Pub Date : 2025-06-01Epub Date: 2025-05-05DOI: 10.1016/j.intaccaudtax.2025.100687
Robert K. Larson (former JIAAT Editor-in-Chief (2017-2022))
{"title":"Celebrating JIAAT’s 30th anniversary: Special articles, recognitions, and thank yous","authors":"Robert K. Larson (former JIAAT Editor-in-Chief (2017-2022))","doi":"10.1016/j.intaccaudtax.2025.100687","DOIUrl":"10.1016/j.intaccaudtax.2025.100687","url":null,"abstract":"","PeriodicalId":53221,"journal":{"name":"Journal of International Accounting Auditing and Taxation","volume":"58 ","pages":"Article 100687"},"PeriodicalIF":3.3,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143941644","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 factors shaping the choices of countries in the Middle East and North Africa (MENA) region in adopting International Financial Reporting Standards (IFRS), using a neo-institutional isomorphism framework. Analyzing data from 19 countries spanning two decades (1996–2015) and comprising 380 country-year observations, this research reveals that internal coercive and mimetic institutional pressures are key influencers behind IFRS adoption in the region. Specifically, governance quality improvement and openness to international trade emerge as crucial determinants. This highlights the predominant role of social and political contexts over economic motivations in driving IFRS adoption in the MENA region. Furthermore, the findings indicate that foreign aid and internal accounting have minimal impact on IFRS adoption in the region.
{"title":"Factors influencing the adoption of IFRS in the MENA region: A neo-institutional approach","authors":"Abdulbaset Ab. Klish , Moade Shubita , Kamil Omoteso , Junjie Wu","doi":"10.1016/j.intaccaudtax.2024.100674","DOIUrl":"10.1016/j.intaccaudtax.2024.100674","url":null,"abstract":"<div><div>This study examines the factors shaping the choices of countries in the Middle East and North Africa (MENA) region in adopting International Financial Reporting Standards (IFRS), using a neo-institutional isomorphism framework. Analyzing data from 19 countries spanning two decades (1996–2015) and comprising 380 country-year observations, this research reveals that internal coercive and mimetic institutional pressures are key influencers behind IFRS adoption in the region. Specifically, governance quality improvement and openness to international trade emerge as crucial determinants. This highlights the predominant role of social and political contexts over economic motivations in driving IFRS adoption in the MENA region. Furthermore, the findings indicate that foreign aid and internal accounting have minimal impact on IFRS adoption in the region.</div></div>","PeriodicalId":53221,"journal":{"name":"Journal of International Accounting Auditing and Taxation","volume":"58 ","pages":"Article 100674"},"PeriodicalIF":3.3,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143142849","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-06-01Epub Date: 2025-01-09DOI: 10.1016/j.intaccaudtax.2025.100678
Joyce van der Laan Smith , Brandon Byunghwan Lee , Daniel Gyung Paik , Ajay Adhikari
This study examines whether firms’ choice of both the timing of a consumer product recall and the type of remedy offered are influenced by their Corporate Social Performance (CSP). Using twelve years (2008 – 2019) of manufacturer product recalls issued by the U.S. Consumer Product Safety Commission, the agency responsible forensuring the safety of domestically produced and imported consumer products, and CSP data from KLD, we provide evidence of an inverse relationship between CSP strength and proactive recalls suggesting that companies with stronger CSP delay recall announcements, mitigating the financial impact on shareholders. We find no significant relationship between firms with CSP concerns and proactive recall strategies. We also find that once a recall is initiated, firms with recognized CSP strengths provide a full remedy to consumers, repairing consumer trust. These results imply that firms with strong CSP make a balanced tradeoff between the interests of consumers and shareholders. Overall, these findings imply that CSP provides firms strategic flexibility in developing their response to product harm crises. Given the interconnected global economy, these results should be of interest not only to US regulators but also to other country regulators who work to ensure the safety of consumer products.
{"title":"Does corporate social performance influence a firm’s choice of product recall strategy?","authors":"Joyce van der Laan Smith , Brandon Byunghwan Lee , Daniel Gyung Paik , Ajay Adhikari","doi":"10.1016/j.intaccaudtax.2025.100678","DOIUrl":"10.1016/j.intaccaudtax.2025.100678","url":null,"abstract":"<div><div>This study examines whether firms’ choice of both the timing of a consumer product recall and the type of remedy offered are influenced by their Corporate Social Performance (CSP). Using twelve years (2008 – 2019) of manufacturer product recalls issued by the U.S. Consumer Product Safety Commission, the agency responsible forensuring the safety of domestically produced and imported consumer products, and CSP data from KLD, we provide evidence of an inverse relationship between CSP strength and proactive recalls suggesting that companies with stronger CSP delay recall announcements, mitigating the financial impact on shareholders. We find no significant relationship between firms with CSP concerns and proactive recall strategies. We also find that once a recall is initiated, firms with recognized CSP strengths provide a full remedy to consumers, repairing consumer trust. These results imply that firms with strong CSP make a balanced tradeoff between the interests of consumers and shareholders. Overall, these findings imply that CSP provides firms strategic flexibility in developing their response to product harm crises. Given the interconnected global economy, these results should be of interest not only to US regulators but also to other country regulators who work to ensure the safety of consumer products.</div></div>","PeriodicalId":53221,"journal":{"name":"Journal of International Accounting Auditing and Taxation","volume":"58 ","pages":"Article 100678"},"PeriodicalIF":3.3,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143143763","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 explores the relationship between cost asymmetry and future tax avoidance. Cost stickiness is positively associated with adjustment costs, more optimistic managerial expectations of future performance, and intense managerial empire-building behavior. We expect that higher adjustment costs will increase future requirements for internal financing via tax avoidance. Additionally, self-interested managerial behavior and managerial expectations of improved performance and higher tax burden may enhance managers’ motives to engage in tax avoidance. We find a positive relationship between the prior period’s cost stickiness and the current period’s tax avoidance using a sample of 30,923 firm-year observations of US listed companies over the 2000–2019 period. Our results are more pronounced for firms with high adjustment costs and firms with high managerial expectations of future sales. The level of accrual earnings does not seem to affect our empirical results, which remain robust to alternative measures of tax avoidance, differences rather than levels in the variables, and macroeconomic event shocks. These findings remain consistent when the data are partitioned into samples and propensity scored for cost asymmetry.
{"title":"The effect of cost asymmetry on future tax avoidance","authors":"Constantinos Chalevas, Dimitrios Ntounis , Orestes Vlismas","doi":"10.1016/j.intaccaudtax.2025.100681","DOIUrl":"10.1016/j.intaccaudtax.2025.100681","url":null,"abstract":"<div><div>This study explores the relationship between cost asymmetry and future tax avoidance. Cost stickiness is positively associated with adjustment costs, more optimistic managerial expectations of future performance, and intense managerial empire-building behavior. We expect that higher adjustment costs will increase future requirements for internal financing via tax avoidance. Additionally, self-interested managerial behavior and managerial expectations of improved performance and higher tax burden may enhance managers’ motives to engage in tax avoidance. We find a positive relationship between the prior period’s cost stickiness and the current period’s tax avoidance using a sample of 30,923 firm-year observations of US listed companies over the 2000–2019 period. Our results are more pronounced for firms with high adjustment costs and firms with high managerial expectations of future sales. The level of accrual earnings does not seem to affect our empirical results, which remain robust to alternative measures of tax avoidance, differences rather than levels in the variables, and macroeconomic event shocks. These findings remain consistent when the data are partitioned into samples and propensity scored for cost asymmetry.</div></div>","PeriodicalId":53221,"journal":{"name":"Journal of International Accounting Auditing and Taxation","volume":"58 ","pages":"Article 100681"},"PeriodicalIF":3.3,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143143764","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 : 2025-06-01Epub Date: 2025-01-15DOI: 10.1016/j.intaccaudtax.2025.100680
Vu Quang Trinh , Marwa Elnahass , Fotios Pasiouras
Cybersecurity attacks represent a pressing corporate risk that has shaped contemporary practice worldwide. Motivated by the increased frequency of cyberattacks experienced by corporations around the world, we examine the effect of a CEO’s personal traits (i.e., qualifications, directorships, marital status, tenure, and age) on both the propensity and the level of cybersecurity-related disclosures. Using a sample of publicly traded U.S. firms during 2002–2020, we find the following results. Firms led by CEOs who have PhDs are likely to disclose less cybersecurity information, but firms led by CEOs who serve as directors of multiple firms show higher levels of disclosure. Furthermore, longer-tenured CEOs tend to disclose less, whereas married and older CEOs disclose more. Our findings suggest that the personal traits of managers are fundamental in explaining firms’ discrepant cybersecurity disclosure practices. The results offer new insights and have important implications for national regulators across the world, international accounting bodies, and investors. They also suggest directions for future studies of strategic responses to institutional pressures and firms’ cybersecurity policies and controls.
{"title":"Personal traits of CEOs and cybersecurity-related disclosure","authors":"Vu Quang Trinh , Marwa Elnahass , Fotios Pasiouras","doi":"10.1016/j.intaccaudtax.2025.100680","DOIUrl":"10.1016/j.intaccaudtax.2025.100680","url":null,"abstract":"<div><div>Cybersecurity attacks represent a pressing corporate risk that has shaped contemporary practice worldwide. Motivated by the increased frequency of cyberattacks experienced by corporations around the world, we examine the effect of a CEO’s personal traits (i.e., qualifications, directorships, marital status, tenure, and age) on both the propensity and the level of cybersecurity-related disclosures. Using a sample of publicly traded U.S. firms during 2002–2020, we find the following results. Firms led by CEOs who have PhDs are likely to disclose less cybersecurity information, but firms led by CEOs who serve as directors of multiple firms show higher levels of disclosure. Furthermore, longer-tenured CEOs tend to disclose less, whereas married and older CEOs disclose more. Our findings suggest that the personal traits of managers are fundamental in explaining firms’ discrepant cybersecurity disclosure practices. The results offer new insights and have important implications for national regulators across the world, international accounting bodies, and investors. They also suggest directions for future studies of strategic responses to institutional pressures and firms’ cybersecurity policies and controls.</div></div>","PeriodicalId":53221,"journal":{"name":"Journal of International Accounting Auditing and Taxation","volume":"58 ","pages":"Article 100680"},"PeriodicalIF":3.3,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143143766","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 investigates the effects of religiosity and secrecy culture on corporate social responsibility (CSR) report assurance practices. It explores what drives companies whose reports are awarded high CSR scores to have assured reports and to select audit firm assurors. Using a 2015 through 2019 sample of companies that won the 2020 S&P Global’s Sustainability Awards in 24 countries, the results show that firms in countries with strong religious adherence are less likely to have their CSR reports assured, and if these reports are assured, then less likely to select audit firms as their assurors. Interestingly, among countries with strong religious adherence, the less likelihood of having CSR reports assured is more pronounced in countries with a high-secrecy environment. However, if firms in a high-secrecy environment have CSR reports assured, they are more likely to hire audit firms. This is likely due to the external pressure on companies to enhance the credibility of their reports and build their corporate reputation.
{"title":"Religiosity, secrecy culture, and corporate social responsibility report assurance","authors":"Kriengkrai Boonlert-U-Thai , Weerapong Kitiwong , Muttanachai Suttipun","doi":"10.1016/j.intaccaudtax.2024.100667","DOIUrl":"10.1016/j.intaccaudtax.2024.100667","url":null,"abstract":"<div><div>This study investigates the effects of religiosity and secrecy culture on corporate social responsibility (CSR) report assurance practices. It explores what drives companies whose reports are awarded high CSR scores to have assured reports and to select audit firm assurors. Using a 2015 through 2019 sample of companies that won the 2020 S&P Global’s Sustainability Awards in 24 countries, the results show that firms in countries with strong religious adherence are less likely to have their CSR reports assured, and if these reports are assured, then less likely to select audit firms as their assurors. Interestingly, among countries with strong religious adherence, the less likelihood of having CSR reports assured is more pronounced in countries with a high-secrecy environment. However, if firms in a high-secrecy environment have CSR reports assured, they are more likely to hire audit firms. This is likely due to the external pressure on companies to enhance the credibility of their reports and build their corporate reputation.</div></div>","PeriodicalId":53221,"journal":{"name":"Journal of International Accounting Auditing and Taxation","volume":"58 ","pages":"Article 100667"},"PeriodicalIF":3.3,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143143478","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 extends our understanding of the association between key audit matter (KAM) disclosures and investor sentiment in Thailand, an advanced emerging market. Thailand is characterized by a culture of high secrecy, strong uncertainty avoidance, and strong societal trust. The primary aim of this study is to analyze the local language versions of auditors’ reports, as they may differ from English-translated versions due to cultural and linguistic variations. To achieve this, we compiled a bag of Thai words to analyze the content of KAM sections in 334 publicly listed Thai companies during the period 2016–2017. We found that investor sentiment responds marginally to only three categories of KAMs and neutral words within KAM sections. However, investors do not react to the number of KAMs or to words associated with negativity, positivity, litigation, or uncertainty. These results suggest that KAM disclosures hold limited information value for investors. Regulators and standard setters successfully educated investors and other stakeholders about KAM disclosures before their implementation. However, in a high-secrecy environment, the use of neutral language in KAM sections triggers investor skepticism, leading to stock price discounts.
{"title":"Analysis of non-English key audit matters: Do key audit matters influence investor sentiment?","authors":"Weerapong Kitiwong, Erboon Ekasingh, Naruanard Sarapaivanich","doi":"10.1016/j.intaccaudtax.2024.100670","DOIUrl":"10.1016/j.intaccaudtax.2024.100670","url":null,"abstract":"<div><div>This study extends our understanding of the association between key audit matter (KAM) disclosures and investor sentiment in Thailand, an advanced emerging market. Thailand is characterized by a culture of high secrecy, strong uncertainty avoidance, and strong societal trust. The primary aim of this study is to analyze the local language versions of auditors’ reports, as they may differ from English-translated versions due to cultural and linguistic variations. To achieve this, we compiled a bag of Thai words to analyze the content of KAM sections in 334 publicly listed Thai companies during the period 2016–2017. We found that investor sentiment responds marginally to only three categories of KAMs and neutral words within KAM sections. However, investors do not react to the number of KAMs or to words associated with negativity, positivity, litigation, or uncertainty. These results suggest that KAM disclosures hold limited information value for investors. Regulators and standard setters successfully educated investors and other stakeholders about KAM disclosures before their implementation. However, in a high-secrecy environment, the use of neutral language in KAM sections triggers investor skepticism, leading to stock price discounts.</div></div>","PeriodicalId":53221,"journal":{"name":"Journal of International Accounting Auditing and Taxation","volume":"58 ","pages":"Article 100670"},"PeriodicalIF":3.3,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143143480","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-06-01Epub Date: 2025-01-28DOI: 10.1016/j.intaccaudtax.2025.100683
Nouf Binhadab
This paper investigates the relationship between cash effective tax rates (ETRs) and environmental, social, and governance (ESG) performance using a firm level analysis of the Financial Times Stock Exchange 100 (FTSE 100) and FTSE 250 firms. The findings show a positive correlation between ESG performance and cash ETRs. The findings are robust to an instrumental variable approach that controls for the potential endogeneity between ESG performance and cash ETRs. For non-financial firms, this positive correlation between ESG performance and cash ETRs is particularly driven by the environmental aspect of ESG performance, whereas it is driven by the social and governance aspects of ESG performance for financial firms. Additional analysis indicates that the corporate social responsibility (CSR) strategy dimension, which measures a firm’s integration of CSR aspects into its daily decision making, has a positive impact on cash ETRs. The findings seem to suggest that corporate culture can influence tax strategies.
{"title":"ESG performance and cash effective tax rates: Evidence from UK listed firms","authors":"Nouf Binhadab","doi":"10.1016/j.intaccaudtax.2025.100683","DOIUrl":"10.1016/j.intaccaudtax.2025.100683","url":null,"abstract":"<div><div>This paper investigates the relationship between cash effective tax rates (ETRs) and environmental, social, and governance (ESG) performance using a firm level analysis of the Financial Times Stock Exchange 100 (FTSE 100) and FTSE 250 firms. The findings show a positive correlation between ESG performance and cash ETRs. The findings are robust to an instrumental variable approach that controls for the potential endogeneity between ESG performance and cash ETRs. For non-financial firms, this positive correlation between ESG performance and cash ETRs is particularly driven by the environmental aspect of ESG performance, whereas it is driven by the social and governance aspects of ESG performance for financial firms. Additional analysis indicates that the corporate social responsibility (CSR) strategy dimension, which measures a firm’s integration of CSR aspects into its daily decision making, has a positive impact on cash ETRs. The findings seem to suggest that corporate culture can influence tax strategies.</div></div>","PeriodicalId":53221,"journal":{"name":"Journal of International Accounting Auditing and Taxation","volume":"58 ","pages":"Article 100683"},"PeriodicalIF":3.3,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143317653","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}
We investigate whether the independence of the board of directors and stock ownership by outside directors and executives may limit interest payment classification shifting within the statement of cash flows. We find that such classification shifting is less prevalent in United Kingdom (UK) firms with high-quality internal governance, demonstrating that effective internal governance may serve as a substitute for rules-based accounting standards. While we find that governance mechanisms play a crucial role in mitigating this practice in both distressed and non-distressed firms, our findings are more pronounced in non-distressed firms. We also find that there is an inverted U-shaped relationship between board independence, stock ownership by managers and independent directors, and the classification shifting of interest payment. Thus, it is premature to propose that board independence and stock ownership can mitigate managerial opportunism in all cases. Indeed, our findings suggest that there are optimal independent director and ownership thresholds below which caution is required to ensure that managers remain focused on maximizing shareholder value.
{"title":"Does the board of directors and their stock ownership mitigate interest payment classification shifting? UK evidence","authors":"Mohamed Hessian , Alaa Mansour Zalata , Khaled Hussainey","doi":"10.1016/j.intaccaudtax.2024.100677","DOIUrl":"10.1016/j.intaccaudtax.2024.100677","url":null,"abstract":"<div><div>We investigate whether the independence of the board of directors and stock ownership by outside directors and executives may limit interest payment classification shifting within the statement of cash flows. We find that such classification shifting is less prevalent in United Kingdom (UK) firms with high-quality internal governance, demonstrating that effective internal governance may serve as a substitute for rules-based accounting standards. While we find that governance mechanisms play a crucial role in mitigating this practice in both distressed and non-distressed firms, our findings are more pronounced in non-distressed firms. We also find that there is an inverted U-shaped relationship between board independence, stock ownership by managers and independent directors, and the classification shifting of interest payment. Thus, it is premature to propose that board independence and stock ownership can mitigate managerial opportunism in all cases. Indeed, our findings suggest that there are optimal independent director and ownership thresholds below which caution is required to ensure that managers remain focused on maximizing shareholder value.</div></div>","PeriodicalId":53221,"journal":{"name":"Journal of International Accounting Auditing and Taxation","volume":"58 ","pages":"Article 100677"},"PeriodicalIF":3.3,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143142851","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 : 2025-06-01Epub Date: 2024-12-12DOI: 10.1016/j.intaccaudtax.2024.100673
Phuong Nguyen Trang Doan , Mieke Dingenen , Ann Gaeremynck , Piet Sercu
We examine whether employee representation on a firm’s board of directors (ERB) has an impact on aggressiveness in corporate financial and tax reporting. Using an international sample of 3,450 firms across 29 countries over the period 2012–2021, we find that ERB firms practice less income-increasing accruals management, real-earnings management, and tax avoidance — consistent with a monitoring role for employee directors. Second, we present evidence that, at least for tax issues, this monitoring works even better when the board has desirable characteristics such as more independent directors, a single-mandate chief executive officer (CEO), and a majority shareholder. Third, we find that the monitoring effect is unaffected by the voluntary or law-imposed nature of ERB, but the useful interactions between the ERB effect and the desirable board characteristics are solely traced to the voluntary arrangements. Lastly, cross-sectional analyses show that younger, female, and employee directors without shares are typically better monitors.
{"title":"Aggressiveness in corporate financial and tax reporting:Do employee directors matter? A cross-country study","authors":"Phuong Nguyen Trang Doan , Mieke Dingenen , Ann Gaeremynck , Piet Sercu","doi":"10.1016/j.intaccaudtax.2024.100673","DOIUrl":"10.1016/j.intaccaudtax.2024.100673","url":null,"abstract":"<div><div>We examine whether employee representation on a firm’s board of directors (ERB) has an impact on aggressiveness in corporate financial and tax reporting. Using an international sample of 3,450 firms across 29 countries over the period 2012–2021, we find that ERB firms practice less income-increasing accruals management, real-earnings management, and tax avoidance — consistent with a monitoring role for employee directors. Second, we present evidence that, at least for tax issues, this monitoring works even better when the board has desirable characteristics such as more independent directors, a single-mandate chief executive officer (CEO), and a majority shareholder. Third, we find that the monitoring effect is unaffected by the voluntary or law-imposed nature of ERB, but the useful interactions between the ERB effect and the desirable board characteristics are solely traced to the voluntary arrangements. Lastly, cross-sectional analyses show that younger, female, and employee directors without shares are typically better monitors.</div></div>","PeriodicalId":53221,"journal":{"name":"Journal of International Accounting Auditing and Taxation","volume":"58 ","pages":"Article 100673"},"PeriodicalIF":3.3,"publicationDate":"2025-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143143477","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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