Journal of International Financial Management & Accounting最新文献

We contribute to the growing literature on bank risk management by examining the credit risk implications of nonperforming loan (NPL) management during the period 2012–2020. We construct a unique database with 116 NPL deals by 31 European Union (EU) banks. Our study is motivated by the hypothesis that NPL securitization has a beneficial effect on bank loan quality and that this effect is incorporated in the bank's credit default swap (CDS) spread. Our analysis finds a statistically significant decline in a bank's CDS spread in the days leading up to and shortly after the announcement of an NPL securitization. This suggests that the CDS market views NPL securitization as a de-risking activity and a means of risk mitigation. The impact is even more evident for NPL securitization with a government guarantee which may offer additional credibility to these de-risking activities.

We investigate the relationship of institutional quality, religion, and economic cycles to bank stability using a sample of 254 banks, including Islamic (IBs) and conventional banks (CBs), located in nine countries (QISMUT+3) that follow dual banking systems. We use a comprehensive model and adopt a stronger econometric methodology compared with previous literature. Our findings reaffirm the significant positive influence of institutional quality on bank stability as proxied by a bank's Z-score. Institutional quality variables including financial freedom, voice and accountability, the rule of law, and political stability positively influence bank stability. On the other hand, other institutional quality variables such as economic freedom, government effectiveness, RQ, and corruption negatively affect bank stability. Overall, our empirical evidence shows that IBs are relatively less stable than CBs, due to banking practices, riskier products, and immature legal frameworks. Our analysis also suggests that IBs operate in a similar manner as CBs. New to this study, results suggest that religious orientation has no significant effect on bank stability in our sample countries with dual banking systems. Importantly, we find that the legal system, in particular the Sharià-based legal system, has no significant effect on stability for IBs. Furthermore, customer religiosity measured as the share of Muslim population does not appear to have a differential impact on stability for IBs compared to CBs except when the Muslim share in population exceeds 85%.

We propose that firms in regions with strong tax enforcement efforts have low stock price crash risk. Using a large sample of Chinese firms from 2003 to 2017, we find that tax enforcement efforts negatively affect future crash risk. This negative effect is stronger among state-owned companies but weaker when information opacity is higher for firms. These results are robust to alternative measures, additional controls, and additional analyses. We also show that tax avoidance and accounting conservatism are two potential channels through which tax enforcement efforts affect crash risk. The findings contribute to the literature by elaborating that tax enforcement efforts not only alleviate tax-avoiding activities but also can act as a governance mechanism in reducing crash risk in an emerging economy context.

Romania ranks at the extreme low end in Eastern Europe in terms of Hofstede cultural insights, rule of law, government effectiveness, and corruption—potentially limiting governance quality for restricting resource channeling. In this paper, we examine whether these shortcomings flow over into the degree of corporate insider trading profitability at the firm level. Consistent with high power distance, low individualism, and voice and accountability, executives and their family members extract higher returns. The conjectured monitoring constraint of equity ownership had little impact on reducing profitable trading. Second, media reporting of firm-related scandals only restrained insider profitability in firms with government ownership—consistent with general forbearance of corruption and sanction from the use of politically controlled assets. Third, the global financial crisis revealed both a crisis of inept trading consistent with high uncertainty avoidance and also highly profitable trades for a limited set of executives who undertook short-term reversal strategies. Our exploratory microanalysis suggests a prototype to highlight areas requiring governance and investor attention in Eastern European countries.

I focus on the relationship between real earnings smoothing and one-year-ahead firm-specific crash risk in Japan and investigate the effect of financial institutional ownership and the implementation of J-SOX on the above relationship. Specifically, I hypothesize that the garbling real earnings smoothing is positively associated with stock price crash risk, and the informative real earnings smoothing is negatively associated with stock price crash risk. My results show that the crash risk increases as the garbling real earnings smoothing increases due to the managerial concealment of bad news about firms’ prospects. However, there is no significant relationship between the informative real earnings smoothing and crash risk. I further find that the relation between garbling real earnings smoothing and crash risk is constrained by effective external monitoring by stable institutional investors and the implementation of J-SOX. Further evidence indicates that there is a significant and negative relationship between the garbling real earnings smoothing and asymmetric timeliness with respect to bad news. These results suggest that managers undertake the garbling component of real earnings smoothing to withhold the negative private information, resulting in the increase of downside risk of firms’ stock price. Overall, this study investigates the role of real earnings smoothing in the negative information transmission by managers in Japanese firms.

We study whether and how pay disparities between chief executive officers (CEOs) and chief financial officers (CFOs) affect corporate policies. Consistent with the tournament theory, we find a positive association between the CEO–CFO pay disparity and aggressiveness in corporate financial and investment policies. Specifically, a firm with a large CEO–CFO pay disparity tends to have an aggressive capital structure and tilt toward high-risk investments. Furthermore, we test the impact of the CEO–CFO pay disparity on firm value and show that the pay disparity is positively associated with firm value. Overall, we conclude that CEO–CFO pay disparities provide CFOs with tournament incentives to not only adopt aggressive corporate policies but also select better investment projects. Our research highlights the career-enhancing and value-creating effects of CEO–CFO pay disparities as well as the important role of CFOs’ incentives on the treasurer side of their duties.

This paper investigated the impact of religiosity on accrual and real earnings management. Unlike most previous studies which consider this issue in a multi-religious setting, we use a mono-religious setting, specifically Poland where the Roman Catholic Church holds a dominant position. Thus, we are able to study the impact of religiosity on earnings management ignoring the impact of different religious denominations magnified by cultural factors. Our study focuses on the impact the Catholic religion has on earnings management. A novelty of this study is our proxy for religiosity. We use the communicantes ratio applicable only to Catholic and Orthodox denominations. This study contributes to the literature by providing a broader picture of the impact of religiosity on earnings management. Based on a sample of Polish companies, we find that Catholicism positively (negatively) influences the level of accrual (real) earnings management. We carefully examine the issue of differences between religiosity and personal faith and highlight the problems related to selecting a proxy for religiosity. The results indicate that a firm's preferred earnings management strategy depends heavily on the values shared by the national community. The majority of previous studies find that religiosity has a negative (positive) impact on accrual (real) earnings management. We provide empirical evidence that this is not always the case. There exists a setting in which the impact of religiosity is opposite, and the mechanisms through which religiosity influences earnings management are much more complicated than what was previously assumed.

The purpose of this paper is to analyze empirically the behavior of expected loan loss provisions during the economic cycle. The provisioning rules under IFRS 9 require the creation of reserves to cover expected credit losses, were anticipated to act countercyclically, and thus replaced the rules under IAS 39, which are widely presumed to have a procyclical impact. Observing the dynamics of the economic cycle during the economic downturn resulting from the COVID restrictions, a panel regression was performed to test the hypothesis that loan loss provisioning rules under IFRS 9 have a procyclical impact. The hypothesis was not rejected on the basis of a sample of the member countries of the European Union for the period of 1Q 2015 – 3Q 2020. Since the conclusions about procyclicality of loan loss provisions under IFRS 9 might be sensitive to the choice of models applied by the banks or to the assumptions applied to forward-looking information used in the models, there are certain areas that supervisory and regulatory authorities might look into to increase the quality of ECL models and their predictive power and help to eliminate potential triggers of procyclicality.

The Directive 2014/95/EU represents one of the main innovations introduced by the European Commission to encourage large companies to disclose their contribution to sustainable development. Since its introduction, the Directive 2014/95/EU has put into motion an intense debate about its effectiveness. Academics and policymakers agreed on the need to rethink mandatory non-financial reporting to enhance the contribution to the 2030 Agenda. In fact, despite a quantitative increase in the overall number of non-financial reports published yearly in Europe, only a limited number of companies explicitly disclose information about their contribution to the SDGs. In this sense, the disclosure of information about SDGs is driven by factors related to institutional and organizational dynamics. Building on a sample of 873 Public Interest Entities, an empirical analysis was conducted to fill the theoretical gap about the enabling role covered by cultural factors on SDG reporting. The analysis revealed that companies operating in institutional contexts characterized by long-term orientation and an adequate degree of balance between indulgence and restraints are more oriented to disclose their contributions to the SDGs. Our insights underlined the need to consider cultural dimensions in policymaking and standard-setting to encourage large companies to voluntarily disclose their contribution to 2030 Agenda.