Journal of International Accounting Auditing and Taxation最新文献

This study investigates the impact of family ownership and supervisory board characteristics on audit report lag in Indonesia. The study relies on a balanced panel dataset and matched-pair sample of 124 listed non-financial firms (2017–2019) in a two-tier board context, drawing on Type II agency theory and the entrenchment/alignment implications of ownership concentration. First, we find a positive and significant association between family ownership and audit report lag. Second, we find evidence that the size of the supervisory board (locally referred to as the board of commissioners) and the frequency of meetings are negatively associated with audit report lag. Further analyses reveal that firms with a larger proportion of family members on the supervisory board experience longer reporting lag. This finding highlights the family’s entrenchment and their domination of the board of commissioners. Additional analysis considering the commissioners’ backgrounds reveals that audit report timeliness worsens when there is a larger proportion of community leadership. This suggests that some commissioner profiles could further lead to entrenchment behaviors. Our findings contribute to the literature and to policy by highlighting the potential and limits of a two-tier board policy on accounting outcomes, particularly in the context of dominant family structures in emerging economies.

This study explores the relationship between business strategy and earnings properties, which are frequently considered as proxies of earnings quality. Specifically, we examine the implications of different strategic positionings for earnings properties that are related to earnings management, conditional conservatism, earnings persistence, and earnings smoothness. Using an international sample, our empirical results indicate that business strategy is inherently linked to these earnings properties. Firms that focus on a business strategy of continuous innovation have larger discretionary accruals, more persistent earnings, and lower earnings smoothness relative to firms that focus on a business strategy of operation efficiency. We also find some evidence for differences in conditional conservatism, although the associations are weaker and sensitive to sample composition. Our main inference is that business strategy inherently affects earnings properties.

Post Brexit, this study contributes to assessing the efficacy of the European Union (EU) Transparency Directive (TPD) in attaining its regulator-specified goals for the United Kingdom (UK) capital market. During its adoption in 2004, the Commission of European Communities and the UK Government argued that TPD adoption should increase firms’ financial reporting quality and investment efficiency while decreasing firms’ cost of capital and information asymmetry. Using several alternative test variables in a sample of FTSE All-Share Index firms, I find evidence consistent with these four goals following TPD adoption. Additionally, I find that firms have lower cash holdings and higher dividend payouts following TPD adoption. Most of these trends do not reverse after the 2014 TPD amendment that abolished mandatory quarterly trading updates. This is the first study to examine the association between TPD adoption and firms’ cost of capital, investment efficiency, cash holdings, and dividend payout. Collectively, my results suggest that the primary regulatory goals of the TPD are being attained in the UK. Therefore, a case can be made for the relevance of the TPD and the resulting Disclosure and Transparency Rules in UK post Brexit.

We investigate whether a local government’s level of human development is associated with its financial reporting quality. We use audit opinions and accruals management to capture financial reporting quality and manually collected data from our sample of 4,254 financial reports of Indonesian local governments from 2010 to 2018. We find that local governments whose citizens have a higher Human Development Index (HDI) and on each dimension of human development are more likely to receive an unqualified audit opinion on their financial reports. However, we find that local governments with a higher development index are more likely to use accruals management through revenue overestimation or expense underestimation in preparing the statement of operations. Our results suggest that employees of higher quality, as indicated by a higher HDI, have a greater ability to follow accounting rules resulting in a cleaner audit opinion. However, they might opportunistically use their judgments in making accounting estimates. Finally, our study contributes to the literature by providing insight into how human development and its dimensions are associated with the quality of financial reporting, especially in the public sector in developing countries.

This study reviews 128 empirical studies on mandatory auditor rotation (MAR) in light of the long-standing debate on the effectiveness of MAR and the different regulatory choices made worldwide over time. A structured literature review was conducted to address three research questions. How has empirical research on MAR developed from 2000 to 2022? What is the focus and critique of the empirical research on MAR? What is the future of MAR empirical research? The findings reveal growing empirical evidence on MAR. However, this evidence is fragmented and country-based. Scholars have primarily focused on audit firm rotation rather than audit partner rotation. While quantitative research based on archival data predominates, survey questionnaires prevail in a few regions. Evidence on how MAR impacts auditor independence, the auditor–client relationship, and audit market concentration is scant, whereas audit quality is the most investigated research question. Nonetheless, assessing whether MAR benefits audit quality remains challenging because the research outcomes depend on the research question, rotation type, research method, and regulations enforced in the empirical setting. Based on this comprehensive and rigorous overview of worldwide MAR empirical research, knowledge gaps are underlined, avenues for future research are suggested, and warnings are issued to shareholders and policymakers.

Increasing levels of information disclosure and firm transparency are drawing researchers’ attention to abnormal audit fees (AAFs), and a growing body of literature is focused on the association between AAFs and financial reporting quality (FRQ). These studies use various FRQ constructs and theoretical lenses, and find contradictory results. Thus, it remains unclear whether AAFs are positively or negatively associated with FRQ. This meta-analysis of the literature assesses (a) the association between AAFs and FRQ; (b) the extent to which the FRQ proxies used in the literature are homogeneous; and (c) the different theoretical frameworks that are used to interpret the association between AAFs and FRQ. The results show that higher AAFs are associated with reduced FRQ, and this finding is robust to different FRQ constructs and theoretical frameworks.

We adopt a structured literature review methodology to review the literature on the impact of informal institutions on accounting outcomes. We address three key questions: How is research on the impact of informal institutions on accounting outcomes developing? What is the focus and critiques of the literature on the impact of informal institutions on accounting outcomes? Finally, what is the future for research on the impact of informal institutions on accounting outcomes? We contribute to the international accounting literature by producing a study that reviews this lively research area, enabling valuable and impactful future research in this field.

Information is considered value relevant when used by financial markets in equity valuation and is reflected in market values. The value relevance of different information, such as accounting numbers, changes according to shifts in investors’ needs. Given the rising importance of environmental and social agendas for policymakers and practitioners, this study examines whether accounting numbers have lost explanatory power and sustainability information has become value relevant. The analysis focuses on 3025 nonfinancial companies operating in the eurozone from 2005 to 2020. This study makes several contributions to the extant literature. First, analyzing the trend in the value relevance of financial accounting numbers, the results point to an overall decrease in the explanatory power of book values and earnings, particularly for environmental, social, and governance (ESG)-rated companies. However, the results indicate that ESG ratings have not gained value relevance over time. These findings have important implications for policymakers and practitioners. In line with the concept of “double materiality,” implementing ESG agendas will be possible only by redirecting corporate investment decision and increasing awareness of sustainability issues. This paper documents that such a shift has not yet been accomplished, despite the increasing commitment of the European Union to the ESG agenda.

This study examines whether there is a correspondence between auditor disclosures of key audit matters (KAMs) and management disclosures of significant accounting policies and estimates, following the introduction of the International Standard on Auditing (ISA) 701. In addition, we investigate how audit committees moderate the relationship. We employ a sample of Swedish listed firms (2016–2018), using measures that capture the extent and quality of management disclosures and how they relate to auditor KAM disclosures, including the number of accounting items disclosed, total number of words, and number of unique KAM-related words (via a “bag-of-word” technique). We find a positive correspondence between auditor and management disclosures, and the correlation is greater in firms with an audit committee. Additional analyses provide evidence that management disclosure quality increases after the introduction of ISA 701, but the positive effect is mostly found in firms with a separate audit committee on the board. The results are robust to alternative measures for disclosures and using a matched sample design. Our findings suggest that policymakers should consider the interplay between audit standards and audit committees.