International Journal of Accounting and Information Management

The effect of auditing firms' tone at the top on auditors' job autonomy, organizational-professional conflict, and job satisfaction : Table of Contents

E. Michael Bamber, Venkataraman Iyer — Sat Oct 10 08:00:17 BST 2009

Abstract:
Purpose – The purpose of this paper is to examine the relationship between auditors' perception of their firm's tone at the top and attributes of their professional environment and their job satisfaction. Design/methodology/approach – Research hypotheses are developed based on prior research including research on social judgment theory. Structural equation modeling is used to analyze the data collected through a survey of auditors. Findings – The results show that the tone at the top affects job autonomy and organizational-professional conflict. Each of these variables directly or indirectly affects job satisfaction. This paper also provides evidence that the tone at the top filters down to at least the senior rank. Research limitations/implications – Limitations include the usual caveats associated with the survey method. Notwithstanding these limitations, the results suggest that a tone at the top that emphasizes audit effectiveness may not only improve the quality of today's audits, but by improving job satisfaction have long-term benefits for audit firms' culture. Originality/value – This paper empirically measures “tone at the top” and it shows that a tone at the top emphasis on audit effectiveness is consistent with auditors' own professionalism and may not only improve the quality of today's audits, but by improving job satisfaction have long-term benefits for audit firms' culture.

Moderator effects to internal audits' self-efficacy and job involvement : Table of Contents

Kuang-Hsun Shih, Yin-Ru Hsieh, Binshan Lin — Sat Oct 10 08:00:17 BST 2009

Abstract:
Purpose – The purpose of this paper is to examine the relationship between two variables, self-efficacy and job involvement, of internal auditors of companies. It also aims to explore its intervention on self-efficacy and job involvement using organizational power as another variable. Design/methodology/approach – A survey is conducted on 600 publicly listed Taiwanese companies that have subsidiaries in China. A total of 600 questionnaires are distributed to their internal auditors. Findings – The results show that there is a significant and positive correlation between self-efficacy and job involvement of internal auditors. Organizational control power does not exhibit intervening effects on self-efficacy or job involvement. Practical implications – This paper can offer a new perspective for managers of internal auditors because internal auditors' self-efficacy can influence job involvement. Therefore, at the same time of supervising internal auditors, managers should not overlook the need to strengthen internal auditors' self-efficacy. Originality/value – Past discussions on internal auditors are widespread. However, the conclusion of this paper, which is focused on the exploration of the relationship between self-efficacy and job involvement, can offer a different insight on the internal auditor domain.

Accruals' persistence, accruals mispricing and operating cycle: evidence from the US : Table of Contents

Qian Hao — Sat Oct 10 08:00:17 BST 2009

Abstract:
Purpose – The purpose of this paper is to investigate the effect of operating cycle on the differential persistence of accruals and cash flow, and the market reaction to the different components of earnings across firms with various operating cycles. Design/methodology/approach – By examining the US public firms' earnings and the capital market reaction to different components of earnings, from 1964 to 1993, it is found that the longer the operating cycle, the lesser will be the persistent of accruals. Findings – This result is consistent with Sloan's theory that the differential persistence of accruals is attributable to estimation errors in accruals. Moreover, the market efficiency test shows that the mispricing of accruals is greater for firms with longer operating cycle, indicating that investors fixate on earnings, while ignoring the persistence of accruals among firms with different earnings quality. Originality/value – This paper adds to the growing literature that has begun to examine the factors affecting accrual persistence and accrual mispricing by indicating that the length of operating cycle can play a role. In addition, it provides fresh evidence that the market fixates on earnings, thus emphasizing the importance of contextual analysis of financial statement. Finally, it corroborates Sloan and Xie that estimation errors in accruals drive the lower persistence of accruals.

Economic freedom, equity performance and market volatility : Table of Contents

Carl R. Chen, Ying Sophie Huang — Sat Oct 10 08:00:17 BST 2009

Abstract:
Purpose – The purpose of this paper is to investigate the relationships between the Index of Economic Freedom, equity market performance and its volatility. Design/methodology/approach – The paper examines whether the level of economic freedom is significant for a country's stock market performance and volatiling. Findings – Regression results show that adjusted stock returns bear little relationship with economic freedom. On the other hand, economic freedom is associated with lower stock market volatility. Originality/value – The results imply that a country with greater economic freedom provides investors with better mean-variance investment efficiency.

When do firms revalue their assets upwards? Evidence from the UK : Table of Contents

C.S. Agnes Cheng, Stephen W.J. Lin — Sat Oct 10 08:00:17 BST 2009

Abstract:
Purpose – The purpose of this paper is to investigate the timing of upward asset revaluations using large UK data. Design/methodology/approach – A standard logistic model is used to examine the timing of upward asset revaluations. The result is further confirmed by using the ordinary least squares regression. Findings – UK firms with higher industrial leverage and share performance two years before the revaluation year are inclined to write up their assets, suggesting that firms choose not to recognise good news unless it has been supported by their superior market performance and industry norm. This finding differs from the leverage reduction as well as the signalling objective suggested by previous literature. Originality/value – This paper provides the first UK evidence on the timing of upward asset revaluation, which further enhance the understanding of the economic determinants of upward asset revaluations.