Journal of International Financial Management & Accounting最新文献

We examine the extent to which US Dow 30 companies disclose the Global Core Indicators (GCIs), which are measures to assess companies’ contribution toward the United Nation’s 2030 Agenda for Sustainable Development. We find that the Dow 30 are generally compliant with disclosing GCIs that align with US capital market reporting expectations, high-profile current events, and issues that are financially relevant. We also find the Dow 30 are more likely to disclose institutional and economic issues, rather than environmental and social issues, and note disclosure variation across industries in which the Dow 30 operate. Supplemental analyses indicate that GCI disclosure levels are generally higher when those GCIs are associated with financially relevant ESG issues, suggesting companies are more amenable to addressing sustainability when doing so aligns with their mandate to shareholders. Correlation analyses reveal that the GCI indices moderately or strongly correlate with two of three MSCI sustainability ratings, highlighting companies’ focus on financially relevant areas, and weakly correlate with companies’ CDP climate change ratings, highlighting the limited scope of the GCIs in capturing detailed environmentally focused sustainability efforts. We also show that the MSCI sustainability ratings of the Dow 30 have generally trended higher over time, with increases driven by companies in the manufacturing, financial, and retail industries. Our findings help fill a void in sustainability literature on US company reporting of the GCIs and may be informative to the United Nations Conference on Trade and Development as it reviews the GCIs in support of the 2030 Agenda.

Financial statement preparers’ discretion in fair value measurements is integral to asset impairment accounting. Firms may misuse this discretion to report more or less impairment loss than is warranted by underlying economic circumstances. Using data from a sample of publicly listed firms in China, this study finds that analyst following reduces abnormal impairment loss, the portion of reported impairment loss that cannot be explained by corporate economic circumstances and that this effect is more pronounced for firms with lower information disclosure quality. However, the reducing effects of analyst following and its interaction with disclosure quality are greater for income-decreasing than for income-increasing abnormal impairment loss. Additional analyses support the argument that these differences are attributable to the dominance of accounting’s contracting role over its informational role. Overall, the findings indicate that the influence of analyst following on discretionary impairment accounting decisions is moderated by disclosure quality and by the relative importance of accounting’s contracting and informational roles in an emerging market setting.

This study examines patterns in cash management, particularly cash holdings speed of adjustment (CH-SOA), across 48 countries. I find that managerial cultural characteristics and country-level macroeconomic factors influence the persistence of cash reserve levels, deviation from target, and the speed with which firms in different countries adjust their cash holdings. The findings support the idea that agency costs as well as market frictions influence CH-SOA and other aspects of cash management. The findings are robust to the inclusion of a wide range of firm-level characteristics, country-level corporate-governance variables, and an alternative cultural index.

Occurrences of financial distress (FD) are not readily obvious yet can span several periods. This paper examines episodes of FD using industry-relative (IR) firm-/ accounting-, market- and macro-level information. Mixed logit regressions reveal that firm- and market-based measures, as well as macro-level variables explain the likelihood of FD in 263 publicly listed non-banking firms in the Philippines during the period 1995 to 2018. Rates of identification of firms in financial distressed states of close to 69 percent are obtained at a cutoff probability of 0.30 in the model with time-varying intercept and slope. This study shows the importance of recognizing heterogeneous firm behavior. The ability to more accurately predict the probability of FD and to determine the financial health of firms can help financial institutions in allocating funds and policy makers in predicting crises episodes.

This paper investigates the determinants of a “successful” IPO from a corporate governance perspective upon a representative sample of European listings from 2000 to 2015. We use an extensive dataset of market performance, financial data, and corporate governance characteristics to run the investigation. Differently from previous studies, our analysis embraces both a short-term perspective and a medium–long-term perspective, where the board of directors seems to perform different tasks, moving from a value creation to a value protection strategy. Among the others, we find that board size, board independence, and their qualifications, together with their experience in other boards, are associated with a positive performance of the IPO in a short-term horizon and in the medium–long-term period, although significant differences emerge among those time perspectives.

This paper explores the perceptions of key audit industry stakeholders concerning the direct and indirect financial effects of the implementation of mandatory audit firm rotation (MAFR) in South Africa. Globally, concerns over audit quality, in response to corporate failures, have resulted in renewed debate over MAFR as a solution. The European Union and South Africa have recently ruled in its favor, while other countries have rejected it on grounds that the benefits do not exceed the costs. Using structured surveys, the informed perspectives of experienced auditors, chief financial officers, audit committee chairs, and equity fund managers are explored and contrasted. We find that considerable costs will be imposed on audit firms in the form of “setup and transition costs,” as well as costs incurred to submit and present competitive tenders to secure appointment. Although auditors will try to recoup these costs with fee increases, this will likely not be allowed by the clients, resulting in a squeeze of audit firm profits. The Big 4 firm fee premium, relative to non-Big 4 firms, will decrease due to increased competition. From the clients' perspective, the costs will be in the form of audit inefficiency translating into staff time and disruption, caused by the incoming auditors being less familiar with the complexities of the business. We contribute to the literature detailed descriptions and estimations of the nature and extent of potential cost implications, as expressed by experienced practitioners. The findings inform audit industry regulators, standard-setters, and practitioners to more effectively mitigate potential unintended consequences of the regulation.

This paper examines how the ownership structure and board of directors' features determine the managerial opportunistic behavior exemplified in the management of accounting earnings. This study contributes to the literature by investigating the relationship of firm-level and country-level corporate governance systems on the earnings management in the Spanish corporate sector. Results reveal that the varying efficiency of the corporate governance systems is reflected in the way in which accounting discretion is performed. We found evidence that earnings management is reduced as the voting rights of the controlling shareholder increased and that there is an inverse U-shaped relationship between insiders' ownership and the earnings manipulation. Regarding the board characteristics, we observe that larger, independent boards, those with a larger proportion of female members, and those with an audit committee compounded by a greater proportion of outside independent directors oversee managers more efficiently, constraining their capacity to manage earnings. To the contrary, board duality increases the likelihood of opportunistic manipulation of financial reporting. We found that when the institutional environment improves in the Spanish context, the discretionary power of the corporate sector to overstate the financial statements is reduced. The findings prove the necessity of reinforcing the rules and regulations toward a more transparent disclosure of the financial statements.

Since its introduction, integrated reporting (IR) has triggered a rich debate covering several aspects, from the structure and the features of a document to the effects of its publication. Very recently, scholars have examined the negative relationship between IR and the cost of capital for firms, completely missing the opportunity to understand whether this fact is contingent on the cultural context that adopting companies operate in. We fill this gap by resorting to a panel sample of 211 adopters from 31 countries over the period spanning 2009–2017, counting 1,455 observations. Our evidence confirms that adopters, on average, benefit from a 1.4% decrease in the cost of capital. Yet, more importantly, IR effectiveness is exalted in countries with low power distance, strong collectivism values, and high level of masculinity, while uncertainty avoidance, long-term orientation, and indulgence do not seem to play any moderating role.

The effectiveness of International Financial Reporting Standards (IFRS) is dependent on the strength of enforcement of accounting standards in a given country. This study explores the implications of the adoption of IFRS in Nigeria after the enforcement of accounting standards was strengthened. The strengthening of accounting standards enforcement, and the subsequent adoption of IFRS in Nigeria, was recommended by the World Bank to improve the country's regulatory outlook after a capital market crisis in 2007/2008 that was triggered by widespread accounting irregularities. Results indicate that accounting quality declined in Nigeria following the adoption of IFRS; while earnings management increased, timely loss recognition and earnings persistence reduced. Our study contributes to the burgeoning literature on IFRS adoption and concludes that the effect of IFRS adoption is contextual. Therefore, accounting regulatory institutions operating in a similar context to Nigeria should localize IFRS.

This study examines financial analyst coverage for U.S. firms following an increase in foreign product market competition. To capture exogenous shocks to domestic firms' competitive environments, we exploit a quasi-natural experiment from large import tariff reductions over the 1984 to 2005 period in the manufacturing sector. Using data for the years before and after large tariff reductions, our difference-in-differences analysis shows evidence of a significant decrease in analyst coverage for incumbent U.S. firms when they face greater entry threat from foreign competitors. We also find that analysts with less firm-specific experience and less accurate prior-period forecasts are more likely to stop following the domestic firm when foreign competition intensifies. Overall, the findings suggest that foreign product market competition from global trade liberalization is an important determinant of financial analysts' coverage decisions.