Journal of Applied Accounting Research最新文献

{"title":"Does ownership structure drive the effect of CEO overconfidence on earnings quality?","authors":"Bilel Bzeouich, Florence Depoers, Faten Lakhal","doi":"10.1108/jaar-10-2022-0265","DOIUrl":"https://doi.org/10.1108/jaar-10-2022-0265","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>The purpose of this paper is to examine the effect of chief executive officer (CEO) overconfidence on earnings quality and the moderating role of ownership structure as a crucial corporate governance device.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>The paper uses the generalized method of moments (GMM) estimation method to test our models on a sample of 335 French companies between 2009 and 2020, i.e. 4,020 observations.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The results show that CEO overconfidence negatively affects earnings quality. This result supports the predictions of behavioral finance theory and suggests that CEO overconfidence is a behavioral bias that affects the quality of earnings. The authors also examined the effect of different types of ownership structures on this relationship. The results show the significant role of controlling shareholders, owner-managers, families and institutional investors in mitigating the negative effect of CEO overconfidence on earnings quality.</p><!--/ Abstract__block -->\u0000<h3>Research limitations/implications</h3>\u0000<p>This paper has some limitations. First, other types of ownership structures could have been analyzed such as state ownership. Second, we ignored the role of the board of directors as an important governance mechanism in controlling overconfident CEOs’ actions.</p><!--/ Abstract__block -->\u0000<h3>Practical implications</h3>\u0000<p>Companies should be aware of the potential risks associated with CEO overconfidence, which can compromise the faithful representation of earnings. This highlights the importance of effective monitoring and internal controls to detect and prevent such practices, which involve the role of ownership structure.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This paper addresses the effect of CEO overconfidence on earnings quality and provides new evidence on the role of different ownership structure types in shaping this relationship. Additionally, this paper sheds new light on how overconfident CEOs may behave in challenging times.</p><!--/ Abstract__block -->","PeriodicalId":46321,"journal":{"name":"Journal of Applied Accounting Research","volume":null,"pages":null},"PeriodicalIF":3.0,"publicationDate":"2024-05-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141166138","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}

{"title":"The effect of non-audit fees on interest payments classification shifting: does internal governance and firm financial well-being matter?","authors":"Mohamed Hessian, A. Zalata, Khaled Hussainey","doi":"10.1108/jaar-05-2023-0135","DOIUrl":"https://doi.org/10.1108/jaar-05-2023-0135","url":null,"abstract":"PurposeThis study examines the effect of non-audit fees (NAF) provisions on interest payments classification shifting. In addition, we investigate to what extent the NAF economic bonding and interest payments classification shifting is contingent on internal governance and firm financial well-being.Design/methodology/approachThis study employed probit regression using a sample of UK non-financial firms indexed in FT UK (500) over the period from 2009 to 2017.FindingsWe find evidence that the economic bonding of NAF between external auditors and their clients is more likely to encourage managers in UK firms to manipulate operating cash flows through interest payment classification shifting. In addition, and interestingly, our results evince that classification-shifting may be the less costly and soft choice of managers in firms with strong governance and charging higher NAF. Furthermore, we show that financially distressed firms associated with their auditors in purchasing non-audit services are more prone to attempting to manipulate and engage in interest payments classification-shifting. Our result did not provide a significant effect of external auditor tenure on the interest payments classification shifting.Research limitations/implicationsOur findings are subject to the following limitations: First, this study uses a composite index to measure the quality of internal corporate governance. It focuses only on the board of directors, but this index does not reflect other internal governance mechanisms. Second, this study is subject to limited study time due to the implementation of key IFRS standards (IFRS 9 Financial Instruments and IFRS 15 Revenue from Contract with Customers) from 2018–2019.Practical implicationsThis study was motivated by the UK’s Financial Reporting Council regulators' pressure on the Big 4 audit firms to move more audit time into main auditing activities, reduce cross-selling to audit clients and separate their audit practices by 2024. Overall, we provide new evidence that directs a close spotlight on the threats of NAF that are potentially useful to regulators, shareholders and investors.Originality/valueIt is motivated by the UK’s Financial Reporting Council regulators' pressure on the Big 4 to move more audit firm time into main auditing activities, reduce cross-selling to audit clients and separate their audit practices by 2024. Overall, we provide new evidence that directs a close spotlight on the threats of NAS that are potentially useful to regulators, shareholders and investors.","PeriodicalId":46321,"journal":{"name":"Journal of Applied Accounting Research","volume":null,"pages":null},"PeriodicalIF":3.0,"publicationDate":"2024-05-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141107076","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}

{"title":"How does movie foster experiential learning in auditing education?","authors":"Mohamed Omran, Zhiying Huang, Yan Jin","doi":"10.1108/jaar-12-2023-0389","DOIUrl":"https://doi.org/10.1108/jaar-12-2023-0389","url":null,"abstract":"PurposeThis study explores virtual platforms’ capabilities, particularly emphasising the influence of educational movies embedded with lifelike narratives to serve as a potent medium for immersive learning within the auditing discipline. Through this exploration, we aim to discern how cinematic depictions can educate and encapsulate the intricate dynamics of real-world auditing scenarios, thereby enriching the educational experience for budding auditors.Design/methodology/approachBy employing an action research methodology, this study engaged 134 auditing students from China in an experiment, using a questionnaire to assess their grasp of auditing concepts like internal control, corporate governance, and professional ethics.FindingsPreliminary findings underscore the efficacy of movies as pedagogical tools. These movie experiences bridge the gap between theoretical knowledge and its real-world application, particularly highlighting the nuances of professional ethics and corporate governance. Results show that such a method amplifies students’ comprehension of auditor skillsets, practical complications, and ethical insight and nurtures professional scepticism about tangible audit issues.Research limitations/implicationsThis study illuminates a novel virtual learning approach using movies that primes students to exercise critical thinking and augments cognitive skillsets, especially when navigating ethical conundrums. The broader implication is the potential enhancement of auditing education quality in China, presenting educators with an innovative teaching modality that bolsters students’ critical analysis and cognitive development.Practical implicationsThis study has multiple implications for auditing education policy. It underscores the imperative need for curriculum revision in contemporary auditing education. Our study can significantly change contemporary auditing education by incorporating movie-based experiential learning. Educators and institutions in China and other parts of the world explore this avenue, customising it to fit the unique requirements of their respective courses and the country’s contexts. Our study also highlights the challenges and recommendations for real-world audit simulation for auditing education. While our research highlights the promise of educational movies, it also sheds light on the potential difficulties in their integration. Audit educators need adequate support and training for effective assimilation, ensuring they leverage educational movies to maximise learning outcomes. Careful curation and selection of movies, combined with strategic planning, are paramount to this teaching method’s success. With the continual evolution of video tools, there is an opportunity for a more immersive and holistic education model, shaping the next generation of auditors.Originality/valueThis study offers insights into innovative strategies to imbue real-world experience into traditional curricula, ensuring relevance and appli","PeriodicalId":46321,"journal":{"name":"Journal of Applied Accounting Research","volume":null,"pages":null},"PeriodicalIF":3.0,"publicationDate":"2024-05-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140977973","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}

{"title":"Board gender diversity and environmental material topics: Evidence from GRI-based reports in the Italian context","authors":"Riccardo Macchioni, Martina Prisco, Claudia Zagaria","doi":"10.1108/jaar-08-2023-0255","DOIUrl":"https://doi.org/10.1108/jaar-08-2023-0255","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>This paper investigates whether board gender diversity is associated with the propensity to prioritize environmental issues in the material topic list on Global Reporting Initiative (GRI)-based reports.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>Regressions analyses are performed using a sample of 755 firm-year observations from Italy over the 2018–2022 period. The data were obtained from hand-collection on GRI-based reports and Refinitiv Eikon database. Board gender diversity is measured through three proxies: the natural logarithm of the number of women directors, the ratio of female representation on board and the Blau index reflecting the proportion of women/men on board. Additional tests are also developed.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>Results show that board gender diversity positively influences the propensity to rank environmental issues at the top of the material topic list on GRI-based reports.</p><!--/ Abstract__block -->\u0000<h3>Research limitations/implications</h3>\u0000<p>Since the study focuses on the Italian context, results cannot be subjective to an extensive generalization to other countries.</p><!--/ Abstract__block -->\u0000<h3>Practical implications</h3>\u0000<p>This study highlights the importance of strengthening the female participation on board to prioritize the firm’s impact on environment within the materiality assessment of sustainability reporting.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>To the best of the authors’ knowledge, this study is the first to investigate the association between board gender diversity and the highest ranked environmental material topics, thus contributing to better understand the role of women directors on materiality assessment within sustainability reporting.</p><!--/ Abstract__block -->","PeriodicalId":46321,"journal":{"name":"Journal of Applied Accounting Research","volume":null,"pages":null},"PeriodicalIF":3.0,"publicationDate":"2024-05-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140938652","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}

{"title":"Sustainability assurance joint provision and assurance statement readability: does the assurance provider gender diversity matter?","authors":"Yosra Mnif, Jihene Kchaou","doi":"10.1108/jaar-04-2023-0117","DOIUrl":"https://doi.org/10.1108/jaar-04-2023-0117","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>The primary objective of this paper is to investigate the relation between the joint provision of sustainability assurance and the readability of sustainability assurance statements. Additionally, it explores whether the presence of a female assurance partner influences the relation between the joint provision of sustainability assurance and the readability of sustainability assurance statements.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>We analyzed a dataset comprising 882 firm-year observations from companies operating in sustainability sensitive industries for the period that spans the years 2016–2018.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The research indicates that joint sustainability assurance provision is associated with a more readable sustainability assurance statement, consistent with the “four-eyes” principle. Furthermore, the presence of a female assurance provider influences the joint assurance provision’s impact on sustainability assurance statement readability. Collectively, these results remain robust as they hold unchanged after controlling for endogeneity concerns.</p><!--/ Abstract__block -->\u0000<h3>Research limitations/implications</h3>\u0000<p>This study provides novel insights into the recent sustainability assurance literature, being the first to examine joint assurance provision, assurance partner gender and sustainability assurance statement readability.</p><!--/ Abstract__block -->\u0000<h3>Practical implications</h3>\u0000<p>This study has the potential to catalyze regulatory and policy initiatives by providing compelling evidence in favor of mandating joint audits within the area of sustainability assurance practices. Additionally, this research contributes to the ongoing discussion about gender diversity in accounting and nonaccounting assurance firms, providing evidence of the positive impact of female assurance partners on sustainability assurance statement readability.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>The regression results provide preliminary evidence on how the presence of a female audit partner influences the relationship between the sustainability assurance joint provision and sustainability assurance statement readability, an issue that has not been examined before.</p><!--/ Abstract__block -->","PeriodicalId":46321,"journal":{"name":"Journal of Applied Accounting Research","volume":null,"pages":null},"PeriodicalIF":3.0,"publicationDate":"2024-05-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140938247","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}

{"title":"Sustainable development goals disclosure and analyst forecast quality","authors":"Giuseppe Nicolò, Giovanni Zampone, Giuseppe Sannino, Paolo Tartaglia Polcini","doi":"10.1108/jaar-07-2023-0223","DOIUrl":"https://doi.org/10.1108/jaar-07-2023-0223","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>This study aims to investigate the relationship between corporate sustainable development goals (SDGs) disclosure and analyst forecast quality.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>The study focuses on a sample of 95 Italian-listed companies preparing the mandatory non-financial declaration (NFD) according to the Global Reporting Initiative (GRI) standards over a five-year period (2017–2021), corresponding to an unbalanced sample of 438 observations. Analyst forecast quality was proxied by earnings forecast accuracy (FA) and earnings forecast dispersion (FD), built on data retrieved from the Refinitiv database. A manual content analysis was performed on NFDs to derive an SDG disclosure score (SDGD) for each sampled company.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>This study provides empirical evidence suggesting that voluntary SDG disclosure matters to the capital market in that it helps enhance the information environment of companies, evidenced by improved analyst forecast quality. In particular, this study highlighted that SDG disclosure positively influences analyst FA while negatively affecting analyst FD.</p><!--/ Abstract__block -->\u0000<h3>Research limitations/implications</h3>\u0000<p>This study focuses on the Italian context, which has idiosyncratic characteristics regarding the structure of the financial market, the composition of corporate ownership and experience in non-financial reporting practices.</p><!--/ Abstract__block -->\u0000<h3>Practical implications</h3>\u0000<p>This study indicates to corporate managers that following GRI standards may represent the right way to better integrate SDG disclosure in corporate non-financial reports and increase the relevance of such information for investors and other capital market participants.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>To the best of the authors’ knowledge, this is the first study that empirically examines the association between SDG disclosure and analyst forecast quality.</p><!--/ Abstract__block -->","PeriodicalId":46321,"journal":{"name":"Journal of Applied Accounting Research","volume":null,"pages":null},"PeriodicalIF":3.0,"publicationDate":"2024-05-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140834165","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}

{"title":"Do investors care about greening in corporations? The role of eco-innovation and CSR committee","authors":"Abdullah S. Karaman, Ali Uyar, Rim Boussaada, Majdi Karmani","doi":"10.1108/jaar-10-2023-0289","DOIUrl":"https://doi.org/10.1108/jaar-10-2023-0289","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>Prior studies mostly tested the association between carbon emissions and firm value in certain contexts. This study aims to advance the existing literature by concentrating on three indicators of greening in corporations namely resource use, emissions and eco-innovation, and examining their value relevance in the stock market at the global level. Furthermore, we deepen the investigation by exploring the moderating role of eco-innovation and the CSR committee between greening in corporations and market value.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>The data for the study were retrieved from the Thomson Reuters Eikon database for the years between 2002 and 2019 and contain 17,961 firm-year observations which are analyzed through fixed-effects regression.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The results reveal that while resource usage is viewed as value-relevant by the market, the emissions and eco-innovation are not. However, despite eco-innovation <em>per se</em> not being value-relevant, its interaction with resource usage and emissions is value-relevant. Furthermore, CSR committees undertake a very critical role in translating greening practices into market value.</p><!--/ Abstract__block -->\u0000<h3>Research limitations/implications</h3>\u0000<p>While the results for emissions support the cost-concerned school, the findings for resource usage confirm the value creation school. Furthermore, the interaction effect of eco-innovation and CSR committee confirms the resource-based theory and stakeholder theory, respectively.</p><!--/ Abstract__block -->\u0000<h3>Practical implications</h3>\u0000<p>Investors regard eco-innovation-induced pro-environmental behaviors as value-relevant. These results propose firms replace eco-innovation at the focal point in developing environmental strategies and connecting other greening efforts to it. Moreover, CSR committees are critical to corporations in translating greening practices into firm value by developing and implementing disclosure and communication strategies.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>The study’s originality stems from investigating the synergetic effect that eco-innovation and CSR committees generate in translating greening practices to greater market value at a global scale.</p><!--/ Abstract__block -->","PeriodicalId":46321,"journal":{"name":"Journal of Applied Accounting Research","volume":null,"pages":null},"PeriodicalIF":3.0,"publicationDate":"2024-04-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140625303","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}

{"title":"How does excess cash affect corporate financial performance?","authors":"Ismail Kalash","doi":"10.1108/jaar-08-2023-0231","DOIUrl":"https://doi.org/10.1108/jaar-08-2023-0231","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>This article analyzes the moderating role of investment opportunities, business risk and agency costs in shaping the nexus between excess cash and corporate performance.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>This research uses dynamic regression models (two-step system generalized method of moments) to analyze the data related to 200 Turkish companies listed on Borsa Istanbul (BIST) for the years between 2009 and 2020.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>The findings indicate that when excess cash increases, the financial performance deteriorates only for firms with lower investments compared to firms with more investments. In addition, investment contributes to better financial performance for firms that hold cash surplus, whereas the influence of investment is insignificant for firms that have insufficient cash. Agency costs of equity exacerbate the adverse impact of excess cash on financial performance while agency costs of debt mitigate this effect. Excess cash reduces the financial performance of highly leveraged firms. However, this impact becomes insignificant when debt ratio decreases. The findings also show that investment has more significant role than business risk in building the precautionary motive to hold cash.</p><!--/ Abstract__block -->\u0000<h3>Research limitations/implications</h3>\u0000<p>The findings of this article are limited to the Turkish market. Future research is still needed in other emerging markets to compare the results and reveal more about the effect of excess cash on firm performance, and how other factors can change this effect.</p><!--/ Abstract__block -->\u0000<h3>Practical implications</h3>\u0000<p>The findings verify the increased significance of excess cash in the presence of investment opportunities and difficulties in accessing external funds. Nevertheless, the role of the equity related agency problem in reducing the benefits of cash surplus confirms the necessity of policies that support corporate governance, especially in emerging markets.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>This article, according to the knowledge of author, is the first to examine the role of agency costs associated with debt and equity, and the compound effect of investment opportunities and business risk on the nexus between excess internal funds and corporate financial performance in emerging markets.</p><!--/ Abstract__block -->","PeriodicalId":46321,"journal":{"name":"Journal of Applied Accounting Research","volume":null,"pages":null},"PeriodicalIF":3.0,"publicationDate":"2024-04-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140584019","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}

{"title":"On the independence of audit committee in developing countries: evidence from Jordan","authors":"Salem Alhababsah, Al Azzam","doi":"10.1108/jaar-07-2023-0215","DOIUrl":"https://doi.org/10.1108/jaar-07-2023-0215","url":null,"abstract":"PurposeThis study aims to investigate the extent to which audit committee (AC) members who are formally independent are truly independent in practice, and what challenges they face that undermine their independence.Design/methodology/approachThe study utilizes semi-structured interviews with 18 members of the AC in Jordan.FindingsThe responses indicate that AC is mostly labelled as independent but fails to play an effective monitoring role due to different institutional factors. These factors include family ownership, government ownership, culture, compensation package and the lack of qualified directors.Research limitations/implicationsThis research addresses this gap by presenting qualitative evidence from a civil law jurisdiction, featured by a developing financial market, a prevalence of family businesses, limited investor protection and a low risk of litigation. Additionally, this study aims to rectify the current imbalance between qualitative and quantitative studies on AC and bridge the gap between research conducted in developed countries and their developing counterparts.Practical implicationsThis study offers valuable insights for regulatory authorities to engage in a more profound contemplation of extant governance regulations. Also, this study offers useful feedback for nomination committees of public companies, and it also has an implication for shareholders as they rely on independent directors to protect their investment. Furthermore, implications of the findings derived from this research possess the potential for generalization to other developing nations characterized by akin institutional contexts, notably encompassing the countries situated in the Middle East and North Africa (MENA) region.Originality/valueThis research introduces novel qualitative empirical evidence from a distinctive jurisdiction governed by civil law, thereby enriching the existing scholarly discourse. It also contributes to the AC literature by suggesting that it is not only the existence of conventionally independent ACs that affect the integrity of financial statements, but also the absence of social ties and other contextual obstacles.","PeriodicalId":46321,"journal":{"name":"Journal of Applied Accounting Research","volume":null,"pages":null},"PeriodicalIF":3.0,"publicationDate":"2024-04-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140352678","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}

{"title":"The influence of financial flexibility on firm performance: the moderating effects of investment efficiency and investment scale","authors":"Wei Wu, Chau Le, Yulu Shi, Fadi Alkaraan","doi":"10.1108/jaar-07-2023-0192","DOIUrl":"https://doi.org/10.1108/jaar-07-2023-0192","url":null,"abstract":"<h3>Purpose</h3>\u0000<p>Financial flexibility and investment efficiency are of vital importance in strategic choices at boardrooms, particularly in post-crisis recovery strategies. This study examines the moderating effects of investment efficiency and investment scale on the relationship between financial flexibility and firm performance.</p><!--/ Abstract__block -->\u0000<h3>Design/methodology/approach</h3>\u0000<p>The authors use sample of 10,755 US-listed firms over the period 2010–2021 to examine the relationships between investment scale, investment efficiency, financial flexibility and firm performance. Particular attention is paid to overinvestment and underinvestment.</p><!--/ Abstract__block -->\u0000<h3>Findings</h3>\u0000<p>Findings of this study reveal that financial flexibility mitigates investment inefficiency through reducing overinvestment. Financial flexibility contributes to boost a firm’s accounting and market performance. Additionally, investment efficiency and investment scale have moderating effects on the relationship between financial flexibility and firm performance. However, the influence of investment efficiency is greater than the influence of investment scale. Finally, the authors find that the direct and indirect effects of financial flexibility are stronger on market performance than accounting performance, implying that market is more sensitive to corporate financial policies.</p><!--/ Abstract__block -->\u0000<h3>Research limitations/implications</h3>\u0000<p>Findings of this study have implications for scholars, decision-makers policymakers, investors and other stakeholders.</p><!--/ Abstract__block -->\u0000<h3>Practical implications</h3>\u0000<p>This study has its own limitations due to the sample selection issues, country context and the research model adopted by this study.</p><!--/ Abstract__block -->\u0000<h3>Originality/value</h3>\u0000<p>The novel contribution to the extant literature is incorporating the influence of investment scale and investment efficiency into the relationship between financial flexibility and firm performance.</p><!--/ Abstract__block -->","PeriodicalId":46321,"journal":{"name":"Journal of Applied Accounting Research","volume":null,"pages":null},"PeriodicalIF":3.0,"publicationDate":"2024-03-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140074397","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}