u0000 Research suggests that following several high-profile accounting scandals and the passage of SOX legislation in 2002, firms substituted real earnings management strategies for accrual manipulation. However, the broader implications of this tradeoff from a public policy and financial oversight perspective are not well understood. Consistent with our expectations, we find that abnormal operating decisions are less informative about future ROA in the post-SOX period. We also find that the increase in real earnings management negatively impacts firm value, but investors appear slow to recognize and price the myopic behavior. We do not observe a corresponding increase in the quality of discretionary accruals after SOX, but market mispricing of abnormal accruals essentially disappears, consistent with greater investor scrutiny. Although the shift away from accrual manipulation to real earnings management should result in less distortion of underlying economic events, the net effect appears to be value destroying for the average firm.\u0000 Data Availability: Data are publicly available from sources identified in the paper.\u0000 JEL Classifications: G32; G38; M41; M48.","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-06-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42695210","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}
Capital constraints require companies to prioritize among the host of sustainability issues to which they can allocate capital. In this study, we investigate the role of three important factors that can affect this prioritization process: key decision-makers, sustainability reporting models, and stakeholder communications. We investigate these factors through the lenses of economic theory (i.e., the shareholder value approach), stakeholder theory, and enlightened stakeholder theory by collecting survey evidence from 104 managers in the resource transformation sector who are involved in or familiar with their company's prioritization process. This study contributes to the literature by providing important insights into companies' internal decision-making processes regarding sustainability issue prioritization. JEL Classifications: G34; M14; M41. Data Availability: The data are available from the authors upon request.
{"title":"Prioritizing Sustainability Issues: Insights from Corporate Managers about Key Decision-Makers, Reporting Models, and Stakeholder Communications","authors":"Joseph A. Johnson, S. Sutton, Jochen C. Theis","doi":"10.2139/SSRN.3157152","DOIUrl":"https://doi.org/10.2139/SSRN.3157152","url":null,"abstract":"\u0000 Capital constraints require companies to prioritize among the host of sustainability issues to which they can allocate capital. In this study, we investigate the role of three important factors that can affect this prioritization process: key decision-makers, sustainability reporting models, and stakeholder communications. We investigate these factors through the lenses of economic theory (i.e., the shareholder value approach), stakeholder theory, and enlightened stakeholder theory by collecting survey evidence from 104 managers in the resource transformation sector who are involved in or familiar with their company's prioritization process. This study contributes to the literature by providing important insights into companies' internal decision-making processes regarding sustainability issue prioritization.\u0000 JEL Classifications: G34; M14; M41.\u0000 Data Availability: The data are available from the authors upon request.","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":" ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2020-06-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2139/SSRN.3157152","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46050571","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}
Reservations are generally expressed about the applicability of performance management tools, which were primarily developed for the private sector, to public sector institutions. One of the concer...
对于主要为私营部门开发的业绩管理工具是否适用于公共部门机构，一般表示保留意见。其中一个问题是……
{"title":"Mapping Stakeholder Expectations of a Publicly Funded Post-Secondary Institution: A Balanced Scorecard Perspective","authors":"Katelyn Stejskal, Naqi Sayed, Camillo Lento","doi":"10.2308/api-19-002","DOIUrl":"https://doi.org/10.2308/api-19-002","url":null,"abstract":"Reservations are generally expressed about the applicability of performance management tools, which were primarily developed for the private sector, to public sector institutions. One of the concer...","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":"1 1","pages":"0000-0000"},"PeriodicalIF":0.0,"publicationDate":"2020-03-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46915411","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}
{"title":"Annual Editor Report","authors":"Amy M. Hageman","doi":"10.2308/apin-10734","DOIUrl":"https://doi.org/10.2308/apin-10734","url":null,"abstract":"","PeriodicalId":38883,"journal":{"name":"Accounting and the Public Interest","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2019-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46609144","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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