Pub Date : 2023-06-12DOI: 10.1108/arj-08-2022-0218
David Manry, H. Huang, Yun-Chia Yan
Purpose The purpose of this study is to investigate whether the likelihood that a firm will face financial statement fraud litigation is affected by the disclosure of internal control material weaknesses (MW) and the “busyness” of a firm’s board of directors. Design/methodology/approach The results are derived from logistic regression models and data are collected from the Audit Analytics database augmented by data from CompuStat, the Stanford Law School website and the SEC Accounting and Auditing Enforcement Releases. The authors also test for endogeneity with a propensity score matching procedure. Findings The authors find that an MW report is strongly associated with the likelihood of subsequent financial statement fraud litigation, and that the influence of entity-level MW on litigation likelihood is stronger than that of account-level MW. Moreover, the number of outside board directorships significantly increases the influence of entity-level MW on the likelihood of litigation, indicating that board of directors’ busyness significantly increases the risk of litigation. Originality/value Previous research notes that board members holding multiple directorships cannot effectively oversee the financial reporting process and, thus, are associated with poorer governance. The authors extend this implication of board busyness to the association between disclosure of MW type and the filing of subsequent litigation alleging financial statement fraud. To the best of the authors’ knowledge, no other research has done so.
{"title":"Financial statement fraud litigation, material weaknesses, and board characteristics","authors":"David Manry, H. Huang, Yun-Chia Yan","doi":"10.1108/arj-08-2022-0218","DOIUrl":"https://doi.org/10.1108/arj-08-2022-0218","url":null,"abstract":"\u0000Purpose\u0000The purpose of this study is to investigate whether the likelihood that a firm will face financial statement fraud litigation is affected by the disclosure of internal control material weaknesses (MW) and the “busyness” of a firm’s board of directors.\u0000\u0000\u0000Design/methodology/approach\u0000The results are derived from logistic regression models and data are collected from the Audit Analytics database augmented by data from CompuStat, the Stanford Law School website and the SEC Accounting and Auditing Enforcement Releases. The authors also test for endogeneity with a propensity score matching procedure.\u0000\u0000\u0000Findings\u0000The authors find that an MW report is strongly associated with the likelihood of subsequent financial statement fraud litigation, and that the influence of entity-level MW on litigation likelihood is stronger than that of account-level MW. Moreover, the number of outside board directorships significantly increases the influence of entity-level MW on the likelihood of litigation, indicating that board of directors’ busyness significantly increases the risk of litigation.\u0000\u0000\u0000Originality/value\u0000Previous research notes that board members holding multiple directorships cannot effectively oversee the financial reporting process and, thus, are associated with poorer governance. The authors extend this implication of board busyness to the association between disclosure of MW type and the filing of subsequent litigation alleging financial statement fraud. To the best of the authors’ knowledge, no other research has done so.\u0000","PeriodicalId":45591,"journal":{"name":"Accounting Research Journal","volume":" ","pages":""},"PeriodicalIF":1.9,"publicationDate":"2023-06-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48939882","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 : 2023-05-22DOI: 10.1108/arj-10-2022-0258
T. Poje, Maja Zaman Groff
Purpose To build public trust in the accounting profession, previous research studies have stressed the need for ethics education. This present research aims to investigate the effects of teaching ethics using the ethics education toolkit (EET) developed by the International Accounting Education Standards Board on accounting students’ moral judgment. Design/methodology/approach An experimental design was used to determine the effects of teaching ethics using the EET on moral judgment. Data were obtained using the multidimensional ethics scale questionnaire and analysed with multiple linear regression. Factor analysis was performed to obtain the four moral philosophies defined in the literature. Findings The results confirm that use of the EET improves the moral judgment of accounting students. The influence of utilitarianism and relativism on moral judgment was reduced, while the students’ ability to recognise violating an unwritten contract as an unethical act was improved. Contrary to expectations, the influence of justice on moral judgment decreased. Practical implications The study may benefit academics by showing positive outcomes of EET use. The EET is a well-developed teaching tool, also suitable for educators insufficiently qualified to develop their own ethics courses or facing time constraints. Originality/value The EET was developed to support implementation of ethics education in programmes for professional accountants. By investigating the applicability and effects of the tool in higher education, this study aims to develop moral judgment in accounting students before they enter the accounting profession.
{"title":"Ways ethics education toolkit impacts moral judgment of accounting students","authors":"T. Poje, Maja Zaman Groff","doi":"10.1108/arj-10-2022-0258","DOIUrl":"https://doi.org/10.1108/arj-10-2022-0258","url":null,"abstract":"\u0000Purpose\u0000To build public trust in the accounting profession, previous research studies have stressed the need for ethics education. This present research aims to investigate the effects of teaching ethics using the ethics education toolkit (EET) developed by the International Accounting Education Standards Board on accounting students’ moral judgment.\u0000\u0000\u0000Design/methodology/approach\u0000An experimental design was used to determine the effects of teaching ethics using the EET on moral judgment. Data were obtained using the multidimensional ethics scale questionnaire and analysed with multiple linear regression. Factor analysis was performed to obtain the four moral philosophies defined in the literature.\u0000\u0000\u0000Findings\u0000The results confirm that use of the EET improves the moral judgment of accounting students. The influence of utilitarianism and relativism on moral judgment was reduced, while the students’ ability to recognise violating an unwritten contract as an unethical act was improved. Contrary to expectations, the influence of justice on moral judgment decreased.\u0000\u0000\u0000Practical implications\u0000The study may benefit academics by showing positive outcomes of EET use. The EET is a well-developed teaching tool, also suitable for educators insufficiently qualified to develop their own ethics courses or facing time constraints.\u0000\u0000\u0000Originality/value\u0000The EET was developed to support implementation of ethics education in programmes for professional accountants. By investigating the applicability and effects of the tool in higher education, this study aims to develop moral judgment in accounting students before they enter the accounting profession.\u0000","PeriodicalId":45591,"journal":{"name":"Accounting Research Journal","volume":" ","pages":""},"PeriodicalIF":1.9,"publicationDate":"2023-05-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44170636","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 : 2023-05-16DOI: 10.1108/arj-10-2022-0248
Barry Hettler, Justyna Skomra, Arno Forst
Purpose Motivated by significant global developments affecting the sell-side industry, in particular a shift toward passive investments and growing regulation, this study examines whether financial analyst coverage declined over the past decade and if any loss of analyst coverage is associated with a change in forecast accuracy. Design/methodology/approach After investigating, and confirming, a general decline in analyst following, the authors calculate the loss of analyst coverage relative to the firm-specific maximum between 2009 and 2013. In multivariate analyses, the authors then examine whether this loss of coverage differs across geographic region, firm size and capital market development, and whether it is associated with consensus analyst accuracy. Findings Results indicate that between 2011 and 2021, firm-specific analyst coverage globally declined 17.8%, while the decline in the EU was an even greater, 28.5%. Within the EU, results are most pronounced for small-cap firms. As a consequence of the loss of coverage, the authors observe a global decline in forecast accuracy, with EU small-cap firms and firms domiciled in EU non-developed capital markets faring the worst. Originality/value This study is the first to document a concerning global decline in analyst coverage over the past decade. The study results provide broad-based empirical support for anecdotal reports that smaller firms in the EU and those in EU non-developed capital markets bear the brunt of consequences stemming from changes in the sell-side analyst industry.
{"title":"The great sell-side sell-off: evidence of declining financial analyst coverage","authors":"Barry Hettler, Justyna Skomra, Arno Forst","doi":"10.1108/arj-10-2022-0248","DOIUrl":"https://doi.org/10.1108/arj-10-2022-0248","url":null,"abstract":"\u0000Purpose\u0000Motivated by significant global developments affecting the sell-side industry, in particular a shift toward passive investments and growing regulation, this study examines whether financial analyst coverage declined over the past decade and if any loss of analyst coverage is associated with a change in forecast accuracy.\u0000\u0000\u0000Design/methodology/approach\u0000After investigating, and confirming, a general decline in analyst following, the authors calculate the loss of analyst coverage relative to the firm-specific maximum between 2009 and 2013. In multivariate analyses, the authors then examine whether this loss of coverage differs across geographic region, firm size and capital market development, and whether it is associated with consensus analyst accuracy.\u0000\u0000\u0000Findings\u0000Results indicate that between 2011 and 2021, firm-specific analyst coverage globally declined 17.8%, while the decline in the EU was an even greater, 28.5%. Within the EU, results are most pronounced for small-cap firms. As a consequence of the loss of coverage, the authors observe a global decline in forecast accuracy, with EU small-cap firms and firms domiciled in EU non-developed capital markets faring the worst.\u0000\u0000\u0000Originality/value\u0000This study is the first to document a concerning global decline in analyst coverage over the past decade. The study results provide broad-based empirical support for anecdotal reports that smaller firms in the EU and those in EU non-developed capital markets bear the brunt of consequences stemming from changes in the sell-side analyst industry.\u0000","PeriodicalId":45591,"journal":{"name":"Accounting Research Journal","volume":" ","pages":""},"PeriodicalIF":1.9,"publicationDate":"2023-05-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47145309","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 : 2023-05-12DOI: 10.1108/arj-09-2021-0278
P. Biswas, S. K. Bala, Priyoti Mandal
Purpose This paper aims to examine the relationship between audit committee (AC) independence and AC meeting frequency in an emerging country where the presence of majority independent directors (IDs) on AC is a voluntary requirement. Design/methodology/approach This study uses the agency theory framework to examine the relationship between AC independence and AC meeting frequency. The empirical evidence is provided by a unique hand-collected sample of Bangladeshi listed companies. Multivariate regression analysis is used to test the relationship. Robustness checks provide further empirical support. Findings This paper finds a positive and significant relationship between AC independence and AC meeting frequency. This is consistent with the notion that IDs are better monitors and demand more frequent AC meetings to protect their reputations. However, having at least two IDs does not significantly affect the number of AC meetings in family firms. This evidence questions director independence in family firms. Research limitations/implications This is a single-country study. Therefore, the findings may not apply to other countries with different institutional settings. Originality/value Unlike most prior studies, this study is based on a voluntary institutional setting where the companies are not required to have ACs comprising the majority of IDs. In such a setting, the authors find a significantly positive association between AC independence and meeting frequency compared to either a negative or insignificant relationship in the prior literature.
{"title":"Audit committee diligence: do independent directors matter?","authors":"P. Biswas, S. K. Bala, Priyoti Mandal","doi":"10.1108/arj-09-2021-0278","DOIUrl":"https://doi.org/10.1108/arj-09-2021-0278","url":null,"abstract":"\u0000Purpose\u0000This paper aims to examine the relationship between audit committee (AC) independence and AC meeting frequency in an emerging country where the presence of majority independent directors (IDs) on AC is a voluntary requirement.\u0000\u0000\u0000Design/methodology/approach\u0000This study uses the agency theory framework to examine the relationship between AC independence and AC meeting frequency. The empirical evidence is provided by a unique hand-collected sample of Bangladeshi listed companies. Multivariate regression analysis is used to test the relationship. Robustness checks provide further empirical support.\u0000\u0000\u0000Findings\u0000This paper finds a positive and significant relationship between AC independence and AC meeting frequency. This is consistent with the notion that IDs are better monitors and demand more frequent AC meetings to protect their reputations. However, having at least two IDs does not significantly affect the number of AC meetings in family firms. This evidence questions director independence in family firms.\u0000\u0000\u0000Research limitations/implications\u0000This is a single-country study. Therefore, the findings may not apply to other countries with different institutional settings.\u0000\u0000\u0000Originality/value\u0000Unlike most prior studies, this study is based on a voluntary institutional setting where the companies are not required to have ACs comprising the majority of IDs. In such a setting, the authors find a significantly positive association between AC independence and meeting frequency compared to either a negative or insignificant relationship in the prior literature.\u0000","PeriodicalId":45591,"journal":{"name":"Accounting Research Journal","volume":" ","pages":""},"PeriodicalIF":1.9,"publicationDate":"2023-05-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43735228","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 : 2023-04-25DOI: 10.1108/arj-12-2021-0344
C. Porter, Matthew G. Sherwood
Purpose This paper aims to examine the relation between SEC regulations centered on board of director independence and financial reporting quality and investigates the different routes to board independence. Design/methodology/approach The sample includes 1,248 firm observations whose board composition is compared between 2001 and 2008. Each firm is categorized based on how they increase board independence. The authors test the hypotheses using ordinary least squares regression models. Findings Results show that firms choose between multiple routes when complying with the independence requirements, and how firms operationalize the SEC requirement impacts financial reporting quality. Specifically, firms that achieve increased board independence through increased board size are associated with higher financial reporting quality. However, there is no association between higher financial reporting quality and a subsequent increase in audit fees. Suggesting the reporting quality results from the board monitoring function and not from an increase in auditor effort. Originality/value No evidence exists on how a firm’s chosen route to increased board independence relates to financial reporting quality.
{"title":"The effect of increases in board independence on financial reporting quality","authors":"C. Porter, Matthew G. Sherwood","doi":"10.1108/arj-12-2021-0344","DOIUrl":"https://doi.org/10.1108/arj-12-2021-0344","url":null,"abstract":"\u0000Purpose\u0000This paper aims to examine the relation between SEC regulations centered on board of director independence and financial reporting quality and investigates the different routes to board independence.\u0000\u0000\u0000Design/methodology/approach\u0000The sample includes 1,248 firm observations whose board composition is compared between 2001 and 2008. Each firm is categorized based on how they increase board independence. The authors test the hypotheses using ordinary least squares regression models.\u0000\u0000\u0000Findings\u0000Results show that firms choose between multiple routes when complying with the independence requirements, and how firms operationalize the SEC requirement impacts financial reporting quality. Specifically, firms that achieve increased board independence through increased board size are associated with higher financial reporting quality. However, there is no association between higher financial reporting quality and a subsequent increase in audit fees. Suggesting the reporting quality results from the board monitoring function and not from an increase in auditor effort.\u0000\u0000\u0000Originality/value\u0000No evidence exists on how a firm’s chosen route to increased board independence relates to financial reporting quality.\u0000","PeriodicalId":45591,"journal":{"name":"Accounting Research Journal","volume":" ","pages":""},"PeriodicalIF":1.9,"publicationDate":"2023-04-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47645770","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 : 2023-04-20DOI: 10.1108/arj-08-2022-0187
R. P. Sihombing, I. M. Narsa, I. Harymawan
Purpose Auditors’ skills and knowledge of data analytics and big data can influence their judgment at the audit planning stage. At this stage, the auditor will determine the level of audit risk and estimate how long the audit will take. This study aims to test whether big data and data analytics affect auditors’ judgment by adopting the cognitive fit theory. Design/methodology/approach This was an experimental study involving 109 accounting students as participants. The 2 × 2 factorial design between subjects in a laboratory setting was applied to test the hypothesis. Findings First, this study supports the proposed hypothesis that participants who are provided with visual analytics information will rate audit risk lower than text analytics. Second, participants who receive information on unstructured data types will assess audit risk (audit hours) higher (longer) than those receiving structured data types. In addition, those who receive information from visual analytics results have a higher level of reliance than those receiving text analytics. Practical implications This research has implications for external and internal auditors to improve their skills and knowledge of data analytics and big data to make better judgments, especially when the auditor is planning the audit. Originality/value Previous studies have examined the effect of data analytics (predictive vs anomaly) and big data (financial vs non-financial) on auditor judgment, whereas this study examined data analytics (visual vs text analytics) and big data (structured and unstructured), which were not tested in previous studies.
{"title":"Big data analytics and auditor judgment: an experimental study","authors":"R. P. Sihombing, I. M. Narsa, I. Harymawan","doi":"10.1108/arj-08-2022-0187","DOIUrl":"https://doi.org/10.1108/arj-08-2022-0187","url":null,"abstract":"\u0000Purpose\u0000Auditors’ skills and knowledge of data analytics and big data can influence their judgment at the audit planning stage. At this stage, the auditor will determine the level of audit risk and estimate how long the audit will take. This study aims to test whether big data and data analytics affect auditors’ judgment by adopting the cognitive fit theory.\u0000\u0000\u0000Design/methodology/approach\u0000This was an experimental study involving 109 accounting students as participants. The 2 × 2 factorial design between subjects in a laboratory setting was applied to test the hypothesis.\u0000\u0000\u0000Findings\u0000First, this study supports the proposed hypothesis that participants who are provided with visual analytics information will rate audit risk lower than text analytics. Second, participants who receive information on unstructured data types will assess audit risk (audit hours) higher (longer) than those receiving structured data types. In addition, those who receive information from visual analytics results have a higher level of reliance than those receiving text analytics.\u0000\u0000\u0000Practical implications\u0000This research has implications for external and internal auditors to improve their skills and knowledge of data analytics and big data to make better judgments, especially when the auditor is planning the audit.\u0000\u0000\u0000Originality/value\u0000Previous studies have examined the effect of data analytics (predictive vs anomaly) and big data (financial vs non-financial) on auditor judgment, whereas this study examined data analytics (visual vs text analytics) and big data (structured and unstructured), which were not tested in previous studies.\u0000","PeriodicalId":45591,"journal":{"name":"Accounting Research Journal","volume":" ","pages":""},"PeriodicalIF":1.9,"publicationDate":"2023-04-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49555080","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 : 2023-04-20DOI: 10.1108/arj-07-2022-0160
Kim-Lim Tan, Yuming Liu, Qiuting Ye
Purpose With the worsening of corporate fraud and consequential loss, the growing importance of truthful disclosure is globally advocated. This study aims to examine corporate governance’s role in accountants’ intention to disclose fraudulent practices honestly. At the same time, this study examines intergender differences concerning the formation of the disclosure intention. Design/methodology/approach Based on the theory of planned behavior (TPB), data from 256 accountants working in China have been collected via an online survey. This data is subsequently analyzed with the partial least square (PLS) structural equation modeling method. Findings The results revealed that integrity and corporate governance significantly positively affect employees’ attitudes, subjective norms and perceived behavioral control toward disclosure intention. At the same time, it shows that only subjective norm and perceived behavioral control established a significant positive relationship with disclosure intention. It also shows that males display higher attitudes and perceived behavioral control in developing the intention. Originality/value This study helps understand accountants’ disclosure intention of fraud practices, especially during shock events such as the COVID-19 pandemic. To the best of the authors’ knowledge, this study is the first to extend the TPB incorporating corporate governance and integrity as antecedents to disclosure intention. At the same time, this study contributes to the existing literature by being the first attempt to investigate intergender differences. Finally, it advances the body of knowledge on employees’ behavior and contributes methodologically by introducing the PLS approach.
{"title":"A gendered discourse on truthful disclosure of financial fraud practices among accountants in China: implications to corporate governance","authors":"Kim-Lim Tan, Yuming Liu, Qiuting Ye","doi":"10.1108/arj-07-2022-0160","DOIUrl":"https://doi.org/10.1108/arj-07-2022-0160","url":null,"abstract":"\u0000Purpose\u0000With the worsening of corporate fraud and consequential loss, the growing importance of truthful disclosure is globally advocated. This study aims to examine corporate governance’s role in accountants’ intention to disclose fraudulent practices honestly. At the same time, this study examines intergender differences concerning the formation of the disclosure intention.\u0000\u0000\u0000Design/methodology/approach\u0000Based on the theory of planned behavior (TPB), data from 256 accountants working in China have been collected via an online survey. This data is subsequently analyzed with the partial least square (PLS) structural equation modeling method.\u0000\u0000\u0000Findings\u0000The results revealed that integrity and corporate governance significantly positively affect employees’ attitudes, subjective norms and perceived behavioral control toward disclosure intention. At the same time, it shows that only subjective norm and perceived behavioral control established a significant positive relationship with disclosure intention. It also shows that males display higher attitudes and perceived behavioral control in developing the intention.\u0000\u0000\u0000Originality/value\u0000This study helps understand accountants’ disclosure intention of fraud practices, especially during shock events such as the COVID-19 pandemic. To the best of the authors’ knowledge, this study is the first to extend the TPB incorporating corporate governance and integrity as antecedents to disclosure intention. At the same time, this study contributes to the existing literature by being the first attempt to investigate intergender differences. Finally, it advances the body of knowledge on employees’ behavior and contributes methodologically by introducing the PLS approach.\u0000","PeriodicalId":45591,"journal":{"name":"Accounting Research Journal","volume":" ","pages":""},"PeriodicalIF":1.9,"publicationDate":"2023-04-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44201383","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 : 2023-04-19DOI: 10.1108/arj-06-2021-0176
P. Kumari, C. Mishra
Purpose This study aims to investigate how the intangible intensive nature of firms affects the value relevance of earnings and the book value of equity between profit- and loss-reporting firms. The study also examines how firms’ intangible intensity affects the value relevance of R&D outlays between profit- and loss-reporting firms. Design/methodology/approach An empirical analysis based on Ohlson’s (1995) framework is used. A total of 54,421 firm-year observations of Indian listed firms from financial years 1992–2016 constitute the study sample. Findings The findings suggest that the difference in the value relevance of earnings and the book value of equity between profit- and loss-reporting firms is more significant in non-intangible intensive firms than in intangible firms. Specifically, earnings are more value relevant in profit-reporting and non-intangible intensive firms, whereas book value of equity is more value relevant in loss-reporting and intangible intensive firms. The results also suggest that the difference in the incremental value relevance of R&D information between profit- and loss-making firms is higher in intangible intensive firms than in non-intangible intensive firms. Practical implications The findings of this study can help managers, standard-setters and investors make effective decisions. Originality/value This study offers insights into the impact of intangible intensity on the value relevance of aggregated and disaggregated accounting information between profit- and loss-making firms in institutional settings where capitalization of R&D expenditures is allowed.
{"title":"Value relevance of earnings and book value of equity in profit versus loss reporting firms: significance of intangible intensity","authors":"P. Kumari, C. Mishra","doi":"10.1108/arj-06-2021-0176","DOIUrl":"https://doi.org/10.1108/arj-06-2021-0176","url":null,"abstract":"\u0000Purpose\u0000This study aims to investigate how the intangible intensive nature of firms affects the value relevance of earnings and the book value of equity between profit- and loss-reporting firms. The study also examines how firms’ intangible intensity affects the value relevance of R&D outlays between profit- and loss-reporting firms.\u0000\u0000\u0000Design/methodology/approach\u0000An empirical analysis based on Ohlson’s (1995) framework is used. A total of 54,421 firm-year observations of Indian listed firms from financial years 1992–2016 constitute the study sample.\u0000\u0000\u0000Findings\u0000The findings suggest that the difference in the value relevance of earnings and the book value of equity between profit- and loss-reporting firms is more significant in non-intangible intensive firms than in intangible firms. Specifically, earnings are more value relevant in profit-reporting and non-intangible intensive firms, whereas book value of equity is more value relevant in loss-reporting and intangible intensive firms. The results also suggest that the difference in the incremental value relevance of R&D information between profit- and loss-making firms is higher in intangible intensive firms than in non-intangible intensive firms.\u0000\u0000\u0000Practical implications\u0000The findings of this study can help managers, standard-setters and investors make effective decisions.\u0000\u0000\u0000Originality/value\u0000This study offers insights into the impact of intangible intensity on the value relevance of aggregated and disaggregated accounting information between profit- and loss-making firms in institutional settings where capitalization of R&D expenditures is allowed.\u0000","PeriodicalId":45591,"journal":{"name":"Accounting Research Journal","volume":" ","pages":""},"PeriodicalIF":1.9,"publicationDate":"2023-04-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47690178","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 : 2023-04-17DOI: 10.1108/arj-07-2022-0178
Mandella Osei-Assibey Bonsu, Y. Wang, Yongsheng Guo
Purpose Innovation in fintech presents great opportunities and huge challenges for accounting practices around the world. This paper aims to examine the impact of Fintech on accounting practices including financial reporting, performance management, budgeting, auditing, risk and fraud management. Fintech is proxied by the adoption of AI and big data analysis in accounting practices. Design/methodology/approach We chose African countries as our focus countries and surveyed chartered and qualified accountants in both Ghana and Nigeria. With 201 questionnaires qualified for our final analyses, we adopted the structural equation modelling to analyse the impact of Fintech on accounting practices. Findings The empirical results show that the impact of AI and big data on accounting practices is positive and significant, indicating that fintech could potentially mitigate the agency problem in accounting practices and lead to better accounting practices. Interestingly, we find that, in general, the impact of AI is larger than that of big data. Originality/value Our results provide significant insights to regulators, policymakers and managers about the future development of adopting fintech in the regulation and governance framework at both macro and micro levels for accounting practice.
{"title":"Does fintech lead to better accounting practices? Empirical evidence","authors":"Mandella Osei-Assibey Bonsu, Y. Wang, Yongsheng Guo","doi":"10.1108/arj-07-2022-0178","DOIUrl":"https://doi.org/10.1108/arj-07-2022-0178","url":null,"abstract":"\u0000Purpose\u0000Innovation in fintech presents great opportunities and huge challenges for accounting practices around the world. This paper aims to examine the impact of Fintech on accounting practices including financial reporting, performance management, budgeting, auditing, risk and fraud management. Fintech is proxied by the adoption of AI and big data analysis in accounting practices.\u0000\u0000\u0000Design/methodology/approach\u0000We chose African countries as our focus countries and surveyed chartered and qualified accountants in both Ghana and Nigeria. With 201 questionnaires qualified for our final analyses, we adopted the structural equation modelling to analyse the impact of Fintech on accounting practices.\u0000\u0000\u0000Findings\u0000The empirical results show that the impact of AI and big data on accounting practices is positive and significant, indicating that fintech could potentially mitigate the agency problem in accounting practices and lead to better accounting practices. Interestingly, we find that, in general, the impact of AI is larger than that of big data.\u0000\u0000\u0000Originality/value\u0000Our results provide significant insights to regulators, policymakers and managers about the future development of adopting fintech in the regulation and governance framework at both macro and micro levels for accounting practice.\u0000","PeriodicalId":45591,"journal":{"name":"Accounting Research Journal","volume":" ","pages":""},"PeriodicalIF":1.9,"publicationDate":"2023-04-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49503087","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 : 2023-04-12DOI: 10.1108/arj-08-2022-0214
R. Messer
Purpose This paper aims to make suggestions for addressing the apparent failure of business schools to communicate good ethical decision-making skills to students studying in postsecondary institutions. Design/methodology/approach At the beginning of university management classes, a form is distributed to students outlining a short scenario that requires a course of action. The two questions asked, based on this decision context, are (i) is it ethical to offer bribes to secure construction contracts in countries where this practice is considered an acceptable way of conducting business and (ii) has the student completed an ethics course at the university? Findings The scenario described is what occurred at SNC Lavalin, a Canadian construction company that was charged and convicted with offering illegal inducements to foreign officials (in Libya) to secure large government construction contracts. Ethically, the “right” decision would be to not offer bribes; this is because they are illegal when offered both in the Canada and in foreign jurisdictions. The response results to the survey questionnaire showed that 21% of the students thought that bribery was acceptable, if it was a customary business practice in the country where the transaction occurred, and 93% of these students had taken an ethics course. It was interesting to note that almost all the students, who had not taken a business ethics courses, thought that bribery is not acceptable under the circumstances described. Originality/value To address the apparent failure to communicate good ethical decision-making skills, this essay suggests that when teaching business ethics, there should a clearer focus on (i) the distinction between morality and ethics; (ii) the problem posed by relativism; and (iii) the reasoning behind ethical standards. This approach is novel in that it makes sense from the perspective of both a business practitioner and university educator.
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