Journal of Corporate Accounting and Finance最新文献

This study examines the potential effect of using component auditors in multinational group audits (group audits) on the investment efficiency of multinational companies (MNCs). Group audits tend to negatively affect MNCs’ investment efficiency by creating an opaque information environment and impairing auditors’ monitoring efficacy. Using a sample of US MNCs, this study demonstrates a positive association between group audits and underinvestment (overinvestment) in settings prone to underinvestment (overinvestment). In other words, among MNCs that are likely to underinvest (overinvest), those with group audits underinvest (overinvest) more. Furthermore, to address the concern that using group audits may be driven by MNCs’ characteristics, propensity score matching (PSM) and entropy balancing procedures are employed to pre-treat the sample. The results hold with using the treated samples. This study extends the literature on the effect of group audits on audit outcomes and investor's response by providing evidence that group audits can also affect business outcomes.

Existing studies of capital structure show a positive association between tangible assets and leverage, but these studies have ignored the potential systematic variation in magnitude due to institutional heterogeneity across countries. Using a sample from 32 countries, we find that the association between tangible assets and leverage is weaker if firms are located in countries with stronger creditors’ rights, better financial development, good governance, and more transparency. Using the US subprime mortgage crisis as a quasi-natural experiment, we find that the role of tangibility as a determinant of leverage becomes stronger during the crisis period. However, stronger institutional environments (i.e., stronger creditors rights, better financial development, good governance, and high country-level transparency) play a pivotal moderating role and reduce this enhanced association during the crisis period.

This paper examines how the adoption of iXBRL affects future earnings response coefficients (FERCs), which measure investors’ ability to predict future performance and impound the prediction into the current-year stock price. We find that the adoption of iXBRL is positively associated with FERCs. This finding indicates that investors can better anticipate the future performance from iXBRL filings and reflect it on the current stock price. We also find that the number of standardized and extension tags can strengthen the association between iXBRL adoption and FERCs, demonstrating the benefit of those two tags in enhancing investors’ capabilities to analyze complex financial disclosures. Our findings are informative to the SEC regarding the effectiveness of the iXBRL mandate. We also contribute to the emerging literature on iXBRL adoption and the usability of iXBRL filings.

This study investigates the relationship between the earnings management practices of target firms prior to mergers and acquisitions (M&A) announcements and the duration of post-announcement due diligence. Utilizing a dataset of 1070 publicly listed European target firms that participated in M&A transactions from 2005 to 2023, we provide robust evidence that earnings management, specifically through accruals and production cost manipulation, is significantly associated with extended due diligence periods. Our analysis reveals that income-increasing accrual-based earnings management and income-decreasing manipulation of production costs contribute to a notable prolongation of due diligence. Furthermore, this research examines the moderating role of information asymmetry, focusing on cross-border and inter-sector transactions. The findings indicate that the positive association between earnings management and due diligence duration remains significant, even in heightened information asymmetry. These results suggest that acquirers possess the required means and mechanisms to accurately assess the financial status of target firms, even when such firms engage in alleged, less detectable real earnings management practices or when the transactions occur within unfamiliar national and industry contexts.

This paper revisits and provides an explanation for the negative relationship between intangible information and future stock returns, as identified in an influential study by Daniel and Titman. Our empirical analysis reveals that while intangible information has a positive relationship with future earnings, this association weakens in a diminishing fashion overtime. As a result, due to this diminishing effect, intangible information has negative implications for firms’ future profitability growth. Our findings suggest that investors’ mispricing of intangible information stems from their misunderstanding of this diminishing impact of intangible information on future earnings. Once we control for the diminishing effect, the negative relationship between intangible information and future abnormal returns no longer holds.

This study investigates the integration of Artificial Intelligence (AI) into accounting systems, identifying key challenges, and potential opportunities. The objective is to provide a critical assessment of the impact that AI has on modern accounting practices and systems. Methodologically, the research involves a review and analysis of secondary data, including official company portals, comprehensive industry analyses, product documentation, and insightful whitepapers of 10 major companies pioneering AI adoption. The study reveals challenges such as the compatibility of AI with existing accounting infrastructures and the need for workforce reskilling to adapt to AI-driven processes. Conversely, the study highlights opportunities such as enhanced operational efficiency, improved accuracy, and the facilitation of strategic decision-making through predictive analytics. The research underscores the necessity for strategic planning and the development of adaptable systems to leverage AI technologies effectively in accounting.

Using work-related injury data from the Occupational Safety and Health Administration (OSHA), we document that firms with higher workers’ injuries and illnesses tend to manage earnings through real activities manipulation. Rather than the relative cost from switching one method to another, short-term performance pressure by transient institutional investors, who trade based on current earning news, explains our results. Further analyses show that if firms have a higher CEO risk incentive, managers of those firms are more likely to smooth their earnings by reporting inflated production and contracted discretionary expenses. Overall, our findings suggest that poor workplace safety leads to incentives for managers’ opportunistic financial reporting behavior.