Pub Date : 2024-03-27DOI: 10.1108/jal-11-2023-0198
A. Saragih
PurposeThis paper examines the moderating effect of good corporate governance on the association between internal information quality and tax savings.Design/methodology/approachThis study uses a quantitative approach. It employs an Australian sample of analysis composed of 1,295 firm-year observations from the period 2017 to 2021. Data relating to corporate governance are hand-collected from the annual reports.FindingsBased on the result of the analysis, this study demonstrates that the interaction between corporate governance and quality of internal information is positively associated with tax savings. Superior corporate governance is critical in activating the effect of internal information quality on tax savings. This finding is robust to a battery of robustness checks and additional tests.Research limitations/implicationsThis examination utilizes only publicly traded companies from one developed country.Practical implicationsFor the company management, an effective governance structure must be at the top because it will determine the development of all other areas. This study emphasizes the need to continuously improve the effectiveness of corporate governance practices. For long-term investors, an important indicator that can be considered in assessing the “safety” of a company’s tax strategy is its corporate governance aspects. For regulators, this study is expected to assist regulators in creating a more adequate corporate governance implementation and disclosure package to be implemented by corporations in the future.Originality/valueThis study provides new evidence on a crucial construct that can strengthen the relationship between internal information quality and tax savings.
{"title":"The power of good corporate governance in activating the impact of internal information quality on tax savings","authors":"A. Saragih","doi":"10.1108/jal-11-2023-0198","DOIUrl":"https://doi.org/10.1108/jal-11-2023-0198","url":null,"abstract":"PurposeThis paper examines the moderating effect of good corporate governance on the association between internal information quality and tax savings.Design/methodology/approachThis study uses a quantitative approach. It employs an Australian sample of analysis composed of 1,295 firm-year observations from the period 2017 to 2021. Data relating to corporate governance are hand-collected from the annual reports.FindingsBased on the result of the analysis, this study demonstrates that the interaction between corporate governance and quality of internal information is positively associated with tax savings. Superior corporate governance is critical in activating the effect of internal information quality on tax savings. This finding is robust to a battery of robustness checks and additional tests.Research limitations/implicationsThis examination utilizes only publicly traded companies from one developed country.Practical implicationsFor the company management, an effective governance structure must be at the top because it will determine the development of all other areas. This study emphasizes the need to continuously improve the effectiveness of corporate governance practices. For long-term investors, an important indicator that can be considered in assessing the “safety” of a company’s tax strategy is its corporate governance aspects. For regulators, this study is expected to assist regulators in creating a more adequate corporate governance implementation and disclosure package to be implemented by corporations in the future.Originality/valueThis study provides new evidence on a crucial construct that can strengthen the relationship between internal information quality and tax savings.","PeriodicalId":45666,"journal":{"name":"Journal of Accounting Literature","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2024-03-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140376565","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 : 2024-03-27DOI: 10.1108/jal-11-2023-0202
Jinfang Tian, Xiaofan Meng, Lee Li, Wei Cao, Rui Xue
PurposeThis study aims to investigate how firms of different sizes respond to competitive pressure from peers.Design/methodology/approachThis study employs machine learning techniques to measure competitive pressure based on management discussion and analysis (MD&A) documents and then utilises the constructed pressure indicator to explore the relationship between competitive pressure and corporate risk-taking behaviours amongst firms of different sizes.FindingsWe find that firm sizes are positively associated with their risk-taking behaviours when firms respond to competitive pressure. Large firms are inclined to exhibit a high level of risk-taking behaviours, whereas small firms tend to make conservative decisions. Regional growth potential and institutional ownership moderate the relationships.Originality/valueUtilising text mining techniques, this study constructs a novel quantitative indicator to measure competitive pressure perceived by focal firms and demonstrates the heterogeneous behaviour of firms of different sizes in response to competitive pressure from peers, advancing research on competitive market pressures.
{"title":"Competitive pressure from peers, firm sizes and firms' risk-taking behaviours: machine learning evidence","authors":"Jinfang Tian, Xiaofan Meng, Lee Li, Wei Cao, Rui Xue","doi":"10.1108/jal-11-2023-0202","DOIUrl":"https://doi.org/10.1108/jal-11-2023-0202","url":null,"abstract":"PurposeThis study aims to investigate how firms of different sizes respond to competitive pressure from peers.Design/methodology/approachThis study employs machine learning techniques to measure competitive pressure based on management discussion and analysis (MD&A) documents and then utilises the constructed pressure indicator to explore the relationship between competitive pressure and corporate risk-taking behaviours amongst firms of different sizes.FindingsWe find that firm sizes are positively associated with their risk-taking behaviours when firms respond to competitive pressure. Large firms are inclined to exhibit a high level of risk-taking behaviours, whereas small firms tend to make conservative decisions. Regional growth potential and institutional ownership moderate the relationships.Originality/valueUtilising text mining techniques, this study constructs a novel quantitative indicator to measure competitive pressure perceived by focal firms and demonstrates the heterogeneous behaviour of firms of different sizes in response to competitive pressure from peers, advancing research on competitive market pressures.","PeriodicalId":45666,"journal":{"name":"Journal of Accounting Literature","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2024-03-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140374823","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 : 2024-03-21DOI: 10.1108/jal-06-2023-0105
Camille J. Mora, Arunima Malik, Sruthi Shanmuga, Baljit Sidhu
PurposeBusinesses are increasingly vulnerable and exposed to physical climate change risks, which can cascade through local, national and international supply chains. Currently, few methodologies can capture how physical risks impact businesses via the supply chains, yet outside the business literature, methodologies such as sustainability assessments can assess cascading impacts.Design/methodology/approachAdopting a scoping review framework by Arksey and O'Malley (2005) and the PRISMA extension for scoping reviews (PRISMA-ScR), this paper reviews 27 articles that assess climate risk in supply chains.FindingsThe literature on supply chain risks of climate change using quantitative techniques is limited. Our review confirms that no research adopts sustainability assessment methods to assess climate risk at a business-level.Originality/valueAlongside the need to quantify physical risks to businesses is the growing awareness that climate change impacts traverse global supply chains. We review the state of the literature on methodological approaches and identify the opportunities for researchers to use sustainability assessment methods to assess climate risk in the supply chains of an individual business.
{"title":"Understanding climate risk externalities through the global supply chains: a framework and review of the literature on existing approaches","authors":"Camille J. Mora, Arunima Malik, Sruthi Shanmuga, Baljit Sidhu","doi":"10.1108/jal-06-2023-0105","DOIUrl":"https://doi.org/10.1108/jal-06-2023-0105","url":null,"abstract":"PurposeBusinesses are increasingly vulnerable and exposed to physical climate change risks, which can cascade through local, national and international supply chains. Currently, few methodologies can capture how physical risks impact businesses via the supply chains, yet outside the business literature, methodologies such as sustainability assessments can assess cascading impacts.Design/methodology/approachAdopting a scoping review framework by Arksey and O'Malley (2005) and the PRISMA extension for scoping reviews (PRISMA-ScR), this paper reviews 27 articles that assess climate risk in supply chains.FindingsThe literature on supply chain risks of climate change using quantitative techniques is limited. Our review confirms that no research adopts sustainability assessment methods to assess climate risk at a business-level.Originality/valueAlongside the need to quantify physical risks to businesses is the growing awareness that climate change impacts traverse global supply chains. We review the state of the literature on methodological approaches and identify the opportunities for researchers to use sustainability assessment methods to assess climate risk in the supply chains of an individual business.","PeriodicalId":45666,"journal":{"name":"Journal of Accounting Literature","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2024-03-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140223313","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 : 2024-03-20DOI: 10.1108/jal-11-2023-0201
Clinton Free, Stewart Jones, Marie-Soleil Tremblay
PurposeThe purpose of this paper is to synthesize insights from the emerging work in accounting on greenwashing and sustainability assurance and propose an agenda for future research in this area.Design/methodology/approachThis article offers an original analysis of papers published on greenwashing and sustainability assurance research in the field of accounting. It adopts a systematic literature review and a narrative approach to analyse the dominant themes and key findings in this new and rapidly evolving field. From this overview, specific avenues for future research are identified.FindingsIn the past few years there has been a substantial spike in concern relating to greenwashing among academics, practitioners, regulators and society. This growing concern has only partly been reflected in the research literature. To date, research has primarily focused on: (1) the characteristics of firms adopting sustainability assurance, (2) the challenges facing sustainability auditors, (3) the development of appropriate assurance standards and regulations, and (4) capital market responses to greenwashing and sustainability auditing/assurance. Three key future research issues with respect to greenwashing are identified: (1) the future of standard-setter attempts to regulate greenwashing, (2) professional jockeying in sustainability reporting assurance, and (3) capital market opportunities and challenges relating to greenwashing and assurance.Originality/valueDespite the profound economic and reputational impact of greenwashing and the rapid development of sustainability assurance services, research in accounting remains fragmented and emergent. This review identifies avenues offering considerable scope for inter-disciplinarity and bridging the divide between academia and practice.
{"title":"Greenwashing and sustainability assurance: a review and call for future research","authors":"Clinton Free, Stewart Jones, Marie-Soleil Tremblay","doi":"10.1108/jal-11-2023-0201","DOIUrl":"https://doi.org/10.1108/jal-11-2023-0201","url":null,"abstract":"PurposeThe purpose of this paper is to synthesize insights from the emerging work in accounting on greenwashing and sustainability assurance and propose an agenda for future research in this area.Design/methodology/approachThis article offers an original analysis of papers published on greenwashing and sustainability assurance research in the field of accounting. It adopts a systematic literature review and a narrative approach to analyse the dominant themes and key findings in this new and rapidly evolving field. From this overview, specific avenues for future research are identified.FindingsIn the past few years there has been a substantial spike in concern relating to greenwashing among academics, practitioners, regulators and society. This growing concern has only partly been reflected in the research literature. To date, research has primarily focused on: (1) the characteristics of firms adopting sustainability assurance, (2) the challenges facing sustainability auditors, (3) the development of appropriate assurance standards and regulations, and (4) capital market responses to greenwashing and sustainability auditing/assurance. Three key future research issues with respect to greenwashing are identified: (1) the future of standard-setter attempts to regulate greenwashing, (2) professional jockeying in sustainability reporting assurance, and (3) capital market opportunities and challenges relating to greenwashing and assurance.Originality/valueDespite the profound economic and reputational impact of greenwashing and the rapid development of sustainability assurance services, research in accounting remains fragmented and emergent. This review identifies avenues offering considerable scope for inter-disciplinarity and bridging the divide between academia and practice.","PeriodicalId":45666,"journal":{"name":"Journal of Accounting Literature","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2024-03-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140226998","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 : 2024-03-18DOI: 10.1108/jal-11-2023-0204
Isaac S. Awuye, Daniel Taylor
PurposeIn 2018, the International Financial Reporting Standard 9-Financial Instruments became mandatory, effectively changing the underlying accounting principles of financial instruments. This paper systematically reviews the academic literature on the implementation effects of IFRS 9, providing a coherent picture of the state of the empirical literature on IFRS 9.Design/methodology/approachThe study thrives on a systematic review approach by analyzing existing academic studies along the following three broad categories: adoption and implementation, impact on financial reporting, and risk management and provisioning. The study concludes by providing research prospects to fill the identified gaps.FindingsWe document data-related issues, forecasting uncertainties and the interaction of IFRS 9 with other regulatory standards as implementation challenges encountered. Also, we observe cross-country heterogeneity in reporting quality. Furthermore, contrary to pre-implementation expectations, we find improvement in risk management. This suggests that despite the complexities of the new regulatory standard on financial instruments, it appears to be more successful in achieving the intended objective of enhancing better market discipline and transparency rather than being a regulatory overreach.Originality/valueAs the literature on IFRS 9 is burgeoning, we provide state-of-the-art guidance and direction for researchers with a keen interest in the economic significance and implications of IFRS 9 adoption. The study identifies gaps in the literature that require further research, specifically, IFRS 9 adoption and firm’s hedging activities, IFRS 9 implications on non-financial firms. Lastly, existing studies are mostly focused on Europe and underscore the need for more research in under-researched jurisdictions, particularly in Asia and Africa. Also, to standard setters, policymakers and practitioners, we provide some insight to aid the formulation and application of standards.
{"title":"Over half a decade into the adoption of IFRS 9: a systematic literature review","authors":"Isaac S. Awuye, Daniel Taylor","doi":"10.1108/jal-11-2023-0204","DOIUrl":"https://doi.org/10.1108/jal-11-2023-0204","url":null,"abstract":"PurposeIn 2018, the International Financial Reporting Standard 9-Financial Instruments became mandatory, effectively changing the underlying accounting principles of financial instruments. This paper systematically reviews the academic literature on the implementation effects of IFRS 9, providing a coherent picture of the state of the empirical literature on IFRS 9.Design/methodology/approachThe study thrives on a systematic review approach by analyzing existing academic studies along the following three broad categories: adoption and implementation, impact on financial reporting, and risk management and provisioning. The study concludes by providing research prospects to fill the identified gaps.FindingsWe document data-related issues, forecasting uncertainties and the interaction of IFRS 9 with other regulatory standards as implementation challenges encountered. Also, we observe cross-country heterogeneity in reporting quality. Furthermore, contrary to pre-implementation expectations, we find improvement in risk management. This suggests that despite the complexities of the new regulatory standard on financial instruments, it appears to be more successful in achieving the intended objective of enhancing better market discipline and transparency rather than being a regulatory overreach.Originality/valueAs the literature on IFRS 9 is burgeoning, we provide state-of-the-art guidance and direction for researchers with a keen interest in the economic significance and implications of IFRS 9 adoption. The study identifies gaps in the literature that require further research, specifically, IFRS 9 adoption and firm’s hedging activities, IFRS 9 implications on non-financial firms. Lastly, existing studies are mostly focused on Europe and underscore the need for more research in under-researched jurisdictions, particularly in Asia and Africa. Also, to standard setters, policymakers and practitioners, we provide some insight to aid the formulation and application of standards.","PeriodicalId":45666,"journal":{"name":"Journal of Accounting Literature","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2024-03-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140234786","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 : 2024-03-15DOI: 10.1108/jal-06-2023-0096
Emmanuel Mamatzakis, Mike Tsionas
PurposeThis study proposes a new model to measure unexpected core earnings, using Bayesian dynamic latent method.Design/methodology/approachThe Bayesian dynamic latent modeling approach identifies the effects that stem from complex, multidimensional variables related to culture and legal framework, on unexpected core earnings. It also allows testing whether there is persistence over time in unexpected core earnings. We use sequential Bayesian Monte Carlo methods, also known as particle filtering, that simplify estimations.FindingsIn an international empirical application, we find evidence of persistence in unexpected core earnings as well as classification shifting. The impact of the legal framework on classification shifting shows variability across samples. Religion reduces classification shifting, whereas the cultural variables of power distance, masculinity and uncertainty avoidance enhances it. Interestingly, the persistence in unexpected core earnings is strong and moderates the ability of legal framework and religion in abating classification shifting.Research limitations/implicationsIn terms of policy implications, we show that strengthening legal framework would improve financial reporting and reduce the scope for manipulation. This could involve stricter enforcement mechanisms, increased penalties for non-compliance and regular audits to detect and deter classification shifting practices. Given that religion plays a role in moderating classification shifting, policymakers may explore partnerships or collaborations with religious institutions to promote ethical financial practices. Engaging religious leaders and organizations can help emphasize the importance of integrity and ethical behavior in financial reporting, potentially influencing the behavior of individuals and organizations.Originality/valueTo the best of our knowledge this is the first study that opts for Bayesian dynamic latent model for an international sample.
{"title":"A single-step firm-level identification of classification shifting","authors":"Emmanuel Mamatzakis, Mike Tsionas","doi":"10.1108/jal-06-2023-0096","DOIUrl":"https://doi.org/10.1108/jal-06-2023-0096","url":null,"abstract":"PurposeThis study proposes a new model to measure unexpected core earnings, using Bayesian dynamic latent method.Design/methodology/approachThe Bayesian dynamic latent modeling approach identifies the effects that stem from complex, multidimensional variables related to culture and legal framework, on unexpected core earnings. It also allows testing whether there is persistence over time in unexpected core earnings. We use sequential Bayesian Monte Carlo methods, also known as particle filtering, that simplify estimations.FindingsIn an international empirical application, we find evidence of persistence in unexpected core earnings as well as classification shifting. The impact of the legal framework on classification shifting shows variability across samples. Religion reduces classification shifting, whereas the cultural variables of power distance, masculinity and uncertainty avoidance enhances it. Interestingly, the persistence in unexpected core earnings is strong and moderates the ability of legal framework and religion in abating classification shifting.Research limitations/implicationsIn terms of policy implications, we show that strengthening legal framework would improve financial reporting and reduce the scope for manipulation. This could involve stricter enforcement mechanisms, increased penalties for non-compliance and regular audits to detect and deter classification shifting practices. Given that religion plays a role in moderating classification shifting, policymakers may explore partnerships or collaborations with religious institutions to promote ethical financial practices. Engaging religious leaders and organizations can help emphasize the importance of integrity and ethical behavior in financial reporting, potentially influencing the behavior of individuals and organizations.Originality/valueTo the best of our knowledge this is the first study that opts for Bayesian dynamic latent model for an international sample.","PeriodicalId":45666,"journal":{"name":"Journal of Accounting Literature","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2024-03-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140238475","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 : 2024-03-14DOI: 10.1108/jal-12-2023-0214
Grant Richardson, Grantley Taylor, M. Hasan
PurposeThis study examines the importance of income income-shifting arrangements of US multinational corporations (MNCs) on future stock price crash risk.Design/methodology/approachThis study employs a sample of 7,641 corporation-year observations over the 2005–2017 period and uses ordinary least squares regression analysis.FindingsThe authors find that the income-shifting arrangements of MNCs are positively and significantly associated with stock price crash risk after controlling for corporate tax avoidance and other known determinants of stock price crash risk in the regression model. This result is robust to alternative measures of stock price crash risk and income-shifting, and several endogeneity tests. The authors also observe that income-shifting arrangements increase stock price crash risk both directly and indirectly through the information opacity channel. Finally, in cross-sectional analyses, the authors find that the positive association between income-shifting and stock price crash risk is more pronounced for MNCs that use tax haven subsidiaries and have weak corporate governance mechanisms.Originality/valueThe authors provide new empirical evidence that MNCs will likely face significant capital market consequences regarding their income-shifting arrangements.
{"title":"Income-shifting arrangements of US multinational corporations and future stock price crash risk","authors":"Grant Richardson, Grantley Taylor, M. Hasan","doi":"10.1108/jal-12-2023-0214","DOIUrl":"https://doi.org/10.1108/jal-12-2023-0214","url":null,"abstract":"PurposeThis study examines the importance of income income-shifting arrangements of US multinational corporations (MNCs) on future stock price crash risk.Design/methodology/approachThis study employs a sample of 7,641 corporation-year observations over the 2005–2017 period and uses ordinary least squares regression analysis.FindingsThe authors find that the income-shifting arrangements of MNCs are positively and significantly associated with stock price crash risk after controlling for corporate tax avoidance and other known determinants of stock price crash risk in the regression model. This result is robust to alternative measures of stock price crash risk and income-shifting, and several endogeneity tests. The authors also observe that income-shifting arrangements increase stock price crash risk both directly and indirectly through the information opacity channel. Finally, in cross-sectional analyses, the authors find that the positive association between income-shifting and stock price crash risk is more pronounced for MNCs that use tax haven subsidiaries and have weak corporate governance mechanisms.Originality/valueThe authors provide new empirical evidence that MNCs will likely face significant capital market consequences regarding their income-shifting arrangements.","PeriodicalId":45666,"journal":{"name":"Journal of Accounting Literature","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2024-03-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140244318","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 : 2024-03-05DOI: 10.1108/jal-11-2022-0112
Sana Ramzan, M. Lokanan
PurposeThis study aims to objectively synthesize the volume of accounting literature on financial statement fraud (FSF) using a systematic literature review research method (SLRRM). This paper analyzes the vast FSF literature based on inclusion and exclusion criteria. These criteria filter articles that are present in the accounting fraud domain and are published in peer-reviewed quality journals based on Australian Business Deans Council (ABDC) journal ranking. Lastly, a reverse search, analyzing the articles' abstracts, further narrows the search to 88 peer-reviewed articles. After examining these 88 articles, the results imply that the current literature is shifting from traditional statistical approaches towards computational methods, specifically machine learning (ML), for predicting and detecting FSF. This evolution of the literature is influenced by the impact of micro and macro variables on FSF and the inadequacy of audit procedures to detect red flags of fraud. The findings also concluded that A* peer-reviewed journals accepted articles that showed a complete picture of performance measures of computational techniques in their results. Therefore, this paper contributes to the literature by providing insights to researchers about why ML articles on fraud do not make it to top accounting journals and which computational techniques are the best algorithms for predicting and detecting FSF.Design/methodology/approachThis paper chronicles the cluster of narratives surrounding the inadequacy of current accounting and auditing practices in preventing and detecting Financial Statement Fraud. The primary objective of this study is to objectively synthesize the volume of accounting literature on financial statement fraud. More specifically, this study will conduct a systematic literature review (SLR) to examine the evolution of financial statement fraud research and the emergence of new computational techniques to detect fraud in the accounting and finance literature.FindingsThe storyline of this study illustrates how the literature has evolved from conventional fraud detection mechanisms to computational techniques such as artificial intelligence (AI) and machine learning (ML). The findings also concluded that A* peer-reviewed journals accepted articles that showed a complete picture of performance measures of computational techniques in their results. Therefore, this paper contributes to the literature by providing insights to researchers about why ML articles on fraud do not make it to top accounting journals and which computational techniques are the best algorithms for predicting and detecting FSF.Originality/valueThis paper contributes to the literature by providing insights to researchers about why the evolution of accounting fraud literature from traditional statistical methods to machine learning algorithms in fraud detection and prediction.
{"title":"The application of machine learning to study fraud in the accounting literature","authors":"Sana Ramzan, M. Lokanan","doi":"10.1108/jal-11-2022-0112","DOIUrl":"https://doi.org/10.1108/jal-11-2022-0112","url":null,"abstract":"PurposeThis study aims to objectively synthesize the volume of accounting literature on financial statement fraud (FSF) using a systematic literature review research method (SLRRM). This paper analyzes the vast FSF literature based on inclusion and exclusion criteria. These criteria filter articles that are present in the accounting fraud domain and are published in peer-reviewed quality journals based on Australian Business Deans Council (ABDC) journal ranking. Lastly, a reverse search, analyzing the articles' abstracts, further narrows the search to 88 peer-reviewed articles. After examining these 88 articles, the results imply that the current literature is shifting from traditional statistical approaches towards computational methods, specifically machine learning (ML), for predicting and detecting FSF. This evolution of the literature is influenced by the impact of micro and macro variables on FSF and the inadequacy of audit procedures to detect red flags of fraud. The findings also concluded that A* peer-reviewed journals accepted articles that showed a complete picture of performance measures of computational techniques in their results. Therefore, this paper contributes to the literature by providing insights to researchers about why ML articles on fraud do not make it to top accounting journals and which computational techniques are the best algorithms for predicting and detecting FSF.Design/methodology/approachThis paper chronicles the cluster of narratives surrounding the inadequacy of current accounting and auditing practices in preventing and detecting Financial Statement Fraud. The primary objective of this study is to objectively synthesize the volume of accounting literature on financial statement fraud. More specifically, this study will conduct a systematic literature review (SLR) to examine the evolution of financial statement fraud research and the emergence of new computational techniques to detect fraud in the accounting and finance literature.FindingsThe storyline of this study illustrates how the literature has evolved from conventional fraud detection mechanisms to computational techniques such as artificial intelligence (AI) and machine learning (ML). The findings also concluded that A* peer-reviewed journals accepted articles that showed a complete picture of performance measures of computational techniques in their results. Therefore, this paper contributes to the literature by providing insights to researchers about why ML articles on fraud do not make it to top accounting journals and which computational techniques are the best algorithms for predicting and detecting FSF.Originality/valueThis paper contributes to the literature by providing insights to researchers about why the evolution of accounting fraud literature from traditional statistical methods to machine learning algorithms in fraud detection and prediction.","PeriodicalId":45666,"journal":{"name":"Journal of Accounting Literature","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2024-03-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140079176","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 : 2024-03-01DOI: 10.1108/jal-06-2023-0093
Yuxuan Chang, Xiaoyang Zhao
PurposeThis paper examines whether technological changes that promote communications between investors and managers help bridge the gap in the cost of equity capital among firms in different regions.Design/methodology/approachWe use the online interaction platforms of listed firms in China and utilize brokerage presence (BP) to capture the geographic distribution of financial factors. We explore whether online interactions would reduce the cost of equity to a greater extent for firms located in low brokerage presence regions (hereafter “low-BP firms”) than those in high brokerage presence regions (hereafter “high-BP firms”).FindingsWe find low-BP firms benefit more from an improved information environment created by online interactions. We also find that posts about low-BP firms are more value-relevant and useful in processing corporate disclosures. Further, a higher number of interactions significantly enhances more informational efficiency for low-BP firms, and the effect of reducing the gap in financing costs is more pronounced when corporate information is complex.Originality/valueWe conclude that online interactions alleviate geography-induced information frictions and create a relatively level playing field for firms located in all regions.
本文探讨了促进投资者与管理者之间沟通的技术变革是否有助于缩小不同地区企业之间股权资本成本的差距。设计/方法/途径我们利用中国上市公司的在线互动平台，并利用券商影响力（BP）来捕捉金融要素的地理分布。我们探讨了在线互动是否会在更大程度上降低低经纪存在地区企业（以下简称 "低经纪存在地区企业"）的股权成本，而不是高经纪存在地区企业（以下简称 "高经纪存在地区企业"）的股权成本。我们还发现，关于低 BP 公司的帖子在处理公司信息披露方面更有价值，也更有用。此外，互动次数越多，低 BP 公司的信息效率就越高，而当公司信息复杂时，缩小融资成本差距的效果就越明显。原创性/价值我们得出结论，在线互动缓解了地理位置引起的信息摩擦，为所有地区的公司创造了相对公平的竞争环境。
{"title":"Can online interactions help level the playing field for firms in different regions?","authors":"Yuxuan Chang, Xiaoyang Zhao","doi":"10.1108/jal-06-2023-0093","DOIUrl":"https://doi.org/10.1108/jal-06-2023-0093","url":null,"abstract":"PurposeThis paper examines whether technological changes that promote communications between investors and managers help bridge the gap in the cost of equity capital among firms in different regions.Design/methodology/approachWe use the online interaction platforms of listed firms in China and utilize brokerage presence (BP) to capture the geographic distribution of financial factors. We explore whether online interactions would reduce the cost of equity to a greater extent for firms located in low brokerage presence regions (hereafter “low-BP firms”) than those in high brokerage presence regions (hereafter “high-BP firms”).FindingsWe find low-BP firms benefit more from an improved information environment created by online interactions. We also find that posts about low-BP firms are more value-relevant and useful in processing corporate disclosures. Further, a higher number of interactions significantly enhances more informational efficiency for low-BP firms, and the effect of reducing the gap in financing costs is more pronounced when corporate information is complex.Originality/valueWe conclude that online interactions alleviate geography-induced information frictions and create a relatively level playing field for firms located in all regions.","PeriodicalId":45666,"journal":{"name":"Journal of Accounting Literature","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2024-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140085024","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 : 2024-02-19DOI: 10.1108/jal-05-2023-0088
Ming-Chang Wang, Yu-Feng Hsu, Hsiang-Ying Chien
PurposeThis study investigates the media activities of firms issuing private equity placements and seasoned equity offerings in Taiwan, as firms have incentives to manage media coverage to influence their stock prices during private equity placement.Design/methodology/approachWe collect a corpus of news stories and transform the news into term sets based on the part of speech. Then, we refer to Cecchini et al. (2010) to classify the news terms into positive, negative, and usual categories. Next, we employ the SVM algorithm to perform the classification tasks and the term frequency method to perform the text mining task. In last, we use a multiple regression model to verify the hypotheses.FindingsWe determine that issuing firms in a private placement have substantially more positive news stories and fewer negative news stories than those in public offerings. Furthermore, we evidence that the media management effects of postequity issues are more active than those of preequity issues. Finally, our results demonstrate that the timing and content of financial media coverage among different equity issuance methods may be biased by firm management. According to previous studies, they may attempt to manipulate stock prices to increase the number of highly profitable insider stakeholders.Originality/valueTo our knowledge, this is the first study to investigate that if private placement will associate with more active media management than the public offerings. According to our results of the difference-in-means test, the public offerings market may control news coverage; however, this result is inconsistent with that of the regression results. The private placements market may also exercise media management in the “before announcement day” and “after announcement day” periods by increasing positive news and reducing negative news.
{"title":"Are private placements associated with more active media management than public offerings? Evidence from Taiwan","authors":"Ming-Chang Wang, Yu-Feng Hsu, Hsiang-Ying Chien","doi":"10.1108/jal-05-2023-0088","DOIUrl":"https://doi.org/10.1108/jal-05-2023-0088","url":null,"abstract":"PurposeThis study investigates the media activities of firms issuing private equity placements and seasoned equity offerings in Taiwan, as firms have incentives to manage media coverage to influence their stock prices during private equity placement.Design/methodology/approachWe collect a corpus of news stories and transform the news into term sets based on the part of speech. Then, we refer to Cecchini et al. (2010) to classify the news terms into positive, negative, and usual categories. Next, we employ the SVM algorithm to perform the classification tasks and the term frequency method to perform the text mining task. In last, we use a multiple regression model to verify the hypotheses.FindingsWe determine that issuing firms in a private placement have substantially more positive news stories and fewer negative news stories than those in public offerings. Furthermore, we evidence that the media management effects of postequity issues are more active than those of preequity issues. Finally, our results demonstrate that the timing and content of financial media coverage among different equity issuance methods may be biased by firm management. According to previous studies, they may attempt to manipulate stock prices to increase the number of highly profitable insider stakeholders.Originality/valueTo our knowledge, this is the first study to investigate that if private placement will associate with more active media management than the public offerings. According to our results of the difference-in-means test, the public offerings market may control news coverage; however, this result is inconsistent with that of the regression results. The private placements market may also exercise media management in the “before announcement day” and “after announcement day” periods by increasing positive news and reducing negative news.","PeriodicalId":45666,"journal":{"name":"Journal of Accounting Literature","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2024-02-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139958183","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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