Pub Date : 2023-06-06DOI: 10.1108/par-08-2022-0127
Kitty Mo Kong, H. Huang
Purpose This paper investigates whether the audit fees of Chinese listed firms are associated with the share pledging practice of the firm’s controlling shareholders. Design/methodology/approach This study uses the audit pricing model to estimate the association between the share pledging of listed firms and audit fees. Cross-sectional analysis is conducted on a large sample of Chinese listed firms during the period 2004 to 2019. The authors further test the moderating effects of listing on the Main Board, state ownership and abnormal audit report lag on the association between share pledging and audit fees. The results remain robust to various endogeneity tests including two-stage least squares instrumental variable analysis, entropy balancing analysis and difference-in-difference analysis. Findings The study finds that audit fees are positively associated with the proportion of shares pledged by the listed firm’s controlling shareholder in China. The results also provide new evidence that the positive association between audit fees and the share pledging of controlling shareholders could be mitigated if the firm is listed on the Main Board and/or it is a state-owned enterprise. In contrast, pledged firms with abnormal audit report lag are found to have higher audit fees than their pledged counterparts without the excessively long audit delay. Practical implications Findings of this study have important practical implications to those charged with governance, as boards need to comprehensively understand the adverse consequences of share pledging when pursuing it as the firm’s major source of financing. The study also has policy implications for stock market regulators such as the China Securities Regulatory Commission in China. Regulators could consider developing a threshold-based share pledging disclosure and pledge ratio requirements based on factors such as a firm’s listing status and ownership structure. Originality/value This study provides new evidence on the audit-related consequences of share pledging in a significant capital market. Findings of this study also enrich the existing audit literature by introducing the share pledging activities of controlling shareholders into the audit pricing decision-making model.
{"title":"Do auditors respond when listed firms pledge shares? Evidence from China","authors":"Kitty Mo Kong, H. Huang","doi":"10.1108/par-08-2022-0127","DOIUrl":"https://doi.org/10.1108/par-08-2022-0127","url":null,"abstract":"\u0000Purpose\u0000This paper investigates whether the audit fees of Chinese listed firms are associated with the share pledging practice of the firm’s controlling shareholders.\u0000\u0000\u0000Design/methodology/approach\u0000This study uses the audit pricing model to estimate the association between the share pledging of listed firms and audit fees. Cross-sectional analysis is conducted on a large sample of Chinese listed firms during the period 2004 to 2019. The authors further test the moderating effects of listing on the Main Board, state ownership and abnormal audit report lag on the association between share pledging and audit fees. The results remain robust to various endogeneity tests including two-stage least squares instrumental variable analysis, entropy balancing analysis and difference-in-difference analysis.\u0000\u0000\u0000Findings\u0000The study finds that audit fees are positively associated with the proportion of shares pledged by the listed firm’s controlling shareholder in China. The results also provide new evidence that the positive association between audit fees and the share pledging of controlling shareholders could be mitigated if the firm is listed on the Main Board and/or it is a state-owned enterprise. In contrast, pledged firms with abnormal audit report lag are found to have higher audit fees than their pledged counterparts without the excessively long audit delay.\u0000\u0000\u0000Practical implications\u0000Findings of this study have important practical implications to those charged with governance, as boards need to comprehensively understand the adverse consequences of share pledging when pursuing it as the firm’s major source of financing. The study also has policy implications for stock market regulators such as the China Securities Regulatory Commission in China. Regulators could consider developing a threshold-based share pledging disclosure and pledge ratio requirements based on factors such as a firm’s listing status and ownership structure.\u0000\u0000\u0000Originality/value\u0000This study provides new evidence on the audit-related consequences of share pledging in a significant capital market. Findings of this study also enrich the existing audit literature by introducing the share pledging activities of controlling shareholders into the audit pricing decision-making model.\u0000","PeriodicalId":46088,"journal":{"name":"Pacific Accounting Review","volume":null,"pages":null},"PeriodicalIF":2.1,"publicationDate":"2023-06-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43528756","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 : 2023-06-06DOI: 10.1108/par-09-2022-0141
C. Lim, Themin Suwardy, T. Zhang
Purpose Previous research in auditing has used the probability of small profits or losses as a measure of audit quality. The purpose of this paper is to investigate the validity of the underlying assumption in prior audit literature that auditing mitigates clients’ inclination towards loss avoidance and to shed light on the debate regarding earnings discontinuity. Design/methodology/approach This paper compares the discontinuity in earnings distribution around zero, both before and after auditing. Findings Using a unique data set that contains both recorded and waived adjustments, the authors find that audit adjustments do not reduce the discontinuity in earnings distribution around zero. Research limitations/implications The results advise caution in using the probability of small profits or losses as a measure of audit quality. The findings suggest the discontinuity in earnings around zero may not be caused by loss avoidance achieved through accounting misreporting, which falls under the purview of auditing. Originality/value This research makes unique contributions beyond those of prior studies. By incorporating waived adjustments, the authors are able to conduct more comprehensive tests and explore richer details of audit adjustments that were not available in previous studies. The proportion of losses in this study's sample aligns with that in prior US research, which enhances the generalisability of the authors’ findings and minimizes the influence of inherent discrepancies in auditors' motivations to curb loss avoidance.
{"title":"Audit adjustments and the discontinuity in earnings distribution around zero","authors":"C. Lim, Themin Suwardy, T. Zhang","doi":"10.1108/par-09-2022-0141","DOIUrl":"https://doi.org/10.1108/par-09-2022-0141","url":null,"abstract":"\u0000Purpose\u0000Previous research in auditing has used the probability of small profits or losses as a measure of audit quality. The purpose of this paper is to investigate the validity of the underlying assumption in prior audit literature that auditing mitigates clients’ inclination towards loss avoidance and to shed light on the debate regarding earnings discontinuity.\u0000\u0000\u0000Design/methodology/approach\u0000This paper compares the discontinuity in earnings distribution around zero, both before and after auditing.\u0000\u0000\u0000Findings\u0000Using a unique data set that contains both recorded and waived adjustments, the authors find that audit adjustments do not reduce the discontinuity in earnings distribution around zero.\u0000\u0000\u0000Research limitations/implications\u0000The results advise caution in using the probability of small profits or losses as a measure of audit quality. The findings suggest the discontinuity in earnings around zero may not be caused by loss avoidance achieved through accounting misreporting, which falls under the purview of auditing.\u0000\u0000\u0000Originality/value\u0000This research makes unique contributions beyond those of prior studies. By incorporating waived adjustments, the authors are able to conduct more comprehensive tests and explore richer details of audit adjustments that were not available in previous studies. The proportion of losses in this study's sample aligns with that in prior US research, which enhances the generalisability of the authors’ findings and minimizes the influence of inherent discrepancies in auditors' motivations to curb loss avoidance.\u0000","PeriodicalId":46088,"journal":{"name":"Pacific Accounting Review","volume":null,"pages":null},"PeriodicalIF":2.1,"publicationDate":"2023-06-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47262315","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/par-07-2022-0103
Kishore Singh, P. Best
Purpose During a pandemic, with businesses implementing social distancing protocols and work-from-home strategies, the use of continuous controls monitoring (CCM) may add value to the internal audit function. This study aims to examine the use of CCM technologies and the impact on the internal audit function during a pandemic. Design/methodology/approach This study adopted a case study approach for this study because it focuses on questions of “how” and “what.” Case studies provided an opportunity for an in-depth analysis of the phenomena being investigated. Semi-structured interviews were used to collect data. This study did not use sampling. Instead, multiple case studies were used for data collection. Findings Based on the findings, this study makes several contributions to the literature, for example, in health-care evidence suggests the pandemic has caused internal audit to focus on risk areas. Other industries, such as retail, have invested in CCM. However, in all cases, education and preparedness (or the lack thereof) appeared to significantly influence uptake of CCM. Organizations that made prior investments in CCM technologies experienced greater acceptance in the face of changing demands. Training in emerging technologies is a key competency in supporting audit operations in changing environments. Research limitations/implications As the study was conducted with a small sample of cases, findings cannot be extrapolated nor generalized beyond the case study organizations. Practical implications This study found that several factors limit adoption, exploitation and further development of CCM technologies, such as lack of top management support, acceptance of CCM technologies and suitable education and training of internal audit staff. Originality/value This study addresses the issue of the value that CCM offers organizations and whether it is a silver bullet that the internal audit profession needs, particularly when physical access to organizations may be restricted. The COVID-19 pandemic placed considerable focus on digital access. Better IT systems and more data will allow organizations to better support employees, inform strategic and financial decisions and engage stakeholders. During the recovery phase, leveraging investments in CCM technologies will contribute to internal audits’ ability to help clients to manage organizational risk.
{"title":"Auditing during a pandemic – can continuous controls monitoring (CCM) address challenges facing internal audit departments?","authors":"Kishore Singh, P. Best","doi":"10.1108/par-07-2022-0103","DOIUrl":"https://doi.org/10.1108/par-07-2022-0103","url":null,"abstract":"\u0000Purpose\u0000During a pandemic, with businesses implementing social distancing protocols and work-from-home strategies, the use of continuous controls monitoring (CCM) may add value to the internal audit function. This study aims to examine the use of CCM technologies and the impact on the internal audit function during a pandemic.\u0000\u0000\u0000Design/methodology/approach\u0000This study adopted a case study approach for this study because it focuses on questions of “how” and “what.” Case studies provided an opportunity for an in-depth analysis of the phenomena being investigated. Semi-structured interviews were used to collect data. This study did not use sampling. Instead, multiple case studies were used for data collection.\u0000\u0000\u0000Findings\u0000Based on the findings, this study makes several contributions to the literature, for example, in health-care evidence suggests the pandemic has caused internal audit to focus on risk areas. Other industries, such as retail, have invested in CCM. However, in all cases, education and preparedness (or the lack thereof) appeared to significantly influence uptake of CCM. Organizations that made prior investments in CCM technologies experienced greater acceptance in the face of changing demands. Training in emerging technologies is a key competency in supporting audit operations in changing environments.\u0000\u0000\u0000Research limitations/implications\u0000As the study was conducted with a small sample of cases, findings cannot be extrapolated nor generalized beyond the case study organizations.\u0000\u0000\u0000Practical implications\u0000This study found that several factors limit adoption, exploitation and further development of CCM technologies, such as lack of top management support, acceptance of CCM technologies and suitable education and training of internal audit staff.\u0000\u0000\u0000Originality/value\u0000This study addresses the issue of the value that CCM offers organizations and whether it is a silver bullet that the internal audit profession needs, particularly when physical access to organizations may be restricted. The COVID-19 pandemic placed considerable focus on digital access. Better IT systems and more data will allow organizations to better support employees, inform strategic and financial decisions and engage stakeholders. During the recovery phase, leveraging investments in CCM technologies will contribute to internal audits’ ability to help clients to manage organizational risk.\u0000","PeriodicalId":46088,"journal":{"name":"Pacific Accounting Review","volume":null,"pages":null},"PeriodicalIF":2.1,"publicationDate":"2023-05-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43080940","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/par-02-2023-0017
D. Hay, E. Rainsbury, Debbie Van Dyk
Purpose The purpose of this study is to examine the cost of the introduction of independent audit inspections in New Zealand. Design/methodology/approach The research is conducted using audit fee data from New Zealand and examines the overall impact of the reforms on the cost imposed on auditees. Findings The findings show that there was no general increase in audit fees but a significant increase in audit fees for small listed companies compared to audit fees for unlisted companies and large listed companies. Practical implications The practical implications of this study suggest that the introduction of independent inspections led to increased costs for some clients, particularly smaller listed companies, and that audit firms were able to pass on these costs to their clients. These results have important implications for policymakers and auditors alike. Originality/value This study provides new insights into the cost of the introduction of independent audit inspections, which have been the subject of ongoing criticisms and recommendations for improvement.
{"title":"The effect of audit inspections on audit fees","authors":"D. Hay, E. Rainsbury, Debbie Van Dyk","doi":"10.1108/par-02-2023-0017","DOIUrl":"https://doi.org/10.1108/par-02-2023-0017","url":null,"abstract":"\u0000Purpose\u0000The purpose of this study is to examine the cost of the introduction of independent audit inspections in New Zealand.\u0000\u0000\u0000Design/methodology/approach\u0000The research is conducted using audit fee data from New Zealand and examines the overall impact of the reforms on the cost imposed on auditees.\u0000\u0000\u0000Findings\u0000The findings show that there was no general increase in audit fees but a significant increase in audit fees for small listed companies compared to audit fees for unlisted companies and large listed companies.\u0000\u0000\u0000Practical implications\u0000The practical implications of this study suggest that the introduction of independent inspections led to increased costs for some clients, particularly smaller listed companies, and that audit firms were able to pass on these costs to their clients. These results have important implications for policymakers and auditors alike.\u0000\u0000\u0000Originality/value\u0000This study provides new insights into the cost of the introduction of independent audit inspections, which have been the subject of ongoing criticisms and recommendations for improvement.\u0000","PeriodicalId":46088,"journal":{"name":"Pacific Accounting Review","volume":null,"pages":null},"PeriodicalIF":2.1,"publicationDate":"2023-05-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46518377","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 : 2023-04-07DOI: 10.1108/par-02-2022-0026
S. Ramachandra, A. Rahman
Purpose This paper aims to examine the effects of the social distinction of company directors on firm performance. Design/methodology/approach The social distinction of company directors adds to the firm’s reputation, allowing the firm to access resources and privileges. The indicators of social distinction this study uses are the prenominal titles of directors in Malaysian companies. As Malaysian companies are known to have directors with political connections and the prenominal titles can be intertwined with these connections, to ascertain the effects of social distinction on firm performance, this study examines whether social distinctions proxy and complement political connections in improving firm performance. This study uses Tobin’s Q (TQ) for longer-term performance and gross sales for current-year performance. Findings This study finds evidence to suggest that the impact of higher-order titles on Tobin’s Q and sales is greater in politically unconnected firms than in connected firms. This study also finds evidence to suggest that higher-order titles amplify the effect on Tobin’s Q in politically connected firms, whereas lower-order titles amplify sales, both moderated by firm-age. The findings shed light on the mediating variables that contribute to the above, and are robust for alternative performance measures, and account for endogeneity concerns. Research limitations/implications The results are generalisable only to countries where social distinctions are of significance. Practical implications Future research on political connections should consider social connections that affect firms. Also, such research should prompt the awarders of titles to prohibit the use of titles for pecuniary motives to minimise market imperfections. Originality/value Adding to the prior literature on the characteristics of directors and firm performance, this study shows that the social distinctions of directors do matter.
{"title":"Social distinctions of directors and firm performance","authors":"S. Ramachandra, A. Rahman","doi":"10.1108/par-02-2022-0026","DOIUrl":"https://doi.org/10.1108/par-02-2022-0026","url":null,"abstract":"\u0000Purpose\u0000This paper aims to examine the effects of the social distinction of company directors on firm performance.\u0000\u0000\u0000Design/methodology/approach\u0000The social distinction of company directors adds to the firm’s reputation, allowing the firm to access resources and privileges. The indicators of social distinction this study uses are the prenominal titles of directors in Malaysian companies. As Malaysian companies are known to have directors with political connections and the prenominal titles can be intertwined with these connections, to ascertain the effects of social distinction on firm performance, this study examines whether social distinctions proxy and complement political connections in improving firm performance. This study uses Tobin’s Q (TQ) for longer-term performance and gross sales for current-year performance.\u0000\u0000\u0000Findings\u0000This study finds evidence to suggest that the impact of higher-order titles on Tobin’s Q and sales is greater in politically unconnected firms than in connected firms. This study also finds evidence to suggest that higher-order titles amplify the effect on Tobin’s Q in politically connected firms, whereas lower-order titles amplify sales, both moderated by firm-age. The findings shed light on the mediating variables that contribute to the above, and are robust for alternative performance measures, and account for endogeneity concerns.\u0000\u0000\u0000Research limitations/implications\u0000The results are generalisable only to countries where social distinctions are of significance.\u0000\u0000\u0000Practical implications\u0000Future research on political connections should consider social connections that affect firms. Also, such research should prompt the awarders of titles to prohibit the use of titles for pecuniary motives to minimise market imperfections.\u0000\u0000\u0000Originality/value\u0000Adding to the prior literature on the characteristics of directors and firm performance, this study shows that the social distinctions of directors do matter.\u0000","PeriodicalId":46088,"journal":{"name":"Pacific Accounting Review","volume":null,"pages":null},"PeriodicalIF":2.1,"publicationDate":"2023-04-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44259039","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 : 2023-03-17DOI: 10.1108/par-08-2022-0121
Le Wang, Liping Zou, Ji Wu
Purpose This paper aims to use artificial neural network (ANN) methods to predict stock price crashes in the Chinese equity market. Design/methodology/approach Three ANN models are developed and compared with the logistic regression model. Findings Results from this study conclude that the ANN approaches outperform the traditional logistic regression model, with fewer hidden layers in the ANN model having superior performance compared to the ANNs with multiple hidden layers. Results from the ANN approach also reveal that foreign institutional ownership, financial leverage, weekly average return and market-to-book ratio are the important variables when predicting stock price crashes, consistent with results from the traditional logistic model. Originality/value First, the ANN framework has been used in this study to forecast the stock price crashes and compared to the traditional logistic model in the world’s largest emerging market China. Second, the receiver operating characteristics curves and the area under the ROC curve have been used to evaluate the forecasting performance between the ANNs and the traditional approaches, in addition to some traditional performance evaluation methods.
{"title":"Stock price crashes in China: an artificial neural network approach","authors":"Le Wang, Liping Zou, Ji Wu","doi":"10.1108/par-08-2022-0121","DOIUrl":"https://doi.org/10.1108/par-08-2022-0121","url":null,"abstract":"\u0000Purpose\u0000This paper aims to use artificial neural network (ANN) methods to predict stock price crashes in the Chinese equity market.\u0000\u0000\u0000Design/methodology/approach\u0000Three ANN models are developed and compared with the logistic regression model.\u0000\u0000\u0000Findings\u0000Results from this study conclude that the ANN approaches outperform the traditional logistic regression model, with fewer hidden layers in the ANN model having superior performance compared to the ANNs with multiple hidden layers. Results from the ANN approach also reveal that foreign institutional ownership, financial leverage, weekly average return and market-to-book ratio are the important variables when predicting stock price crashes, consistent with results from the traditional logistic model.\u0000\u0000\u0000Originality/value\u0000First, the ANN framework has been used in this study to forecast the stock price crashes and compared to the traditional logistic model in the world’s largest emerging market China. Second, the receiver operating characteristics curves and the area under the ROC curve have been used to evaluate the forecasting performance between the ANNs and the traditional approaches, in addition to some traditional performance evaluation methods.\u0000","PeriodicalId":46088,"journal":{"name":"Pacific Accounting Review","volume":null,"pages":null},"PeriodicalIF":2.1,"publicationDate":"2023-03-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42943569","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 : 2023-03-14DOI: 10.1108/par-07-2022-0102
W. Badenhorst, Rieka von Well
Purpose This paper aims to investigate the pricing of discretionary earnings in South Africa. This is a unique setting, as South African listed firms also report mandatory non-GAAP earnings (“headline earnings”). Design/methodology/approach Results are based on multivariate regression analyses for South African firms that report from 2010 to 2019. Findings Findings show that the value-relevance of discretionary earnings exceeds that of both GAAP earnings and headline earnings. In addition, placement of discretionary earnings reconciliations communicates information about the decision-usefulness of earnings. Originality/value Discretionary earnings remain the most value-relevant earnings measure, despite the divergent decision-useful characteristics offered by headline earnings and GAAP earnings. Therefore, the most decision-useful earnings reflect unique industry or firm characteristics rather than the assurance arising from regulation.
{"title":"The information content of mandatory and discretionary non-GAAP earnings","authors":"W. Badenhorst, Rieka von Well","doi":"10.1108/par-07-2022-0102","DOIUrl":"https://doi.org/10.1108/par-07-2022-0102","url":null,"abstract":"\u0000Purpose\u0000This paper aims to investigate the pricing of discretionary earnings in South Africa. This is a unique setting, as South African listed firms also report mandatory non-GAAP earnings (“headline earnings”).\u0000\u0000\u0000Design/methodology/approach\u0000Results are based on multivariate regression analyses for South African firms that report from 2010 to 2019.\u0000\u0000\u0000Findings\u0000Findings show that the value-relevance of discretionary earnings exceeds that of both GAAP earnings and headline earnings. In addition, placement of discretionary earnings reconciliations communicates information about the decision-usefulness of earnings.\u0000\u0000\u0000Originality/value\u0000Discretionary earnings remain the most value-relevant earnings measure, despite the divergent decision-useful characteristics offered by headline earnings and GAAP earnings. Therefore, the most decision-useful earnings reflect unique industry or firm characteristics rather than the assurance arising from regulation.\u0000","PeriodicalId":46088,"journal":{"name":"Pacific Accounting Review","volume":null,"pages":null},"PeriodicalIF":2.1,"publicationDate":"2023-03-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46501755","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 : 2023-03-14DOI: 10.1108/par-04-2022-0059
Walid El Hamad, Lee Moerman, Sanja Pupovac
Purpose This paper aims to use rhetorical theory to understand how actors mobilise persuasive communication to justify the arguments for and against transfer pricing and tax management schemes in an international context. The strategic adoption of transfer pricing by transnational corporations is controversial since it affects wealth transfers. Design/methodology/approach This paper adopts a micro-rhetorical analysis of submissions to a recent government Inquiry in Australia based on Aristotle's appeals of logos, ethos and pathos. The arguments used by Chevron Australia, and its protagonist civil society organisation, the Tax Justice Network highlight the vexed nature of tax management schemes. Findings Transfer pricing (TP) is more than a mere technical practice, as it involves wealth transfers initiated by powerful economic players. From a neoliberal justification of fair markets and shareholder wealth maximisation, the moral ambiguity is attenuated because it is accepted as a normative social ideal. Originality/value Prior studies on TP and tax schemes are primarily theoretical and conceptual. This paper adopts a rhetorical approach which provides important insights into the communication devices used to legitimate taken-for-granted ideas about corporate actions.
{"title":"Chevron Australia and Tax Justice Network: a case of rhetoric","authors":"Walid El Hamad, Lee Moerman, Sanja Pupovac","doi":"10.1108/par-04-2022-0059","DOIUrl":"https://doi.org/10.1108/par-04-2022-0059","url":null,"abstract":"\u0000Purpose\u0000This paper aims to use rhetorical theory to understand how actors mobilise persuasive communication to justify the arguments for and against transfer pricing and tax management schemes in an international context. The strategic adoption of transfer pricing by transnational corporations is controversial since it affects wealth transfers.\u0000\u0000\u0000Design/methodology/approach\u0000This paper adopts a micro-rhetorical analysis of submissions to a recent government Inquiry in Australia based on Aristotle's appeals of logos, ethos and pathos. The arguments used by Chevron Australia, and its protagonist civil society organisation, the Tax Justice Network highlight the vexed nature of tax management schemes.\u0000\u0000\u0000Findings\u0000Transfer pricing (TP) is more than a mere technical practice, as it involves wealth transfers initiated by powerful economic players. From a neoliberal justification of fair markets and shareholder wealth maximisation, the moral ambiguity is attenuated because it is accepted as a normative social ideal.\u0000\u0000\u0000Originality/value\u0000Prior studies on TP and tax schemes are primarily theoretical and conceptual. This paper adopts a rhetorical approach which provides important insights into the communication devices used to legitimate taken-for-granted ideas about corporate actions.\u0000","PeriodicalId":46088,"journal":{"name":"Pacific Accounting Review","volume":null,"pages":null},"PeriodicalIF":2.1,"publicationDate":"2023-03-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41554529","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 : 2023-03-07DOI: 10.1108/par-05-2022-0070
Somya Arora, Yogesh Chauhan
Purpose This paper aims to explore whether financial statement readability overcomes the information disadvantage of foreign equity investors. Design/methodology/approach A comprehensive data set of Indian firms listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) for 2007–2019 has been used to evaluate the proposed research questions. This study uses the Panel data method to investigate the research question. Findings The results reveal that readable financial statements attract foreign investments. The readability benefits are more noticeable for firms operating in less competitive industries and having poor earnings quality. Originality/value This study suggests that foreign investors facing informational disadvantages prefer firms with better readability as a substitute for informational acquisition, processing and monitoring.
{"title":"Does financial statement readability alleviate the informational disadvantage of foreign investors?","authors":"Somya Arora, Yogesh Chauhan","doi":"10.1108/par-05-2022-0070","DOIUrl":"https://doi.org/10.1108/par-05-2022-0070","url":null,"abstract":"\u0000Purpose\u0000This paper aims to explore whether financial statement readability overcomes the information disadvantage of foreign equity investors.\u0000\u0000\u0000Design/methodology/approach\u0000A comprehensive data set of Indian firms listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) for 2007–2019 has been used to evaluate the proposed research questions. This study uses the Panel data method to investigate the research question.\u0000\u0000\u0000Findings\u0000The results reveal that readable financial statements attract foreign investments. The readability benefits are more noticeable for firms operating in less competitive industries and having poor earnings quality.\u0000\u0000\u0000Originality/value\u0000This study suggests that foreign investors facing informational disadvantages prefer firms with better readability as a substitute for informational acquisition, processing and monitoring.\u0000","PeriodicalId":46088,"journal":{"name":"Pacific Accounting Review","volume":null,"pages":null},"PeriodicalIF":2.1,"publicationDate":"2023-03-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49235858","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 : 2023-01-19DOI: 10.1108/par-06-2022-0089
M. Momin, S. Chong
Purpose The purpose of this study is to examine how visual elements along with textual narratives are used to disclose workplace diversity-related information in corporate social and environmental reports. Design/methodology/approach A qualitative content analysis is used to examine the workplace diversity-related information in the 2016 standalone sustainability/corporate responsibility reports of 47 Fortune companies. A total of 539 tables, figures and photographs and their related textual narratives are analysed through an impression management lens. Findings The study finds that multiple types of visual elements are used to supplement textual narratives to communicate workplace diversity-related messages. The positive and often non-verifiable workplace diversity-related information is symbolically suggestive of the companies’ workplace diversity commitment and success. While tables and figures are typically presented using numbers, percentages and words to enhance and promote the positive information, the “feel-good” photographs are used to arouse positive feelings in the readers. These visual elements are presented in either a single-visual or mixed-visual presentation form. Practical implications This study has the potential to inform and assist preparers in the use of multiple visual elements and textual narratives to promote an impartial and substantive reporting of workplace diversity-related information. Understanding the motivation behind the usage and presentation of visual elements can be useful for the promulgation of guidelines for workplace diversity disclosure, and make readers aware that the visual elements can be exploited for impression management and symbolic legitimacy. Originality/value This study provides empirical evidence on the use of multiple types of visual elements in the reporting of workplace diversity-related information. It demonstrates how these visual elements are strategically used and presented to deliver an impression of workplace diversity to the readers.
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