Pub Date : 2024-06-27DOI: 10.1016/j.bar.2024.101439
Ly Pham, David Hay, Antti Miihkinen, Emma-Riikka Myllymäki, Lasse Niemi, Jukka Sihvonen
Many jurisdictions are establishing requirements for corporations to disclose climate-related risks, and for those disclosures to be audited. One of the first jurisdictions to do so is Australia, where the Australian Accounting Standards Board (AASB) and Auditing and Assurance Standards Board (AUASB) issued a Joint Bulletin in 2018 stating that both preparers and auditors should consider the impact of climate risks on the company's financials. Utilising the Australian setting, this paper introduces a new measure of audit partner expertise, namely , and examines whether it is associated with the client company's climate risk reporting. We define audit partner expertise in climate-related issues based on their client portfolio composition in terms of greenhouse gas emissions. We find that the likelihood and quality of climate risk disclosures is higher when the audit partner has climate risk expertise, and this finding is driven by clients in industries with material climate risks.
{"title":"Climate risk disclosures and auditor expertise","authors":"Ly Pham, David Hay, Antti Miihkinen, Emma-Riikka Myllymäki, Lasse Niemi, Jukka Sihvonen","doi":"10.1016/j.bar.2024.101439","DOIUrl":"https://doi.org/10.1016/j.bar.2024.101439","url":null,"abstract":"Many jurisdictions are establishing requirements for corporations to disclose climate-related risks, and for those disclosures to be audited. One of the first jurisdictions to do so is Australia, where the Australian Accounting Standards Board (AASB) and Auditing and Assurance Standards Board (AUASB) issued a Joint Bulletin in 2018 stating that both preparers and auditors should consider the impact of climate risks on the company's financials. Utilising the Australian setting, this paper introduces a new measure of audit partner expertise, namely , and examines whether it is associated with the client company's climate risk reporting. We define audit partner expertise in climate-related issues based on their client portfolio composition in terms of greenhouse gas emissions. We find that the likelihood and quality of climate risk disclosures is higher when the audit partner has climate risk expertise, and this finding is driven by clients in industries with material climate risks.","PeriodicalId":501001,"journal":{"name":"The British Accounting Review","volume":"72 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-06-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141783765","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 : 2024-06-25DOI: 10.1016/j.bar.2024.101438
Anastasia Kopita, Zacharias Petrou
We examine the relationship between analysts' task-specific experience in the context of ESG information and the informativeness of their stock recommendation revisions. While sell-side analysts incorporate ESG information in their valuation process and research reports, previous studies have indicated that the increased availability of ESG information in the market poses challenges for analysts to issue incrementally informative reports. Building upon existing literature that highlights systematic differences in analysts' performance that is attributed to their experience, we introduce a measure of financial analysts' ESG experience. We document a positive association between our proxy of analyst ESG experience and market reactions to their recommendation revisions. Our findings also show that analysts' ESG experience contributes to the interpretation of information included in firm ESG reports. We further find support for a stronger association between the market reaction and our ESG-experience proxy when firms exhibit lower levels of ESG disclosure and when they face higher external scrutiny due to their exposure to ESG-related risks. Our results are robust when considering analysts' innate and forecasting ability and when additional specifications are applied.
{"title":"Does analyst ESG experience matter?","authors":"Anastasia Kopita, Zacharias Petrou","doi":"10.1016/j.bar.2024.101438","DOIUrl":"https://doi.org/10.1016/j.bar.2024.101438","url":null,"abstract":"We examine the relationship between analysts' task-specific experience in the context of ESG information and the informativeness of their stock recommendation revisions. While sell-side analysts incorporate ESG information in their valuation process and research reports, previous studies have indicated that the increased availability of ESG information in the market poses challenges for analysts to issue incrementally informative reports. Building upon existing literature that highlights systematic differences in analysts' performance that is attributed to their experience, we introduce a measure of financial analysts' ESG experience. We document a positive association between our proxy of analyst ESG experience and market reactions to their recommendation revisions. Our findings also show that analysts' ESG experience contributes to the interpretation of information included in firm ESG reports. We further find support for a stronger association between the market reaction and our ESG-experience proxy when firms exhibit lower levels of ESG disclosure and when they face higher external scrutiny due to their exposure to ESG-related risks. Our results are robust when considering analysts' innate and forecasting ability and when additional specifications are applied.","PeriodicalId":501001,"journal":{"name":"The British Accounting Review","volume":"40 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-06-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141783766","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 : 2024-06-22DOI: 10.1016/j.bar.2024.101424
Reghezza Alessio, Chrysovalantis Vasilakis
This paper examines the role of cultural diversity in bank boardrooms for the acquisition of innovation financial technology – or “FinTech” – firms. Using a sample of 808 banks from 2008-18 in 65 countries, we find that culturally diverse boards are more likely to pursue the acquisition of FinTech firms. We also show that bank-, country- and corporate governance-specific characteristics matter for FinTech acquisition. In particular, banks with older and more gender diverse boardrooms are more likely to acquire FinTech firms. Our paper assumes particular relevance for banks seeking to invest in digital technologies and to adapt to the new digital era.
{"title":"Why do banks acquire FinTech? The role of board cultural diversity","authors":"Reghezza Alessio, Chrysovalantis Vasilakis","doi":"10.1016/j.bar.2024.101424","DOIUrl":"https://doi.org/10.1016/j.bar.2024.101424","url":null,"abstract":"This paper examines the role of cultural diversity in bank boardrooms for the acquisition of innovation financial technology – or “FinTech” – firms. Using a sample of 808 banks from 2008-18 in 65 countries, we find that culturally diverse boards are more likely to pursue the acquisition of FinTech firms. We also show that bank-, country- and corporate governance-specific characteristics matter for FinTech acquisition. In particular, banks with older and more gender diverse boardrooms are more likely to acquire FinTech firms. Our paper assumes particular relevance for banks seeking to invest in digital technologies and to adapt to the new digital era.","PeriodicalId":501001,"journal":{"name":"The British Accounting Review","volume":"21 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-06-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141615186","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 : 2024-06-22DOI: 10.1016/j.bar.2024.101435
John (Xuefeng) Jiang, Jing Kong, Michael Shen
This paper examines the information content in Moody's rating action reports, which Moody's releases concurrently with its rating actions. Using a topic modeling approach, we identify two informative topics after controlling for rating characteristics and report tones. We find that unfavorable discussion of the topic (about issuers' financial performance) generates a significant positive market reaction, while unfavorable discussion of the topic (about issuers' liquidity profile) generates a significant negative market reaction around rating actions. Together, these two topics increase the explanatory power of market reaction around rating actions by over 10%. Further analysis reveals significant associations between these two topics and future default likelihood and debt-paying ability, and the associations are consistent with market reaction to these topics. Although investors have less confidence in rating reports following the Dodd-Frank Act, these two topics are more predictive of future default probabilities. Overall, we find that rating reports topics provide important information to investors as they significantly predict future default likelihood and financial performance.
{"title":"The information content of rating action reports: A topic modeling approach","authors":"John (Xuefeng) Jiang, Jing Kong, Michael Shen","doi":"10.1016/j.bar.2024.101435","DOIUrl":"https://doi.org/10.1016/j.bar.2024.101435","url":null,"abstract":"This paper examines the information content in Moody's rating action reports, which Moody's releases concurrently with its rating actions. Using a topic modeling approach, we identify two informative topics after controlling for rating characteristics and report tones. We find that unfavorable discussion of the topic (about issuers' financial performance) generates a significant positive market reaction, while unfavorable discussion of the topic (about issuers' liquidity profile) generates a significant negative market reaction around rating actions. Together, these two topics increase the explanatory power of market reaction around rating actions by over 10%. Further analysis reveals significant associations between these two topics and future default likelihood and debt-paying ability, and the associations are consistent with market reaction to these topics. Although investors have less confidence in rating reports following the Dodd-Frank Act, these two topics are more predictive of future default probabilities. Overall, we find that rating reports topics provide important information to investors as they significantly predict future default likelihood and financial performance.","PeriodicalId":501001,"journal":{"name":"The British Accounting Review","volume":"2012 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-06-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141615185","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}
This study examines the relationship between firms’ political sentiment (PSENT) and their credit ratings. Using US public firms as the sample, we reveal that PSENT is positively associated with corporate credit ratings. Furthermore, we find evidence indicating that a positive PSENT leads to higher credit ratings, while a negative PSENT results in lower credit ratings. We also demonstrate that PSENT is positively (negatively) associated with the investment grade and rating upgrade (rating downgrade). The cross-sectional analysis indicates that the positive relationship between PSENT and credit ratings is more evident among firms facing severe information asymmetry, financial distress risk, and weaker governance. Additionally, we observe that PSENT leads to higher new debt issuance. Finally, we conduct a survey of credit analysts and find evidence that corroborates our findings from empirical analyses. Overall, our study suggests that PSENT has an essential bearing on corporate credit quality.
{"title":"Political sentiment and credit ratings","authors":"Mostafa Monzur Hasan, Ashrafee Hossain, Haiyan Jiang","doi":"10.1016/j.bar.2024.101432","DOIUrl":"https://doi.org/10.1016/j.bar.2024.101432","url":null,"abstract":"This study examines the relationship between firms’ political sentiment (PSENT) and their credit ratings. Using US public firms as the sample, we reveal that PSENT is positively associated with corporate credit ratings. Furthermore, we find evidence indicating that a positive PSENT leads to higher credit ratings, while a negative PSENT results in lower credit ratings. We also demonstrate that PSENT is positively (negatively) associated with the investment grade and rating upgrade (rating downgrade). The cross-sectional analysis indicates that the positive relationship between PSENT and credit ratings is more evident among firms facing severe information asymmetry, financial distress risk, and weaker governance. Additionally, we observe that PSENT leads to higher new debt issuance. Finally, we conduct a survey of credit analysts and find evidence that corroborates our findings from empirical analyses. Overall, our study suggests that PSENT has an essential bearing on corporate credit quality.","PeriodicalId":501001,"journal":{"name":"The British Accounting Review","volume":"337 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-06-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141463487","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 : 2024-06-21DOI: 10.1016/j.bar.2024.101433
Douglas Cumming, Yihui Lan, Yuan George Shan, Junru Zhang
This study examines the relationship between abnormal tone and project performance of reward-based crowdfunding (RBC) using the Kickstarter data from 2009 to 2020. We document a negative relationship between abnormal tone and the success of a project in the RBC campaign section, while a positive impact in the Risks and Challenges section. This outcome remains robust to a variety of sensitivity tests and after accounting for potential endogeneity concerns. Cross-sectional analyses reveal that the effect of abnormal tone in RBC on project success is contingent on project quality and legal jurisdiction. Further investigation of the concurrent effect of abnormal tone in the two sections shows that an increase in the discretionary tone, given that it is overly optimistic, has a negative effect on funding performance. Last, based on a machine learning Sent-Latent Dirichlet Allocation model, we explore up to 70 specific risk categories embedded in Kickstarter projects, and we find that eight of them are strongly and negatively associated with project success. Our paper provides valuable insights into the significance of disclosure and sheds light on the ongoing and increased regulations on crowdfunding platforms.
{"title":"Discretionary tone in reward-based crowdfunding: Do project owners talk their way to success?","authors":"Douglas Cumming, Yihui Lan, Yuan George Shan, Junru Zhang","doi":"10.1016/j.bar.2024.101433","DOIUrl":"https://doi.org/10.1016/j.bar.2024.101433","url":null,"abstract":"This study examines the relationship between abnormal tone and project performance of reward-based crowdfunding (RBC) using the Kickstarter data from 2009 to 2020. We document a negative relationship between abnormal tone and the success of a project in the RBC campaign section, while a positive impact in the Risks and Challenges section. This outcome remains robust to a variety of sensitivity tests and after accounting for potential endogeneity concerns. Cross-sectional analyses reveal that the effect of abnormal tone in RBC on project success is contingent on project quality and legal jurisdiction. Further investigation of the concurrent effect of abnormal tone in the two sections shows that an increase in the discretionary tone, given that it is overly optimistic, has a negative effect on funding performance. Last, based on a machine learning Sent-Latent Dirichlet Allocation model, we explore up to 70 specific risk categories embedded in Kickstarter projects, and we find that eight of them are strongly and negatively associated with project success. Our paper provides valuable insights into the significance of disclosure and sheds light on the ongoing and increased regulations on crowdfunding platforms.","PeriodicalId":501001,"journal":{"name":"The British Accounting Review","volume":"89 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-06-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141463231","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 : 2024-06-20DOI: 10.1016/j.bar.2024.101434
Nathan Zhenghang Zhu, Kun Tracy Wang
The US Securities and Exchange Commission implemented Exchange Act Rule 12h-6 in 2007, which made it considerably easier for cross-listed firms in the US market to deregister and terminate their regulatory obligations as US exchange listings. Using a difference-in-differences research design, we predict and find that in the period after the implementation of Rule 12h-6, cross-listed firms have significantly less innovation than non-cross-listed domestic firms, which suggests that Rule 12h-6 impedes innovation in cross-listed firms. This effect is stronger for firms that rely more on external financing, have high R&D intensity, and face greater financial constraints. It is also more pronounced in countries with low investor protection, low regulatory quality, greater differences with the US Generally Accepted Accounting Principles, and less liberalized stock markets. The results of the channel analyses indicate that cross-listed firms experience lower sensitivity of R&D investment to stock price and a decrease in foreign institutional ownership in the post Rule 12h-6 implementation period. Taken together, our findings suggest that Rule 12h-6 reduces the benefits of cross-listing for foreign investors, which hinders innovation in non-US economies.
{"title":"The impact of loosening regulatory requirements on firm innovation: Evidence from SEC rule 12h-6","authors":"Nathan Zhenghang Zhu, Kun Tracy Wang","doi":"10.1016/j.bar.2024.101434","DOIUrl":"https://doi.org/10.1016/j.bar.2024.101434","url":null,"abstract":"The US Securities and Exchange Commission implemented Exchange Act Rule 12h-6 in 2007, which made it considerably easier for cross-listed firms in the US market to deregister and terminate their regulatory obligations as US exchange listings. Using a difference-in-differences research design, we predict and find that in the period after the implementation of Rule 12h-6, cross-listed firms have significantly less innovation than non-cross-listed domestic firms, which suggests that Rule 12h-6 impedes innovation in cross-listed firms. This effect is stronger for firms that rely more on external financing, have high R&D intensity, and face greater financial constraints. It is also more pronounced in countries with low investor protection, low regulatory quality, greater differences with the US Generally Accepted Accounting Principles, and less liberalized stock markets. The results of the channel analyses indicate that cross-listed firms experience lower sensitivity of R&D investment to stock price and a decrease in foreign institutional ownership in the post Rule 12h-6 implementation period. Taken together, our findings suggest that Rule 12h-6 reduces the benefits of cross-listing for foreign investors, which hinders innovation in non-US economies.","PeriodicalId":501001,"journal":{"name":"The British Accounting Review","volume":"38 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-06-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141463239","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 : 2024-04-16DOI: 10.1016/j.bar.2024.101385
García-Meca Emma, Ruiz-Barbadillo Emiliano, Martínez-Ferrero Jennifer
This study aims to investigate whether companies engage high-quality assurance in response to legitimacy threats caused by media coverage of negative sustainability events. Since responsive strategies designed to maintain or repair legitimacy directly emanate from boards, the paper also analyses whether board effectiveness reinforces defensive strategies to maintain a company's reputational capital and public image under environmental, social and governance (ESG) concerns by supporting high-quality sustainability assurance. Using a sample of STOXX Europe 600 index firms from 2015 to 2020, the empirical results confirm the substantive role of assurance. When a company's legitimacy is at risk due to media coverage of ESG misconduct, the assurance of sustainability information is employed as an instrument to aid in repairing the company's legitimacy. In addition, our results confirm that boards with desirable attributes of independence and activity act jointly with assurance quality to legitimise companies. In addition, this paper also brings evidence about the mediating effect of board effectiveness; the impact of negative media ESG coverage on sustainability assurance quality appears to be justified by the effectiveness of the board. The evidence also points to interesting findings concerning controversial industries and countries with tight cultures, where the assurance quality seems not to respond to the legitimacy threats associated with media coverage of undesirable ESG. However, and after studying how the European Directive 2014/95/EU affected the symbolic use of assurance, results confirm that there are no significant differences in the legitimising use of assurance quality after irresponsible ESG actions before and after the directive, and neither, depending on the level of sustainability performance or public enforcement.
{"title":"High-quality assurance, ESG legitimacy threats and board effectiveness","authors":"García-Meca Emma, Ruiz-Barbadillo Emiliano, Martínez-Ferrero Jennifer","doi":"10.1016/j.bar.2024.101385","DOIUrl":"https://doi.org/10.1016/j.bar.2024.101385","url":null,"abstract":"This study aims to investigate whether companies engage high-quality assurance in response to legitimacy threats caused by media coverage of negative sustainability events. Since responsive strategies designed to maintain or repair legitimacy directly emanate from boards, the paper also analyses whether board effectiveness reinforces defensive strategies to maintain a company's reputational capital and public image under environmental, social and governance (ESG) concerns by supporting high-quality sustainability assurance. Using a sample of STOXX Europe 600 index firms from 2015 to 2020, the empirical results confirm the substantive role of assurance. When a company's legitimacy is at risk due to media coverage of ESG misconduct, the assurance of sustainability information is employed as an instrument to aid in repairing the company's legitimacy. In addition, our results confirm that boards with desirable attributes of independence and activity act jointly with assurance quality to legitimise companies. In addition, this paper also brings evidence about the mediating effect of board effectiveness; the impact of negative media ESG coverage on sustainability assurance quality appears to be justified by the effectiveness of the board. The evidence also points to interesting findings concerning controversial industries and countries with tight cultures, where the assurance quality seems not to respond to the legitimacy threats associated with media coverage of undesirable ESG. However, and after studying how the European Directive 2014/95/EU affected the symbolic use of assurance, results confirm that there are no significant differences in the legitimising use of assurance quality after irresponsible ESG actions before and after the directive, and neither, depending on the level of sustainability performance or public enforcement.","PeriodicalId":501001,"journal":{"name":"The British Accounting Review","volume":"122 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-04-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140643294","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 : 2024-04-01DOI: 10.1016/j.bar.2024.101383
Paul A. Griffin, D. Lont, Martien Lubberink
{"title":"The effects of extreme high temperature spells on financial performance","authors":"Paul A. Griffin, D. Lont, Martien Lubberink","doi":"10.1016/j.bar.2024.101383","DOIUrl":"https://doi.org/10.1016/j.bar.2024.101383","url":null,"abstract":"","PeriodicalId":501001,"journal":{"name":"The British Accounting Review","volume":"171 ","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140785304","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}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：