Pub Date : 2023-06-23DOI: 10.1108/jaee-10-2021-0318
I. Harymawan, Fiona Vista Putri
PurposeHow does the internal audit function make external auditors work more efficiently at the early stage of the COVID-19 pandemic? This study examines the relationship between internal audit function, audit report lag and audit fee at the early stage of the COVID-19 pandemic.Design/methodology/approachThis study uses data from all public firms listed on the Indonesia Stock Exchange from 2018 to 2019 using the difference-in-difference test technique to answer the proposed hypothesis. In addition, this study also tested the issue of endogeneity using Coarsened Exact Matching (CEM) and Two-Stage Least Square (Heckman, 1979).FindingsThis study finds that, at the early stage of the COVID-19 pandemic, a good internal audit function significantly reduced audit report lag and audit fee. These findings indicate that good corporate governance implemented through an internal audit function during the COVID-19 pandemic can give assurance to prevent and mitigate the firm's risk so that external auditors can work more efficiently. Furthermore, this study also carries out an additional analysis by subsampling the high and low technological industries. Based on the robustness test, it is revealed that the results of this study are consistent.Originality/valueThis study contributes to the novelty of literature in auditing studies that highlights the audit process at the early stage of the COVID-19 pandemic
{"title":"Internal audit function, audit report lag and audit fee: evidence from the early stage of COVID-19 pandemic","authors":"I. Harymawan, Fiona Vista Putri","doi":"10.1108/jaee-10-2021-0318","DOIUrl":"https://doi.org/10.1108/jaee-10-2021-0318","url":null,"abstract":"PurposeHow does the internal audit function make external auditors work more efficiently at the early stage of the COVID-19 pandemic? This study examines the relationship between internal audit function, audit report lag and audit fee at the early stage of the COVID-19 pandemic.Design/methodology/approachThis study uses data from all public firms listed on the Indonesia Stock Exchange from 2018 to 2019 using the difference-in-difference test technique to answer the proposed hypothesis. In addition, this study also tested the issue of endogeneity using Coarsened Exact Matching (CEM) and Two-Stage Least Square (Heckman, 1979).FindingsThis study finds that, at the early stage of the COVID-19 pandemic, a good internal audit function significantly reduced audit report lag and audit fee. These findings indicate that good corporate governance implemented through an internal audit function during the COVID-19 pandemic can give assurance to prevent and mitigate the firm's risk so that external auditors can work more efficiently. Furthermore, this study also carries out an additional analysis by subsampling the high and low technological industries. Based on the robustness test, it is revealed that the results of this study are consistent.Originality/valueThis study contributes to the novelty of literature in auditing studies that highlights the audit process at the early stage of the COVID-19 pandemic","PeriodicalId":45702,"journal":{"name":"Journal of Accounting in Emerging Economies","volume":null,"pages":null},"PeriodicalIF":2.3,"publicationDate":"2023-06-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48102222","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 : 2023-06-23DOI: 10.1108/jaee-10-2022-0280
Inna Choban, Sousa Paiva, M. I. S. A. andez, Lu ı sa, Cagica Carvalho, Inna Choban de
PurposeWith the increasing awareness of sustainability and its importance around the world, corporate social responsibility (CSR) in Africa also requires attention. Based on the stakeholder theory, this study aims to determine the relationship between CSR information received by small and medium-sized enterprises (SMEs) and CSR's diffusion and the mediating role of environmental awareness in Angola as a country representative of the African context.Design/methodology/approachThe empirical study analyzes managers' perceptions of 131 SMEs in Angola. The partial least squares structural equation modeling (PLS-SEM) is the method to assess the relationship between CSR information and its diffusion and the mediating role of environmental awareness SMEs in Angola.FindingsThe authors found strong evidence that CSR diffusion, and disclosure as one of CSR's related actions, heavily depends on the information received and managed by the firm. The authors also confirmed that environmental awareness puts pressure on SMEs to increase the SMEs' diffusion efforts.Practical implicationsThe study points out the role of managers in promoting a responsible orientation of businesses in Angola for preserving the environment and improving the competitive success of SMEs.Social implicationsThe social, economic and legal contexts of Angola are vulnerable. The findings raise concerns about whether governments and regulatory efforts improve the development of the strategies toward social responsibility of African firms and whether these firms also increase the role of SMEs in producing positive outcomes through CSR.Originality/valueThe results of this study contribute to a better understanding of the features of the strategic orientation of SMEs in Angola, necessary to enhance CSR and protect the environment. The conclusions highlight the potential role of managers in promoting a culture of ethics, social innovation and successful competition change in businesses.
{"title":"CSR information, environmental awareness and CSR diffusion in SMEs of Angola","authors":"Inna Choban, Sousa Paiva, M. I. S. A. andez, Lu ı sa, Cagica Carvalho, Inna Choban de","doi":"10.1108/jaee-10-2022-0280","DOIUrl":"https://doi.org/10.1108/jaee-10-2022-0280","url":null,"abstract":"PurposeWith the increasing awareness of sustainability and its importance around the world, corporate social responsibility (CSR) in Africa also requires attention. Based on the stakeholder theory, this study aims to determine the relationship between CSR information received by small and medium-sized enterprises (SMEs) and CSR's diffusion and the mediating role of environmental awareness in Angola as a country representative of the African context.Design/methodology/approachThe empirical study analyzes managers' perceptions of 131 SMEs in Angola. The partial least squares structural equation modeling (PLS-SEM) is the method to assess the relationship between CSR information and its diffusion and the mediating role of environmental awareness SMEs in Angola.FindingsThe authors found strong evidence that CSR diffusion, and disclosure as one of CSR's related actions, heavily depends on the information received and managed by the firm. The authors also confirmed that environmental awareness puts pressure on SMEs to increase the SMEs' diffusion efforts.Practical implicationsThe study points out the role of managers in promoting a responsible orientation of businesses in Angola for preserving the environment and improving the competitive success of SMEs.Social implicationsThe social, economic and legal contexts of Angola are vulnerable. The findings raise concerns about whether governments and regulatory efforts improve the development of the strategies toward social responsibility of African firms and whether these firms also increase the role of SMEs in producing positive outcomes through CSR.Originality/valueThe results of this study contribute to a better understanding of the features of the strategic orientation of SMEs in Angola, necessary to enhance CSR and protect the environment. The conclusions highlight the potential role of managers in promoting a culture of ethics, social innovation and successful competition change in businesses.","PeriodicalId":45702,"journal":{"name":"Journal of Accounting in Emerging Economies","volume":null,"pages":null},"PeriodicalIF":2.3,"publicationDate":"2023-06-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44497012","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 : 2023-06-15DOI: 10.1108/jaee-06-2022-0175
T. Garanina
PurposeThis paper explores the relationship between earnings management and firms' value through the moderating effect of the missing elements – corporate social responsibility (CSR) disclosure and state ownership in Russian companies. The main argument of the paper is that CSR disclosure can be used as a mitigating mechanism to weaken the negative relationship between earnings manipulation and market value. Additionally test whether state ownership is an important moderating factor in this relationship are conducted as state has always played an important role in the emerging Russian market.Design/methodology/approachThe hypotheses are tested on panel data for 223 publicly listed Russian firms for the period 2012–2018. A number of robustness tests are used to check the obtained results for consistency. Following previous research GMM method is employed to address endogeneity concerns.FindingsSupported by stakeholder theory, it is observed that firms that disclosed more CSR information experience a weaker negative relationship between earnings management and market value because investors and other stakeholders positively evaluate a positive CSR image. This negative effect of earnings management on market value is even weaker for state-owned companies as market participants appreciate involvement of state-owned companies in CSR activities and place greater expectations on these firms to be responsible without clear understanding whether these actions are “window dressing” for this type of companies or not.Originality/valueThe study results provide new insights into the relation between earnings management, firm's value, CSR disclosure and state ownership in emerging-market firms. The paper highlight the importance of considering country-specific factors, such as state ownership, while analysing the market reaction on CSR disclosure and earnings management since the institutional peculiarities may help to explain differences in the obtained results.
{"title":"CSR disclosure and state ownership: implications for earnings management and market value","authors":"T. Garanina","doi":"10.1108/jaee-06-2022-0175","DOIUrl":"https://doi.org/10.1108/jaee-06-2022-0175","url":null,"abstract":"PurposeThis paper explores the relationship between earnings management and firms' value through the moderating effect of the missing elements – corporate social responsibility (CSR) disclosure and state ownership in Russian companies. The main argument of the paper is that CSR disclosure can be used as a mitigating mechanism to weaken the negative relationship between earnings manipulation and market value. Additionally test whether state ownership is an important moderating factor in this relationship are conducted as state has always played an important role in the emerging Russian market.Design/methodology/approachThe hypotheses are tested on panel data for 223 publicly listed Russian firms for the period 2012–2018. A number of robustness tests are used to check the obtained results for consistency. Following previous research GMM method is employed to address endogeneity concerns.FindingsSupported by stakeholder theory, it is observed that firms that disclosed more CSR information experience a weaker negative relationship between earnings management and market value because investors and other stakeholders positively evaluate a positive CSR image. This negative effect of earnings management on market value is even weaker for state-owned companies as market participants appreciate involvement of state-owned companies in CSR activities and place greater expectations on these firms to be responsible without clear understanding whether these actions are “window dressing” for this type of companies or not.Originality/valueThe study results provide new insights into the relation between earnings management, firm's value, CSR disclosure and state ownership in emerging-market firms. The paper highlight the importance of considering country-specific factors, such as state ownership, while analysing the market reaction on CSR disclosure and earnings management since the institutional peculiarities may help to explain differences in the obtained results.","PeriodicalId":45702,"journal":{"name":"Journal of Accounting in Emerging Economies","volume":null,"pages":null},"PeriodicalIF":2.3,"publicationDate":"2023-06-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42827094","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 : 2023-05-30DOI: 10.1108/jaee-10-2022-0286
Wided Bouaine, Karima Alaya, C. Slim
PurposeThe objective of this paper is to study the impact of political connection and governance on credit rating and whether there is a substitution or complementary relationship between them.Design/methodology/approachIn order to achieve the objective, a succession of eight ordered probit regressions has been carried out. Moderating variables between the political connection and governance characteristics were introduced. The whole population is taken as a sample, i.e., 27 Tunisian companies that are evaluated by FITSH NORTH AFRICA agencies over a period of 10 years (2009–2018).FindingsThe outcomes are mixed. They show that the political connection does not always influence credit rating; the size and board independence always improves credit rating; the duality between the functions affects credit rating; whereas the majorities’ proportion does not influence credit rating; and a substitution between the political connection and the governance characteristics is validated.Research limitations/implicationsLike any other research, our results are factors of our measures and variable choice and depends heavily on the how these variables were conceived. Also, although our number of observations responds to the statistical result generalization requirements, our sample remains relatively narrow with 27 companies only.Practical implicationsIn practice, the research will allow investors to have a better vision upon the future of their investments based on whether to develop their governance system or promote political networking. It will also prompt lenders to look beyond ratings and consider factors such as political connections to make a rational judgment on their future placements.Social implicationsThis study leads us to find various solutions: the establishment of credit agencies that take into consideration all the data of all the operators taken as a whole (bank, leasing company, and factoring). It encourages the reorganization of the Tunisian banking sector through mergers for example.Originality/valueThis study is a pioneer in the credit rating field in Tunisia, where the source of debt financing is the most used by all enterprises across all sectors. This study extends the literature of political connection effectiveness, independent directors, board size, in improving corporate performance and credit rating.
{"title":"The effect of political connections and governance on credit ratings: substitution versus complementary view: case of Tunisian firm","authors":"Wided Bouaine, Karima Alaya, C. Slim","doi":"10.1108/jaee-10-2022-0286","DOIUrl":"https://doi.org/10.1108/jaee-10-2022-0286","url":null,"abstract":"PurposeThe objective of this paper is to study the impact of political connection and governance on credit rating and whether there is a substitution or complementary relationship between them.Design/methodology/approachIn order to achieve the objective, a succession of eight ordered probit regressions has been carried out. Moderating variables between the political connection and governance characteristics were introduced. The whole population is taken as a sample, i.e., 27 Tunisian companies that are evaluated by FITSH NORTH AFRICA agencies over a period of 10 years (2009–2018).FindingsThe outcomes are mixed. They show that the political connection does not always influence credit rating; the size and board independence always improves credit rating; the duality between the functions affects credit rating; whereas the majorities’ proportion does not influence credit rating; and a substitution between the political connection and the governance characteristics is validated.Research limitations/implicationsLike any other research, our results are factors of our measures and variable choice and depends heavily on the how these variables were conceived. Also, although our number of observations responds to the statistical result generalization requirements, our sample remains relatively narrow with 27 companies only.Practical implicationsIn practice, the research will allow investors to have a better vision upon the future of their investments based on whether to develop their governance system or promote political networking. It will also prompt lenders to look beyond ratings and consider factors such as political connections to make a rational judgment on their future placements.Social implicationsThis study leads us to find various solutions: the establishment of credit agencies that take into consideration all the data of all the operators taken as a whole (bank, leasing company, and factoring). It encourages the reorganization of the Tunisian banking sector through mergers for example.Originality/valueThis study is a pioneer in the credit rating field in Tunisia, where the source of debt financing is the most used by all enterprises across all sectors. This study extends the literature of political connection effectiveness, independent directors, board size, in improving corporate performance and credit rating.","PeriodicalId":45702,"journal":{"name":"Journal of Accounting in Emerging Economies","volume":null,"pages":null},"PeriodicalIF":2.3,"publicationDate":"2023-05-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43061922","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/jaee-09-2020-0247
Marwa Elnahass, M. Tahir, Noora Abdul Rahman Ahmed, A. Salama
PurposeThis study examines the association between internal corporate governance mechanisms (i.e. board of directors and audit committee) and the information value of bank earnings. The authors comparatively assess this association across different bank types, Islamic versus conventional banks. The authors also investigate the mediating effect of Shariah governance.Design/methodology/approachThe authors utilize a unique and an international sample of 723 bank-year observations representing 100 listed banks from 16 countries during the period 2007–2015. The authors investigate the characteristics of the board of directors and audit committee (i.e. size and independence) and employ three core analyses for earnings informativeness (i.e. earnings persistence, cash flow predictability and reliability of loan loss provisions). Additional analyses address Shariah supervisory boards’ (SSBs’) size, financial expertise and multiple outside directorships. The authors use the random-effect Generalised Least Squares (GLS) estimation technique and provide several robustness checks and sensitivities.FindingsThe authors find that, on average, having large and independent boards (and audit committees) increases the informativeness of reported earnings for banks. Conditional on bank type, our results report strong evidence for differential effects across the two alternative banking systems. In Islamic banks, large and independent board of directors (and audit committees) is positively associated with all measures of information value. There is insignificant evidence for conventional banks. However, SSBs show no significant effect on the reported earnings’ informativeness.Originality/valueThis is the first study, to the best of our knowledge, that empirically and comparatively assesses the information value of reported earnings in association with effective internal governance while recognizing the institutional characteristics of different bank types. The authors offer new insights to policymakers, investors and other stakeholders located within countries operating on a dual banking system. The results could help regulators to improve their rules/guidance related to double-layer governance and financial reporting quality.
{"title":"Internal governance mechanisms and information value of banks’ earnings","authors":"Marwa Elnahass, M. Tahir, Noora Abdul Rahman Ahmed, A. Salama","doi":"10.1108/jaee-09-2020-0247","DOIUrl":"https://doi.org/10.1108/jaee-09-2020-0247","url":null,"abstract":"PurposeThis study examines the association between internal corporate governance mechanisms (i.e. board of directors and audit committee) and the information value of bank earnings. The authors comparatively assess this association across different bank types, Islamic versus conventional banks. The authors also investigate the mediating effect of Shariah governance.Design/methodology/approachThe authors utilize a unique and an international sample of 723 bank-year observations representing 100 listed banks from 16 countries during the period 2007–2015. The authors investigate the characteristics of the board of directors and audit committee (i.e. size and independence) and employ three core analyses for earnings informativeness (i.e. earnings persistence, cash flow predictability and reliability of loan loss provisions). Additional analyses address Shariah supervisory boards’ (SSBs’) size, financial expertise and multiple outside directorships. The authors use the random-effect Generalised Least Squares (GLS) estimation technique and provide several robustness checks and sensitivities.FindingsThe authors find that, on average, having large and independent boards (and audit committees) increases the informativeness of reported earnings for banks. Conditional on bank type, our results report strong evidence for differential effects across the two alternative banking systems. In Islamic banks, large and independent board of directors (and audit committees) is positively associated with all measures of information value. There is insignificant evidence for conventional banks. However, SSBs show no significant effect on the reported earnings’ informativeness.Originality/valueThis is the first study, to the best of our knowledge, that empirically and comparatively assesses the information value of reported earnings in association with effective internal governance while recognizing the institutional characteristics of different bank types. The authors offer new insights to policymakers, investors and other stakeholders located within countries operating on a dual banking system. The results could help regulators to improve their rules/guidance related to double-layer governance and financial reporting quality.","PeriodicalId":45702,"journal":{"name":"Journal of Accounting in Emerging Economies","volume":null,"pages":null},"PeriodicalIF":2.3,"publicationDate":"2023-05-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47269406","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/jaee-10-2021-0308
N. Wijekoon, Umesh Sharma, Grant Samkin
PurposeThis paper aims to examine the perceptions of owners and accountants of small- and medium-sized entities (SMEs) on the users and their financial information needs of SME financial reporting.Design/methodology/approachPostal questionnaire surveys with owners and accountants of SMEs were used to identify users and their financial information needs. In total, 1,498 questionnaires were sent to SME owners and accountants. A total of 358 questionnaires were returned, generating 323 useable questionnaires. The management branch of stakeholder theory is used for the study which asserts that company management is expected to meet the expectations of those stakeholders who are more powerful than others.FindingsThe users of Sri Lanka SME financial information were limited to owners, banks and Department of Inland Revenue. Users and financial information needs of owners varied in relation to the size of the SME. Financial information are useful for making capital investment and planning decisions for owners regardless of the size of the SME. By sharing information with outside parties, disclosures can diminish information asymmetries between the firms and its stakeholders. The top three reasons for which owners use SME financial information are for planning purposes, estimating income tax liabilities, and taking marketing and pricing decisions.Research limitations/implicationsSince the study focuses only on the views of owner-managers and accountants of SMEs, the holistic understanding of uses of SME financial information by other user groups cannot be achieved.Practical implicationsThe results of this study provide international and local standard setters with an indication of future direction for SME financial reporting.Social implicationsThis paper extends existing knowledge on users and their financial information needs of SMEs in developing countries. Consequently, the findings of this paper make a valuable contribution to the work of practitioners such as local and international standards-setters and regulators who may be considering developing/revising financial reporting framework for SMEs either worldwide or in developing countries.Originality/valueAlthough SME financial reporting has attracted enormous attention in the recent accounting literature, academic research into SME financial reporting is scant. This paper extends existing knowledge on users and their financial information needs of SMEs in developing countries. The general purpose financial reporting model and the accounting standard IFRS for SMEs in particular would not be applicable to Sri Lankan SMEs unless it modifies to reflect the financial information needs of users of Sri Lankan SME financial information.
{"title":"SME owners and accountants' perceptions of financial information in small- and medium-sized entities: a Sri Lanka case study","authors":"N. Wijekoon, Umesh Sharma, Grant Samkin","doi":"10.1108/jaee-10-2021-0308","DOIUrl":"https://doi.org/10.1108/jaee-10-2021-0308","url":null,"abstract":"PurposeThis paper aims to examine the perceptions of owners and accountants of small- and medium-sized entities (SMEs) on the users and their financial information needs of SME financial reporting.Design/methodology/approachPostal questionnaire surveys with owners and accountants of SMEs were used to identify users and their financial information needs. In total, 1,498 questionnaires were sent to SME owners and accountants. A total of 358 questionnaires were returned, generating 323 useable questionnaires. The management branch of stakeholder theory is used for the study which asserts that company management is expected to meet the expectations of those stakeholders who are more powerful than others.FindingsThe users of Sri Lanka SME financial information were limited to owners, banks and Department of Inland Revenue. Users and financial information needs of owners varied in relation to the size of the SME. Financial information are useful for making capital investment and planning decisions for owners regardless of the size of the SME. By sharing information with outside parties, disclosures can diminish information asymmetries between the firms and its stakeholders. The top three reasons for which owners use SME financial information are for planning purposes, estimating income tax liabilities, and taking marketing and pricing decisions.Research limitations/implicationsSince the study focuses only on the views of owner-managers and accountants of SMEs, the holistic understanding of uses of SME financial information by other user groups cannot be achieved.Practical implicationsThe results of this study provide international and local standard setters with an indication of future direction for SME financial reporting.Social implicationsThis paper extends existing knowledge on users and their financial information needs of SMEs in developing countries. Consequently, the findings of this paper make a valuable contribution to the work of practitioners such as local and international standards-setters and regulators who may be considering developing/revising financial reporting framework for SMEs either worldwide or in developing countries.Originality/valueAlthough SME financial reporting has attracted enormous attention in the recent accounting literature, academic research into SME financial reporting is scant. This paper extends existing knowledge on users and their financial information needs of SMEs in developing countries. The general purpose financial reporting model and the accounting standard IFRS for SMEs in particular would not be applicable to Sri Lankan SMEs unless it modifies to reflect the financial information needs of users of Sri Lankan SME financial information.","PeriodicalId":45702,"journal":{"name":"Journal of Accounting in Emerging Economies","volume":null,"pages":null},"PeriodicalIF":2.3,"publicationDate":"2023-05-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49180471","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 : 2023-05-11DOI: 10.1108/jaee-10-2022-0300
Naruanard Sarapaivanich, Erboon Ekasingh, Jomjai Sampet, P. Patterson
PurposeThis study examines how professional service firms' communication effectiveness (affiliative communications style, social dialogue and information provision), social cognitive capital and rapport established between an auditor and SME client are instrumental in influencing the latter's evaluation of the technical quality of an audit.Design/methodology/approachThe study combines qualitative and quantitative methodologies to create a cross-sectional survey covering four geographic regions in an emerging economy – Thailand. The authors examine the hypotheses by employing social interaction theory.FindingsA study of 744 SME executives plus post-survey interviews with three audit partners revealed that an affiliative communications style and information provision are positively associated with the rapport developed between financial auditor and client, and that rapport, in turn, had a strong association with client perceptions of audit quality. In addition, affiliative communication style, information provision and social cognitive capital had a direct (positive) association with perceptions of audit quality. The effects of communication effectiveness and social cognitive capital varied, depending on whether or not the SME client possessed formal accounting qualifications.Originality/valueThe study contributes to the literature on the business-to-business professional services, and accounting in particular, by explicating the important roles of communication effectiveness, rapport, and social cognitive capital in the relationship between an auditor and a client. Moreover, the paper reveals that the differences in educational background of clients result in differential impacts of communication effectiveness and social cognitive capital on rapport and perceptions of audit quality.
{"title":"SME clients evaluation of audit quality: the roles of auditors' communication effectiveness, rapport and social capital","authors":"Naruanard Sarapaivanich, Erboon Ekasingh, Jomjai Sampet, P. Patterson","doi":"10.1108/jaee-10-2022-0300","DOIUrl":"https://doi.org/10.1108/jaee-10-2022-0300","url":null,"abstract":"PurposeThis study examines how professional service firms' communication effectiveness (affiliative communications style, social dialogue and information provision), social cognitive capital and rapport established between an auditor and SME client are instrumental in influencing the latter's evaluation of the technical quality of an audit.Design/methodology/approachThe study combines qualitative and quantitative methodologies to create a cross-sectional survey covering four geographic regions in an emerging economy – Thailand. The authors examine the hypotheses by employing social interaction theory.FindingsA study of 744 SME executives plus post-survey interviews with three audit partners revealed that an affiliative communications style and information provision are positively associated with the rapport developed between financial auditor and client, and that rapport, in turn, had a strong association with client perceptions of audit quality. In addition, affiliative communication style, information provision and social cognitive capital had a direct (positive) association with perceptions of audit quality. The effects of communication effectiveness and social cognitive capital varied, depending on whether or not the SME client possessed formal accounting qualifications.Originality/valueThe study contributes to the literature on the business-to-business professional services, and accounting in particular, by explicating the important roles of communication effectiveness, rapport, and social cognitive capital in the relationship between an auditor and a client. Moreover, the paper reveals that the differences in educational background of clients result in differential impacts of communication effectiveness and social cognitive capital on rapport and perceptions of audit quality.","PeriodicalId":45702,"journal":{"name":"Journal of Accounting in Emerging Economies","volume":null,"pages":null},"PeriodicalIF":2.3,"publicationDate":"2023-05-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45869857","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 : 2023-04-13DOI: 10.1108/jaee-08-2020-0204
PurposeThe aim of this study is to explore how a practice approach can provide an understanding of board diversity practices. Drawing from Schatzki's practice theory, this study considered how board diversity is practiced from the doings and sayings of directors in Mauritius.Design/methodology/approachIn this study, in-depth interviews with directors in listed companies from different industrial sectors were used to collect data.FindingsThe authors' findings indicate that a country's board diversity practices are influenced by the country's unique social, economic and cultural environment. Whilst board diversity practices may appear as the practices that are motivated by compliance, a deeper look at the results reveals that the laws governing board diversity are interpreted very subtly in a way that benefits shareholders' self-interest. A low percentage of female directors on boards and some indications of shareholder-driven practices are also found. Whilst the corporate sector acknowledges the advantages of diversity, there are some practices that they are unwilling to abandon, demonstrating the importance of the teleoaffective structures and normativity in determining what really occurs. Members of boards resolving disagreement further demonstrates the teleoaffective structure.Research limitations/implicationsThis research would be of interest to researchers because of the research's novel approach in studying board diversity which could be used by other researchers to experiment with a practice approach in exploring corporate governance phenomena in unique settings.Practical implicationsThe findings are of relevance to policymakers and regulators who seek to strengthen corporate governance practices in similar settings.Originality/valueThis research contributes to the literature on board diversity by showing that analysing board diversity through a practice approach enables a more comprehensive understanding of practices. The authors' study confirms that practice theory has the potential to re-orient the way board diversity studies are undertaken.
{"title":"Board diversity in Mauritius: a practice theory perspective","authors":"","doi":"10.1108/jaee-08-2020-0204","DOIUrl":"https://doi.org/10.1108/jaee-08-2020-0204","url":null,"abstract":"PurposeThe aim of this study is to explore how a practice approach can provide an understanding of board diversity practices. Drawing from Schatzki's practice theory, this study considered how board diversity is practiced from the doings and sayings of directors in Mauritius.Design/methodology/approachIn this study, in-depth interviews with directors in listed companies from different industrial sectors were used to collect data.FindingsThe authors' findings indicate that a country's board diversity practices are influenced by the country's unique social, economic and cultural environment. Whilst board diversity practices may appear as the practices that are motivated by compliance, a deeper look at the results reveals that the laws governing board diversity are interpreted very subtly in a way that benefits shareholders' self-interest. A low percentage of female directors on boards and some indications of shareholder-driven practices are also found. Whilst the corporate sector acknowledges the advantages of diversity, there are some practices that they are unwilling to abandon, demonstrating the importance of the teleoaffective structures and normativity in determining what really occurs. Members of boards resolving disagreement further demonstrates the teleoaffective structure.Research limitations/implicationsThis research would be of interest to researchers because of the research's novel approach in studying board diversity which could be used by other researchers to experiment with a practice approach in exploring corporate governance phenomena in unique settings.Practical implicationsThe findings are of relevance to policymakers and regulators who seek to strengthen corporate governance practices in similar settings.Originality/valueThis research contributes to the literature on board diversity by showing that analysing board diversity through a practice approach enables a more comprehensive understanding of practices. The authors' study confirms that practice theory has the potential to re-orient the way board diversity studies are undertaken.","PeriodicalId":45702,"journal":{"name":"Journal of Accounting in Emerging Economies","volume":null,"pages":null},"PeriodicalIF":2.3,"publicationDate":"2023-04-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43418619","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 : 2023-04-13DOI: 10.1108/jaee-06-2022-0177
PurposeThis study examines whether investors value the timing and/or information of mandatory disclosures in a unique research setting of listed companies in Thailand.Design/methodology/approachThe authors adopt an event-study based approach. Abnormal stock returns are calculated using an OLS market model to measure market reactions to three types of mandatory reports issued by listed Thai firms: financial statements, Form 56-1 and Form 56-2. These reports are released sequentially but contain overlapping information content. Multivariate regression models are employed to examine the market reactions to these regulatory reports and explore the characteristics of firms that affect the market response.FindingsThe stock market reacts differentially to these reports. The financial statements, which are filed the earliest and are the most concise, prompt the strongest reaction. Investors similarly react significantly to Form 56-1 and Form 56-2, although Form 56-2 provides additional information beyond Form 56-1. The market reactions to small firms are stronger. Collectively, equity investors focus on the timeliness of disclosures rather than the information disclosed in the mandatory reports.Practical implicationsThe evidence provides support for ongoing regulatory initiatives aimed at improving the timeliness of mandatory disclosures in emerging economies.Originality/valuePrior studies on disclosure regulation investigate either the effect of information content or the timing of mandatory disclosures in isolation. The authors differentiate the effect of information content from disclosure timing and extend the literature by suggesting that investors incrementally value timeliness of disclosures. Investors perceive the benefit of the timely release of quantitative information compared to subsequent narrative disclosures. Between Form 56-1 and Form 56-2, the earlier release of the narrative non-financial information is incrementally traded into share prices.
{"title":"Market reactions to timing and information of mandatory disclosures","authors":"","doi":"10.1108/jaee-06-2022-0177","DOIUrl":"https://doi.org/10.1108/jaee-06-2022-0177","url":null,"abstract":"PurposeThis study examines whether investors value the timing and/or information of mandatory disclosures in a unique research setting of listed companies in Thailand.Design/methodology/approachThe authors adopt an event-study based approach. Abnormal stock returns are calculated using an OLS market model to measure market reactions to three types of mandatory reports issued by listed Thai firms: financial statements, Form 56-1 and Form 56-2. These reports are released sequentially but contain overlapping information content. Multivariate regression models are employed to examine the market reactions to these regulatory reports and explore the characteristics of firms that affect the market response.FindingsThe stock market reacts differentially to these reports. The financial statements, which are filed the earliest and are the most concise, prompt the strongest reaction. Investors similarly react significantly to Form 56-1 and Form 56-2, although Form 56-2 provides additional information beyond Form 56-1. The market reactions to small firms are stronger. Collectively, equity investors focus on the timeliness of disclosures rather than the information disclosed in the mandatory reports.Practical implicationsThe evidence provides support for ongoing regulatory initiatives aimed at improving the timeliness of mandatory disclosures in emerging economies.Originality/valuePrior studies on disclosure regulation investigate either the effect of information content or the timing of mandatory disclosures in isolation. The authors differentiate the effect of information content from disclosure timing and extend the literature by suggesting that investors incrementally value timeliness of disclosures. Investors perceive the benefit of the timely release of quantitative information compared to subsequent narrative disclosures. Between Form 56-1 and Form 56-2, the earlier release of the narrative non-financial information is incrementally traded into share prices.","PeriodicalId":45702,"journal":{"name":"Journal of Accounting in Emerging Economies","volume":null,"pages":null},"PeriodicalIF":2.3,"publicationDate":"2023-04-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47383507","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 : 2023-04-05DOI: 10.1108/jaee-02-2022-0044
Yosra Mnif, Yosra Gafsi
PurposeThis paper investigates to what extent public sector entities (PSEs) in developing countries (DCs) are compliant with IPSAS and examines the impact of the socioeconomic and politico-administrative environment on this compliance during the period 2015–2018.Design/methodology/approachThis research develops a self-constructed checklist consisting of 116 disclosure items from five accrual-based IPSAS (IPSASs, 1, 2, 3, 14 and 24) and applies panel regressions for a sample of 500 entity-year observations of 125 PSEs.FindingsThe study results show a high level of disparity in the degree of compliance with IPSAS amongst DCs' governments, with an overall average level of 61%. They reveal that compliance with IPSAS is positively influenced by the level of citizen wealth, government political culture (degree of government openness) and the quality of public administration, whereas jurisdiction size, government financial condition and political competition are non-significant factors.Practical implicationsThis research provides researchers and practitioners with a comprehensive framework for understanding the extent of New Public Management reforms in DCs with a focus on International Public Sector Accounting Standards implementation. It might assist policymakers in their accounting strategies and might be a signal for DCs with low compliance to tap lessons from governments with successful experience of IPSAS adoption.Originality/valueFocusing on DCs' context, this paper brings new insights into the analysis of socioeconomic and politico-administrative incentives for government compliance with IPSAS. It is the first to investigate the impact of citizen wealth and political competition on IPSAS disclosures.
{"title":"The influence of the socioeconomic and politico-administrative environment on the extent of compliance with IPSAS in developing countries","authors":"Yosra Mnif, Yosra Gafsi","doi":"10.1108/jaee-02-2022-0044","DOIUrl":"https://doi.org/10.1108/jaee-02-2022-0044","url":null,"abstract":"PurposeThis paper investigates to what extent public sector entities (PSEs) in developing countries (DCs) are compliant with IPSAS and examines the impact of the socioeconomic and politico-administrative environment on this compliance during the period 2015–2018.Design/methodology/approachThis research develops a self-constructed checklist consisting of 116 disclosure items from five accrual-based IPSAS (IPSASs, 1, 2, 3, 14 and 24) and applies panel regressions for a sample of 500 entity-year observations of 125 PSEs.FindingsThe study results show a high level of disparity in the degree of compliance with IPSAS amongst DCs' governments, with an overall average level of 61%. They reveal that compliance with IPSAS is positively influenced by the level of citizen wealth, government political culture (degree of government openness) and the quality of public administration, whereas jurisdiction size, government financial condition and political competition are non-significant factors.Practical implicationsThis research provides researchers and practitioners with a comprehensive framework for understanding the extent of New Public Management reforms in DCs with a focus on International Public Sector Accounting Standards implementation. It might assist policymakers in their accounting strategies and might be a signal for DCs with low compliance to tap lessons from governments with successful experience of IPSAS adoption.Originality/valueFocusing on DCs' context, this paper brings new insights into the analysis of socioeconomic and politico-administrative incentives for government compliance with IPSAS. It is the first to investigate the impact of citizen wealth and political competition on IPSAS disclosures.","PeriodicalId":45702,"journal":{"name":"Journal of Accounting in Emerging Economies","volume":null,"pages":null},"PeriodicalIF":2.3,"publicationDate":"2023-04-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49434207","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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