The research objective starts from the argument that small-scale multinational corporations’ (SMNCs’) managerial behavior toward auditing decisions is influenced by their personal value, especially when the auditing process is not mandatory. This study aims to examine how national culture-religiosity affects that decision. The authors further examine how foreign-owned MNCs might behave differently from local MNCs, although the host country’s cultural-religiosity value might influence that decision.
This study obtains the data from three sources: Hofstede Framework, Pew Research Center and World Bank Enterprise Survey in cross-sectional mode. The final sample consists of 8,590 SMNCs from 45 countries as the observations. This study uses robust regression analysis to test the effects of culture, religiosity and controlling shareholders on the audited financial statements decision.
The regression results support the hypothesis, whereas cultural-religiosity values are associated with the audited financial report. The findings confirm stakeholder theory and institutional theory.
This study fills a gap in the literature by providing empirical evidence on the cultural and religiosity effects on the accounting decision of SMNCs. The results can be used as the foundation for future research related to MNCs’ managerial behavior toward accounting policies, especially with the psychosocial factors.
Exploiting novel measures of climate change exposure and corporate culture generated by a powerful textual analysis of earnings conference calls, this study aims to explore the effect of firm-specific climate change exposure on corporate innovation through the lens of corporate culture.
The authors apply the standard regression analysis as well as a variety of sophisticated techniques, namely, propensity score matching, entropy balancing and an instrumental-variable analysis with multiple alternative instruments.
The authors find that more exposure to climate change risk results in more innovation, as indicated by a significantly stronger culture of innovation. The findings are consistent with the notion that firms more exposed to climate change risk are pressed to be more innovative to adapt to the numerous changes caused by climate change. Finally, the authors also find that the effect of firm-level exposure on innovation is considerably less pronounced during uncertain times.
The authors are among the first studies to take advantage of a novel measure of firm-specific exposure to climate change and investigate how climate change exposure influences an innovative culture. Since climate change is a timely issue, the findings offer important implication to several stakeholders, such as shareholders, executives and investors in general.
The purpose of this research note is to investigate the drivers and market reaction to firms’ decision to release general COVID-19-related announcements and to withdraw earnings forecasts and dividends during the COVID-19 pandemic in the continuous disclosure environment of Australia.
The authors first tracked the market reaction of all firms in the Australian Securities Exchange All Ordinaries, Top 300, Top 200 and Top 100 indices during the early period of the COVID-19 pandemic between 1 January and 21 September 2020. The authors then focus the investigation on the incidence of firms deciding to withdraw earnings forecasts and dividends and how the market responded to these incidences during that period.
The market reacted negatively during the March/April 2020 period but then bounced back to the pre-March 2020 level. The market reaction is mainly driven by three industries, including consumer discretionary, health care and utilities. Firms in industry sectors such as consumer discretionary, materials, health care and information technology contribute to the highest percentage of COVID-19 announcements. It is interesting to document that firms issuing COVID-19 announcements and withdrawing earnings forecasts and dividends tend to be larger firms with stronger financial performance and higher financial leverage. Regarding the stock market reaction, while the market generally reacted positively to COVID-19-related announcements, the decision to withdraw earnings forecasts and dividends is significantly regarded as bad news.
The COVID-19 pandemic has provided a unique natural event to examine firms’ disclosure behaviour in the continuous disclosure environment of Australia during this period of extreme uncertainty. The incidences of earnings forecasts and dividend withdrawals are mainly driven by larger, better performing and higher leverage firms in the consumer discretionary, health care, materials and information technology industry sectors. The market generally reacted favourably to COVID-19-related announcements, despite a significant stock price drop during the March/April 2020 period. The findings provide important regulatory and practical implications.
This study aims to investigate the impact of human resource investment in internal controls (hereinafter, IC personnel) on managers’ goodwill impairment decisions.
The authors use the ratio of IC personnel to the number of employees in the firm and the average work experience of IC personnel as quantitative and qualitative measures for IC personnel, respectively.
The authors find that the relationship between the likelihood of impairment and the expected impairment is not associated with the ratio of IC personnel. However, the average experience of IC personnel increases the likelihood that a company will record an impairment when there are market and financial indicators of impairment. The findings suggest that the effectiveness of IC is determined by practical proficiency rather than size. Furthermore, our analyses demonstrate that the greater the experience of the IC personnel in the accounting/finance or IT departments, the more likely the manager will record an expected impairment. Overall, our findings emphasize the importance of IC personnel expertise to enhance the effectiveness of IC for financial reporting.
Using unique data available only in Korea, to the best of the authors’ knowledge, this is the first study to show the effect of human resource investment in IC on goodwill impairment.
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