Journal of International Financial Management & Accounting最新文献

This paper investigates the ability of female presence to affect value relevance. Focusing on a sample of 487 entities listed in 18 European countries over the period 2009–2017, it uses a price model to assess the ability of female presence to affect the value relevance of earnings and book value disclosed in the consolidated annual reports of the firms analyzed. Findings offer evidence that female presence on corporate boards increases the value relevance of accounting amounts, providing insights that board composition affects investors’ judgments. Taking into account that in the literature scholars have shown that female presence is associated with market prices, this paper provides a contribution, showing its ability to affect the value relevance of earnings and book value of equity. The research findings suggest that not only the quality of accounting standards but also other factors such as female presence on the corporate board of directors affect accounting practices and, in turn, the quality of financial reporting and value relevance. Its findings offer an additional support to the European Union Gender Equality Strategy 2020–2025 according to which an increase in women's participation in the labor market has a strong, positive impact on the whole economy.

This paper analyzes the influence of large bank shareholders on the terms of bank loans for a sample of 12,045 loans to 3,290 borrowers from 45 countries over the period 2004–2013. We investigate the effects of bank control over bank loan terms during the global financial crisis, regardless of whether the bank shareholder is a lender or not. In line with a monitoring effect, the results suggest that firms with bank shareholders that are non-lenders borrowed at lower interest rates and longer maturities during the period of crisis. However, borrowers paid higher spreads and were offered shorter maturities when they borrowed from banks that are also shareholders. This effect is consistent with banks obtaining private benefits as large shareholders as a consequence of the informational hold-up problems affecting borrowers.

In this paper, we examine the role of external monitoring as an alternative mechanism of corporate governance pertaining to the risk and mispricing of accruals in the Brazilian market. The results provide evidence of the accruals anomaly for companies with low external monitoring and evidence that is stronger when evaluating the discretionary component of accruals. Our analysis does not support the conclusion that total and discretionary accruals represent price risk factors, which suggests that the evidence of anomaly results from mispricing. Our evidence contributes to the growing literature on accruals pricing in emerging markets, by adding elements such as the influence of external monitoring and the level of investor sophistication, hereby represented by market analysts and institutional investors. Our study provides additional evidence that the presence of these intermediary agents creates an external layer of control capable of contributing positively to the process of disclosure and pricing of financial information. Thus, the role of such intermediaries as external monitors in emerging markets can be potentially significant for correctly pricing accruals. While Brazil has its own unique institutional characteristics, our findings confirm the evidence obtained for other countries.

Prior literature has largely dealt with the effect of either corporate social responsibility (CSR) or innovation on firm financial risk. No earlier research has examined the combined effect of a firm's simultaneous pursuit of CSR and innovation on firm financial risk. This study investigates the combined effects with a view to fostering our understanding of relationships of CSR and innovation with financial risk. Using the patent application and CSR data of 2,174 Chinese listed firms over the period 2010–2016, this study finds that firms with higher levels of imitative innovation and good CSR performance exhibit higher financial risk. The results remain after a series of robustness tests including the use of an alternative measure of firm financial risk and CSR. The results indicate that firms with a higher level of imitative innovation exhibit greater financial risk; however, the risk cannot be mitigated by firms' good CSR performance. CSR performance helps firms boost the positive image of a “good citizen” and reduce firm financial risk; however, the combined effects of CSR and imitative innovation trigger higher financial risk. The results of this study support the umbrella theory of CSR that exacerbates the moral hazard for those firms that rely on imitative innovation.

This study examines the impact of profitability on the capital structure decision of US multinational and domestic corporations. The findings reveal that the relationship between multinational corporations’ (MNCs') profitability and their leverage ratios is U-shaped and nonlinear, while this nonlinear relation does not exist for domestic firms (DCs). This nonlinear relationship indicates that the effect of profitability on multinational corporations' leverage depends on the levels of their profitability. Consistent with the dominance of the pecking order theory, lower-profitability MNCs have a tax shield advantage that does not outweigh the information asymmetry costs of debt financing. Conversely, higher-profitability MNCs have a tax shield advantage that outweighs the information asymmetry costs of debt financing. The findings are robust after using two different classifications for multinational firms, including foreign tax and foreign sales; after applying an alternative methodology and during different time horizons.

This study provides empirical evidence on changes in entities’ reporting of interests in joint ventures from proportionate consolidation to the equity method following adoption of IFRS 11 and their application of the corresponding IFRS 12 disclosure requirements. The sample includes 551 firms from 26 countries affected by the adoption of IFRS 11 (1,858 financial statements). The findings indicate that many firms are not fully complying with IFRS 12 disclosure requirements and that firm-level characteristics (e.g., size, leverage, and ownership concentration) contribute more to explaining the level of (non)compliance, when compared to country-level variables (e.g., legal system and emerging versus developed countries). We also find that the level of materiality of joint ventures is positively associated with the level of compliance with IFRS 12 disclosure requirements. Our results contribute to the literature on the determinants of compliance with IFRS Standards disclosure requirements and bring important insights for the post-implementation review of IFRS 11 and IFRS 12 occurring between 2020 and 2022.

This paper summarizes the UNCTAD ISAR WBCSD Webinar—Assurance on Sustainability Reports: Current Practices and Challenges, which explored views and practices on assurance of extended external reporting (EER) and identified challenges and potential ways forward. Stakeholders are demanding more accountability, as reflected in increased publication of EER and regulatory developments. EER can play an important role in rebuilding trust by catalyzing corporate focus and disclosure of business-centric matters material to stakeholders including strategy, business model, governance, and greater transparency on other material non-financial matters. Relatedly, EER cannot rebuild trust unless disclosures are credible and viewed as credible. Therefore, it is important that assurance, and other credibility enhancing techniques, is developed alongside EER frameworks and takes account of regulatory initiatives. We expand on lessons outlined during the Webinar by highlighting questions posed by participants, providing a historical overview of European regulatory developments (e.g., Directive 2014/95/EU and a forthcoming revision), providing a historical overview of the IAASB’s development of ISAE 3000 and forthcoming guidance on addressing major challenges aimed at supporting EER assurance, and providing an overview of practice-focused publications addressing EER assurance. We conclude with an assessment of the way forward in regard to possible changes in the EER institutional setting, potential harmonization of EER standards, and the ability to provide reasonable versus limited assurance. Along with our companion paper (Venter and van Eck, 2021, 32), we contribute to the current discussion on EER assurance by providing a comprehensive assessment of the EER assurance landscape.

This paper examines whether strategic corporate social responsibility (CSR) disclosures are value relevant for investors and analysts in the context of China. Using a sample of Chinese listed firms from One Belt One Road (OBOR) theme indices, we construct a rating system of strategic CSR disclosures including five dimensions and 20 indicators and perform a principal component analysis and a non-hierarchical cluster analysis to group sample firms. We find that the market has a positive reaction to strategic CSR disclosures, but the market fails to perceive whether such disclosures are credible. We also find that the number of analysts following a firm is positively associated with its strategic CSR disclosures, and the positive association between strategic CSR disclosures and analysts following is less pronounced for firms with lower credibility. Additional analyses demonstrate that the higher the strategic CSR disclosure quality the more the positive market reaction and that the higher the strategic CSR disclosure quality the more the numbers of analysts following, but this positive association between disclosure quality and analysts following is discounted by a firm's lower credibility. Additional analyses further confirm that the CSR disclosure mandate has a negative moderating effect on investors’ and analysts’ positive reactions to strategic CSR disclosures. We do not find convincing evidence that the ownership of foreign institutional investors (QFII) has a moderating effect on investors’ and analysts’ reactions to strategic CSR disclosures. Finally, our extended analyses reveal that strategic CSR disclosures have a positive effect on firm performance with a complementary mediation of innovation.

The assurance of non-financial information (NFI) included in extended external reports (EERs) is a global activity that has far-reaching consequences for business, investors, other stakeholders, and society. EERs remain largely unregulated with few standards. Along with our companion paper (Krasodomska, Simnett, & Street, 2021, Journal of International Financial Management and Accounting, 25, 209), we contribute to the current discussion on EER assurance by providing an overview of the academic literature to inform the standard setting initiatives of the International Auditing and Assurance Standard Setting Board (IAASB), as well as the practice of assurance of EERs. We identify 121 articles on extended external reporting (EER) assurance published between 2009 and 2020 across 35 journals ranked A*, A, and B on the Australian Business Deans Council (ABDC) 2019 Journal Quality List. These articles cover archival, experimental, interviews, case studies, surveys, and content analysis research methods and serve as a possible input for standard setting activities. We document a rapid increase in this literature with almost half of the articles published in the last 3 years, 2018 to 2020. Finally, we offer ideas for future research directly linked to the proposed Guidance of the IAASB on EER assurance. We encourage researchers to engage in these and other issues of the IAASB’s Guidance to assist them with valuable input for their standard setting activities.

We examine how the size and the composition of acquirer boards are associated with shareholder abnormal returns for 2,230 M&As made by listed firms in Continental Europe. Although board size proves insignificant, our findings do offer some evidence as to a beneficial effect of board diversity on M&A value creation. Gender diversity appears marginally positively associated with acquirer shareholder abnormal returns. The fraction of foreign directors is in general not significantly positive, unless the rule of law in the acquirer country is weak. Nonetheless, nationality diversity in the board turns out harmful in purely domestic takeovers. The influence of age diversity is marginally positive, yet only in domestic and horizontal takeovers. Next, the fraction of independent directors has a robust positive effect on the acquirer CAR, while directors with multiple board appointments prove valuable especially through preventing firms from pursuing poor takeovers. Finally, CEO duality is detrimental only in industry-diversifying deals initiated by acquirers that are not controlled by an individual or a family shareholder. Any negative CEO-duality effect is mitigated when the acquirer-country rule of law is strong.