Journal of Contemporary Accounting & Economics最新文献

英文中文

The communicative value of key audit matters in M&As: The effect of performance commitments

IF 2.9 3区管理学 Q2 BUSINESS, FINANCE

Journal of Contemporary Accounting & Economics

Pub Date : 2025-02-26 DOI: 10.1016/j.jcae.2025.100464

Xiang Luo , Yi Luo , Jianan Zhou

Previous research suggests that including performance commitment contracts (PCs) in mergers and acquisitions (M&As) increases the post-acquisition risk of goodwill impairment. Using a sample of Chinese companies from 2017 to 2022, we find that M&As with PCs not only lead auditors to be more likely to disclose M&A-related key audit matters (KAMs) in audit reports but also result in these disclosures being less boilerplate. Moreover, KAMs related to M&As with PCs are more informative, as evidenced by higher cumulative absolute abnormal returns, greater abnormal trading volume, and lower share price synchronisation. Our findings further indicate that the negative relationship between PCs and the disclosure of boilerplate M&A-related KAMs is particularly pronounced when auditors face higher accountability risks or when they are more prudent or prioritise their professional reputations. Additionally, M&A-related KAMs with more detailed information attract greater attention from analysts and institutional investors. Overall, our results suggest that auditors, driven by professional diligence, enhance the communicative value of KAMs by disclosing non-boilerplate information, thereby facilitating the effective transmission of risk information in the capital market.

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引用次数: 0

ESG rating agencies and investors’ reactions to earnings news

IF 2.9 3区管理学 Q2 BUSINESS, FINANCE

Journal of Contemporary Accounting & Economics

Pub Date : 2025-02-04 DOI: 10.1016/j.jcae.2025.100456

Qingyuan Li , Albert Tsang , Qiong Wu , Xi Xiong

We examine the effect of environmental, social, and governance (ESG) information provided by rating agencies on investors’ reactions to earnings news. Based on ESG ratings provided by three major rating agencies, we present evidence that firms’ earnings response coefficients (ERCs) are positively correlated with the initiation of coverage, intensity of coverage, and rating dispersion of ESG rating agencies. Our evidence further suggests that the positive effect of ESG information on ERCs is more pronounced for firms that operate within a weaker information environment. In addition, ESG rating agencies tend to play a more important role in strengthening the stock market reaction to positive earnings news than that to negative earnings news. We also document that the main effects are stronger for firms that have higher-quality ESG ratings and are covered by ESG rating agencies facing more intense competition. Collectively, our results support the view that the ESG information made available by ESG rating agencies significantly enhances the stock market reaction to earnings news by aiding investors’ assessment of firms’ future financial performance and earnings sustainability.

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引用次数: 0

Catalyzing transparency: Proactive enforcement of information disclosure and its impact on stock price synchronicity

IF 2.9 3区管理学 Q2 BUSINESS, FINANCE

Journal of Contemporary Accounting & Economics

Pub Date : 2025-01-27 DOI: 10.1016/j.jcae.2025.100455

Shijun Guo , Fang Hu

Focusing on the Industry Information Disclosure Guides (IIDGs) in China’s stock markets, we investigate the impact of firm-specific industry information disclosure on stock price synchronicity under proactive public enforcement. Employing a difference-in-differences analysis around industry-targeted events, we find a significant reduction in stock price synchronicity among companies in focus sectors compared to those in non-focus sectors following the introduction of industry-specific disclosure regulations. This reduction is distinguishing industry-level from market-level synchronicity and spilling over to non-regulated industries through manager learning channel, emphasizing the unique information features of IIDGs at the industry level. Additional tests demonstrate the heightened significance of IIDGs in poor information environment, particularly for companies with opaque financial reporting, with limited private oversight and operating in less competitive markets. Our findings provide valuable insights into the interplay between disclosure mechanisms and information environment in emerging markets.

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引用次数: 0

Housing prices and labor cost stickiness: Evidence from China

IF 2.9 3区管理学 Q2 BUSINESS, FINANCE

Journal of Contemporary Accounting & Economics

Pub Date : 2025-01-10 DOI: 10.1016/j.jcae.2025.100454

Suyan Yan, Chang Tong, Qiliang Liu

Based on firm-level data from 2007 to 2020, this study examines the influence of housing prices on labor cost stickiness. The results show that housing prices strengthen firms’ labor cost stickiness. The strengthening effect is particularly pronounced in high-tech industries and during periods of high economic policy uncertainty. Moreover, as the observation period extends, the impact of housing prices on labor cost stickiness diminishes. Further analysis reveals that housing prices have a reinforcing effect on stickiness in terms of employee numbers, with no significant impact on per capita remuneration stickiness. This study indicates that a company will need to allocate additional resources toward investment in machinery and equipment to address the labor cost stickiness stemming from the housing price surge.

引用次数: 0

Seeing is believing: Director accounting enforcement experience and financial reporting quality

IF 2.9 3区管理学 Q2 BUSINESS, FINANCE

Journal of Contemporary Accounting & Economics

Pub Date : 2024-12-24 DOI: 10.1016/j.jcae.2024.100453

Silver Chung , Daniel Sejun Hwang

This study investigates the impact of directors’ experiences with accounting enforcement on financial reporting quality (FRQ). While firms often regard real-life experiences as a crucial factor in their hiring decisions, the actual impact of directors’ experiences on corporate decisions, particularly financial reporting decisions remains unclear. Using a difference-in-differences method, we find significant changes in a firm’s FRQ when its director experiences SEC enforcement at another firm where she serves as a director. More specifically, we find that discretionary accruals and restatement likelihood decrease while real activities manipulation increases following a director’s Accounting and Auditing Enforcement Releases (AAER) experience. Additionally, such changes are concentrated among subsamples where AAERs allege fraud or GAAP violations, or the director serves on the audit committee at the perpetrating company. Collectively, these findings show that directors’ experiences make differences in related corporate decision-making and SEC enforcement actions have disciplinary effects beyond the firms that directly face charges.

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引用次数: 0

Carbon emission regulation and corporate financing constraints: A quasi-natural experiment based on China’s carbon emissions trading mechanism

IF 2.9 3区管理学 Q2 BUSINESS, FINANCE

Journal of Contemporary Accounting & Economics

Pub Date : 2024-12-20 DOI: 10.1016/j.jcae.2024.100452

Pengcheng Zhang , Jiayin Qi

This study empirically investigates the impact of carbon emissions trading on corporate financing constraints using a difference-in-differences model. By compiling lists of emission-controlled enterprises from each pilot carbon market, this study demonstrates that carbon emissions trading significantly increases financing constraints for these enterprises. However, no significant regional or sectoral spillover effects are observed. The results of the mechanism testing show that carbon emissions trading diminishes enterprise performance in the stock market and exerts adverse effects on the scale of corporate bank borrowing and the debt maturity structure. Further research reveals that good corporate governance and better information quality can inhibit the adverse effects of carbon emissions trading. This mechanism reduces firms’ investment expenditures, but increases their investments in research and development and financial asset allocation. Notably, despite financing constraints being detrimental to innovation, carbon emissions trading significantly enhances both the level and quality of innovation in firms. These findings underscore the complex effects of carbon emissions trading on corporate financing constraints and highlight the intricate nature of environmental policies at the microeconomic level.

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引用次数: 0

Does air pollution matter for audit process and audit outcomes? Evidence from China

IF 2.9 3区管理学 Q2 BUSINESS, FINANCE

Journal of Contemporary Accounting & Economics

Pub Date : 2024-12-19 DOI: 10.1016/j.jcae.2024.100451

Yaqian Wu , Jiyuan Li

We investigate the impact of air pollution on audit process and audit outcomes using unique data from the Chinese capital market between 2013 and 2020. We find that auditors exert less effort in client firms located in cities with severe air pollution, leading to lower audit quality represented by a lower probability of and fewer audit adjustments. The cross-sectional analysis shows that auditors from Big 4 audit firms can mitigate the effect of air pollution on audit effort and audit quality. We also draw some interesting conclusions about the effect of auditors’ perceptions of air pollution variation in both spatial and time dimensions, and the impact of COVID-19. Our findings still hold in several robustness checks such as using alternative proxies, controlling for more fixed effects, considering mutual selection issues, employing regression discontinuity design, utilizing instrument variables method, and conducting placebo tests. Our study contributes to the emerging literature on behavioral finance by extending the research into ambient air pollution to the auditing context, provides new insights into the determinants of audit effort and audit quality, and has some implications for regulators.

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引用次数: 0

The unintended consequences of targeted poverty alleviation: Evidence from China

IF 2.9 3区管理学 Q2 BUSINESS, FINANCE

Journal of Contemporary Accounting & Economics

Pub Date : 2024-11-26 DOI: 10.1016/j.jcae.2024.100450

Jing Zhou , Lili Jiu , Oupin Tang , Po-Hsiang Yu

This study examines the effect of corporate targeted poverty alleviation (TPA) activities endorsed by Chinese governments on audit outcomes. We find that firms engaging in TPA activities are less likely to receive modified audit opinions (MAOs) relative to those without TPA activities and more TPA investments induce less MAO issuance, documenting an unintentional beneficial consequence of TPA. These findings are robust to a battery of sensitivity tests, including addressing endogeneity issues and ruling out the alternative explanation. Our cross-sectional results show that the negative relation between TPA and MAOs is more significant for firms audited by non-industry specialists and short-tenure auditors, non-state-owned enterprises (non-SOEs), and labor-intensive firms. We perform the mediation analyses and identify three potential channels- improved operating performance, enhanced information disclosure quality, and elevated reputation- through which TPA engagements influence the likelihood of receiving MAOs. Moreover, we find industrial development TPA has a more pronounced effect on audit outcomes due to its positive impact on firms’ business operations. Overall, our research documents an unintended consequence of firms’ TPA initiatives in mitigating audit risk. As a vital facet of policy-oriented CSR, TPA engagements exhibit unique characteristics compared to other CSR perspectives. Given its economic relevance and political features, our study contributes to this stream of research and offers implications for TPA initiatives.

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引用次数: 0

Expanded auditor’s reports and voluntary disclosure 扩大审计报告和自愿披露范围

IF 2.9 3区管理学 Q2 BUSINESS, FINANCE

Journal of Contemporary Accounting & Economics

Pub Date : 2024-10-18 DOI: 10.1016/j.jcae.2024.100443

Wenxuan Huang , Weidong Xu , Donghui Li , Jiancheng (Duncan) Liu

Employing a panel sample of 5,090 firm-years from 981 UK firms during the period from 2010 to 2016, we investigate the impact of the implementation of expanded auditor’s reports (EARs) on corporate voluntary disclosure. We find that the likelihood and frequency of voluntary disclosure significantly decrease after the implementation of EARs. In addition, the total number of risks of material misstatement (RMMs) has no impact on voluntary disclosure after the implementation of EARs, while certain RMMs categories (i.e., entity rather than account risks, and firm-specific rather than industry-level risks) display a more pronounced impact on corporate voluntary disclosure. In further analysis, we find that the mandatory adoption of EARs increases the proportion of long-term forecasts, riches the content of voluntary disclosure, and elicits a more positive market response to the announcement of voluntary disclosure. Cross-sectional analyses show that the impact of the implementation of EARs on voluntary disclosure can be magnified by a higher level of media coverage, especially breaking news coverage. Our results remain valid after considering various robustness tests and selection bias concerns.

我们采用 2010 年至 2016 年期间 981 家英国公司的 5,090 个公司年的面板样本，研究了扩大审计报告（EARs）的实施对企业自愿性信息披露的影响。我们发现，实施 EARs 后，自愿披露的可能性和频率都显著下降。此外，重大错报风险（RMMs）的总数在 EARs 实施后对自愿披露没有影响，而某些 RMMs 类别（即实体风险而非账户风险，以及公司特定风险而非行业层面风险）对企业自愿披露的影响更为明显。在进一步的分析中，我们发现强制采用 EARs 会增加长期预测的比例，丰富自愿披露的内容，并引起市场对自愿披露公告更积极的反应。横截面分析表明，更高水平的媒体报道，尤其是突发新闻报道，会放大 EARs 的实施对自愿披露的影响。在考虑了各种稳健性检验和选择偏差问题后，我们的结果仍然有效。

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引用次数: 0

Long-term tax strategy and corporate acquisition payment structure: An analysis based on the book-tax tradeoff theory 长期税收战略与企业收购支付结构：基于账面税收权衡理论的分析

IF 2.9 3区管理学 Q2 BUSINESS, FINANCE

Journal of Contemporary Accounting & Economics

Pub Date : 2024-09-23 DOI: 10.1016/j.jcae.2024.100442

K. Hung Chan , Miao He , Phyllis Lai Lan Mo , Weiyin Zhang

This study examines the relationship between corporate acquirers’ long-term tax strategy (i.e., past behavior) and their subsequent choice of an acquisition payment method (i.e., future behavior) based on a book-tax tradeoff analysis. We find that acquirers with a high (low) level of long-term tax avoidance are more likely to have cash (stock)-financed acquisitions. Political influence attenuates the significance of the above relationship. Among the acquirers who use cash-financed payment method, those who are less tax aggressive tend to include debt to finance their acquisitions, suggesting that debt and non-debt tax shields are substitutes for each other in acquisitions.

本研究基于账面-税收权衡分析，探讨了企业收购方的长期税收策略（即过去行为）与其随后选择的收购支付方式（即未来行为）之间的关系。我们发现，长期避税水平高（低）的收购方更倾向于现金（股票）融资收购。政治影响削弱了上述关系的重要性。在采用现金融资支付方式的收购方中，那些税收激进程度较低的收购方倾向于采用债务融资方式进行收购，这表明债务和非债务税盾在收购中是相互替代的。

引用次数: 0

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Journal of Contemporary Accounting & Economics

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