This study investigates the impact of the SEC’s regulatory cooperation and enforcement on the corporate social responsibility (CSR) reporting practices of U.S.-listed foreign firms using a country’s Multilateral Memorandum of Understanding (MMoU) signing as a catalyst. The MMoU, a cooperative agreement among global securities regulators, enhances the SEC’s ability to engage in cross-border enforcement actions in collaboration with foreign counterparts. Our findings reveal a significant enhancement in both the quantity and quality of CSR reporting among U.S.-listed foreign firms after their home country signs the MMoU. This improvement sets them apart from their non-U.S.-listed counterparts in the same foreign location. Notably, this positive change is more pronounced among foreign firms from signatory countries with weak country-level institutions. This study contributes to the understanding of how regulatory changes, specifically MMoU adoption, influence CSR reporting, emphasizing the strategic role it plays for firms in the face of heightened regulatory cooperation and enforcement. Data Availability: Data subject to third-party restrictions. JEL Classifications: M41; G18; P48; G32.
{"title":"Cross-Border Regulatory Cooperation and Corporate Social Responsibility Reporting","authors":"X. Chen, Le Luo, Albert Tsang","doi":"10.2308/jiar-2022-041","DOIUrl":"https://doi.org/10.2308/jiar-2022-041","url":null,"abstract":"\u0000 This study investigates the impact of the SEC’s regulatory cooperation and enforcement on the corporate social responsibility (CSR) reporting practices of U.S.-listed foreign firms using a country’s Multilateral Memorandum of Understanding (MMoU) signing as a catalyst. The MMoU, a cooperative agreement among global securities regulators, enhances the SEC’s ability to engage in cross-border enforcement actions in collaboration with foreign counterparts. Our findings reveal a significant enhancement in both the quantity and quality of CSR reporting among U.S.-listed foreign firms after their home country signs the MMoU. This improvement sets them apart from their non-U.S.-listed counterparts in the same foreign location. Notably, this positive change is more pronounced among foreign firms from signatory countries with weak country-level institutions. This study contributes to the understanding of how regulatory changes, specifically MMoU adoption, influence CSR reporting, emphasizing the strategic role it plays for firms in the face of heightened regulatory cooperation and enforcement.\u0000 Data Availability: Data subject to third-party restrictions.\u0000 JEL Classifications: M41; G18; P48; G32.","PeriodicalId":45457,"journal":{"name":"Journal of International Accounting Research","volume":"29 13","pages":""},"PeriodicalIF":1.2,"publicationDate":"2024-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139455980","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 paper empirically examines the relationship between forward-looking environmental and social information in sustainability reports (FLSI) and financial analysts’ forecast accuracy. To provide contextual insights, we conduct semistructured interviews with financial analysts. We find that FLSI quantity, measured by FLSI words and scope, and FLSI quality, measured by the precision, horizon, and direction of the environmental or social forecast, are associated with greater earnings forecast accuracy for short-horizon forecasts. Specifically, the precision and direction of FLSI affect analysts’ short- and midhorizon forecasts. Our results hold only for environmental FLSI and FLSI in externally assured sustainability reports. However, the results indicate that the provision of economic information in sustainability reports does not affect analyst forecasts. Collectively, our findings carry far-reaching implications for practitioners and—in particular—regulators around the world by shedding light on the potential costs and benefits of the new European Corporate Sustainability Reporting Directive (CSRD). Data Availability: Data are available from the public sources cited in the text. JEL Classifications: M40; M41.
{"title":"Forward-Looking Sustainability Information and Financial Analysts","authors":"Isabel C. Hertl, Janine Maniora","doi":"10.2308/jiar-2022-039","DOIUrl":"https://doi.org/10.2308/jiar-2022-039","url":null,"abstract":"This paper empirically examines the relationship between forward-looking environmental and social information in sustainability reports (FLSI) and financial analysts’ forecast accuracy. To provide contextual insights, we conduct semistructured interviews with financial analysts. We find that FLSI quantity, measured by FLSI words and scope, and FLSI quality, measured by the precision, horizon, and direction of the environmental or social forecast, are associated with greater earnings forecast accuracy for short-horizon forecasts. Specifically, the precision and direction of FLSI affect analysts’ short- and midhorizon forecasts. Our results hold only for environmental FLSI and FLSI in externally assured sustainability reports. However, the results indicate that the provision of economic information in sustainability reports does not affect analyst forecasts. Collectively, our findings carry far-reaching implications for practitioners and—in particular—regulators around the world by shedding light on the potential costs and benefits of the new European Corporate Sustainability Reporting Directive (CSRD). Data Availability: Data are available from the public sources cited in the text. JEL Classifications: M40; M41.","PeriodicalId":45457,"journal":{"name":"Journal of International Accounting Research","volume":"23 1","pages":""},"PeriodicalIF":1.2,"publicationDate":"2023-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139294989","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}
Pub Date : 2023-10-01DOI: 10.2308/1542-6297-22.3.i
{"title":"Covers and Front Matter","authors":"","doi":"10.2308/1542-6297-22.3.i","DOIUrl":"https://doi.org/10.2308/1542-6297-22.3.i","url":null,"abstract":"","PeriodicalId":45457,"journal":{"name":"Journal of International Accounting Research","volume":"87 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136054549","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}
Pub Date : 2023-10-01DOI: 10.2308/1542-6297-22.3.175
{"title":"Editorial Policy","authors":"","doi":"10.2308/1542-6297-22.3.175","DOIUrl":"https://doi.org/10.2308/1542-6297-22.3.175","url":null,"abstract":"","PeriodicalId":45457,"journal":{"name":"Journal of International Accounting Research","volume":"51 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136054531","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}
Giorgio Gotti, Leo Jiahe Liu, Rebeca Pérez, Xingqiang Yin
ABSTRACT Audit disclosure requirements have increased across countries in recent years. In this study, we explore a disclosure pattern that has been adopted by approximately 23 percent of Chinese publicly listed companies and their auditors—the disclosure of up to three overlapping items both in the risk factor section of financial reports and in the key audit matters (KAM) section of the audit report. We predict and find that such disclosure overlaps increase auditor liability, using audit fees as a proxy for auditor liability, and that (1) both the magnitude and explicitness of overlapped disclosure are positively associated with auditor liability and (2) analyst following, Top 10 auditors, and auditor tenure play a moderating role in the association between overlapped disclosures and auditors’ perceived liability. Collectively, our analysis supports our hypothesis that KAM disclosure increases auditor liability when coupled with management disclosure of related risk factors. Data Availability: Data are available from the sources cited in the text. JEL Classifications: M41; M42; K41.
{"title":"The Impact of Risk Disclosure Overlaps on Auditor Liability: Evidence from China","authors":"Giorgio Gotti, Leo Jiahe Liu, Rebeca Pérez, Xingqiang Yin","doi":"10.2308/jiar-2022-031","DOIUrl":"https://doi.org/10.2308/jiar-2022-031","url":null,"abstract":"ABSTRACT Audit disclosure requirements have increased across countries in recent years. In this study, we explore a disclosure pattern that has been adopted by approximately 23 percent of Chinese publicly listed companies and their auditors—the disclosure of up to three overlapping items both in the risk factor section of financial reports and in the key audit matters (KAM) section of the audit report. We predict and find that such disclosure overlaps increase auditor liability, using audit fees as a proxy for auditor liability, and that (1) both the magnitude and explicitness of overlapped disclosure are positively associated with auditor liability and (2) analyst following, Top 10 auditors, and auditor tenure play a moderating role in the association between overlapped disclosures and auditors’ perceived liability. Collectively, our analysis supports our hypothesis that KAM disclosure increases auditor liability when coupled with management disclosure of related risk factors. Data Availability: Data are available from the sources cited in the text. JEL Classifications: M41; M42; K41.","PeriodicalId":45457,"journal":{"name":"Journal of International Accounting Research","volume":"38 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135963344","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}
ABSTRACT This study examines the impact of economic downturns on real earnings management activities in an international setting. Using a sample of 27 countries between 1988 and 2016, I find that the extent of real earnings management increases and that the substitution relation between real earnings management and accrual-based earnings management becomes stronger during economic downturns. Managers tend to rely on real earnings management to avoid the threat of greater scrutiny during economic downturns. The effect of an economic downturn on real earnings management is stronger for firms with high earnings management incentives, such as to avoid reporting earnings decreases and losses, to just meet or beat analysts’ earnings forecasts, and to facilitate the success of seasonal equity offerings. The findings suggest that real earnings management comes at a high cost. Firms sacrifice future performance when engaging in real earnings management. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: G14; G28; G39; M41.
{"title":"Real Earnings Management during Economic Downturns","authors":"Hong Kim Duong","doi":"10.2308/jiar-2021-093","DOIUrl":"https://doi.org/10.2308/jiar-2021-093","url":null,"abstract":"ABSTRACT This study examines the impact of economic downturns on real earnings management activities in an international setting. Using a sample of 27 countries between 1988 and 2016, I find that the extent of real earnings management increases and that the substitution relation between real earnings management and accrual-based earnings management becomes stronger during economic downturns. Managers tend to rely on real earnings management to avoid the threat of greater scrutiny during economic downturns. The effect of an economic downturn on real earnings management is stronger for firms with high earnings management incentives, such as to avoid reporting earnings decreases and losses, to just meet or beat analysts’ earnings forecasts, and to facilitate the success of seasonal equity offerings. The findings suggest that real earnings management comes at a high cost. Firms sacrifice future performance when engaging in real earnings management. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: G14; G28; G39; M41.","PeriodicalId":45457,"journal":{"name":"Journal of International Accounting Research","volume":"27 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136307268","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}
ABSTRACT This study explores the evolution of accounting research by utilizing an unsupervised machine learning approach. We aim to identify the latent topics of accounting from the 1980s up to 2018, the dynamics and emerging topics of accounting research, and the economic reasons behind those changes. First, based on 23,220 articles from 46 accounting journals, we identify 55 topics using the latent Dirichlet allocation model. To illustrate the connection between topics, we use HistCite to generate a citation map along a timeline. The citation clusters demonstrate the “tribalism” phenomenon in accounting research. We then implement the dynamic topic model to reveal the dynamics of topics to show changes in accounting research. The emerging research trends are identified from the topic analytics. We further explore the economic reasons and in-depth insights into the topic evolution, indicating the economic development embeddedness nature of accounting research. JEL Classifications: B26; M40.
{"title":"Exploring Accounting Research Topic Evolution: An Unsupervised Machine Learning Approach","authors":"June Cao, Zhanzhong Gu, Iftekhar Hasan","doi":"10.2308/jiar-2021-073","DOIUrl":"https://doi.org/10.2308/jiar-2021-073","url":null,"abstract":"ABSTRACT This study explores the evolution of accounting research by utilizing an unsupervised machine learning approach. We aim to identify the latent topics of accounting from the 1980s up to 2018, the dynamics and emerging topics of accounting research, and the economic reasons behind those changes. First, based on 23,220 articles from 46 accounting journals, we identify 55 topics using the latent Dirichlet allocation model. To illustrate the connection between topics, we use HistCite to generate a citation map along a timeline. The citation clusters demonstrate the “tribalism” phenomenon in accounting research. We then implement the dynamic topic model to reveal the dynamics of topics to show changes in accounting research. The emerging research trends are identified from the topic analytics. We further explore the economic reasons and in-depth insights into the topic evolution, indicating the economic development embeddedness nature of accounting research. JEL Classifications: B26; M40.","PeriodicalId":45457,"journal":{"name":"Journal of International Accounting Research","volume":"1 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135248433","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}
Kiridaran Kanagaretnam, Jimmy Lee, Chee Yeow Lim, Gerald J. Lobo
ABSTRACT We first review the recent research published in the Journal of International Accounting Research (JIAR) on the influence of international institutions on accounting practices. We follow this with a discussion of the literature by studying the influence of institutions on tax avoidance and tax evasion. We then propose a new methodological approach that draws on the theory of institutional hierarchy proposed by Williamson (2000) and examine the relative importance of three broad types of institutions (informal, formal, and media) in curtailing perceived tax evasion activities. We contribute to the international accounting literature by summarizing the recent research that addresses tax avoidance and tax evasion and by providing preliminary evidence on how employing an institutional hierarchy approach can address the interdependencies between commonly used institutional factors. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: H26; G28; O16.
{"title":"Institutions and Corporate Tax Evasion: A Review of the Literature and a Methodological Approach","authors":"Kiridaran Kanagaretnam, Jimmy Lee, Chee Yeow Lim, Gerald J. Lobo","doi":"10.2308/jiar-2021-082","DOIUrl":"https://doi.org/10.2308/jiar-2021-082","url":null,"abstract":"ABSTRACT We first review the recent research published in the Journal of International Accounting Research (JIAR) on the influence of international institutions on accounting practices. We follow this with a discussion of the literature by studying the influence of institutions on tax avoidance and tax evasion. We then propose a new methodological approach that draws on the theory of institutional hierarchy proposed by Williamson (2000) and examine the relative importance of three broad types of institutions (informal, formal, and media) in curtailing perceived tax evasion activities. We contribute to the international accounting literature by summarizing the recent research that addresses tax avoidance and tax evasion and by providing preliminary evidence on how employing an institutional hierarchy approach can address the interdependencies between commonly used institutional factors. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: H26; G28; O16.","PeriodicalId":45457,"journal":{"name":"Journal of International Accounting Research","volume":"39 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135255103","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}
Stefano Cascino, Holger Daske, Mark L. Defond, Annita Florou, Joachim Gassen, Mingyi Hung
At the Ninth International Conference of the Journal of International Accounting Research, Editor Steve Lin organized a plenary session titled “20 Years of IFRS Research” to commemorate the 20th anniversary of the worldwide adoption of International Financial Reporting Standards (IFRS). During the session, each panelist presented their views on what we have learned from researching IFRS for the past 20 years and where we should go from here. This article presents a short essay from each panelist summarizing their comments, as well as related issues that were not fully explored at the conference.
{"title":"Reflections on the 20-Year Anniversary of Worldwide IFRS Adoption","authors":"Stefano Cascino, Holger Daske, Mark L. Defond, Annita Florou, Joachim Gassen, Mingyi Hung","doi":"10.2308/jiar-2023-037","DOIUrl":"https://doi.org/10.2308/jiar-2023-037","url":null,"abstract":"\u0000 At the Ninth International Conference of the Journal of International Accounting Research, Editor Steve Lin organized a plenary session titled “20 Years of IFRS Research” to commemorate the 20th anniversary of the worldwide adoption of International Financial Reporting Standards (IFRS). During the session, each panelist presented their views on what we have learned from researching IFRS for the past 20 years and where we should go from here. This article presents a short essay from each panelist summarizing their comments, as well as related issues that were not fully explored at the conference.","PeriodicalId":45457,"journal":{"name":"Journal of International Accounting Research","volume":" ","pages":""},"PeriodicalIF":1.2,"publicationDate":"2023-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43688495","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}
Financial transparency can affect labor markets directly by mitigating information asymmetries and optimizing the matching of heterogeneous firms and employees (matching efficiency channel) and indirectly through the effect of transparency on firms’ capital inputs (capital utilization channel). Exploiting the increase in financial transparency following the mandatory International Financial Reporting Standards (IFRS) adoption by European Union countries, we perform a battery of tests that indicate subsequent increases in labor productivity and real wages for manufacturing industries in member countries. More importantly, we find evidence that both channels are economically relevant in explaining gains in labor productivity and real wages following the mandatory IFRS adoption. Collectively, our results underscore that the benefits of an increase in transparency go beyond the effects on capital markets and corporate investments, with implications for the allocation of human resources across corporations.
{"title":"Financial Transparency, Labor Productivity, and Real Wages: Evidence from Mandatory IFRS Adoption","authors":"Nargess M. Golshan, Inder K. Khurana, F. Silva","doi":"10.2308/jiar-2022-044","DOIUrl":"https://doi.org/10.2308/jiar-2022-044","url":null,"abstract":"\u0000 Financial transparency can affect labor markets directly by mitigating information asymmetries and optimizing the matching of heterogeneous firms and employees (matching efficiency channel) and indirectly through the effect of transparency on firms’ capital inputs (capital utilization channel). Exploiting the increase in financial transparency following the mandatory International Financial Reporting Standards (IFRS) adoption by European Union countries, we perform a battery of tests that indicate subsequent increases in labor productivity and real wages for manufacturing industries in member countries. More importantly, we find evidence that both channels are economically relevant in explaining gains in labor productivity and real wages following the mandatory IFRS adoption. Collectively, our results underscore that the benefits of an increase in transparency go beyond the effects on capital markets and corporate investments, with implications for the allocation of human resources across corporations.","PeriodicalId":45457,"journal":{"name":"Journal of International Accounting Research","volume":" ","pages":""},"PeriodicalIF":1.2,"publicationDate":"2023-08-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43125491","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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