We investigate how managers' evasiveness affects peer firms' stock returns. Managers' evasiveness is measured by the degree of managers' irrelevant answers and non‐answers during earnings communication conferences. Our results show that peer firms' investors react negatively to managers' evasiveness. Moreover, we find that the spillover effects are stronger for peer firms with lower information transparency, and the leading firms with a higher market power or a higher leverage ratio.
{"title":"The spillover effects of managers' evasiveness: Evidence from earnings communication conferences","authors":"Baochen Yang, Xiaoning Ren, Yifang Liu","doi":"10.1111/acfi.13234","DOIUrl":"https://doi.org/10.1111/acfi.13234","url":null,"abstract":"We investigate how managers' evasiveness affects peer firms' stock returns. Managers' evasiveness is measured by the degree of managers' irrelevant answers and non‐answers during earnings communication conferences. Our results show that peer firms' investors react negatively to managers' evasiveness. Moreover, we find that the spillover effects are stronger for peer firms with lower information transparency, and the leading firms with a higher market power or a higher leverage ratio.","PeriodicalId":501109,"journal":{"name":"Accounting & Finance","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2024-02-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140025168","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}
Using a matched sample of foreign and domestic IPO firm listings on US stock exchanges, we find that foreign IPO firms are associated with significantly higher upward earnings management via discretionary (abnormal) long‐term accruals in the first 2 years post‐IPO year, and lower long‐run stock returns in the 3 years post‐listing, compared to US domestic IPO firms. Our results also show that the lower long‐run stock returns of foreign IPO firms are associated with their higher discretionary long‐term accruals. We provide further evidence that institutional investors can mitigate lower long‐run stock returns of foreign IPO firms compared with US domestic IPO firms.
{"title":"Earnings management in the post‐IPO years and their impact on the long‐run stock performance of foreign versus domestic IPO firms","authors":"Janto Haman, Wei Lu, Dharmendra Naidu","doi":"10.1111/acfi.13239","DOIUrl":"https://doi.org/10.1111/acfi.13239","url":null,"abstract":"Using a matched sample of foreign and domestic IPO firm listings on US stock exchanges, we find that foreign IPO firms are associated with significantly higher upward earnings management via discretionary (abnormal) long‐term accruals in the first 2 years post‐IPO year, and lower long‐run stock returns in the 3 years post‐listing, compared to US domestic IPO firms. Our results also show that the lower long‐run stock returns of foreign IPO firms are associated with their higher discretionary long‐term accruals. We provide further evidence that institutional investors can mitigate lower long‐run stock returns of foreign IPO firms compared with US domestic IPO firms.","PeriodicalId":501109,"journal":{"name":"Accounting & Finance","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2024-02-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140025171","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}
Steven Dellaportas, Sophia Ji, Pavithra Siriwardhane, Dudu Luo
This study contributes to the discussion on the meaning and operation of the public interest. The all-inclusive perspective in defining the public interest adopted by IFAC, was criticised by stakeholders, predominantly professional bodies, for being broad and impractical. IFAC responded by proposing a process-oriented approach to simplify the definition and assessment of public interest policies and actions. The limitations in understanding the public interest from both conceptual and practical perspectives have not been addressed in a significant way, suggesting there is room for further guidance on the meaning of the public interest and how to implement it.
{"title":"Revisiting the concept of the public interest in accounting: A stakeholder analysis","authors":"Steven Dellaportas, Sophia Ji, Pavithra Siriwardhane, Dudu Luo","doi":"10.1111/acfi.13236","DOIUrl":"https://doi.org/10.1111/acfi.13236","url":null,"abstract":"This study contributes to the discussion on the meaning and operation of the public interest. The all-inclusive perspective in defining the public interest adopted by IFAC, was criticised by stakeholders, predominantly professional bodies, for being broad and impractical. IFAC responded by proposing a process-oriented approach to simplify the definition and assessment of public interest policies and actions. The limitations in understanding the public interest from both conceptual and practical perspectives have not been addressed in a significant way, suggesting there is room for further guidance on the meaning of the public interest and how to implement it.","PeriodicalId":501109,"journal":{"name":"Accounting & Finance","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2024-02-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139926473","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}
Using tax centralisation reform enacted to eliminate decentralised tax authorities, we find firms have lower probabilities of tax and accounting fraud since its implementation. Our analysis shows the negative impact of the reform on tax and accounting fraud becomes stronger among firms with weaker tax enforcement, indicating that the reform plays a corporate governance role through strengthening tax enforcement. Additionally, we find this effect is stronger when firm-level governance is weaker and stronger in firms with higher agency costs. Finally, the reform effect is weaker among non-state-owned enterprises with political connections to the central government.
{"title":"The impact of the organisational structure of tax authorities on tax and accounting fraud","authors":"Senlin Miao, Fenghua Wen","doi":"10.1111/acfi.13232","DOIUrl":"https://doi.org/10.1111/acfi.13232","url":null,"abstract":"Using tax centralisation reform enacted to eliminate decentralised tax authorities, we find firms have lower probabilities of tax and accounting fraud since its implementation. Our analysis shows the negative impact of the reform on tax and accounting fraud becomes stronger among firms with weaker tax enforcement, indicating that the reform plays a corporate governance role through strengthening tax enforcement. Additionally, we find this effect is stronger when firm-level governance is weaker and stronger in firms with higher agency costs. Finally, the reform effect is weaker among non-state-owned enterprises with political connections to the central government.","PeriodicalId":501109,"journal":{"name":"Accounting & Finance","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2024-02-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139770603","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}
Steven Crawford, Bumjoon Kim, Minjae Koo, Thien Le
Using daily-level data on corporate social media activity, we show that investor attention generally increases when firms post on Twitter, Instagram and YouTube and that the effect is stronger during earnings announcement periods. We find that stock market liquidity improves when firms post on social media, but the effects are the most consistent for Twitter. Finally, we document that when firms miss earnings, they post more on social media if the magnitude of the bad news is small but remain silent when the magnitude is large. This strategic behaviour is prevalent across all three social media platforms.
{"title":"The effect of corporate Twitter, Instagram and YouTube activity on investor attention and market liquidity","authors":"Steven Crawford, Bumjoon Kim, Minjae Koo, Thien Le","doi":"10.1111/acfi.13227","DOIUrl":"https://doi.org/10.1111/acfi.13227","url":null,"abstract":"Using daily-level data on corporate social media activity, we show that investor attention generally increases when firms post on Twitter, Instagram and YouTube and that the effect is stronger during earnings announcement periods. We find that stock market liquidity improves when firms post on social media, but the effects are the most consistent for Twitter. Finally, we document that when firms miss earnings, they post more on social media if the magnitude of the bad news is small but remain silent when the magnitude is large. This strategic behaviour is prevalent across all three social media platforms.","PeriodicalId":501109,"journal":{"name":"Accounting & Finance","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2024-01-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139516044","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 shows that shareholders demand a higher level of conservatism when the firm commits non-financial misconduct. This positive relationship between corporate non-financial misconduct and accounting conservatism is more pronounced for firms with higher information asymmetry, worse financial conditions and greater monitoring by shareholders. Further analyses reveal that corporate non-financial misconduct is associated with less efficient managerial control over operations, lower employee satisfaction, worse performance and higher information uncertainties in the future. These results are robust to alternative measures, endogeneity concerns and controls for the potential influence arising from financial misconduct and internal control weakness.
{"title":"Corporate non-financial misconduct and accounting conservatism","authors":"Yinan Yang, Wei Liu","doi":"10.1111/acfi.13229","DOIUrl":"https://doi.org/10.1111/acfi.13229","url":null,"abstract":"This study shows that shareholders demand a higher level of conservatism when the firm commits non-financial misconduct. This positive relationship between corporate non-financial misconduct and accounting conservatism is more pronounced for firms with higher information asymmetry, worse financial conditions and greater monitoring by shareholders. Further analyses reveal that corporate non-financial misconduct is associated with less efficient managerial control over operations, lower employee satisfaction, worse performance and higher information uncertainties in the future. These results are robust to alternative measures, endogeneity concerns and controls for the potential influence arising from financial misconduct and internal control weakness.","PeriodicalId":501109,"journal":{"name":"Accounting & Finance","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2024-01-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139516315","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 associations between academics' perceptions of their institutions' performance management systems, and in particular their performance evaluation, and academics' attitudes and behaviours. Responses from over 1000 New Zealand academics reveal that those who perceive their performance evaluation as outcomes-focused and process-focused are more likely to exhibit compliance-based behaviour. In contrast, when performance evaluation is perceived as being values-driven and supportive of collegiality, the academics exhibit internalised behaviours. This study further shows that academics with internalised attitudes score higher in research assessment exercises than academics with compliance-based attitudes.
{"title":"Performance evaluation of academics: A social influence theory perspective","authors":"Ehtasham Ghauri, Ralph Adler","doi":"10.1111/acfi.13226","DOIUrl":"https://doi.org/10.1111/acfi.13226","url":null,"abstract":"This study examines the associations between academics' perceptions of their institutions' performance management systems, and in particular their performance evaluation, and academics' attitudes and behaviours. Responses from over 1000 New Zealand academics reveal that those who perceive their performance evaluation as outcomes-focused and process-focused are more likely to exhibit compliance-based behaviour. In contrast, when performance evaluation is perceived as being values-driven and supportive of collegiality, the academics exhibit internalised behaviours. This study further shows that academics with internalised attitudes score higher in research assessment exercises than academics with compliance-based attitudes.","PeriodicalId":501109,"journal":{"name":"Accounting & Finance","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2024-01-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139560111","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}
Bruno Figlioli, Rafael Moreira Antônio, Rafael Confetti Gatsios, Fabiano Guasti Lima
This study investigates the relationship between the cash conversion cycle (CCC) and the financial and market performances of publicly traded” firms in six Latin American (LatAm) countries: Argentina, Brazil, Chile, Colombia, Mexico, and Peru. The analysis covers the period from 2000 to 2018. The results indicate that increases in CCC negatively impact the generation of operating cash flows and long-term investments, and increase financial risk. Other findings suggest that the mechanisms through which CCC affects a firm's financial performance can provide a satisfactory explanation of its market performance. The evidence is consistent with the hypothesis that CCC is a relevant driver of value in working capital management in undeveloped or emerging economies.
{"title":"Influence of the cash conversion cycle on firm's financial performance: Evidence from publicly traded firms in the Latin American context","authors":"Bruno Figlioli, Rafael Moreira Antônio, Rafael Confetti Gatsios, Fabiano Guasti Lima","doi":"10.1111/acfi.13220","DOIUrl":"https://doi.org/10.1111/acfi.13220","url":null,"abstract":"This study investigates the relationship between the cash conversion cycle (CCC) and the financial and market performances of publicly traded” firms in six Latin American (LatAm) countries: Argentina, Brazil, Chile, Colombia, Mexico, and Peru. The analysis covers the period from 2000 to 2018. The results indicate that increases in CCC negatively impact the generation of operating cash flows and long-term investments, and increase financial risk. Other findings suggest that the mechanisms through which CCC affects a firm's financial performance can provide a satisfactory explanation of its market performance. The evidence is consistent with the hypothesis that CCC is a relevant driver of value in working capital management in undeveloped or emerging economies.","PeriodicalId":501109,"journal":{"name":"Accounting & Finance","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2024-01-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139423125","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 mechanism of voluntary IFRS adoption on earnings management in Japan. Limited research clarifies how IFRS adoption influences earnings management. Using data from listed firms between 2011 and 2018, the multivariate regression results suggest that voluntary IFRS adoption in Japan increases the extent of discretionary accruals. Furthermore, the relation becomes more pronounced when firms have greater accounting opportunities and stronger cost incentives. The main findings hold after various robustness tests. This study fills the gap in the literature by investigating the mechanism that IFRS adoption enhances opportunities and motivation for earnings management through accounting ambiguity.
{"title":"Transparency or ambiguity? Voluntary IFRS adoption and earnings management in Japan","authors":"Yosuke Tohara","doi":"10.1111/acfi.13221","DOIUrl":"https://doi.org/10.1111/acfi.13221","url":null,"abstract":"This study examines the mechanism of voluntary IFRS adoption on earnings management in Japan. Limited research clarifies how IFRS adoption influences earnings management. Using data from listed firms between 2011 and 2018, the multivariate regression results suggest that voluntary IFRS adoption in Japan increases the extent of discretionary accruals. Furthermore, the relation becomes more pronounced when firms have greater accounting opportunities and stronger cost incentives. The main findings hold after various robustness tests. This study fills the gap in the literature by investigating the mechanism that IFRS adoption enhances opportunities and motivation for earnings management through accounting ambiguity.","PeriodicalId":501109,"journal":{"name":"Accounting & Finance","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2024-01-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139421570","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}
Other comprehensive income (OCI) is often confusing for financial statement users and the International Accounting Standards Board has proposed new labelling to improve its presentation. Using an experimental method, we find that OCI labelling influences non-professional investors' evaluation and judgements on financial performance. Non-professional investors place greater weight on OCI information presented with explicit labels when assessing both the current and future performance of a company. Our results indicate that improving the presentation of OCI information enhances their perceived relevance in investors' decision-making. The results have practical implications for standard setters and financial statement users.
{"title":"Labelling in financial reporting: An examination of “other comprehensive income” and non-professional investors' judgements","authors":"Daifei (Troy) Yao, Xin Qu, Tyge-F. Kummer","doi":"10.1111/acfi.13219","DOIUrl":"https://doi.org/10.1111/acfi.13219","url":null,"abstract":"Other comprehensive income (OCI) is often confusing for financial statement users and the International Accounting Standards Board has proposed new labelling to improve its presentation. Using an experimental method, we find that OCI labelling influences non-professional investors' evaluation and judgements on financial performance. Non-professional investors place greater weight on OCI information presented with explicit labels when assessing both the current and future performance of a company. Our results indicate that improving the presentation of OCI information enhances their perceived relevance in investors' decision-making. The results have practical implications for standard setters and financial statement users.","PeriodicalId":501109,"journal":{"name":"Accounting & Finance","volume":null,"pages":null},"PeriodicalIF":0.0,"publicationDate":"2024-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139409566","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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