Pub Date : 2022-05-13DOI: 10.1108/par-09-2021-0162
M. Malik, E. D. Shim
Purpose The purpose of this study is to examine the direct association between firms’ corporate social responsibility (CSR) scores, CSR disclosures and executive compensation. This study further investigates the moderating role of CSR in the association between executive compensation and firms’ stock market and accounting performances. Design/methodology/approach This study collects CEO compensation information from the Execucomp database and CSR performance information from the MSCI ESG database. The final sample consists of 4,193 firm-year observations for 1,318 US public firms for the period 2009–2013. This study uses lagged regression analysis to test the direct and moderating roles of CSR in executive compensation. Findings Regarding the direct role of CSR, this study finds that CEO compensation is positively related to CSR performance but not to firms’ issuance of CSR reports. This study also finds a positive moderating role of CSR in the relationship between CEO compensation and firms’ stock performance. However, the authors do not identify any role for CSR in the relationship between CEO compensation and accounting performance. The results also show a negative association of CSR in the relationship between CEO compensation and firm size. Originality/value This study fills a gap in the literature by providing empirical evidence on the direct association between CSR and CEO compensation and how the association between CEO compensation and firm performance is moderated by CSR scores. The novel findings of this study will benefit managers, boards of directors, shareholders and other stakeholders, including regulators and policymakers.
{"title":"Empirical examination of the direct and moderating role of corporate social responsibility in top executive compensation","authors":"M. Malik, E. D. Shim","doi":"10.1108/par-09-2021-0162","DOIUrl":"https://doi.org/10.1108/par-09-2021-0162","url":null,"abstract":"\u0000Purpose\u0000The purpose of this study is to examine the direct association between firms’ corporate social responsibility (CSR) scores, CSR disclosures and executive compensation. This study further investigates the moderating role of CSR in the association between executive compensation and firms’ stock market and accounting performances.\u0000\u0000\u0000Design/methodology/approach\u0000This study collects CEO compensation information from the Execucomp database and CSR performance information from the MSCI ESG database. The final sample consists of 4,193 firm-year observations for 1,318 US public firms for the period 2009–2013. This study uses lagged regression analysis to test the direct and moderating roles of CSR in executive compensation.\u0000\u0000\u0000Findings\u0000Regarding the direct role of CSR, this study finds that CEO compensation is positively related to CSR performance but not to firms’ issuance of CSR reports. This study also finds a positive moderating role of CSR in the relationship between CEO compensation and firms’ stock performance. However, the authors do not identify any role for CSR in the relationship between CEO compensation and accounting performance. The results also show a negative association of CSR in the relationship between CEO compensation and firm size.\u0000\u0000\u0000Originality/value\u0000This study fills a gap in the literature by providing empirical evidence on the direct association between CSR and CEO compensation and how the association between CEO compensation and firm performance is moderated by CSR scores. The novel findings of this study will benefit managers, boards of directors, shareholders and other stakeholders, including regulators and policymakers.\u0000","PeriodicalId":46088,"journal":{"name":"Pacific Accounting Review","volume":null,"pages":null},"PeriodicalIF":2.1,"publicationDate":"2022-05-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48200760","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 : 2022-05-13DOI: 10.1108/par-06-2021-0098
Seshadev Sahoo, Rishita Raj
Purpose The academic research into underpricing of initial public offerings (IPOs) offers many explanations, i.e. signalling, financial and market hypothesis. However, another set of information, namely, “Qualitative Factors” (along with financial and others), are largely reported by the issuing firms in the prospectus. However, to the best of the authors’ knowledge no such systematic study has been carried out on how firms’ qualitative factors impact the IPO valuation. This paper aims to addresses this gap. Design/methodology/approach Using a sample of 82 IPOs issued from 2014 to 2020, we investigate the issuing firm’s pattern of reporting qualitative factors. These qualitative factors are subjected to factor analysis. The authors classify all reported factors across firms into a few categories using principal component analysis. The authors also investigate the impact of these factors on IPO underpricing using OLS regression. Findings The authors find that the qualitative information relating to market leadership, established brand image and modern scalable information technology infrastructure significantly influences underpricing. The authors also document that market leadership and brand image are the influential reported quality factors that reduce underpricing. Moreover, location advantage, good customer relationship, established relationship with a client, track record of growth and profitability, experienced promoter and management team failed to influence underpricing. Originality/value The outcome of this piece of research offers additional signalling as an attestation of quality for the issue. The authors further argue that the amount of qualitative information disclosed by the managers in the prospectus to support the pricing should not be ignored.
{"title":"Disclosed qualitative factors and underpricing: an empirical evidence from Indian IPO market","authors":"Seshadev Sahoo, Rishita Raj","doi":"10.1108/par-06-2021-0098","DOIUrl":"https://doi.org/10.1108/par-06-2021-0098","url":null,"abstract":"\u0000Purpose\u0000The academic research into underpricing of initial public offerings (IPOs) offers many explanations, i.e. signalling, financial and market hypothesis. However, another set of information, namely, “Qualitative Factors” (along with financial and others), are largely reported by the issuing firms in the prospectus. However, to the best of the authors’ knowledge no such systematic study has been carried out on how firms’ qualitative factors impact the IPO valuation. This paper aims to addresses this gap.\u0000\u0000\u0000Design/methodology/approach\u0000Using a sample of 82 IPOs issued from 2014 to 2020, we investigate the issuing firm’s pattern of reporting qualitative factors. These qualitative factors are subjected to factor analysis. The authors classify all reported factors across firms into a few categories using principal component analysis. The authors also investigate the impact of these factors on IPO underpricing using OLS regression.\u0000\u0000\u0000Findings\u0000The authors find that the qualitative information relating to market leadership, established brand image and modern scalable information technology infrastructure significantly influences underpricing. The authors also document that market leadership and brand image are the influential reported quality factors that reduce underpricing. Moreover, location advantage, good customer relationship, established relationship with a client, track record of growth and profitability, experienced promoter and management team failed to influence underpricing.\u0000\u0000\u0000Originality/value\u0000The outcome of this piece of research offers additional signalling as an attestation of quality for the issue. The authors further argue that the amount of qualitative information disclosed by the managers in the prospectus to support the pricing should not be ignored.\u0000","PeriodicalId":46088,"journal":{"name":"Pacific Accounting Review","volume":null,"pages":null},"PeriodicalIF":2.1,"publicationDate":"2022-05-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47108709","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 : 2022-05-03DOI: 10.1108/par-06-2021-0105
Angela Liew, P. Boxall, Denny Setiawan
Purpose This study aims to explore the implementation of data analytics in the Big-Four accounting firms, including the extent to which a digital transformation is changing the work of financial auditors, why it is doing so and how these firms are managing the transformation process. Design/methodology/approach The authors conducted 23 interviews with 20 participants across four hierarchical levels from three of the Big-Four accounting firms in New Zealand. Findings The firms have entered the era of “smart audit systems”, in which auditors provide deep business insights that are communicated more effectively through data visualisation. The full potential, however, of data analytics depends not only on the transformation process within accounting firms but also on improvement in the quality of IT systems in client companies. The appointment of transformation managers, the recruitment of technology-savvy graduates and the provision of extensive training are helping to embed data analytics in the Big-Four firms. Accounting graduates in financial audit now need to show that they have the aptitude to become “citizen data scientists”. Practical implications The findings explain how data analytics is being embraced in the Big-Four auditing firms and underline the implications for those who work in them. Originality/value The findings challenge the “technological reluctance” thesis. In contrast, the authors observe a climate of positive attitudes towards new technology and accompanying actions in the Big-Four firms. The authors show how branches of the Big-Four firms operating distantly from their global headquarters, and with smaller economies of scale, are implementing the new technologies that characterise their global firms.
{"title":"The transformation to data analytics in Big-Four financial audit: what, why and how?","authors":"Angela Liew, P. Boxall, Denny Setiawan","doi":"10.1108/par-06-2021-0105","DOIUrl":"https://doi.org/10.1108/par-06-2021-0105","url":null,"abstract":"\u0000Purpose\u0000This study aims to explore the implementation of data analytics in the Big-Four accounting firms, including the extent to which a digital transformation is changing the work of financial auditors, why it is doing so and how these firms are managing the transformation process.\u0000\u0000\u0000Design/methodology/approach\u0000The authors conducted 23 interviews with 20 participants across four hierarchical levels from three of the Big-Four accounting firms in New Zealand.\u0000\u0000\u0000Findings\u0000The firms have entered the era of “smart audit systems”, in which auditors provide deep business insights that are communicated more effectively through data visualisation. The full potential, however, of data analytics depends not only on the transformation process within accounting firms but also on improvement in the quality of IT systems in client companies. The appointment of transformation managers, the recruitment of technology-savvy graduates and the provision of extensive training are helping to embed data analytics in the Big-Four firms. Accounting graduates in financial audit now need to show that they have the aptitude to become “citizen data scientists”.\u0000\u0000\u0000Practical implications\u0000The findings explain how data analytics is being embraced in the Big-Four auditing firms and underline the implications for those who work in them.\u0000\u0000\u0000Originality/value\u0000The findings challenge the “technological reluctance” thesis. In contrast, the authors observe a climate of positive attitudes towards new technology and accompanying actions in the Big-Four firms. The authors show how branches of the Big-Four firms operating distantly from their global headquarters, and with smaller economies of scale, are implementing the new technologies that characterise their global firms.\u0000","PeriodicalId":46088,"journal":{"name":"Pacific Accounting Review","volume":null,"pages":null},"PeriodicalIF":2.1,"publicationDate":"2022-05-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47108193","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}