Journal of International Financial Management & Accounting最新文献

This study examines whether financially endorsed corporate social responsibility (CSR) commitments improved the stock market performance of China's listed firms during the COVID-19 pandemic. We find that CSR itself did not lead to higher stock returns during the crisis period of the pandemic, suggesting that the moral (social) capital from CSR could not solely provide an “insurance-like” buffer against the shock. In contrast, our results show that CSR commitments generate higher stock returns when firms are more financially flexible, implying that financial flexibility endorses implicit CSR commitments to stakeholders during a crisis. Our results are robust to a difference-in-differences specification, alternative CSR measures and the inclusion of additional controls.

In the context of economic globalization, the impact of capital market internationalization on sustainable enterprise development has attracted considerable attention. The inclusion of Chinese A-shares in the Morgan Stanley Capital International (MSCI) index has a significant impact on environmental, social, and governance (ESG) performance; however, research on this topic is relatively scarce. This study investigates the impact of capital market internationalization on the ESG performance of listed companies by analyzing data from 2015 to 2020 using a difference-in-differences approach. We find significant improvements in ESG performance post-inclusion, especially for environmental protection and social responsibility. The analysis identifies three mechanisms driving these enhancements: enhanced ESG performance in firms with overseas investors and operations, reduced information asymmetry and increased transparency from MSCI inclusion, and greenwashing incentives. Notably, firms in pollution-intensive sectors and small and medium-sized enterprises show marked ESG improvements post-MSCI inclusion. Our findings underscore the positive role of capital market internationalization in advancing corporate ESG outcomes and offer valuable insights for policymakers and corporate managers aiming to achieve sustainable development goals.

A growing number of companies around the world have started publishing corporate social responsibility (CSR) reports. However, the sustainability literature remains inconclusive as to whether CSR assurance enhances the credibility of these reports, improves stakeholder trust, and ultimately boosts firm value. Analyzing a global sample of 39,776 firm-year observations from 2002 to 2019, we present robust evidence that CSR assurance positively influences investors' valuation of CSR efforts. Furthermore, auditor-provided CSR assurance is found to have a greater impact on CSR valuation in countries where institutions are more conducive to opaque financial reporting. Our analysis further reveals that improved financial performance and better financial reporting quality are the main mechanisms behind this effect. Finally, the impact of CSR assurance is found to be more significant in countries with weaker legal institutions and CSR norms.

I examine the impact of disclosing versus recognizing pension liabilities on managerial discretion regarding pension assumptions, exploiting the unique Japanese accounting standard. In Japan, the current pension accounting standard requires firms to recognize pension items—actuarial gains/losses and prior service costs—in consolidated financial statements; however, firms still disclose these items in the notes when preparing unconsolidated financial statements. I find that recognition firms, those that recognize the previously disclosed pension items on the balance sheet, choose higher discount rates than disclosure firms, those that still disclose them in the notes. Further, I find that my results are driven mainly by firms with more debt-contracting incentives. Overall, my findings suggest that mandating the recognition of pension liabilities induces managerial manipulation of pension assumptions.

This study investigates the role of social media sentiment in classification shifting. Prior literature finds that social media can either reduce accruals management by reducing information asymmetry or increase it by raising market expectations. Using a sample of 21,635 firm-year observations based on data from Chinese A-share listed firms from 2009 to 2020, we examine how social media sentiment from the stock forum EastMoney affects classification shifting in China. We find that managers increase classification shifting in response to negative social media sentiment, and our channel tests support the market pressure hypothesis. We confirm that negative social media sentiment increases classification shifting by exerting greater market pressure on managers. We also find that, if accruals or real earnings management is constrained, firms resort to classification shifting to address negative social media sentiment. Finally, we show that negative social media sentiment triggers more stock volatility and price drops. Our study contributes to the earnings management literature by providing novel evidence that sheds light on the market pressure exerted by social media in shaping earnings management strategies.