Pub Date : 2019-09-01DOI: 10.1142/S1094406019500100
Karin Shields, I. Clacher, Qi Zhang
With the aid of computerized sentiment analysis, this paper analyzes the role of constituents’ comment letters in the process of setting international financial reporting standards for financial instruments. Whilst explicit agreement in comment letters is associated with the board’s decision to proceed with its proposed course of action, we find no consistent evidence that explicitly stated disagreement has an impact on the resulting accounting standard. Using context-specific dictionaries, we find that increased levels of negative tone in comment letters increase the probability of the board subsequently abandoning a proposed course of action. Capturing dissent through negative tone facilitates large-scale analysis, and we show that the financial industry has been less successful than other constituents in its lobbying efforts through comment letters.
{"title":"Negative Tone in Lobbying the International Accounting Standards Board","authors":"Karin Shields, I. Clacher, Qi Zhang","doi":"10.1142/S1094406019500100","DOIUrl":"https://doi.org/10.1142/S1094406019500100","url":null,"abstract":"With the aid of computerized sentiment analysis, this paper analyzes the role of constituents’ comment letters in the process of setting international financial reporting standards for financial instruments. Whilst explicit agreement in comment letters is associated with the board’s decision to proceed with its proposed course of action, we find no consistent evidence that explicitly stated disagreement has an impact on the resulting accounting standard. Using context-specific dictionaries, we find that increased levels of negative tone in comment letters increase the probability of the board subsequently abandoning a proposed course of action. Capturing dissent through negative tone facilitates large-scale analysis, and we show that the financial industry has been less successful than other constituents in its lobbying efforts through comment letters.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2019-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1142/S1094406019500100","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45682752","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-08-25DOI: 10.1142/S1094406019800027
Edward Lee
{"title":"Book Review: \"Corporate Governance Research on Listed Firms in China: Institutions, Governance and Accountability (Foundations and Trends in Accounting)\"","authors":"Edward Lee","doi":"10.1142/S1094406019800027","DOIUrl":"https://doi.org/10.1142/S1094406019800027","url":null,"abstract":"","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2019-08-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1142/S1094406019800027","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41477385","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-08-25DOI: 10.1142/S1094406019500070
Sasson Bar-Yosef, Carlo D’Augusta, A. Prencipe
Private companies play a significant role and are the main growth engine of the global economy. Yet, until recently, empirical research in accounting has focused primarily on public companies. Over the last few years, we have observed a change in trend. Accounting scholars have started researching private firms and have contributed to a better understanding of their accounting decisions. This growing attention is likely due to a better availability of public data and to the fact that several regulators issued specific regulations on private firms’ financial reporting. In this paper, we analyze the state of the art of accounting research in this area. We review 95 papers published in 21 accounting journals over the period 1986–2018. After looking into the definition of private firms, we highlight the role of the private firm status in the research design, classify each paper into four main research areas (i.e., financial accounting, taxation, auditing, and valuation) and discuss the main contributions. We argue that the current state of accounting research on private firms — although quite rich — is still insufficient in light of the relevance of such a segment of the world economy. After soliciting additional research, we devise possible venues for future studies.
{"title":"Accounting Research on Private Firms: State of the Art and Future Directions","authors":"Sasson Bar-Yosef, Carlo D’Augusta, A. Prencipe","doi":"10.1142/S1094406019500070","DOIUrl":"https://doi.org/10.1142/S1094406019500070","url":null,"abstract":"Private companies play a significant role and are the main growth engine of the global economy. Yet, until recently, empirical research in accounting has focused primarily on public companies. Over the last few years, we have observed a change in trend. Accounting scholars have started researching private firms and have contributed to a better understanding of their accounting decisions. This growing attention is likely due to a better availability of public data and to the fact that several regulators issued specific regulations on private firms’ financial reporting. In this paper, we analyze the state of the art of accounting research in this area. We review 95 papers published in 21 accounting journals over the period 1986–2018. After looking into the definition of private firms, we highlight the role of the private firm status in the research design, classify each paper into four main research areas (i.e., financial accounting, taxation, auditing, and valuation) and discuss the main contributions. We argue that the current state of accounting research on private firms — although quite rich — is still insufficient in light of the relevance of such a segment of the world economy. After soliciting additional research, we devise possible venues for future studies.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":"65 11","pages":""},"PeriodicalIF":2.0,"publicationDate":"2019-08-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1142/S1094406019500070","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41246642","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-08-25DOI: 10.1142/S1094406019500082
Jayasinghe Hewa Dulige, N. Abayadeera, Muhammad Jahangir Ali, Paul R. Mather
In this paper, we examine the factors that influence the development of accounting and reporting practices in Sri Lanka in the backdrop of its political and economic environment. We find that the early days of accounting in Sri Lanka were heavily influenced by the British colonial system. Subsequently, its greatest influence was derived from the regulatory and institutional framework backed by local and British professional accounting bodies. We also interview key stakeholders to draw insights on how the institutional factors contribute to the development of financial reporting in Sri Lanka. We discover that the Institute of Chartered Accountants of Sri Lanka (ICASL) is a key player in developing and implementing accounting standards and the best financial reporting practices. We observe that although the Sri Lankan Government has undertaken many initiatives to improve the quality of financial reporting, monitoring and enforcing regulations remain weak partly due to political interference. Therefore, we suggest that strengthening the existing regulatory mechanisms will help to improve the reporting quality and build investor confidence.
{"title":"The Development of Accounting and Financial Reporting Practices in Sri Lanka: An Exploratory Investigation","authors":"Jayasinghe Hewa Dulige, N. Abayadeera, Muhammad Jahangir Ali, Paul R. Mather","doi":"10.1142/S1094406019500082","DOIUrl":"https://doi.org/10.1142/S1094406019500082","url":null,"abstract":"In this paper, we examine the factors that influence the development of accounting and reporting practices in Sri Lanka in the backdrop of its political and economic environment. We find that the early days of accounting in Sri Lanka were heavily influenced by the British colonial system. Subsequently, its greatest influence was derived from the regulatory and institutional framework backed by local and British professional accounting bodies. We also interview key stakeholders to draw insights on how the institutional factors contribute to the development of financial reporting in Sri Lanka. We discover that the Institute of Chartered Accountants of Sri Lanka (ICASL) is a key player in developing and implementing accounting standards and the best financial reporting practices. We observe that although the Sri Lankan Government has undertaken many initiatives to improve the quality of financial reporting, monitoring and enforcing regulations remain weak partly due to political interference. Therefore, we suggest that strengthening the existing regulatory mechanisms will help to improve the reporting quality and build investor confidence.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2019-08-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1142/S1094406019500082","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42377293","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-07-19DOI: 10.1142/s1094406021500189
Ahmed Aboud, Akrum Helfaya
Based on a country-level-characteristics framework, we empirically tested the impact of IFRS 8 adoption, the country’s legal system and level of legal enforcement, investor protection, conservatism, and closeness between national GAAP and IFRS on both the quantity and quality of segment reporting. Using a sample of companies from 15 EU countries covering four years (two years preadoption and two years postadoption of IFRS 8), we found that the adoption of IFRS 8 is associated with a decrease in the quantity and an increase in the quality of segment reporting. Moreover, we report that a common-law system, the country-level legal enforcement, and investor protection have a significant and positive impact on the quantity and quality of segment reporting. Meanwhile, country-level conservatism and closeness between national GAAP and IFRS are negatively related to the quantity and quality of segment reporting. In addition to firm-level characteristics, this study extends the prior limited literature by documenting the importance of country-level characteristics as factors that enhance segment reporting practices in Europe. We also discuss the research contributions and implications for research, professional practice, and policymakers.
{"title":"Role of Country-Level Characteristics in Segment Reporting: EU Evidence","authors":"Ahmed Aboud, Akrum Helfaya","doi":"10.1142/s1094406021500189","DOIUrl":"https://doi.org/10.1142/s1094406021500189","url":null,"abstract":"Based on a country-level-characteristics framework, we empirically tested the impact of IFRS 8 adoption, the country’s legal system and level of legal enforcement, investor protection, conservatism, and closeness between national GAAP and IFRS on both the quantity and quality of segment reporting. Using a sample of companies from 15 EU countries covering four years (two years preadoption and two years postadoption of IFRS 8), we found that the adoption of IFRS 8 is associated with a decrease in the quantity and an increase in the quality of segment reporting. Moreover, we report that a common-law system, the country-level legal enforcement, and investor protection have a significant and positive impact on the quantity and quality of segment reporting. Meanwhile, country-level conservatism and closeness between national GAAP and IFRS are negatively related to the quantity and quality of segment reporting. In addition to firm-level characteristics, this study extends the prior limited literature by documenting the importance of country-level characteristics as factors that enhance segment reporting practices in Europe. We also discuss the research contributions and implications for research, professional practice, and policymakers.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2019-07-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44192367","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-06-01DOI: 10.1142/S1094406019500069
Omaima A. G. Hassan, C. Marston
This paper develops a framework for corporate financial disclosure measurement to identify and evaluate common measures of financial disclosure employed in prior empirical accounting studies. It identifies two approaches: (i) a disclosure-based approach that investigates actual disclosure, operationalizes the concept of disclosure in terms of its main dimensions such as the quantity and quality of disclosure, and develops methods to measure them such as the disclosure index and textual analysis, and (ii) a non-disclosure-based approach that uses the values of some observable variables to proxy for disclosure such as market-based disclosure measures. The study also discusses some empirical challenges related to causal claims and the extent to which the reliability and validity of these different measures of disclosure are tested. The purposes of this review are (i) to help future researchers identify exemplars and select or develop their own suitable disclosure measures, and (ii) to identify measurement issues relating to corporate financial disclosure and provide avenues for future research.
{"title":"Corporate Financial Disclosure Measurement in the Empirical Accounting Literature: A Review Article","authors":"Omaima A. G. Hassan, C. Marston","doi":"10.1142/S1094406019500069","DOIUrl":"https://doi.org/10.1142/S1094406019500069","url":null,"abstract":"This paper develops a framework for corporate financial disclosure measurement to identify and evaluate common measures of financial disclosure employed in prior empirical accounting studies. It identifies two approaches: (i) a disclosure-based approach that investigates actual disclosure, operationalizes the concept of disclosure in terms of its main dimensions such as the quantity and quality of disclosure, and develops methods to measure them such as the disclosure index and textual analysis, and (ii) a non-disclosure-based approach that uses the values of some observable variables to proxy for disclosure such as market-based disclosure measures. The study also discusses some empirical challenges related to causal claims and the extent to which the reliability and validity of these different measures of disclosure are tested. The purposes of this review are (i) to help future researchers identify exemplars and select or develop their own suitable disclosure measures, and (ii) to identify measurement issues relating to corporate financial disclosure and provide avenues for future research.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2019-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1142/S1094406019500069","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42992828","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-04-16DOI: 10.1142/S109440601950001X
Dimitrios Kousenidis, Anestis C. Ladas, Christos I. Negkakis
A recent area of accounting research concerns the ability of changes in aggregate earnings to predict various macroeconomic fundamentals. We extend this line of research and examine whether changes in aggregate earnings convey information regarding the changes in future sovereign risk, which is considered a proxy for changes in aggregate risk. The results of the study indicate that aggregate earnings changes have predictive ability for sovereign credit risk. This result persists even after controlling for liquidity and indicators of macroeconomic imbalance, as well as under alternative research specifications. We also find that in some of the research specifications, future sovereign credit risk is affected by earnings management. In general, our results point towards the presence of significant information in earnings that is related to future sovereign risk.
{"title":"Aggregate Accounting Data and the Prediction of Credit Risk","authors":"Dimitrios Kousenidis, Anestis C. Ladas, Christos I. Negkakis","doi":"10.1142/S109440601950001X","DOIUrl":"https://doi.org/10.1142/S109440601950001X","url":null,"abstract":"A recent area of accounting research concerns the ability of changes in aggregate earnings to predict various macroeconomic fundamentals. We extend this line of research and examine whether changes in aggregate earnings convey information regarding the changes in future sovereign risk, which is considered a proxy for changes in aggregate risk. The results of the study indicate that aggregate earnings changes have predictive ability for sovereign credit risk. This result persists even after controlling for liquidity and indicators of macroeconomic imbalance, as well as under alternative research specifications. We also find that in some of the research specifications, future sovereign credit risk is affected by earnings management. In general, our results point towards the presence of significant information in earnings that is related to future sovereign risk.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2019-04-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1142/S109440601950001X","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45392008","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-04-16DOI: 10.1142/S1094406019500021
Nan-Ting Kuo, Cheng-Few Lee
Our study explores how firms respond to a tax rate reduction under an imputation tax system. By exploring Taiwanese data, we find that firms engage in significant downward earnings management preceding a tax rate reduction, and this earnings management behavior reverses in the following year. We further explore what factors drive this finding, given that corporate tax avoidance reduces shareholder imputation credits and thus generates limited tax benefits to most shareholders. We argue and find evidence that three factors explain the tax-induced earnings management: (1) financing benefits from tax savings, (2) managerial rent extraction, and (3) the influence of foreign and domestic institutional shareholders. Our results suggest that factors other than shareholder tax benefits have significant effects on corporate tax avoidance, suggesting that firms still have strong incentives to avoid taxes under an imputation tax system.
{"title":"Earnings Management in Response to Corporate Tax Rate Reduction Under an Imputation Tax System","authors":"Nan-Ting Kuo, Cheng-Few Lee","doi":"10.1142/S1094406019500021","DOIUrl":"https://doi.org/10.1142/S1094406019500021","url":null,"abstract":"Our study explores how firms respond to a tax rate reduction under an imputation tax system. By exploring Taiwanese data, we find that firms engage in significant downward earnings management preceding a tax rate reduction, and this earnings management behavior reverses in the following year. We further explore what factors drive this finding, given that corporate tax avoidance reduces shareholder imputation credits and thus generates limited tax benefits to most shareholders. We argue and find evidence that three factors explain the tax-induced earnings management: (1) financing benefits from tax savings, (2) managerial rent extraction, and (3) the influence of foreign and domestic institutional shareholders. Our results suggest that factors other than shareholder tax benefits have significant effects on corporate tax avoidance, suggesting that firms still have strong incentives to avoid taxes under an imputation tax system.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2019-04-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1142/S1094406019500021","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49623168","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2019-04-16DOI: 10.1142/S1094406019800015
A. Simpson
{"title":"Book Review: “The Routledge Companion to Behavioural Accounting”","authors":"A. Simpson","doi":"10.1142/S1094406019800015","DOIUrl":"https://doi.org/10.1142/S1094406019800015","url":null,"abstract":"","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":" ","pages":""},"PeriodicalIF":2.0,"publicationDate":"2019-04-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.1142/S1094406019800015","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"43186444","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Purpose : The purpose of the study was to determine the effect of risk evaluation on performance of financial institutions. Methodology : The study used explanatory research design. The study used stratified random sampling to select respondents from target population comprising of managers of 46 commercial banks, 52 Micro Finance institutions (MFIs) and 200 SACCOs and a sample size of 239 respondents obtained. Data was collected using questionnaires. Descriptive statistics was presented, while inferential statistics was done using Pearson product moment correlation. Results: There was a positive influence of risk evaluation [r = .813, p<.05] on the performance of financial institutions was obtained. The risk evaluation positively influenced the performance of financial institutions. The risk evaluation had positive relationship with performance of financial institutions (P<0.05). The null hypothesis H O3 stating that there is no significant effect of risk evaluation on performance of financial institutions was rejected . This indicates that for each increase in the risk evaluation , there is 0.821 increase in performance of financial institutions. Unique contribution to theory, practice and policy : The study has established the importance of ownership structure as a system of corporate governance that significantly moderates the relationship between risk management practices and performance of financial institutions can exploit various risk management practices identification, analysis, evaluation and monitoring should be enhanced so as to bring efficiency in the performance of financial institutions. These may be achieved through establishment and implementation of risk identification, analysis, evaluation and monitoring policy framework which will significantly influence performance of financial institutions and enhance shareholder capabilities to evaluate all risks that can hinder the financial institutions from achieving their set objectives
{"title":"EFFECT OF RISK EVALUATION ON PERFORMANCE OF FINANCIAL INSTITUTIONS","authors":"F. K. Lagat","doi":"10.47941/JACC.183","DOIUrl":"https://doi.org/10.47941/JACC.183","url":null,"abstract":"Purpose : The purpose of the study was to determine the effect of risk evaluation on performance of financial institutions. Methodology : The study used explanatory research design. The study used stratified random sampling to select respondents from target population comprising of managers of 46 commercial banks, 52 Micro Finance institutions (MFIs) and 200 SACCOs and a sample size of 239 respondents obtained. Data was collected using questionnaires. Descriptive statistics was presented, while inferential statistics was done using Pearson product moment correlation. Results: There was a positive influence of risk evaluation [r = .813, p<.05] on the performance of financial institutions was obtained. The risk evaluation positively influenced the performance of financial institutions. The risk evaluation had positive relationship with performance of financial institutions (P<0.05). The null hypothesis H O3 stating that there is no significant effect of risk evaluation on performance of financial institutions was rejected . This indicates that for each increase in the risk evaluation , there is 0.821 increase in performance of financial institutions. Unique contribution to theory, practice and policy : The study has established the importance of ownership structure as a system of corporate governance that significantly moderates the relationship between risk management practices and performance of financial institutions can exploit various risk management practices identification, analysis, evaluation and monitoring should be enhanced so as to bring efficiency in the performance of financial institutions. These may be achieved through establishment and implementation of risk identification, analysis, evaluation and monitoring policy framework which will significantly influence performance of financial institutions and enhance shareholder capabilities to evaluate all risks that can hinder the financial institutions from achieving their set objectives","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":"503 1","pages":"54-68"},"PeriodicalIF":2.0,"publicationDate":"2017-08-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80156410","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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