Pacific Accounting ReviewTable of Contents for Pacific Accounting Review. List of articles from the current issue, including Just Accepted (EarlyCite)https://www.emerald.com/insight/publication/issn/0114-0582/vol/35/iss/5?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestPacific Accounting ReviewEmerald Publishing LimitedPacific Accounting ReviewPacific Accounting Reviewhttps://www.emerald.com/insight/proxy/containerImg?link=/resource/publication/journal/48caee294091d0d36427460deac26c62/urn:emeraldgroup.com:asset:id:binary:par.cover.jpghttps://www.emerald.com/insight/publication/issn/0114-0582/vol/35/iss/5?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe effect of audit inspections on audit feeshttps://www.emerald.com/insight/content/doi/10.1108/PAR-02-2023-0017/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe purpose of this study is to examine the cost of the introduction of independent audit inspections in New Zealand. The research is conducted using audit fee data from New Zealand and examines the overall impact of the reforms on the cost imposed on auditees. The findings show that there was no general increase in audit fees but a significant increase in audit fees for small listed companies compared to audit fees for unlisted companies and large listed companies. The practical implications of this study suggest that the introduction of independent inspections led to increased costs for some clients, particularly smaller listed companies, and that audit firms were able to pass on these costs to their clients. These results have important implications for policymakers and auditors alike. This study provides new insights into the cost of the introduction of independent audit inspections, which have been the subject of ongoing criticisms and recommendations for improvement.The effect of audit inspections on audit fees
David Hay, Elizabeth Rainsbury, Debbie Van Dyk
Pacific Accounting Review, Vol. 35, No. 5, pp.701-726

The purpose of this study is to examine the cost of the introduction of independent audit inspections in New Zealand.

The research is conducted using audit fee data from New Zealand and examines the overall impact of the reforms on the cost imposed on auditees.

The findings show that there was no general increase in audit fees but a significant increase in audit fees for small listed companies compared to audit fees for unlisted companies and large listed companies.

The practical implications of this study suggest that the introduction of independent inspections led to increased costs for some clients, particularly smaller listed companies, and that audit firms were able to pass on these costs to their clients. These results have important implications for policymakers and auditors alike.

This study provides new insights into the cost of the introduction of independent audit inspections, which have been the subject of ongoing criticisms and recommendations for improvement.

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The effect of audit inspections on audit fees10.1108/PAR-02-2023-0017Pacific Accounting Review2023-05-16© 2023 Emerald Publishing LimitedDavid HayElizabeth RainsburyDebbie Van DykPacific Accounting Review3552023-05-1610.1108/PAR-02-2023-0017https://www.emerald.com/insight/content/doi/10.1108/PAR-02-2023-0017/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Auditing during a pandemic – can continuous controls monitoring (CCM) address challenges facing internal audit departments?https://www.emerald.com/insight/content/doi/10.1108/PAR-07-2022-0103/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestDuring a pandemic, with businesses implementing social distancing protocols and work-from-home strategies, the use of continuous controls monitoring (CCM) may add value to the internal audit function. This study aims to examine the use of CCM technologies and the impact on the internal audit function during a pandemic. This study adopted a case study approach for this study because it focuses on questions of “how” and “what.” Case studies provided an opportunity for an in-depth analysis of the phenomena being investigated. Semi-structured interviews were used to collect data. This study did not use sampling. Instead, multiple case studies were used for data collection. Based on the findings, this study makes several contributions to the literature, for example, in health-care evidence suggests the pandemic has caused internal audit to focus on risk areas. Other industries, such as retail, have invested in CCM. However, in all cases, education and preparedness (or the lack thereof) appeared to significantly influence uptake of CCM. Organizations that made prior investments in CCM technologies experienced greater acceptance in the face of changing demands. Training in emerging technologies is a key competency in supporting audit operations in changing environments. As the study was conducted with a small sample of cases, findings cannot be extrapolated nor generalized beyond the case study organizations. This study found that several factors limit adoption, exploitation and further development of CCM technologies, such as lack of top management support, acceptance of CCM technologies and suitable education and training of internal audit staff. This study addresses the issue of the value that CCM offers organizations and whether it is a silver bullet that the internal audit profession needs, particularly when physical access to organizations may be restricted. The COVID-19 pandemic placed considerable focus on digital access. Better IT systems and more data will allow organizations to better support employees, inform strategic and financial decisions and engage stakeholders. During the recovery phase, leveraging investments in CCM technologies will contribute to internal audits’ ability to help clients to manage organizational risk.Auditing during a pandemic – can continuous controls monitoring (CCM) address challenges facing internal audit departments?
Kishore Singh, Peter Best
Pacific Accounting Review, Vol. 35, No. 5, pp.727-745

During a pandemic, with businesses implementing social distancing protocols and work-from-home strategies, the use of continuous controls monitoring (CCM) may add value to the internal audit function. This study aims to examine the use of CCM technologies and the impact on the internal audit function during a pandemic.

This study adopted a case study approach for this study because it focuses on questions of “how” and “what.” Case studies provided an opportunity for an in-depth analysis of the phenomena being investigated. Semi-structured interviews were used to collect data. This study did not use sampling. Instead, multiple case studies were used for data collection.

Based on the findings, this study makes several contributions to the literature, for example, in health-care evidence suggests the pandemic has caused internal audit to focus on risk areas. Other industries, such as retail, have invested in CCM. However, in all cases, education and preparedness (or the lack thereof) appeared to significantly influence uptake of CCM. Organizations that made prior investments in CCM technologies experienced greater acceptance in the face of changing demands. Training in emerging technologies is a key competency in supporting audit operations in changing environments.

As the study was conducted with a small sample of cases, findings cannot be extrapolated nor generalized beyond the case study organizations.

This study found that several factors limit adoption, exploitation and further development of CCM technologies, such as lack of top management support, acceptance of CCM technologies and suitable education and training of internal audit staff.

This study addresses the issue of the value that CCM offers organizations and whether it is a silver bullet that the internal audit profession needs, particularly when physical access to organizations may be restricted. The COVID-19 pandemic placed considerable focus on digital access. Better IT systems and more data will allow organizations to better support employees, inform strategic and financial decisions and engage stakeholders. During the recovery phase, leveraging investments in CCM technologies will contribute to internal audits’ ability to help clients to manage organizational risk.

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Auditing during a pandemic – can continuous controls monitoring (CCM) address challenges facing internal audit departments?10.1108/PAR-07-2022-0103Pacific Accounting Review2023-05-22© 2023 Emerald Publishing LimitedKishore SinghPeter BestPacific Accounting Review3552023-05-2210.1108/PAR-07-2022-0103https://www.emerald.com/insight/content/doi/10.1108/PAR-07-2022-0103/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Audit adjustments and the discontinuity in earnings distribution around zerohttps://www.emerald.com/insight/content/doi/10.1108/PAR-09-2022-0141/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestPrevious research in auditing has used the probability of small profits or losses as a measure of audit quality. The purpose of this paper is to investigate the validity of the underlying assumption in prior audit literature that auditing mitigates clients’ inclination towards loss avoidance and to shed light on the debate regarding earnings discontinuity. This paper compares the discontinuity in earnings distribution around zero, both before and after auditing. Using a unique data set that contains both recorded and waived adjustments, the authors find that audit adjustments do not reduce the discontinuity in earnings distribution around zero. The results advise caution in using the probability of small profits or losses as a measure of audit quality. The findings suggest the discontinuity in earnings around zero may not be caused by loss avoidance achieved through accounting misreporting, which falls under the purview of auditing. This research makes unique contributions beyond those of prior studies. By incorporating waived adjustments, the authors are able to conduct more comprehensive tests and explore richer details of audit adjustments that were not available in previous studies. The proportion of losses in this study's sample aligns with that in prior US research, which enhances the generalisability of the authors’ findings and minimizes the influence of inherent discrepancies in auditors' motivations to curb loss avoidance.Audit adjustments and the discontinuity in earnings distribution around zero
Chu Yeong Lim, Themin Suwardy, Tracey Chunqi Zhang
Pacific Accounting Review, Vol. 35, No. 5, pp.746-772

Previous research in auditing has used the probability of small profits or losses as a measure of audit quality. The purpose of this paper is to investigate the validity of the underlying assumption in prior audit literature that auditing mitigates clients’ inclination towards loss avoidance and to shed light on the debate regarding earnings discontinuity.

This paper compares the discontinuity in earnings distribution around zero, both before and after auditing.

Using a unique data set that contains both recorded and waived adjustments, the authors find that audit adjustments do not reduce the discontinuity in earnings distribution around zero.

The results advise caution in using the probability of small profits or losses as a measure of audit quality. The findings suggest the discontinuity in earnings around zero may not be caused by loss avoidance achieved through accounting misreporting, which falls under the purview of auditing.

This research makes unique contributions beyond those of prior studies. By incorporating waived adjustments, the authors are able to conduct more comprehensive tests and explore richer details of audit adjustments that were not available in previous studies. The proportion of losses in this study's sample aligns with that in prior US research, which enhances the generalisability of the authors’ findings and minimizes the influence of inherent discrepancies in auditors' motivations to curb loss avoidance.

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Audit adjustments and the discontinuity in earnings distribution around zero10.1108/PAR-09-2022-0141Pacific Accounting Review2023-06-06© 2023 Emerald Publishing LimitedChu Yeong LimThemin SuwardyTracey Chunqi ZhangPacific Accounting Review3552023-06-0610.1108/PAR-09-2022-0141https://www.emerald.com/insight/content/doi/10.1108/PAR-09-2022-0141/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Accounting and religious influence in the seventh day Adventist church in the Pacific islandshttps://www.emerald.com/insight/content/doi/10.1108/PAR-03-2021-0040/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis paper aims to investigate the practice of accounting in the Seventh-day Adventist church of the Pacific Islands and pays particular attention to the coexisting of two control devices: accounting and religion. This paper implemented a qualitative field study design collecting interview data from church members from the Solomon Islands, Tonga and Fiji. Data were also collected through focus group discussions, document reviews, website analysis and participant observations. Pierre Bourdieu’s thinking on symbolic violence, doxa and capital are used to interpret the findings. This paper’s main contribution shows that while there is a divine and profane divide, social agents, given their agency, can move back and forth from one side of the divide to the other. Accounting as a control device does not include features such as faith, which is helpful for decision-making; accordingly, religion is relied upon when it comes to decision-making. In contrast, accounting has features that are useful for stewardship purposes. Accordingly, when it comes to the church’s stewardship function accounting in the form of financial reports is relied upon. Pacific Island culture almost permeates all facets of life, including church life; however, this study did not clarify this. Later studies can explore the implications of culture on the deployment of accounting in a religious setting. This rich empirical study describes the control dynamics and the tension between accounting and religion in a religious organisation. Accounting needs to adapt to churches’ unique characteristics, whereby religious/doctrinal beliefs must be accounted for and respected. Unlike in the corporate world, accountants in churches cannot fully practice their training or exercise the kind of influence they usually hold in organisations due to their religious belief systems. To the best of the authors’ knowledge, this research is one of a few studies on the religion-accounting relationship. While the focus of earlier studies was generally on a secular and sacred divide, this study looks at coexisting of accounting and religion. This study adds to the sparse literature on accounting and religion and their controlling influence.Accounting and religious influence in the seventh day Adventist church in the Pacific islands
Clayton Kuma, Peni Fukofuka, Sue Yong
Pacific Accounting Review, Vol. 35, No. 5, pp.773-799

This paper aims to investigate the practice of accounting in the Seventh-day Adventist church of the Pacific Islands and pays particular attention to the coexisting of two control devices: accounting and religion.

This paper implemented a qualitative field study design collecting interview data from church members from the Solomon Islands, Tonga and Fiji. Data were also collected through focus group discussions, document reviews, website analysis and participant observations. Pierre Bourdieu’s thinking on symbolic violence, doxa and capital are used to interpret the findings.

This paper’s main contribution shows that while there is a divine and profane divide, social agents, given their agency, can move back and forth from one side of the divide to the other. Accounting as a control device does not include features such as faith, which is helpful for decision-making; accordingly, religion is relied upon when it comes to decision-making. In contrast, accounting has features that are useful for stewardship purposes. Accordingly, when it comes to the church’s stewardship function accounting in the form of financial reports is relied upon.

Pacific Island culture almost permeates all facets of life, including church life; however, this study did not clarify this. Later studies can explore the implications of culture on the deployment of accounting in a religious setting.

This rich empirical study describes the control dynamics and the tension between accounting and religion in a religious organisation. Accounting needs to adapt to churches’ unique characteristics, whereby religious/doctrinal beliefs must be accounted for and respected. Unlike in the corporate world, accountants in churches cannot fully practice their training or exercise the kind of influence they usually hold in organisations due to their religious belief systems.

To the best of the authors’ knowledge, this research is one of a few studies on the religion-accounting relationship. While the focus of earlier studies was generally on a secular and sacred divide, this study looks at coexisting of accounting and religion. This study adds to the sparse literature on accounting and religion and their controlling influence.

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Accounting and religious influence in the seventh day Adventist church in the Pacific islands10.1108/PAR-03-2021-0040Pacific Accounting Review2023-06-21© 2023 Emerald Publishing LimitedClayton KumaPeni FukofukaSue YongPacific Accounting Review3552023-06-2110.1108/PAR-03-2021-0040https://www.emerald.com/insight/content/doi/10.1108/PAR-03-2021-0040/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Earnings management, market liquidity and capital access of seasoned equity firms in a transition economyhttps://www.emerald.com/insight/content/doi/10.1108/PAR-09-2022-0142/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study aims to examine the effects of market liquidity on earnings management (EM) of seasoned equity offering (SEO) firms considering external capital access. This study uses a panel data set of 158 Vietnamese SEO firms from 2007 to 2019. Both real and accrual EM measures are analysed. The study uses two proxies for market liquidity: stock turnover (the ratio of total shares traded over the year divided by total shares outstanding for the year) and high–low spread (estimated following Corwin and Schultz [2012]) and fixed-effects panel and two-stage least squares regression in the analysis. Firms with high (low) market liquidity report low (high) EM, and the result is robust after controlling for endogeneity. The results hold for both real and accrual-based EM for both market liquidity proxies. However, the results are robust only for firms with low external capital access and non-state-owned companies. The authors find a negative market reaction to earnings manipulation. This study’s findings help policymakers, investors and managers make better decisions regarding SEO firms and reduce the risk of inaccurate information due to EM. Among the few studies that test the influence of market liquidity on EM, to the best of the authors’ knowledge, this study is the first to examine the effect of market liquidity on EM in the context of SEO firms considering the impact of capital access.Earnings management, market liquidity and capital access of seasoned equity firms in a transition economy
Ben Le, Nischala Reddy, Paula Hearn Moore
Pacific Accounting Review, Vol. 35, No. 5, pp.800-838

This study aims to examine the effects of market liquidity on earnings management (EM) of seasoned equity offering (SEO) firms considering external capital access.

This study uses a panel data set of 158 Vietnamese SEO firms from 2007 to 2019. Both real and accrual EM measures are analysed. The study uses two proxies for market liquidity: stock turnover (the ratio of total shares traded over the year divided by total shares outstanding for the year) and high–low spread (estimated following Corwin and Schultz [2012]) and fixed-effects panel and two-stage least squares regression in the analysis.

Firms with high (low) market liquidity report low (high) EM, and the result is robust after controlling for endogeneity. The results hold for both real and accrual-based EM for both market liquidity proxies. However, the results are robust only for firms with low external capital access and non-state-owned companies. The authors find a negative market reaction to earnings manipulation.

This study’s findings help policymakers, investors and managers make better decisions regarding SEO firms and reduce the risk of inaccurate information due to EM.

Among the few studies that test the influence of market liquidity on EM, to the best of the authors’ knowledge, this study is the first to examine the effect of market liquidity on EM in the context of SEO firms considering the impact of capital access.

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Earnings management, market liquidity and capital access of seasoned equity firms in a transition economy10.1108/PAR-09-2022-0142Pacific Accounting Review2023-07-18© 2023 Emerald Publishing LimitedBen LeNischala ReddyPaula Hearn MoorePacific Accounting Review3552023-07-1810.1108/PAR-09-2022-0142https://www.emerald.com/insight/content/doi/10.1108/PAR-09-2022-0142/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Learning experience of accounting students during the COVID-19 pandemic: West Papuan perspectives of online learning in Indonesiahttps://www.emerald.com/insight/content/doi/10.1108/PAR-04-2022-0053/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study aims to examine the learning experiences of indigenous West Papuan students studying accounting in Indonesia during the COVID-19 pandemic. A qualitative approach was taken with 25 indigenous accounting students at five universities in the region who shared testimonies of their online learning experiences. The interview data collected were analysed using initial and selective coding and then interpreted under several themes. The paper shows the personal, faculty and external challenges in indigenous students’ learning activities during university closures because of COVID-19. The interrelated challenges included students’ struggles to adapt their learning habits when using various online applications, difficulties in understanding how the faculty managed lectures, tutorials and evaluations without adequate access to learning materials, the lack of a learning infrastructure, issues with equipment, and obtaining internet data credits. Students’ economic struggles and health issues exacerbated these challenges. While enduring various struggles and being frustrated about their future, all students expected a change in offline learning policies by the government to lessen their strict physical distancing. The findings can inform the importance of integrating accounting students’ learning challenges and needs into curriculum development. This study highlights the learning challenges of indigenous accounting students during the COVID-19 pandemic and how approaches to online learning need to consider the experience of these students.Learning experience of accounting students during the COVID-19 pandemic: West Papuan perspectives of online learning in Indonesia
Otniel Safkaur, Jhon Urasti Blesia, Cornelia Matani, Kurniawan Patma, Pascalina Sesa
Pacific Accounting Review, Vol. 35, No. 5, pp.839-862

This study aims to examine the learning experiences of indigenous West Papuan students studying accounting in Indonesia during the COVID-19 pandemic.

A qualitative approach was taken with 25 indigenous accounting students at five universities in the region who shared testimonies of their online learning experiences. The interview data collected were analysed using initial and selective coding and then interpreted under several themes.

The paper shows the personal, faculty and external challenges in indigenous students’ learning activities during university closures because of COVID-19. The interrelated challenges included students’ struggles to adapt their learning habits when using various online applications, difficulties in understanding how the faculty managed lectures, tutorials and evaluations without adequate access to learning materials, the lack of a learning infrastructure, issues with equipment, and obtaining internet data credits. Students’ economic struggles and health issues exacerbated these challenges. While enduring various struggles and being frustrated about their future, all students expected a change in offline learning policies by the government to lessen their strict physical distancing.

The findings can inform the importance of integrating accounting students’ learning challenges and needs into curriculum development.

This study highlights the learning challenges of indigenous accounting students during the COVID-19 pandemic and how approaches to online learning need to consider the experience of these students.

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Learning experience of accounting students during the COVID-19 pandemic: West Papuan perspectives of online learning in Indonesia10.1108/PAR-04-2022-0053Pacific Accounting Review2023-07-19© 2023 Emerald Publishing LimitedOtniel SafkaurJhon Urasti BlesiaCornelia MataniKurniawan PatmaPascalina SesaPacific Accounting Review3552023-07-1910.1108/PAR-04-2022-0053https://www.emerald.com/insight/content/doi/10.1108/PAR-04-2022-0053/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Should asset impairments be included in earnings when evaluating stewardship by management?https://www.emerald.com/insight/content/doi/10.1108/PAR-07-2023-0091/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis paper aims to consider the relevance of asset impairments when evaluating stewardship by management. This paper considers association of earnings (including and excluding asset impairments) with contemporaneous stock returns which are used as a measure of management performance and demonstration of stewardship. Evidence is provided of earnings including asset impairments (an accounting measure of current measure firm performance) having a higher explanatory power for contemporaneous stock returns (an objective evaluation of current period firm performance) than earnings exclusive of asset impairments. Consistent with this, recognized asset impairments are significantly associated with contemporaneous stock returns. These results occur across firm years generally, as well as for firm years exhibiting indicators of impairment and firm years recognizing asset impairments. This paper adds to the literature providing evidence of asset impairments not being recognised on a timely basis. Additionally, challenges are identified in evaluating the relevance of accounting information for so-called growth firms. These findings support continued recognition of asset impairments in the Statement of Profit or Loss if stewardship is accepted as an objective for financial reporting. It also suggests issues with the recognition of asset impairments that might be addressed by enhanced disclosure. This paper is distinctive in that it considers the relevance of accounting information for evaluating stewardship, as distinct from decision-making. It also considers alternate measure of performance (earnings including and excluding asset impairments) for all firms rather than only those disclosing an alternate measure (i.e. a fair horse race)Should asset impairments be included in earnings when evaluating stewardship by management?
Andrew Dymock, Peter Wells, Brett Govendir
Pacific Accounting Review, Vol. 35, No. 5, pp.863-880

This paper aims to consider the relevance of asset impairments when evaluating stewardship by management.

This paper considers association of earnings (including and excluding asset impairments) with contemporaneous stock returns which are used as a measure of management performance and demonstration of stewardship.

Evidence is provided of earnings including asset impairments (an accounting measure of current measure firm performance) having a higher explanatory power for contemporaneous stock returns (an objective evaluation of current period firm performance) than earnings exclusive of asset impairments. Consistent with this, recognized asset impairments are significantly associated with contemporaneous stock returns. These results occur across firm years generally, as well as for firm years exhibiting indicators of impairment and firm years recognizing asset impairments.

This paper adds to the literature providing evidence of asset impairments not being recognised on a timely basis. Additionally, challenges are identified in evaluating the relevance of accounting information for so-called growth firms.

These findings support continued recognition of asset impairments in the Statement of Profit or Loss if stewardship is accepted as an objective for financial reporting. It also suggests issues with the recognition of asset impairments that might be addressed by enhanced disclosure.

This paper is distinctive in that it considers the relevance of accounting information for evaluating stewardship, as distinct from decision-making. It also considers alternate measure of performance (earnings including and excluding asset impairments) for all firms rather than only those disclosing an alternate measure (i.e. a fair horse race)

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Should asset impairments be included in earnings when evaluating stewardship by management?10.1108/PAR-07-2023-0091Pacific Accounting Review2023-10-16© 2023 Emerald Publishing LimitedAndrew DymockPeter WellsBrett GovendirPacific Accounting Review3552023-10-1610.1108/PAR-07-2023-0091https://www.emerald.com/insight/content/doi/10.1108/PAR-07-2023-0091/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Voter rationality, the use of accounting information and voting behavior: evidence from a referendumhttps://www.emerald.com/insight/content/doi/10.1108/PAR-01-2023-0006/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study aims to investigate whether objective and subjective rationality affects individual voters’ use of accounting information and if such use affects voting behavior. While prior accounting studies assume voter rationality concerning financial performance and political outcomes, this study distinguishes between two types of voters: objective rational voters (who make voting decisions about multiple alternatives based on objective information) and subjective rational voters (who make decisions based on their subjective values, and thus do not explore information or explore only information biased toward one alternative). This study expects that accounting information can influence the voting behavior of objective and subjective rational voters. Focusing on the 2020 Osaka Metropolitan Plan Referendum, this study used an online survey conducted on 768 respondents after the referendum. This study finds that objective rational voters use accounting information more than subjective rational voters, voters who used accounting information were more likely to vote against the referendum, and voting behavior is not directly affected by the type of rationality of voters; rather, objective rational voters are more likely to use accounting information that has a mediating effect on voting behavior. The results advance the understanding of public sector accounting research and practices by providing evidence of the individual voter’s use of accounting information and their voting behavior in political contexts.Voter rationality, the use of accounting information and voting behavior: evidence from a referendum
Makoto Kuroki
Pacific Accounting Review, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study aims to investigate whether objective and subjective rationality affects individual voters’ use of accounting information and if such use affects voting behavior. While prior accounting studies assume voter rationality concerning financial performance and political outcomes, this study distinguishes between two types of voters: objective rational voters (who make voting decisions about multiple alternatives based on objective information) and subjective rational voters (who make decisions based on their subjective values, and thus do not explore information or explore only information biased toward one alternative). This study expects that accounting information can influence the voting behavior of objective and subjective rational voters.

Focusing on the 2020 Osaka Metropolitan Plan Referendum, this study used an online survey conducted on 768 respondents after the referendum.

This study finds that objective rational voters use accounting information more than subjective rational voters, voters who used accounting information were more likely to vote against the referendum, and voting behavior is not directly affected by the type of rationality of voters; rather, objective rational voters are more likely to use accounting information that has a mediating effect on voting behavior.

The results advance the understanding of public sector accounting research and practices by providing evidence of the individual voter’s use of accounting information and their voting behavior in political contexts.

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Voter rationality, the use of accounting information and voting behavior: evidence from a referendum10.1108/PAR-01-2023-0006Pacific Accounting Review2023-08-04© 2023 Makoto Kuroki.Makoto KurokiPacific Accounting Reviewahead-of-printahead-of-print2023-08-0410.1108/PAR-01-2023-0006https://www.emerald.com/insight/content/doi/10.1108/PAR-01-2023-0006/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Makoto Kuroki.
Effect of human resource investments in internal controls on goodwill impairmenthttps://www.emerald.com/insight/content/doi/10.1108/PAR-01-2023-0013/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study aims to investigate the impact of human resource investment in internal controls (hereinafter, IC personnel) on managers’ goodwill impairment decisions. The authors use the ratio of IC personnel to the number of employees in the firm and the average work experience of IC personnel as quantitative and qualitative measures for IC personnel, respectively. The authors find that the relationship between the likelihood of impairment and the expected impairment is not associated with the ratio of IC personnel. However, the average experience of IC personnel increases the likelihood that a company will record an impairment when there are market and financial indicators of impairment. The findings suggest that the effectiveness of IC is determined by practical proficiency rather than size. Furthermore, our analyses demonstrate that the greater the experience of the IC personnel in the accounting/finance or IT departments, the more likely the manager will record an expected impairment. Overall, our findings emphasize the importance of IC personnel expertise to enhance the effectiveness of IC for financial reporting. Using unique data available only in Korea, to the best of the authors’ knowledge, this is the first study to show the effect of human resource investment in IC on goodwill impairment.Effect of human resource investments in internal controls on goodwill impairment
Eun Hye Jo, Jung Wha Lee
Pacific Accounting Review, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study aims to investigate the impact of human resource investment in internal controls (hereinafter, IC personnel) on managers’ goodwill impairment decisions.

The authors use the ratio of IC personnel to the number of employees in the firm and the average work experience of IC personnel as quantitative and qualitative measures for IC personnel, respectively.

The authors find that the relationship between the likelihood of impairment and the expected impairment is not associated with the ratio of IC personnel. However, the average experience of IC personnel increases the likelihood that a company will record an impairment when there are market and financial indicators of impairment. The findings suggest that the effectiveness of IC is determined by practical proficiency rather than size. Furthermore, our analyses demonstrate that the greater the experience of the IC personnel in the accounting/finance or IT departments, the more likely the manager will record an expected impairment. Overall, our findings emphasize the importance of IC personnel expertise to enhance the effectiveness of IC for financial reporting.

Using unique data available only in Korea, to the best of the authors’ knowledge, this is the first study to show the effect of human resource investment in IC on goodwill impairment.

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Effect of human resource investments in internal controls on goodwill impairment10.1108/PAR-01-2023-0013Pacific Accounting Review2023-11-17© 2023 Emerald Publishing LimitedEun Hye JoJung Wha LeePacific Accounting Reviewahead-of-printahead-of-print2023-11-1710.1108/PAR-01-2023-0013https://www.emerald.com/insight/content/doi/10.1108/PAR-01-2023-0013/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Boardroom diversity (task- and relation-oriented diversity) and financial stability: evidence from Chinese financial listed firmshttps://www.emerald.com/insight/content/doi/10.1108/PAR-02-2022-0023/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study aims to examine the impact of boardroom diversity on the financial stability of Chinese financial listed firms. Boardroom diversity is quantified in the following aspects: relation-oriented diversity and task-oriented diversity. Panel data on Chinese financial listed firms between 1998 and 2017 are used in this study. Panel regression is used to analyze the firm data for fixed effects and robust standard errors. Task-oriented diversity of the board increases financial stability. Regarding the impact of boardroom diversity on firm risk, the results reveal that task-oriented diversity of the board reduces firm risk, which supports the predictions of this research. Regarding the moderating effect of state ownership on the relationship between boardroom diversity (task- and relation-oriented diversity) and financial stability, the results show that state ownership enhances the positive impact of the board’s task-oriented diversity on financial stability. Task-oriented diversity of the board enhances the financial stability of Chinese financial listed firms. As existing studies on bank boards in China are limited, the findings of this research can be used when crafting policy initiatives to enhance financial stability. To the best of the authors’ knowledge, this study is the first to examine the effect of boardroom diversity, particularly task- and relation-oriented diversity, on financial stability. It provides empirical support that boardroom diversity positively affects the financial stability of Chinese financial listed firms. This research also offers empirical evidence that state ownership enhances the positive impact of the board’s task-oriented diversity on financial stability.Boardroom diversity (task- and relation-oriented diversity) and financial stability: evidence from Chinese financial listed firms
Ding Ning, Kalimullah Bhat, Ghulam Nabi, Ren Yinong
Pacific Accounting Review, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study aims to examine the impact of boardroom diversity on the financial stability of Chinese financial listed firms. Boardroom diversity is quantified in the following aspects: relation-oriented diversity and task-oriented diversity.

Panel data on Chinese financial listed firms between 1998 and 2017 are used in this study. Panel regression is used to analyze the firm data for fixed effects and robust standard errors.

Task-oriented diversity of the board increases financial stability. Regarding the impact of boardroom diversity on firm risk, the results reveal that task-oriented diversity of the board reduces firm risk, which supports the predictions of this research. Regarding the moderating effect of state ownership on the relationship between boardroom diversity (task- and relation-oriented diversity) and financial stability, the results show that state ownership enhances the positive impact of the board’s task-oriented diversity on financial stability.

Task-oriented diversity of the board enhances the financial stability of Chinese financial listed firms. As existing studies on bank boards in China are limited, the findings of this research can be used when crafting policy initiatives to enhance financial stability.

To the best of the authors’ knowledge, this study is the first to examine the effect of boardroom diversity, particularly task- and relation-oriented diversity, on financial stability. It provides empirical support that boardroom diversity positively affects the financial stability of Chinese financial listed firms. This research also offers empirical evidence that state ownership enhances the positive impact of the board’s task-oriented diversity on financial stability.

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Boardroom diversity (task- and relation-oriented diversity) and financial stability: evidence from Chinese financial listed firms10.1108/PAR-02-2022-0023Pacific Accounting Review2023-10-24© 2023 Emerald Publishing LimitedDing NingKalimullah BhatGhulam NabiRen YinongPacific Accounting Reviewahead-of-printahead-of-print2023-10-2410.1108/PAR-02-2022-0023https://www.emerald.com/insight/content/doi/10.1108/PAR-02-2022-0023/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Digital transformation in Vietnam: the impacts on external auditors and their practiceshttps://www.emerald.com/insight/content/doi/10.1108/PAR-04-2023-0051/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study aims to explore some perceptions related to the suggestion that external auditors will be replaced by audit technologies that use artificial intelligence (AI) tools to make audit judgements when performing the financial statement audits. Digital transformation is revitalising the technologies used by external auditors and their firms; thus, the authors seek to understand what challenges this creates for the auditing profession in Vietnam. Through the theoretical lens of new institutionalism theory, this study uses a qualitative approach involving 20 semi-structured interviews conducted with external auditors in Vietnam during 2022. This sample includes the global Big Four, global mid-tier and smaller local Vietnamese audit firms. The findings indicate that there is resistance or disagreement with the suggestion that in the future audit technologies using AI tools can replace humans (external auditors). The role of external auditors in the professional services sector will gradually be changed by audit technologies; however, external auditors are unlikely to be replaced by audit technologies that use AI tools based on the responses of the participants. Strict institutional rules that exist in Vietnam would prevent the replacement of (human) external auditors. In the future, external auditors may take on new roles as consultants, with unique skills in classifying and processing data for decision-making processes; however, they will not be completely replaced by technology in the audit space. This study has limitations that it is based on the data collection from a single developing country, Vietnam; therefore, the generalisability of the findings is limited to Vietnam. Also, the authors sought insights into the future of external audits in Vietnam. This study highlights the changing role of auditors and institutions. Thus, policymakers, external auditors and auditees in other developing countries would find the findings helpful. This study provides new perspectives, particularly from local Vietnamese firms, about audit practices that emerge due to high-level technological advancements and then embed themselves into existing audit practices in an emerging economy. Prior studies tended to focus on the global Big Four firms, thus this study contributes by sharing the perceptions of the smaller practitioners also.Digital transformation in Vietnam: the impacts on external auditors and their practices
Phuong Thi Nguyen, Michael Kend, Dung Quang Le
Pacific Accounting Review, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study aims to explore some perceptions related to the suggestion that external auditors will be replaced by audit technologies that use artificial intelligence (AI) tools to make audit judgements when performing the financial statement audits. Digital transformation is revitalising the technologies used by external auditors and their firms; thus, the authors seek to understand what challenges this creates for the auditing profession in Vietnam.

Through the theoretical lens of new institutionalism theory, this study uses a qualitative approach involving 20 semi-structured interviews conducted with external auditors in Vietnam during 2022. This sample includes the global Big Four, global mid-tier and smaller local Vietnamese audit firms.

The findings indicate that there is resistance or disagreement with the suggestion that in the future audit technologies using AI tools can replace humans (external auditors). The role of external auditors in the professional services sector will gradually be changed by audit technologies; however, external auditors are unlikely to be replaced by audit technologies that use AI tools based on the responses of the participants. Strict institutional rules that exist in Vietnam would prevent the replacement of (human) external auditors. In the future, external auditors may take on new roles as consultants, with unique skills in classifying and processing data for decision-making processes; however, they will not be completely replaced by technology in the audit space.

This study has limitations that it is based on the data collection from a single developing country, Vietnam; therefore, the generalisability of the findings is limited to Vietnam. Also, the authors sought insights into the future of external audits in Vietnam.

This study highlights the changing role of auditors and institutions. Thus, policymakers, external auditors and auditees in other developing countries would find the findings helpful.

This study provides new perspectives, particularly from local Vietnamese firms, about audit practices that emerge due to high-level technological advancements and then embed themselves into existing audit practices in an emerging economy. Prior studies tended to focus on the global Big Four firms, thus this study contributes by sharing the perceptions of the smaller practitioners also.

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Digital transformation in Vietnam: the impacts on external auditors and their practices10.1108/PAR-04-2023-0051Pacific Accounting Review2024-04-01© 2024 Emerald Publishing LimitedPhuong Thi NguyenMichael KendDung Quang LePacific Accounting Reviewahead-of-printahead-of-print2024-04-0110.1108/PAR-04-2023-0051https://www.emerald.com/insight/content/doi/10.1108/PAR-04-2023-0051/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2024 Emerald Publishing Limited
COVID-19-related announcements in a continuous disclosure environment: drivers and stock market implicationshttps://www.emerald.com/insight/content/doi/10.1108/PAR-06-2023-0074/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe purpose of this research note is to investigate the drivers and market reaction to firms’ decision to release general COVID-19-related announcements and to withdraw earnings forecasts and dividends during the COVID-19 pandemic in the continuous disclosure environment of Australia. The authors first tracked the market reaction of all firms in the Australian Securities Exchange All Ordinaries, Top 300, Top 200 and Top 100 indices during the early period of the COVID-19 pandemic between 1 January and 21 September 2020. The authors then focus the investigation on the incidence of firms deciding to withdraw earnings forecasts and dividends and how the market responded to these incidences during that period. The market reacted negatively during the March/April 2020 period but then bounced back to the pre-March 2020 level. The market reaction is mainly driven by three industries, including consumer discretionary, health care and utilities. Firms in industry sectors such as consumer discretionary, materials, health care and information technology contribute to the highest percentage of COVID-19 announcements. It is interesting to document that firms issuing COVID-19 announcements and withdrawing earnings forecasts and dividends tend to be larger firms with stronger financial performance and higher financial leverage. Regarding the stock market reaction, while the market generally reacted positively to COVID-19-related announcements, the decision to withdraw earnings forecasts and dividends is significantly regarded as bad news. The COVID-19 pandemic has provided a unique natural event to examine firms’ disclosure behaviour in the continuous disclosure environment of Australia during this period of extreme uncertainty. The incidences of earnings forecasts and dividend withdrawals are mainly driven by larger, better performing and higher leverage firms in the consumer discretionary, health care, materials and information technology industry sectors. The market generally reacted favourably to COVID-19-related announcements, despite a significant stock price drop during the March/April 2020 period. The findings provide important regulatory and practical implications.COVID-19-related announcements in a continuous disclosure environment: drivers and stock market implications
Larelle Chapple, Lien Duong, Thu Phuong Truong
Pacific Accounting Review, Vol. ahead-of-print, No. ahead-of-print, pp.-

The purpose of this research note is to investigate the drivers and market reaction to firms’ decision to release general COVID-19-related announcements and to withdraw earnings forecasts and dividends during the COVID-19 pandemic in the continuous disclosure environment of Australia.

The authors first tracked the market reaction of all firms in the Australian Securities Exchange All Ordinaries, Top 300, Top 200 and Top 100 indices during the early period of the COVID-19 pandemic between 1 January and 21 September 2020. The authors then focus the investigation on the incidence of firms deciding to withdraw earnings forecasts and dividends and how the market responded to these incidences during that period.

The market reacted negatively during the March/April 2020 period but then bounced back to the pre-March 2020 level. The market reaction is mainly driven by three industries, including consumer discretionary, health care and utilities. Firms in industry sectors such as consumer discretionary, materials, health care and information technology contribute to the highest percentage of COVID-19 announcements. It is interesting to document that firms issuing COVID-19 announcements and withdrawing earnings forecasts and dividends tend to be larger firms with stronger financial performance and higher financial leverage. Regarding the stock market reaction, while the market generally reacted positively to COVID-19-related announcements, the decision to withdraw earnings forecasts and dividends is significantly regarded as bad news.

The COVID-19 pandemic has provided a unique natural event to examine firms’ disclosure behaviour in the continuous disclosure environment of Australia during this period of extreme uncertainty. The incidences of earnings forecasts and dividend withdrawals are mainly driven by larger, better performing and higher leverage firms in the consumer discretionary, health care, materials and information technology industry sectors. The market generally reacted favourably to COVID-19-related announcements, despite a significant stock price drop during the March/April 2020 period. The findings provide important regulatory and practical implications.

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COVID-19-related announcements in a continuous disclosure environment: drivers and stock market implications10.1108/PAR-06-2023-0074Pacific Accounting Review2024-03-13© 2024 Emerald Publishing LimitedLarelle ChappleLien DuongThu Phuong TruongPacific Accounting Reviewahead-of-printahead-of-print2024-03-1310.1108/PAR-06-2023-0074https://www.emerald.com/insight/content/doi/10.1108/PAR-06-2023-0074/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2024 Emerald Publishing Limited
Related party transactions, accrual-based earnings management and real activities earnings management in emerging markethttps://www.emerald.com/insight/content/doi/10.1108/PAR-08-2022-0112/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe purpose of this study is to examine the association between related party transactions (RPTs) in terms of sales and purchases and earnings management (EM). The authors use the estimation method of system generalized method of moments (Sys-GMM) on a sample of 413 non-financial firms in Vietnam in the period from 2015 to 2019, totaling 1,638 firm-year observations. Multiple proxies for RPTs and EM are used to provide a comprehensive assessment of the relationship between the two factors. There is a positive association between RPTs and EM, suggesting that both types of RPTs could reduce financial reporting quality and allow firms to be more engaged in earnings manipulation. There are a number of studies investigating the above link, but they tend to use aggregate values (the sum of both sales and purchases with related parties) or just either accruals-based earnings or real EM. This study is the first to extend the literature on the relationship between RPTs and EM by examining both sales-based and purchases-based RPTs on both real and accruals-based earnings manipulation. This approach helps uncover the differences in the effect of the two types of RPTs on both types of upward EM.Related party transactions, accrual-based earnings management and real activities earnings management in emerging market
Nguyen Vinh Khuong, Nguyen Thanh Liem, Le Huu Tuan Anh, Bui Thi Ngan Dung
Pacific Accounting Review, Vol. ahead-of-print, No. ahead-of-print, pp.-

The purpose of this study is to examine the association between related party transactions (RPTs) in terms of sales and purchases and earnings management (EM).

The authors use the estimation method of system generalized method of moments (Sys-GMM) on a sample of 413 non-financial firms in Vietnam in the period from 2015 to 2019, totaling 1,638 firm-year observations. Multiple proxies for RPTs and EM are used to provide a comprehensive assessment of the relationship between the two factors.

There is a positive association between RPTs and EM, suggesting that both types of RPTs could reduce financial reporting quality and allow firms to be more engaged in earnings manipulation.

There are a number of studies investigating the above link, but they tend to use aggregate values (the sum of both sales and purchases with related parties) or just either accruals-based earnings or real EM. This study is the first to extend the literature on the relationship between RPTs and EM by examining both sales-based and purchases-based RPTs on both real and accruals-based earnings manipulation. This approach helps uncover the differences in the effect of the two types of RPTs on both types of upward EM.

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Related party transactions, accrual-based earnings management and real activities earnings management in emerging market10.1108/PAR-08-2022-0112Pacific Accounting Review2023-11-03© 2023 Emerald Publishing LimitedNguyen Vinh KhuongNguyen Thanh LiemLe Huu Tuan AnhBui Thi Ngan DungPacific Accounting Reviewahead-of-printahead-of-print2023-11-0310.1108/PAR-08-2022-0112https://www.emerald.com/insight/content/doi/10.1108/PAR-08-2022-0112/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited