Journal of Applied Accounting ResearchTable of Contents for Journal of Applied Accounting Research. List of articles from the current issue, including Just Accepted (EarlyCite)https://www.emerald.com/insight/publication/issn/0967-5426/vol/25/iss/2?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestJournal of Applied Accounting ResearchEmerald Publishing LimitedJournal of Applied Accounting ResearchJournal of Applied Accounting Researchhttps://www.emerald.com/insight/proxy/containerImg?link=/resource/publication/journal/aa10676bbdd2cd5d5245f4f2e17d89fc/urn:emeraldgroup.com:asset:id:binary:jaar.cover.jpghttps://www.emerald.com/insight/publication/issn/0967-5426/vol/25/iss/2?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestFinancial integration and earnings management: evidence from emerging marketshttps://www.emerald.com/insight/content/doi/10.1108/JAAR-11-2022-0288/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study examines whether country-level financial integration affects firms' accounting choices and the quality of financial information. This study employs Propensity Score Matching (PSM), and panel regressions of a large sample of data from 20 emerging markets over the period 1987–2018. This study finds evidence that increased level of financial integration is significantly positively associated with firms' accruals earnings management (AEM) and real earnings management (REM). Findings in the study have implications for standard-setting bodies that aim to enhance the usefulness of financial reporting quality. The study also has implications for various initiatives by governments in emerging markets aimed at raising investor confidence and fostering stock market development through greater financial integration. Findings in the study have implications for standard-setting bodies that aim to enhance the usefulness and quality of financial reporting. The findings can be of interest to analysts, auditors and other monitoring institutions who play a crucial role in detecting earnings management and reducing information asymmetry. Finally, the study has implications for various initiatives by governments in emerging markets aimed at raising investor confidence and fostering stock market development through greater financial integration. Findings in the study reveal how country-level financial integration affects accruals and real earnings management in a sample of firms from 20 emerging markets. Further, the study adds to the growing body of literature on emerging markets where capital markets mechanisms, regulatory environment and firm's corporate governance are distinct to developed markets.Financial integration and earnings management: evidence from emerging markets
Syed Zulfiqar Ali Shah, Fangyi Wan
Journal of Applied Accounting Research, Vol. 25, No. 2, pp.197-220

This study examines whether country-level financial integration affects firms' accounting choices and the quality of financial information.

This study employs Propensity Score Matching (PSM), and panel regressions of a large sample of data from 20 emerging markets over the period 1987–2018.

This study finds evidence that increased level of financial integration is significantly positively associated with firms' accruals earnings management (AEM) and real earnings management (REM).

Findings in the study have implications for standard-setting bodies that aim to enhance the usefulness of financial reporting quality. The study also has implications for various initiatives by governments in emerging markets aimed at raising investor confidence and fostering stock market development through greater financial integration.

Findings in the study have implications for standard-setting bodies that aim to enhance the usefulness and quality of financial reporting. The findings can be of interest to analysts, auditors and other monitoring institutions who play a crucial role in detecting earnings management and reducing information asymmetry. Finally, the study has implications for various initiatives by governments in emerging markets aimed at raising investor confidence and fostering stock market development through greater financial integration.

Findings in the study reveal how country-level financial integration affects accruals and real earnings management in a sample of firms from 20 emerging markets. Further, the study adds to the growing body of literature on emerging markets where capital markets mechanisms, regulatory environment and firm's corporate governance are distinct to developed markets.

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Financial integration and earnings management: evidence from emerging markets10.1108/JAAR-11-2022-0288Journal of Applied Accounting Research2023-06-21© 2023 Emerald Publishing LimitedSyed Zulfiqar Ali ShahFangyi WanJournal of Applied Accounting Research2522023-06-2110.1108/JAAR-11-2022-0288https://www.emerald.com/insight/content/doi/10.1108/JAAR-11-2022-0288/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Does green innovation mediate corporate social responsibility and environmental performance? Empirical evidence from emerging marketshttps://www.emerald.com/insight/content/doi/10.1108/JAAR-10-2022-0271/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis paper examines the mediation role of green innovation in the relationship between corporate social responsibility and environmental performance of manufacturing firms in Ghana. The paper chose African emerging markets and surveyed managers from manufacturing firms. With 301 questionnaires qualified for this study’s final analyses, the authors adopt the multiple regression with mediation models to estimates the nexus among study variables. Results evidence that both corporate social responsibility and green innovation has a positive and significant impact on environmental performance. Interestingly, the authors find that corporate social responsibility significantly improves environmental performance through green innovation indicating that firms could essentially build their dynamic resource and innovation capabilities in sustainability leading to enhanced environmental performance. This paper develops a dynamic resource-based view of firm environmental performance illustrating how firms use resources to build strategic capabilities for competitive advantage, which leads to improved environmental performance. The paper highlights the mediation role of green innovation on corporate social responsibility and environmental performance relationships. This study's results provide significant insights to owners and managers of manufacturing companies to integrate corporate social responsibility and green innovation to ensure environmental performance and sustainability. Furthermore, policy makers should encourage green innovation when design sustainable development systems in the manufacturing industry. The paper provides a valuable model showing how green innovation mediates corporate social responsibility to improve environmental performance and build competitive advantages considering both small, medium, and large manufacturing enterprises in emerging countries.Does green innovation mediate corporate social responsibility and environmental performance? Empirical evidence from emerging markets
Mandella Osei-Assibey Bonsu, Yongsheng Guo, Xiaoxian Zhu
Journal of Applied Accounting Research, Vol. 25, No. 2, pp.221-239

This paper examines the mediation role of green innovation in the relationship between corporate social responsibility and environmental performance of manufacturing firms in Ghana.

The paper chose African emerging markets and surveyed managers from manufacturing firms. With 301 questionnaires qualified for this study’s final analyses, the authors adopt the multiple regression with mediation models to estimates the nexus among study variables.

Results evidence that both corporate social responsibility and green innovation has a positive and significant impact on environmental performance. Interestingly, the authors find that corporate social responsibility significantly improves environmental performance through green innovation indicating that firms could essentially build their dynamic resource and innovation capabilities in sustainability leading to enhanced environmental performance.

This paper develops a dynamic resource-based view of firm environmental performance illustrating how firms use resources to build strategic capabilities for competitive advantage, which leads to improved environmental performance. The paper highlights the mediation role of green innovation on corporate social responsibility and environmental performance relationships.

This study's results provide significant insights to owners and managers of manufacturing companies to integrate corporate social responsibility and green innovation to ensure environmental performance and sustainability. Furthermore, policy makers should encourage green innovation when design sustainable development systems in the manufacturing industry.

The paper provides a valuable model showing how green innovation mediates corporate social responsibility to improve environmental performance and build competitive advantages considering both small, medium, and large manufacturing enterprises in emerging countries.

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Does green innovation mediate corporate social responsibility and environmental performance? Empirical evidence from emerging markets10.1108/JAAR-10-2022-0271Journal of Applied Accounting Research2023-06-28© 2023 Emerald Publishing LimitedMandella Osei-Assibey BonsuYongsheng GuoXiaoxian ZhuJournal of Applied Accounting Research2522023-06-2810.1108/JAAR-10-2022-0271https://www.emerald.com/insight/content/doi/10.1108/JAAR-10-2022-0271/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
The impact of executives' compensation and corporate governance attributes on voluntary disclosures: Does audit quality matter?https://www.emerald.com/insight/content/doi/10.1108/JAAR-11-2022-0302/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis article investigated whether the executives' compensation and corporate governance attributes are aligned with stakeholders' demands for higher corporate voluntary disclosures. Moreover, the study also examined the moderating role of the auditor's reputation in the direction of association among executive compensation, corporate governance attributes, and voluntary disclosures. The study used a sample of S&P BSE index constituents' 90 Indian firms for 2017–2019. The voluntary disclosure scores were fetched from the India Disclosure Index Report published by FTI Consulting. This analysis was carried out in two parts by applying four panel-data regression models in the agency and signalling theories framework. First, the study examined the association between executive compensation, board strength, composition, gender diversity, and voluntary disclosures. Second, the article investigated the moderating role of the “Big 4” in the direction of association among executive compensation, corporate governance attributes, and voluntary disclosures. The willingness of executives to share private information with stakeholders depends on the compensation they receive from their employer. The higher compensation paid to executives leads to a higher “tone from the top,” which is better aligned with stakeholder interests. Further, the research also found that bigger board sizes, a higher proportion of independent and woman directors (indicators of good governance), and an auditor's reputation are associated with increased voluntary disclosure. The findings showed that the executives' compensation and corporate governance attributes are aligned with stakeholders' demand for higher voluntary information from firms. Moreover, the study also found that the “Big 4” play a moderating role in this direction. The choice of a reputed auditor indicates the firms' long-term positive future perspectives, which strengthens investor confidence in the financial market. The study suggests that fair executive compensation can address the agency problem. This research furnishes managers and different stakeholders with significant implications of executives' compensation, corporate governance, and auditor's reputation in the best interests of a firm through reducing potential risks of information asymmetry.The impact of executives' compensation and corporate governance attributes on voluntary disclosures: Does audit quality matter?
Praveen Kumar
Journal of Applied Accounting Research, Vol. 25, No. 2, pp.240-263

This article investigated whether the executives' compensation and corporate governance attributes are aligned with stakeholders' demands for higher corporate voluntary disclosures. Moreover, the study also examined the moderating role of the auditor's reputation in the direction of association among executive compensation, corporate governance attributes, and voluntary disclosures.

The study used a sample of S&P BSE index constituents' 90 Indian firms for 2017–2019. The voluntary disclosure scores were fetched from the India Disclosure Index Report published by FTI Consulting. This analysis was carried out in two parts by applying four panel-data regression models in the agency and signalling theories framework. First, the study examined the association between executive compensation, board strength, composition, gender diversity, and voluntary disclosures. Second, the article investigated the moderating role of the “Big 4” in the direction of association among executive compensation, corporate governance attributes, and voluntary disclosures.

The willingness of executives to share private information with stakeholders depends on the compensation they receive from their employer. The higher compensation paid to executives leads to a higher “tone from the top,” which is better aligned with stakeholder interests. Further, the research also found that bigger board sizes, a higher proportion of independent and woman directors (indicators of good governance), and an auditor's reputation are associated with increased voluntary disclosure.

The findings showed that the executives' compensation and corporate governance attributes are aligned with stakeholders' demand for higher voluntary information from firms. Moreover, the study also found that the “Big 4” play a moderating role in this direction. The choice of a reputed auditor indicates the firms' long-term positive future perspectives, which strengthens investor confidence in the financial market.

The study suggests that fair executive compensation can address the agency problem.

This research furnishes managers and different stakeholders with significant implications of executives' compensation, corporate governance, and auditor's reputation in the best interests of a firm through reducing potential risks of information asymmetry.

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The impact of executives' compensation and corporate governance attributes on voluntary disclosures: Does audit quality matter?10.1108/JAAR-11-2022-0302Journal of Applied Accounting Research2023-06-29© 2023 Emerald Publishing LimitedPraveen KumarJournal of Applied Accounting Research2522023-06-2910.1108/JAAR-11-2022-0302https://www.emerald.com/insight/content/doi/10.1108/JAAR-11-2022-0302/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Using accounting theory to develop a theoretical model for credit card rewards programme transactionshttps://www.emerald.com/insight/content/doi/10.1108/JAAR-10-2022-0278/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestAfter the effective date of International Financial Reporting Standard (IFRS) 15, the accounting treatment of credit card rewards programmes (CCRPs) is no longer explicitly prescribed. Uncertainty regarding what constitutes faithful representation, and the inconsistent accounting practices observed, has created a need for guidance on the appropriate accounting treatment of CCRP transactions. Accounting theory has the potential to provide the foundation for this guidance. As a result, the objective of this study was to develop a theoretical model for the accounting treatment of CCRP transactions using accounting theory. This non-empirical qualitative conceptual study utilised document analysis, focussing specifically on accounting theory, to construct an accounting treatment model. Applying the relevant accounting theory (International Accounting Standards Board's (IASB's) Conceptual Framework), a theoretical model for the accounting treatment of CCRP transactions was developed, which emphasises the importance of understanding the economic phenomenon (the CCRP transaction) and determining how management views the transaction (in isolation as marketing or as an integral part of the credit card transaction). Addressing the problem of accounting for CCRP transactions with reference to accounting theory (which is the main element of scholarly activity in accounting) distinguishes this study from previous research on the topic. The CCRP accounting treatment theoretical model could assist CCRP management in faithfully accounting for a CCRP transaction and reduce uncertainty and inconsistency in practice. Moreover, this study identified the procedures to be employed when using accounting theory to determine the appropriate accounting treatment of business transactions. These procedures could be employed by accountants when faced with other transactions not covered by specific accounting standards.Using accounting theory to develop a theoretical model for credit card rewards programme transactions
Sophia Brink, Gretha Steenkamp
Journal of Applied Accounting Research, Vol. 25, No. 2, pp.264-278

After the effective date of International Financial Reporting Standard (IFRS) 15, the accounting treatment of credit card rewards programmes (CCRPs) is no longer explicitly prescribed. Uncertainty regarding what constitutes faithful representation, and the inconsistent accounting practices observed, has created a need for guidance on the appropriate accounting treatment of CCRP transactions. Accounting theory has the potential to provide the foundation for this guidance. As a result, the objective of this study was to develop a theoretical model for the accounting treatment of CCRP transactions using accounting theory.

This non-empirical qualitative conceptual study utilised document analysis, focussing specifically on accounting theory, to construct an accounting treatment model.

Applying the relevant accounting theory (International Accounting Standards Board's (IASB's) Conceptual Framework), a theoretical model for the accounting treatment of CCRP transactions was developed, which emphasises the importance of understanding the economic phenomenon (the CCRP transaction) and determining how management views the transaction (in isolation as marketing or as an integral part of the credit card transaction).

Addressing the problem of accounting for CCRP transactions with reference to accounting theory (which is the main element of scholarly activity in accounting) distinguishes this study from previous research on the topic. The CCRP accounting treatment theoretical model could assist CCRP management in faithfully accounting for a CCRP transaction and reduce uncertainty and inconsistency in practice. Moreover, this study identified the procedures to be employed when using accounting theory to determine the appropriate accounting treatment of business transactions. These procedures could be employed by accountants when faced with other transactions not covered by specific accounting standards.

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Using accounting theory to develop a theoretical model for credit card rewards programme transactions10.1108/JAAR-10-2022-0278Journal of Applied Accounting Research2023-06-29© 2023 Sophia Brink and Gretha SteenkampSophia BrinkGretha SteenkampJournal of Applied Accounting Research2522023-06-2910.1108/JAAR-10-2022-0278https://www.emerald.com/insight/content/doi/10.1108/JAAR-10-2022-0278/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Sophia Brink and Gretha Steenkamphttp://creativecommons.org/licences/by/4.0/legalcode
The impact of COVID-19 on sustainability reporting: A perspective from the US financial institutionshttps://www.emerald.com/insight/content/doi/10.1108/JAAR-12-2022-0345/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis article provides the first empirical study on the effects of the COVID-19 pandemic on sustainability reporting in US financial institutions using institutional, stakeholder and legitimacy theories. The study used the independent sample t-test and Mann–Whitney U test throughout as well as OLS, random effects, fixed effects and heteroskedasticity corrected model to test the impact of the COVID-19 pandemic on sustainability reporting in the US financial sector. A sample from all listed US financial firms was used after controlling for both the Refinitiv Eikon sector classification and the NAICS sector classification. Using U Mann–Whitney test and independent sample t-test the study revealed that the average ESG score for the pre-COVID19 period is 53% compared with 62.3% for the COVID-19 period, indicating that the sustainability reporting during COVID-19 is much higher compared with the pre-pandemic period. The findings of regression analysis also confirm that the US financial companies increased their sustainability reporting during the COVID-19 pandemic. This study is an early attempt to look at how the COVID-19 epidemic has affected financial reporting procedures, although it is focused only on one area and other entity-related factors like stock market implications, company governance, internal audit practice, etc could have been considered. This research offers useful recommendations for policymakers to create standards for regulators on the significance of raising sustainability awareness. The findings are crucial for accounting regulators as they work to implement COVID-19 and enforce required integrated reporting rules and regulations. The study provides the first empirical evidence on the impact of the COVID-19 pandemic on sustainability reporting, by examining how US financial institutions approach the topic of sustainability during the COVID-19 pandemic and assessing the pandemic's current consequences on sustainability.The impact of COVID-19 on sustainability reporting: A perspective from the US financial institutions
Hani Alkayed, Ibrahim Yousef, Khaled Hussainey, Esam Shehadeh
Journal of Applied Accounting Research, Vol. 25, No. 2, pp.279-297

This article provides the first empirical study on the effects of the COVID-19 pandemic on sustainability reporting in US financial institutions using institutional, stakeholder and legitimacy theories.

The study used the independent sample t-test and Mann–Whitney U test throughout as well as OLS, random effects, fixed effects and heteroskedasticity corrected model to test the impact of the COVID-19 pandemic on sustainability reporting in the US financial sector. A sample from all listed US financial firms was used after controlling for both the Refinitiv Eikon sector classification and the NAICS sector classification.

Using U Mann–Whitney test and independent sample t-test the study revealed that the average ESG score for the pre-COVID19 period is 53% compared with 62.3% for the COVID-19 period, indicating that the sustainability reporting during COVID-19 is much higher compared with the pre-pandemic period. The findings of regression analysis also confirm that the US financial companies increased their sustainability reporting during the COVID-19 pandemic.

This study is an early attempt to look at how the COVID-19 epidemic has affected financial reporting procedures, although it is focused only on one area and other entity-related factors like stock market implications, company governance, internal audit practice, etc could have been considered.

This research offers useful recommendations for policymakers to create standards for regulators on the significance of raising sustainability awareness. The findings are crucial for accounting regulators as they work to implement COVID-19 and enforce required integrated reporting rules and regulations.

The study provides the first empirical evidence on the impact of the COVID-19 pandemic on sustainability reporting, by examining how US financial institutions approach the topic of sustainability during the COVID-19 pandemic and assessing the pandemic's current consequences on sustainability.

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The impact of COVID-19 on sustainability reporting: A perspective from the US financial institutions10.1108/JAAR-12-2022-0345Journal of Applied Accounting Research2023-07-05© 2023 Emerald Publishing LimitedHani AlkayedIbrahim YousefKhaled HussaineyEsam ShehadehJournal of Applied Accounting Research2522023-07-0510.1108/JAAR-12-2022-0345https://www.emerald.com/insight/content/doi/10.1108/JAAR-12-2022-0345/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Carbon media legitimacy in UK companies: actions or words?https://www.emerald.com/insight/content/doi/10.1108/JAAR-08-2022-0200/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study investigates whether carbon media legitimacy is influenced by carbon performance and/or carbon disclosure using a direct measure of carbon media legitimacy in UK context. To test this study's hypotheses, the authors employ Tobit regression analysis of 95 UK companies listed in FTSE350. The authors use balanced panel data (475 observations in total) to reduces the noise introduced by unit heterogeneity. The authors find that while corporate carbon performance is not reflected in carbon media legitimacy, carbon media legitimacy is positively and significantly affected by voluntary carbon disclosure (irrespective of its quality). Thus, voluntary carbon disclosure is shown to be an effective tool in legitimising corporate activities. The results show a certain degree of naivety on the part of the media in assessing corporate carbon behaviour, since it values carbon disclosure (irrespective of its quality) more than carbon performance. Such media behaviour may hinder future improvement in carbon performance of firms. This study's results indicate that the existing UK carbon disclosure policy does not address the heart of climate change and global warming. Thus, tougher regulations should be considered by policy-makers in relation to voluntary carbon disclosure in the UK. To the best of the authors' knowledge, this is the first study to examine whether carbon media legitimacy is associated with both carbon performance and carbon disclosure using a direct measure of carbon media legitimacy, and to use the UK context when addressing this association. It also examines the effectiveness of quality of carbon disclosure as legitimation tool.Carbon media legitimacy in UK companies: actions or words?
Alireza Rohani, Mirna Jabbour
Journal of Applied Accounting Research, Vol. 25, No. 2, pp.298-324

This study investigates whether carbon media legitimacy is influenced by carbon performance and/or carbon disclosure using a direct measure of carbon media legitimacy in UK context.

To test this study's hypotheses, the authors employ Tobit regression analysis of 95 UK companies listed in FTSE350. The authors use balanced panel data (475 observations in total) to reduces the noise introduced by unit heterogeneity.

The authors find that while corporate carbon performance is not reflected in carbon media legitimacy, carbon media legitimacy is positively and significantly affected by voluntary carbon disclosure (irrespective of its quality). Thus, voluntary carbon disclosure is shown to be an effective tool in legitimising corporate activities.

The results show a certain degree of naivety on the part of the media in assessing corporate carbon behaviour, since it values carbon disclosure (irrespective of its quality) more than carbon performance. Such media behaviour may hinder future improvement in carbon performance of firms.

This study's results indicate that the existing UK carbon disclosure policy does not address the heart of climate change and global warming. Thus, tougher regulations should be considered by policy-makers in relation to voluntary carbon disclosure in the UK.

To the best of the authors' knowledge, this is the first study to examine whether carbon media legitimacy is associated with both carbon performance and carbon disclosure using a direct measure of carbon media legitimacy, and to use the UK context when addressing this association. It also examines the effectiveness of quality of carbon disclosure as legitimation tool.

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Carbon media legitimacy in UK companies: actions or words?10.1108/JAAR-08-2022-0200Journal of Applied Accounting Research2023-07-05© 2023 Emerald Publishing LimitedAlireza RohaniMirna JabbourJournal of Applied Accounting Research2522023-07-0510.1108/JAAR-08-2022-0200https://www.emerald.com/insight/content/doi/10.1108/JAAR-08-2022-0200/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Social responsibility and tax evasion: organised hypocrisy of Tunisian professionalshttps://www.emerald.com/insight/content/doi/10.1108/JAAR-12-2022-0320/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe present work aimed to present the perception of Tunisian professionals towards companies engaged in social responsibility practices and describe the tax evasion strategies of socially responsible Tunisian companies following the coronavirus disease 2019 (COVID-19) pandemic (COVID-19) shock. A survey was sent to 119 Tunisian tax administration auditors. Data analysis methods principal component analysis (PCA) and regression analysis were used. The data were collected through a questionnaire after the general containment of Tunisia from September 2020 to February 2021. These quantitative data were analysed using processing software (STATA). Professionals of the tax authorities, particularly those in charge of the audit mission, aim for corporate profitability from the perspective of stakeholders that seek to integrate ethics and social responsibility into companies and consider employee morale a top priority. The results show that highly ethical and socially responsible professionals are far from practising aggressive strategies. Thus, an auditor from the tax administration is far from engaging in social responsibility to justify fraudulent acts. During the COVID-19 period, the role of these professionals was to prevent and detect fraud in the tax sector to fight corruption and investigate taxes based on sound regulations. The results are consistent with optimal taxation theory, which postulates that a tax system should be chosen to maximise a social welfare function subject to a set of constraints. Professionals seek to make taxation much simpler for taxpayers by providing advice and consultation to manage tax obligations. The minimisation of tax or the play of tax values requires expertise in the field to respect legal constraints. Therefore, these professionals play a crucial role in tax collection, as the professionals' advice and suggestions can influence taxpayers' decision-making. In recent years, academic researchers, policy makers and the public have become increasingly interested in corporate tax evasion behaviour. At the same time, companies are under increasing pressure to integrate CSR into the companies' decision-making processes, which has led to increased academic interest in CSR. Opportunistic tax minimisation reduces state resources and funds needed for government programmes to improve the social welfare of the entire community. This study represents an overriding concern not only for legal and tax authorities and companies, but also for shareholders and stakeholders. The authors' study contributes to the existing literature by determining the state of play on corporate social responsibility (CSR) practices amongst Tunisian tax authorities' professionals. In Tunisia, an executive of the tax authorities in charge of the verification mission is required to verify the proper application of the accounting and tax legislation in force, follow up on tax control operations on declared taxes and validate the sincerity of the accounts. This study focussed on the tax evasion of companies engaged in social responsibility practices according to the judgements of Tunisian tax authorities' auditors during the global COVID-19 pandemic.Social responsibility and tax evasion: organised hypocrisy of Tunisian professionals
Saida Dammak, Manel Jmal Ep Derbel
Journal of Applied Accounting Research, Vol. 25, No. 2, pp.325-354

The present work aimed to present the perception of Tunisian professionals towards companies engaged in social responsibility practices and describe the tax evasion strategies of socially responsible Tunisian companies following the coronavirus disease 2019 (COVID-19) pandemic (COVID-19) shock.

A survey was sent to 119 Tunisian tax administration auditors. Data analysis methods principal component analysis (PCA) and regression analysis were used. The data were collected through a questionnaire after the general containment of Tunisia from September 2020 to February 2021. These quantitative data were analysed using processing software (STATA).

Professionals of the tax authorities, particularly those in charge of the audit mission, aim for corporate profitability from the perspective of stakeholders that seek to integrate ethics and social responsibility into companies and consider employee morale a top priority. The results show that highly ethical and socially responsible professionals are far from practising aggressive strategies. Thus, an auditor from the tax administration is far from engaging in social responsibility to justify fraudulent acts. During the COVID-19 period, the role of these professionals was to prevent and detect fraud in the tax sector to fight corruption and investigate taxes based on sound regulations.

The results are consistent with optimal taxation theory, which postulates that a tax system should be chosen to maximise a social welfare function subject to a set of constraints. Professionals seek to make taxation much simpler for taxpayers by providing advice and consultation to manage tax obligations. The minimisation of tax or the play of tax values requires expertise in the field to respect legal constraints. Therefore, these professionals play a crucial role in tax collection, as the professionals' advice and suggestions can influence taxpayers' decision-making.

In recent years, academic researchers, policy makers and the public have become increasingly interested in corporate tax evasion behaviour. At the same time, companies are under increasing pressure to integrate CSR into the companies' decision-making processes, which has led to increased academic interest in CSR. Opportunistic tax minimisation reduces state resources and funds needed for government programmes to improve the social welfare of the entire community. This study represents an overriding concern not only for legal and tax authorities and companies, but also for shareholders and stakeholders.

The authors' study contributes to the existing literature by determining the state of play on corporate social responsibility (CSR) practices amongst Tunisian tax authorities' professionals. In Tunisia, an executive of the tax authorities in charge of the verification mission is required to verify the proper application of the accounting and tax legislation in force, follow up on tax control operations on declared taxes and validate the sincerity of the accounts. This study focussed on the tax evasion of companies engaged in social responsibility practices according to the judgements of Tunisian tax authorities' auditors during the global COVID-19 pandemic.

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Social responsibility and tax evasion: organised hypocrisy of Tunisian professionals10.1108/JAAR-12-2022-0320Journal of Applied Accounting Research2023-07-13© 2023 Emerald Publishing LimitedSaida DammakManel Jmal Ep DerbelJournal of Applied Accounting Research2522023-07-1310.1108/JAAR-12-2022-0320https://www.emerald.com/insight/content/doi/10.1108/JAAR-12-2022-0320/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Implications of the COVID-19 pandemic on internal auditing: a field studyhttps://www.emerald.com/insight/content/doi/10.1108/JAAR-12-2021-0333/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe purpose of this paper is to examine the implications of the COVID-19 pandemic on internal auditing as the pandemic forced individual internal auditors and audit teams to conduct the work remotely. Five in-depth semi-structured interviews of internal audit experts that work in German retail and manufacturing industry were conducted between February and April 2021. The authors find that the importance of audit technologies did not change significantly due to the pandemic, as audit technologies were already an integral part of internal audits. Interestingly, the transition to remote audits occurred with remarkable speed and efficiency. The presence of well-functioning information and communication technologies emerges as a critical facilitator for effective remote communication, collaboration and data exchange. However, audit technologies can only partially replace physical on-site examinations and human interaction. The main challenges of remote audits are related to the auditing of non-digitalized processes and the inherent limitations of auditee interviews and interactions. The authors' interview approach does not allow to cover variations between industries and between countries. While internal audit experts provided notably consistent responses during the interviews, acknowledging that the sample size is very small is important. The COVID-19 pandemic serves as a catalyst for increased digitalization and technology adoption within the realm of internal auditing. A hybrid approach combining the benefits of on-site and remote audits is expected to prevail in the future. The paper is among the first to document the effects of the COVID-19 pandemic on the work of internal auditing using field-based research methods.Implications of the COVID-19 pandemic on internal auditing: a field study
Henry Jarva, Teresa Zeitler
Journal of Applied Accounting Research, Vol. 25, No. 2, pp.355-370

The purpose of this paper is to examine the implications of the COVID-19 pandemic on internal auditing as the pandemic forced individual internal auditors and audit teams to conduct the work remotely.

Five in-depth semi-structured interviews of internal audit experts that work in German retail and manufacturing industry were conducted between February and April 2021.

The authors find that the importance of audit technologies did not change significantly due to the pandemic, as audit technologies were already an integral part of internal audits. Interestingly, the transition to remote audits occurred with remarkable speed and efficiency. The presence of well-functioning information and communication technologies emerges as a critical facilitator for effective remote communication, collaboration and data exchange. However, audit technologies can only partially replace physical on-site examinations and human interaction. The main challenges of remote audits are related to the auditing of non-digitalized processes and the inherent limitations of auditee interviews and interactions.

The authors' interview approach does not allow to cover variations between industries and between countries. While internal audit experts provided notably consistent responses during the interviews, acknowledging that the sample size is very small is important.

The COVID-19 pandemic serves as a catalyst for increased digitalization and technology adoption within the realm of internal auditing. A hybrid approach combining the benefits of on-site and remote audits is expected to prevail in the future.

The paper is among the first to document the effects of the COVID-19 pandemic on the work of internal auditing using field-based research methods.

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Implications of the COVID-19 pandemic on internal auditing: a field study10.1108/JAAR-12-2021-0333Journal of Applied Accounting Research2023-07-04© 2023 Henry Jarva and Teresa ZeitlerHenry JarvaTeresa ZeitlerJournal of Applied Accounting Research2522023-07-0410.1108/JAAR-12-2021-0333https://www.emerald.com/insight/content/doi/10.1108/JAAR-12-2021-0333/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Henry Jarva and Teresa Zeitlerhttp://creativecommons.org/licences/by/4.0/legalcode
A difficult journey from enactment to implementation of local content policy: instigating factors and accountability mechanisms for achieving sustainable developmenthttps://www.emerald.com/insight/content/doi/10.1108/JAAR-02-2023-0043/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe study examines the instigating factors behind the development of the local content (LC) policy in Ghana and it further investigates the accountability mechanisms that drive the LC policy implementation to promote sustainable development. The study reports on a series of interviews with key actors using Institutional Theory and the application of Bovens’ (2010) Global Accountability Framework as a lens for discussion and interpretation of results. The results reveal that two forces instigated LC policy enactment. One is external funding pressure from the Norwegian government and the World Bank. The other is the government’s engagement of Civil Society Organisations and other internal stakeholders to justify its activities and missions to signal adherence to impartiality, neutrality, and, to a lesser extent, solidarity. The analysis also reveals tensions in how accountability legitimacy relates to implementation of the LC policy. The study further discovers that while participation, transparency, monitoring, and evaluation are frequently invoked as de jure institutional legitimacy in oil and gas contracts, actual practices follow normative (de facto) institutionalism rather than what the LC policy law provides. The interview had a relatively small number of participants, which can be argued to affect the study’s validity. Nevertheless, given the data saturation effect and the breadth of the data obtained from the respondents, this study represents a significant advancement in LC policy enactment knowledge, implementation mechanisms and enforcement in an emerging O&G industry. The findings of this study suggest that future policy development in emerging economies should involve detailed consultations to increase decision-maker knowledge, process transparency and expectations. This will improve implementation and reduce stakeholder tension, conflict and mistrust. The findings of this study build on earlier investigations into legitimacy, accountability and impression management in and outside the O&G sector. Also, the findings reveal the legitimising tactics used by O&G actors to promote local content sustainable development targets.A difficult journey from enactment to implementation of local content policy: instigating factors and accountability mechanisms for achieving sustainable development
Lexis Alexander Tetteh, Cletus Agyenim-Boateng, Samuel Nana Yaw Simpson
Journal of Applied Accounting Research, Vol. 25, No. 2, pp.371-394

The study examines the instigating factors behind the development of the local content (LC) policy in Ghana and it further investigates the accountability mechanisms that drive the LC policy implementation to promote sustainable development.

The study reports on a series of interviews with key actors using Institutional Theory and the application of Bovens’ (2010) Global Accountability Framework as a lens for discussion and interpretation of results.

The results reveal that two forces instigated LC policy enactment. One is external funding pressure from the Norwegian government and the World Bank. The other is the government’s engagement of Civil Society Organisations and other internal stakeholders to justify its activities and missions to signal adherence to impartiality, neutrality, and, to a lesser extent, solidarity. The analysis also reveals tensions in how accountability legitimacy relates to implementation of the LC policy. The study further discovers that while participation, transparency, monitoring, and evaluation are frequently invoked as de jure institutional legitimacy in oil and gas contracts, actual practices follow normative (de facto) institutionalism rather than what the LC policy law provides.

The interview had a relatively small number of participants, which can be argued to affect the study’s validity. Nevertheless, given the data saturation effect and the breadth of the data obtained from the respondents, this study represents a significant advancement in LC policy enactment knowledge, implementation mechanisms and enforcement in an emerging O&G industry.

The findings of this study suggest that future policy development in emerging economies should involve detailed consultations to increase decision-maker knowledge, process transparency and expectations. This will improve implementation and reduce stakeholder tension, conflict and mistrust.

The findings of this study build on earlier investigations into legitimacy, accountability and impression management in and outside the O&G sector. Also, the findings reveal the legitimising tactics used by O&G actors to promote local content sustainable development targets.

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A difficult journey from enactment to implementation of local content policy: instigating factors and accountability mechanisms for achieving sustainable development10.1108/JAAR-02-2023-0043Journal of Applied Accounting Research2023-07-04© 2023 Emerald Publishing LimitedLexis Alexander TettehCletus Agyenim-BoatengSamuel Nana Yaw SimpsonJournal of Applied Accounting Research2522023-07-0410.1108/JAAR-02-2023-0043https://www.emerald.com/insight/content/doi/10.1108/JAAR-02-2023-0043/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Accountability in French non-profit organizations: between paradox and complexityhttps://www.emerald.com/insight/content/doi/10.1108/JAAR-01-2023-0006/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis article examines whether accountability can contribute to the analysis of effectiveness in grassroots voluntary organizations (GVOs) in France. Based on recent studies and stakeholder theory, hypotheses are formulated about the negative link between accountability and financial effectiveness and a positive link between accountability and non-financial effectiveness. The findings show that accountability practices are positive determinants of financial indicators (apart from return on assets [ROA]) and employment of people in difficulty. In contrast, the other non-financial indicators are not explained by accountability practices. The study points out the complexity and paradoxes surrounding accountability and highlights the risk of insensitivity to it. It thus underlines a specific French situation, close to the risks of myopia linked to accountability. One possible explanation could be the coupling and decoupling mechanisms that allow non-profit organizations (NPOs) to regain power. Given the sometimes-random effects of accountability, producing nuanced theories is necessary, and governance should oscillate between equilibrium and adaptation in the face of stakeholders. Finally, this article introduces the risk of insensitivity of NPOs to accountability (i.e. they act as they wish, regardless of control mechanisms such as accountability). This study thus reveals governance dilemmas, which could be solved through less formal, more mission-oriented, more creative and therefore heterodox accountability. The French context of mistrust of certain managerial approaches and the development of codes of governance based on a disciplinary vision are confronted with a growing and critical literature on accountability in NPOs.Accountability in French non-profit organizations: between paradox and complexity
Guillaume Plaisance
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

This article examines whether accountability can contribute to the analysis of effectiveness in grassroots voluntary organizations (GVOs) in France.

Based on recent studies and stakeholder theory, hypotheses are formulated about the negative link between accountability and financial effectiveness and a positive link between accountability and non-financial effectiveness.

The findings show that accountability practices are positive determinants of financial indicators (apart from return on assets [ROA]) and employment of people in difficulty. In contrast, the other non-financial indicators are not explained by accountability practices.

The study points out the complexity and paradoxes surrounding accountability and highlights the risk of insensitivity to it. It thus underlines a specific French situation, close to the risks of myopia linked to accountability. One possible explanation could be the coupling and decoupling mechanisms that allow non-profit organizations (NPOs) to regain power. Given the sometimes-random effects of accountability, producing nuanced theories is necessary, and governance should oscillate between equilibrium and adaptation in the face of stakeholders. Finally, this article introduces the risk of insensitivity of NPOs to accountability (i.e. they act as they wish, regardless of control mechanisms such as accountability).

This study thus reveals governance dilemmas, which could be solved through less formal, more mission-oriented, more creative and therefore heterodox accountability.

The French context of mistrust of certain managerial approaches and the development of codes of governance based on a disciplinary vision are confronted with a growing and critical literature on accountability in NPOs.

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Accountability in French non-profit organizations: between paradox and complexity10.1108/JAAR-01-2023-0006Journal of Applied Accounting Research2023-08-01© 2023 Emerald Publishing LimitedGuillaume PlaisanceJournal of Applied Accounting Researchahead-of-printahead-of-print2023-08-0110.1108/JAAR-01-2023-0006https://www.emerald.com/insight/content/doi/10.1108/JAAR-01-2023-0006/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Audit partner attributes and key audit matters readabilityhttps://www.emerald.com/insight/content/doi/10.1108/JAAR-01-2023-0009/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe authors examine the association between two important audit partner characteristics and the readability of key audit matters (KAMs) disclosed in the audit reports. Specifically, the authors examine how the readability of KAMs is associated with audit partner tenure and workload. The authors conduct the study in the audit context of Norway and applied the Flesch reading ease scale to measure the readability levels of reported KAMs in the audit reports of companies listed on the Oslo Stock Exchange. Panel data estimation techniques are applied in estimating how partner tenure and workload are associated with the readability of KAMs. In addition, several robustness tests including different measures of KAMs readability and subsample analyses are performed. The authors find that audit partner tenure and workload have significant associations with the level of KAMs readability. Specifically, the results show that the reported KAMs become more readable as the audit partner tenure increases but are less readable for partners with more workload. These results appear stronger in subsamples of KAMs typically noted to be more complex and associated with higher risks. As KAMs represent the most significant issues in financial statements audit, these results provide important insights to stakeholders on the potential impact of audit partner tenure and workload on KAMs readability. Less readable KAMs could derail stakeholders' desire to bridge the information gap between auditors and users of the audit report. The uniqueness of this study lies in its focus on audit partner characteristics as opposed to the audit firm. Excessive audit partner workload impairs KAMs readability. As KAMs represent the most significant issues in financial statements audit, these results provide important insights to stakeholders on the potential impact of audit partner tenure and workload on KAMs readability. Less readable KAMs could derail stakeholders' desire to bridge the information gap between auditors and users of the audit report. The uniqueness of this study lies in its focus on audit partner characteristics as opposed to the audit firm.Audit partner attributes and key audit matters readability
Gordon Mwintome, Joseph Akadeagre Agana, Stephen Zamore
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

The authors examine the association between two important audit partner characteristics and the readability of key audit matters (KAMs) disclosed in the audit reports. Specifically, the authors examine how the readability of KAMs is associated with audit partner tenure and workload.

The authors conduct the study in the audit context of Norway and applied the Flesch reading ease scale to measure the readability levels of reported KAMs in the audit reports of companies listed on the Oslo Stock Exchange. Panel data estimation techniques are applied in estimating how partner tenure and workload are associated with the readability of KAMs. In addition, several robustness tests including different measures of KAMs readability and subsample analyses are performed.

The authors find that audit partner tenure and workload have significant associations with the level of KAMs readability. Specifically, the results show that the reported KAMs become more readable as the audit partner tenure increases but are less readable for partners with more workload. These results appear stronger in subsamples of KAMs typically noted to be more complex and associated with higher risks.

As KAMs represent the most significant issues in financial statements audit, these results provide important insights to stakeholders on the potential impact of audit partner tenure and workload on KAMs readability. Less readable KAMs could derail stakeholders' desire to bridge the information gap between auditors and users of the audit report. The uniqueness of this study lies in its focus on audit partner characteristics as opposed to the audit firm.

Excessive audit partner workload impairs KAMs readability.

As KAMs represent the most significant issues in financial statements audit, these results provide important insights to stakeholders on the potential impact of audit partner tenure and workload on KAMs readability. Less readable KAMs could derail stakeholders' desire to bridge the information gap between auditors and users of the audit report. The uniqueness of this study lies in its focus on audit partner characteristics as opposed to the audit firm.

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Audit partner attributes and key audit matters readability10.1108/JAAR-01-2023-0009Journal of Applied Accounting Research2023-09-29© 2023 Emerald Publishing LimitedGordon MwintomeJoseph Akadeagre AganaStephen ZamoreJournal of Applied Accounting Researchahead-of-printahead-of-print2023-09-2910.1108/JAAR-01-2023-0009https://www.emerald.com/insight/content/doi/10.1108/JAAR-01-2023-0009/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
The impact of climate risk on accounting conservatism: evidence from developing countrieshttps://www.emerald.com/insight/content/doi/10.1108/JAAR-01-2023-0028/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe authors examine the effect of climate risk on accounting conservatism for a sample of listed companies operating in 26 developing countries. The authors employ the Climate Risk Index (CRI) developed by Germanwatch to capture the severity of losses due to extreme weather events at the country level. The authors use different approaches to measure firm-level accounting conservatism. The authors find that greater climate risk leads to a lower level of accounting conservatism. The results hold even after using different estimation methods. Although the authors' analysis is limited to the period 2007–2016, it could be helpful for standard setters such as International Accounting Standards Board (IASB) and International Sustainable Standards Board (ISSB) as they may consider the potential effect of climate risk in their international standards. The negative impacts of climate risk on the quality of financial reporting as proxied by accounting conservatism could trigger regulators and standard setters to require disclosure of information relating to climate risks and to incorporate climate-related risks in their risk management systems. In addition, for policymakers, incorporating accounting conservatism as a financial quality reporting standard could help promote greater transparency, accuracy and reliability in financial reporting in the context of climate risk. The authors add to the literature on international differences in accounting conservatism by showing that climate risk significantly affects unconditional and conditional conservatism. The authors' results provide fresh evidence of the dark side of climate change. That is, climate risk is shown to decrease financial reporting quality.The impact of climate risk on accounting conservatism: evidence from developing countries
Maha Khalifa, Haykel Zouaoui, Hakim Ben Othman, Khaled Hussainey
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

The authors examine the effect of climate risk on accounting conservatism for a sample of listed companies operating in 26 developing countries.

The authors employ the Climate Risk Index (CRI) developed by Germanwatch to capture the severity of losses due to extreme weather events at the country level. The authors use different approaches to measure firm-level accounting conservatism.

The authors find that greater climate risk leads to a lower level of accounting conservatism. The results hold even after using different estimation methods.

Although the authors' analysis is limited to the period 2007–2016, it could be helpful for standard setters such as International Accounting Standards Board (IASB) and International Sustainable Standards Board (ISSB) as they may consider the potential effect of climate risk in their international standards.

The negative impacts of climate risk on the quality of financial reporting as proxied by accounting conservatism could trigger regulators and standard setters to require disclosure of information relating to climate risks and to incorporate climate-related risks in their risk management systems. In addition, for policymakers, incorporating accounting conservatism as a financial quality reporting standard could help promote greater transparency, accuracy and reliability in financial reporting in the context of climate risk.

The authors add to the literature on international differences in accounting conservatism by showing that climate risk significantly affects unconditional and conditional conservatism. The authors' results provide fresh evidence of the dark side of climate change. That is, climate risk is shown to decrease financial reporting quality.

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The impact of climate risk on accounting conservatism: evidence from developing countries10.1108/JAAR-01-2023-0028Journal of Applied Accounting Research2023-09-05© 2023 Emerald Publishing LimitedMaha KhalifaHaykel ZouaouiHakim Ben OthmanKhaled HussaineyJournal of Applied Accounting Researchahead-of-printahead-of-print2023-09-0510.1108/JAAR-01-2023-0028https://www.emerald.com/insight/content/doi/10.1108/JAAR-01-2023-0028/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Public firm presence, growth opportunity and investment in fixed intangible assets of private UK firmshttps://www.emerald.com/insight/content/doi/10.1108/JAAR-01-2023-0032/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestPrior studies suggest that, in an industry in which several public firms operate (i.e. greater public firm presence), uncertainty about business operations within the industry is reduced due to greater analyst coverage and quality of information disclosure. In this study, the authors examine how UK private firms respond to investment opportunities in fixed intangible assets (FIAs) in an environment characterised by greater public firm presence (PFP). Using data from 61,278 (1,358) private (public) UK firms operating in ten sectors spanning from 2006 to 2016, the authors conduct this analysis by using panel econometric techniques. The authors observe that private firms are more responsive to their FIA investment opportunities when they operate in industries with more PFP. Also, the authors find that firms in industries with better information quality use more debt and have longer debt maturity security but less internal cash flow. Overall, the findings indicate that PFP generates positive externalities for private firms by lessening industry uncertainty and enhancing more efficient FIA investment. The results are robust to endogeneity concerns. A key limitation of the study is that it focuses on a single country (the UK) and therefore there is a likelihood that the results found are specific to this setting but not others, particularly developing and emerging economies. Thus, future studies could explore these ideas from the viewpoint of multiple countries. Overall, the study demonstrates the importance of information disclosure in driving investment decisions of firms. While this paper builds on the information disclosure and corporate investment literature, it is one of the first attempts, to the best of the authors’ knowledge, to explore how private UK firms respond to investment in FIAs in an environment characterised by greater PFP.Public firm presence, growth opportunity and investment in fixed intangible assets of private UK firms
Albert Danso, Emmanuel Adu-Ameyaw, Agyenim Boateng, Bolaji Iyiola
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

Prior studies suggest that, in an industry in which several public firms operate (i.e. greater public firm presence), uncertainty about business operations within the industry is reduced due to greater analyst coverage and quality of information disclosure. In this study, the authors examine how UK private firms respond to investment opportunities in fixed intangible assets (FIAs) in an environment characterised by greater public firm presence (PFP).

Using data from 61,278 (1,358) private (public) UK firms operating in ten sectors spanning from 2006 to 2016, the authors conduct this analysis by using panel econometric techniques.

The authors observe that private firms are more responsive to their FIA investment opportunities when they operate in industries with more PFP. Also, the authors find that firms in industries with better information quality use more debt and have longer debt maturity security but less internal cash flow. Overall, the findings indicate that PFP generates positive externalities for private firms by lessening industry uncertainty and enhancing more efficient FIA investment. The results are robust to endogeneity concerns.

A key limitation of the study is that it focuses on a single country (the UK) and therefore there is a likelihood that the results found are specific to this setting but not others, particularly developing and emerging economies. Thus, future studies could explore these ideas from the viewpoint of multiple countries.

Overall, the study demonstrates the importance of information disclosure in driving investment decisions of firms.

While this paper builds on the information disclosure and corporate investment literature, it is one of the first attempts, to the best of the authors’ knowledge, to explore how private UK firms respond to investment in FIAs in an environment characterised by greater PFP.

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Public firm presence, growth opportunity and investment in fixed intangible assets of private UK firms10.1108/JAAR-01-2023-0032Journal of Applied Accounting Research2023-11-20© 2023 Emerald Publishing LimitedAlbert DansoEmmanuel Adu-AmeyawAgyenim BoatengBolaji IyiolaJournal of Applied Accounting Researchahead-of-printahead-of-print2023-11-2010.1108/JAAR-01-2023-0032https://www.emerald.com/insight/content/doi/10.1108/JAAR-01-2023-0032/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Top management characteristics and comprehensive focus on budgetinghttps://www.emerald.com/insight/content/doi/10.1108/JAAR-02-2023-0036/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study examines how the strong emphasis placed on the purposes of budgeting, referring to a comprehensive focus on budgeting, is related to top managers' education and tenure while controlling for their functional positions in their respective firms and ages, as well as several company-specific predictors (information quality, firm size, information technology, importance of profit and strategy). Survey data were collected from senior managers of large manufacturing firms in Finland and Sweden. The results suggest that academic business education is positively associated with a comprehensive focus on budgeting, but tenure as well as functional position in the company (Chief Financial Officer (CFO) or not) and age are not. Overall, the company-specific control variables in general and information quality in particular are shown to have greater explanatory power than the top management characteristics analyzed. This study identifies several empirically supported factors that seem to contribute to a comprehensive focus on budgeting. The effects of information quality, business education, the importance of profit and firm size could be considered in future research. Academic business education matters more than the other top management characteristics analyzed. If organizations want to make comprehensive use of budgets, they should employ business graduates and be mindful of company-specific variables. This study is the first to address a comprehensive focus on budgeting and some of its determinants. Future research could investigate a broader set of such determinants in different contexts.Top management characteristics and comprehensive focus on budgeting
Lili-Anne Kihn, Eva Ström
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study examines how the strong emphasis placed on the purposes of budgeting, referring to a comprehensive focus on budgeting, is related to top managers' education and tenure while controlling for their functional positions in their respective firms and ages, as well as several company-specific predictors (information quality, firm size, information technology, importance of profit and strategy).

Survey data were collected from senior managers of large manufacturing firms in Finland and Sweden.

The results suggest that academic business education is positively associated with a comprehensive focus on budgeting, but tenure as well as functional position in the company (Chief Financial Officer (CFO) or not) and age are not. Overall, the company-specific control variables in general and information quality in particular are shown to have greater explanatory power than the top management characteristics analyzed.

This study identifies several empirically supported factors that seem to contribute to a comprehensive focus on budgeting. The effects of information quality, business education, the importance of profit and firm size could be considered in future research.

Academic business education matters more than the other top management characteristics analyzed. If organizations want to make comprehensive use of budgets, they should employ business graduates and be mindful of company-specific variables.

This study is the first to address a comprehensive focus on budgeting and some of its determinants. Future research could investigate a broader set of such determinants in different contexts.

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Top management characteristics and comprehensive focus on budgeting10.1108/JAAR-02-2023-0036Journal of Applied Accounting Research2023-12-19© 2023 Lili-Anne Kihn and Eva StrömLili-Anne KihnEva StrömJournal of Applied Accounting Researchahead-of-printahead-of-print2023-12-1910.1108/JAAR-02-2023-0036https://www.emerald.com/insight/content/doi/10.1108/JAAR-02-2023-0036/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Lili-Anne Kihn and Eva Strömhttp://creativecommons.org/licences/by/4.0/legalcode
The impact of directors' attributes on IFRS fair value disclosure: an institutional perspectivehttps://www.emerald.com/insight/content/doi/10.1108/JAAR-02-2023-0038/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe current study investigates the impact of directors' attributes on the extent of compliance with International Financial Reporting Standards (IFRS) fair value disclosure requirements. The attributes investigated include directors' human capital (accounting qualification) and social capital (political association), directors' share ownership and the power distance between the chief executive officer (CEO) and the rest of the board members. The study uses disclosure analysis to measure the extent of compliance with the fair value disclosure requirements of IFRS. Ordinary least squares (OLS) regression is used to test the relationship between the disclosure score and directors' attributes. Data were collected from the annual reports and websites of the sample companies. Contrary to conventional belief, this study's findings suggest that directors' social capital and the power distance between the CEO and the rest of the board act as more powerful factors than directors' human capital in explaining corporate mandatory disclosure. Specifically, the results indicate that powerful actors form a dominant coalition and co-opt influential constituents from the institutional domain to neutralize the effect of legal coercion and the accounting expertise of board members and Big Four audit firms on the extent of compliance with institutional (fair value) rules. This study utilizes Oliver's (1991) framework of strategic response to institutional processes in the Bangladeshi context. Although the study provides new insights into corporate disclosure practices, findings are not generalizable due to different institutional settings in different countries. Therefore, future studies could replicate the approach in different institutional settings. The findings of this study will be of interest to the International Accounting Standards Board (IASB) as it focuses on a developing country that has adopted IFRS 13 and other fair value-related standards relatively recently. The disclosure analysis contained in this study represents the first comprehensive analysis of the extent of compliance with the fair value disclosure requirements of IFRS. Furthermore, this study considers the impact of directors' social capital and finds that it is a more powerful determinant of the extent of compliance with IFRS as compared to human capital.The impact of directors' attributes on IFRS fair value disclosure: an institutional perspective
Imam Arafat, Suzanne Fifield, Theresa Dunne
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

The current study investigates the impact of directors' attributes on the extent of compliance with International Financial Reporting Standards (IFRS) fair value disclosure requirements. The attributes investigated include directors' human capital (accounting qualification) and social capital (political association), directors' share ownership and the power distance between the chief executive officer (CEO) and the rest of the board members.

The study uses disclosure analysis to measure the extent of compliance with the fair value disclosure requirements of IFRS. Ordinary least squares (OLS) regression is used to test the relationship between the disclosure score and directors' attributes. Data were collected from the annual reports and websites of the sample companies.

Contrary to conventional belief, this study's findings suggest that directors' social capital and the power distance between the CEO and the rest of the board act as more powerful factors than directors' human capital in explaining corporate mandatory disclosure. Specifically, the results indicate that powerful actors form a dominant coalition and co-opt influential constituents from the institutional domain to neutralize the effect of legal coercion and the accounting expertise of board members and Big Four audit firms on the extent of compliance with institutional (fair value) rules.

This study utilizes Oliver's (1991) framework of strategic response to institutional processes in the Bangladeshi context. Although the study provides new insights into corporate disclosure practices, findings are not generalizable due to different institutional settings in different countries. Therefore, future studies could replicate the approach in different institutional settings.

The findings of this study will be of interest to the International Accounting Standards Board (IASB) as it focuses on a developing country that has adopted IFRS 13 and other fair value-related standards relatively recently.

The disclosure analysis contained in this study represents the first comprehensive analysis of the extent of compliance with the fair value disclosure requirements of IFRS. Furthermore, this study considers the impact of directors' social capital and finds that it is a more powerful determinant of the extent of compliance with IFRS as compared to human capital.

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The impact of directors' attributes on IFRS fair value disclosure: an institutional perspective10.1108/JAAR-02-2023-0038Journal of Applied Accounting Research2023-12-07© 2023 Emerald Publishing LimitedImam ArafatSuzanne FifieldTheresa DunneJournal of Applied Accounting Researchahead-of-printahead-of-print2023-12-0710.1108/JAAR-02-2023-0038https://www.emerald.com/insight/content/doi/10.1108/JAAR-02-2023-0038/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
A corporate risk assessment and reporting model in emerging economieshttps://www.emerald.com/insight/content/doi/10.1108/JAAR-02-2023-0047/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe growing business complexity has caused many risks (e.g. operational, financial, reputational, cybersecurity, regulatory and compliance) that threaten companies' sustainability and have received attention from regulators, investors, and businesses. The authors present a model for assessing and reporting corporate risk by examining the indicators underlying corporate risk reporting. A thorough review of the literature and semi-structured interviews with experts were conducted and the fuzzy Delphi technique was used to obtain consensus and screening of risks. The relationships between these risk indicators were recognized, weighted and prioritized by employing a hybrid Decision Making Trial and Evaluation Laboratory Model (DEMATEL) method integrated with Analytic Network Process (ANP) (DEMATEL-ANP [DANP]) approach. Finally, using the Iranian setting of corporate risk reporting, a model was developed to calculate the risk-reporting scores. The results indicate that risk disclosure quality is more important than risk disclosures' textual properties and quantity. According to the experts, reporting the key risks that the company faces, management's approach to dealing with these risks and quantifying their impact are more important than the other indicators. The results also show that risk reporting in Iran lacks quantitative and specific information, and most risk disclosures are sticky. The data have been prepared and analyzed according to the unique Iranian reporting environment, which should be considered when interpreting the results. The results of this research can be used by the regulators of the Stock Exchange Organizations (SEO) to evaluate corporate risk reports and rank companies. Results are also relevant to investors and policymakers to identify companies with poor risk disclosure and to take necessary measures to improve their reporting practices. This paper contributes to the social and governance literature by presenting the importance of risk reporting in corporate disclosures. The unique Iranian setting of corporate risk reporting furthers the understanding of risk reporting and thus provides education, policy, practice and research implications for other emerging economies like Iran. Many prior studies focus mainly on the quality of risk disclosure, and other aspects of corporate risk disclosure presented in the study have remained largely overlooked. The corporate risk reporting attributes identified in the study are relevant to the rise of non-financial risks, the textual and qualitative nature of risk reporting and textual risk disclosures.A corporate risk assessment and reporting model in emerging economies
Ghassem Blue, Omid Faraji, Mohsen Khotanlou, Zabihollah Rezaee
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

The growing business complexity has caused many risks (e.g. operational, financial, reputational, cybersecurity, regulatory and compliance) that threaten companies' sustainability and have received attention from regulators, investors, and businesses. The authors present a model for assessing and reporting corporate risk by examining the indicators underlying corporate risk reporting.

A thorough review of the literature and semi-structured interviews with experts were conducted and the fuzzy Delphi technique was used to obtain consensus and screening of risks. The relationships between these risk indicators were recognized, weighted and prioritized by employing a hybrid Decision Making Trial and Evaluation Laboratory Model (DEMATEL) method integrated with Analytic Network Process (ANP) (DEMATEL-ANP [DANP]) approach. Finally, using the Iranian setting of corporate risk reporting, a model was developed to calculate the risk-reporting scores.

The results indicate that risk disclosure quality is more important than risk disclosures' textual properties and quantity. According to the experts, reporting the key risks that the company faces, management's approach to dealing with these risks and quantifying their impact are more important than the other indicators. The results also show that risk reporting in Iran lacks quantitative and specific information, and most risk disclosures are sticky.

The data have been prepared and analyzed according to the unique Iranian reporting environment, which should be considered when interpreting the results.

The results of this research can be used by the regulators of the Stock Exchange Organizations (SEO) to evaluate corporate risk reports and rank companies. Results are also relevant to investors and policymakers to identify companies with poor risk disclosure and to take necessary measures to improve their reporting practices.

This paper contributes to the social and governance literature by presenting the importance of risk reporting in corporate disclosures.

The unique Iranian setting of corporate risk reporting furthers the understanding of risk reporting and thus provides education, policy, practice and research implications for other emerging economies like Iran. Many prior studies focus mainly on the quality of risk disclosure, and other aspects of corporate risk disclosure presented in the study have remained largely overlooked. The corporate risk reporting attributes identified in the study are relevant to the rise of non-financial risks, the textual and qualitative nature of risk reporting and textual risk disclosures.

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A corporate risk assessment and reporting model in emerging economies10.1108/JAAR-02-2023-0047Journal of Applied Accounting Research2023-09-26© 2023 Emerald Publishing LimitedGhassem BlueOmid FarajiMohsen KhotanlouZabihollah RezaeeJournal of Applied Accounting Researchahead-of-printahead-of-print2023-09-2610.1108/JAAR-02-2023-0047https://www.emerald.com/insight/content/doi/10.1108/JAAR-02-2023-0047/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Market reaction to mandatory sustainability disclosures: evidence from Singaporehttps://www.emerald.com/insight/content/doi/10.1108/JAAR-02-2023-0060/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study aims to investigate the equity market reaction to sustainability disclosure measures derived from firms' inaugural sustainability reports following the implementation of mandatory sustainability reporting in Singapore. This study explores the equity market reaction to first-time sustainability reports of mandatory adopters and compares the reactions between voluntary and mandatory adopters. To mitigate any imbalanced distribution effects, entropy balancing techniques are employed. The author observes a significant equity market reaction when mandatory adopters adhere to a reporting framework and release sustainability reports as standalone documents. Additionally, the study indicates that government regulation amplifies the equity market reaction for companies that include a board statement within their sustainability reports and present them as standalone publications. The lack of quantitative information disclosed in the first-time sustainability reports may restrict the generalizability of the findings. The findings provide valuable insights for organizations and managers to evaluate the market's response to sustainability disclosures and improve communication effectiveness with investors. Furthermore, the study has direct policy implications for global standard-setting organizations in sustainability reporting. The findings support the notion that investors value market-led and investor-focused sustainability disclosures. The study contributes to the limited body of research that examines the capital market effects of mandatory sustainability disclosures. To the author’s knowledge, this is among a few studies to directly investigate the equity market reaction to mandatory sustainability disclosures at the firm level.Market reaction to mandatory sustainability disclosures: evidence from Singapore
Jerry Chen
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study aims to investigate the equity market reaction to sustainability disclosure measures derived from firms' inaugural sustainability reports following the implementation of mandatory sustainability reporting in Singapore.

This study explores the equity market reaction to first-time sustainability reports of mandatory adopters and compares the reactions between voluntary and mandatory adopters. To mitigate any imbalanced distribution effects, entropy balancing techniques are employed.

The author observes a significant equity market reaction when mandatory adopters adhere to a reporting framework and release sustainability reports as standalone documents. Additionally, the study indicates that government regulation amplifies the equity market reaction for companies that include a board statement within their sustainability reports and present them as standalone publications.

The lack of quantitative information disclosed in the first-time sustainability reports may restrict the generalizability of the findings.

The findings provide valuable insights for organizations and managers to evaluate the market's response to sustainability disclosures and improve communication effectiveness with investors. Furthermore, the study has direct policy implications for global standard-setting organizations in sustainability reporting. The findings support the notion that investors value market-led and investor-focused sustainability disclosures.

The study contributes to the limited body of research that examines the capital market effects of mandatory sustainability disclosures. To the author’s knowledge, this is among a few studies to directly investigate the equity market reaction to mandatory sustainability disclosures at the firm level.

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Market reaction to mandatory sustainability disclosures: evidence from Singapore10.1108/JAAR-02-2023-0060Journal of Applied Accounting Research2023-10-03© 2023 Emerald Publishing LimitedJerry ChenJournal of Applied Accounting Researchahead-of-printahead-of-print2023-10-0310.1108/JAAR-02-2023-0060https://www.emerald.com/insight/content/doi/10.1108/JAAR-02-2023-0060/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Banking research in the GCC region and agenda for future research – A bibliometric examinationhttps://www.emerald.com/insight/content/doi/10.1108/JAAR-03-2023-0070/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis paper provides a comprehensive review of the influential and intellectual aspects of the literature on the Gulf Cooperation Council (GCC) region's banking activities. This study undertakes a bibliometric meta-analysis review of the GCC region banking literature, covering 199 articles published between 2004 and 2022, extracted from the Web of Science (WoS) database, followed by a content analysis of highly cited papers. This paper identifies the influential aspects of the GCC region banking literature in terms of journals, articles, authors, universities and countries. The paper also identifies and discusses five major research clusters: (1) bank efficiency; (2) corporate governance (CG) and disclosure; (3) performance and risk-taking; (4) systemic risk, bank stability and risk spillovers and (5) intellectual capital (IC). Finally, it identifies gaps in the literature and highlights some important research issues that provide directions for future research. This paper is limited to the articles indexed in the WoS database and written in English. Though the WoS database encompasses a wide range of multidisciplinary journals, there is a chance that some relevant articles are not included in the WoS database or written in another language. This study provides regulators, practitioners and academics with valuable insight and an in-depth understanding of the banking system of the GCC region. To the best of the authors' knowledge, this is the first review paper on GCC region banking literature. This study provides regulators, practitioners and academics with valuable insight and an in-depth understanding of the banking system of the GCC region.Banking research in the GCC region and agenda for future research – A bibliometric examination
Rajib Shome, Hany Elbardan, Hassan Yazdifar
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

This paper provides a comprehensive review of the influential and intellectual aspects of the literature on the Gulf Cooperation Council (GCC) region's banking activities.

This study undertakes a bibliometric meta-analysis review of the GCC region banking literature, covering 199 articles published between 2004 and 2022, extracted from the Web of Science (WoS) database, followed by a content analysis of highly cited papers.

This paper identifies the influential aspects of the GCC region banking literature in terms of journals, articles, authors, universities and countries. The paper also identifies and discusses five major research clusters: (1) bank efficiency; (2) corporate governance (CG) and disclosure; (3) performance and risk-taking; (4) systemic risk, bank stability and risk spillovers and (5) intellectual capital (IC). Finally, it identifies gaps in the literature and highlights some important research issues that provide directions for future research.

This paper is limited to the articles indexed in the WoS database and written in English. Though the WoS database encompasses a wide range of multidisciplinary journals, there is a chance that some relevant articles are not included in the WoS database or written in another language.

This study provides regulators, practitioners and academics with valuable insight and an in-depth understanding of the banking system of the GCC region.

To the best of the authors' knowledge, this is the first review paper on GCC region banking literature. This study provides regulators, practitioners and academics with valuable insight and an in-depth understanding of the banking system of the GCC region.

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Banking research in the GCC region and agenda for future research – A bibliometric examination10.1108/JAAR-03-2023-0070Journal of Applied Accounting Research2023-12-15© 2023 Emerald Publishing LimitedRajib ShomeHany ElbardanHassan YazdifarJournal of Applied Accounting Researchahead-of-printahead-of-print2023-12-1510.1108/JAAR-03-2023-0070https://www.emerald.com/insight/content/doi/10.1108/JAAR-03-2023-0070/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Tying the knot – linking bootstrapping and working capital management in established enterpriseshttps://www.emerald.com/insight/content/doi/10.1108/JAAR-03-2023-0078/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestBootstrapping is a practitioner-based term adopted in entrepreneurship to describe the techniques employed in micro, small and medium-sized enterprises (MSMEs) to minimise the need for external funding by securing resources at little or no cost and applying strategies to effectively use resources. Working capital management (WCM) is a term used in financial management to define a set of practices used to manage business resources, including cash management. This paper explores the overlap and divergence between these two disciplinary distinct concepts. A dual methodology is employed. First, the usage of the two terms in prior literature is analysed and synthesised. Second, the study uses factor analysis to explore how bootstrapping practices described by owners of 167 established MSMEs relate to the components of WCM in financial management. The factor analysis identifies two main bootstrapping practices employed by MSMEs: (1) delaying payments and owner-related bootstrapping and (2) customer-related bootstrapping. Delaying payments is an integral practice in trade payables management and customer-related bootstrapping includes practices that are integral to trade receivables management. Therefore, links between bootstrapping practices and WCM practices are firmly established. The study is not without limitations. Based on cross-sectional evidence for established firms in Ireland only, future studies could explore cross-country longitudinal panel data to fully examine life cycle and sectoral effects, as well as other external shocks (for example, COVID-19) on bootstrapping and WCM practices. This study does not explain why some factors (for example, joint utilisation and inventory management) are present in some bootstrapping studies and not in others; further case study research might help explain this. Finally, changes in the business environment facing start-ups and established enterprise, including increased digitalisation, online trading, self-employment, remote hub working and sustainability, offer new avenues for bootstrapping research. This is the first study to comprehensively explore the conceptual and empirical links between bootstrapping and WCM. This study will enable researchers and practitioners in these two distinct disciplines to learn from each other. Accounting researchers and practitioners can broaden their understanding of how WCM “works” in MSME settings. Similarly, entrepreneurship researchers and practitioners can deepen their understanding of how bootstrapping can be adopted by businesses to manage resources effectively.Tying the knot – linking bootstrapping and working capital management in established enterprises
Margaret Fitzsimons, Teresa Hogan, Michael Thomas Hayden
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

Bootstrapping is a practitioner-based term adopted in entrepreneurship to describe the techniques employed in micro, small and medium-sized enterprises (MSMEs) to minimise the need for external funding by securing resources at little or no cost and applying strategies to effectively use resources. Working capital management (WCM) is a term used in financial management to define a set of practices used to manage business resources, including cash management. This paper explores the overlap and divergence between these two disciplinary distinct concepts.

A dual methodology is employed. First, the usage of the two terms in prior literature is analysed and synthesised. Second, the study uses factor analysis to explore how bootstrapping practices described by owners of 167 established MSMEs relate to the components of WCM in financial management.

The factor analysis identifies two main bootstrapping practices employed by MSMEs: (1) delaying payments and owner-related bootstrapping and (2) customer-related bootstrapping. Delaying payments is an integral practice in trade payables management and customer-related bootstrapping includes practices that are integral to trade receivables management. Therefore, links between bootstrapping practices and WCM practices are firmly established.

The study is not without limitations. Based on cross-sectional evidence for established firms in Ireland only, future studies could explore cross-country longitudinal panel data to fully examine life cycle and sectoral effects, as well as other external shocks (for example, COVID-19) on bootstrapping and WCM practices. This study does not explain why some factors (for example, joint utilisation and inventory management) are present in some bootstrapping studies and not in others; further case study research might help explain this. Finally, changes in the business environment facing start-ups and established enterprise, including increased digitalisation, online trading, self-employment, remote hub working and sustainability, offer new avenues for bootstrapping research.

This is the first study to comprehensively explore the conceptual and empirical links between bootstrapping and WCM. This study will enable researchers and practitioners in these two distinct disciplines to learn from each other. Accounting researchers and practitioners can broaden their understanding of how WCM “works” in MSME settings. Similarly, entrepreneurship researchers and practitioners can deepen their understanding of how bootstrapping can be adopted by businesses to manage resources effectively.

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Tying the knot – linking bootstrapping and working capital management in established enterprises10.1108/JAAR-03-2023-0078Journal of Applied Accounting Research2023-11-02© 2023 Margaret Fitzsimons, Teresa Hogan and Michael Thomas HaydenMargaret FitzsimonsTeresa HoganMichael Thomas HaydenJournal of Applied Accounting Researchahead-of-printahead-of-print2023-11-0210.1108/JAAR-03-2023-0078https://www.emerald.com/insight/content/doi/10.1108/JAAR-03-2023-0078/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Margaret Fitzsimons, Teresa Hogan and Michael Thomas Haydenhttp://creativecommons.org/licences/by/4.0/legalcode
Founder ownership concentration and risk disclosures: an emerging economy viewhttps://www.emerald.com/insight/content/doi/10.1108/JAAR-03-2023-0081/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis paper examines the impact of founder ownership concentration (FOC) on risk disclosures. It further investigates the moderating role of risk governance in the association between FOC and risk disclosures. We use data from the top 200 Indian listed firms as our sample and rely on ordinary least squares (OLS) for our results. In addition, we use the propensity score matching, Heckman selection model and instrumental variable estimates for robustness checks. We find that FOC decreases the risk disclosures. However, the effectiveness of risk management committee composition (risk governance) mitigates the negative influence of FOC on risk disclosures. The paper is built on the agency theory. Based on the agency theory, the ownership concentration has two implications: first, it reduces the conflicts between managers and shareholders. Here, the managers act in favour of shareholders and therefore, brings more risk disclosers. Second, it invites conflicts between controlling and minority shareholders. The study is, therefore, interesting to see the cost and benefits of FOC on risk disclosures. The study has practical implications for the regulatory bodies to encourage risk disclosures and benefit the outsiders of the firm. It also has implications for the companies to see the benefits of risk management committee as improved risk governance. It contributes to the literature of risk disclosures and risk governance in emerging economies. It is the first study to investigate the role of risk governance in mitigating the adverse effects of founder’s ownership on risk disclosures in developing economies. It also contributes to the theory of agency cost and information asymmetry.Founder ownership concentration and risk disclosures: an emerging economy view
Surbhi Jain, Mehul Raithatha
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

This paper examines the impact of founder ownership concentration (FOC) on risk disclosures. It further investigates the moderating role of risk governance in the association between FOC and risk disclosures.

We use data from the top 200 Indian listed firms as our sample and rely on ordinary least squares (OLS) for our results. In addition, we use the propensity score matching, Heckman selection model and instrumental variable estimates for robustness checks.

We find that FOC decreases the risk disclosures. However, the effectiveness of risk management committee composition (risk governance) mitigates the negative influence of FOC on risk disclosures.

The paper is built on the agency theory. Based on the agency theory, the ownership concentration has two implications: first, it reduces the conflicts between managers and shareholders. Here, the managers act in favour of shareholders and therefore, brings more risk disclosers. Second, it invites conflicts between controlling and minority shareholders. The study is, therefore, interesting to see the cost and benefits of FOC on risk disclosures.

The study has practical implications for the regulatory bodies to encourage risk disclosures and benefit the outsiders of the firm. It also has implications for the companies to see the benefits of risk management committee as improved risk governance.

It contributes to the literature of risk disclosures and risk governance in emerging economies. It is the first study to investigate the role of risk governance in mitigating the adverse effects of founder’s ownership on risk disclosures in developing economies. It also contributes to the theory of agency cost and information asymmetry.

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Founder ownership concentration and risk disclosures: an emerging economy view10.1108/JAAR-03-2023-0081Journal of Applied Accounting Research2024-02-06© 2024 Emerald Publishing LimitedSurbhi JainMehul RaithathaJournal of Applied Accounting Researchahead-of-printahead-of-print2024-02-0610.1108/JAAR-03-2023-0081https://www.emerald.com/insight/content/doi/10.1108/JAAR-03-2023-0081/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2024 Emerald Publishing Limited
Business strategy and the cost of equity: the mediating role of accounting information qualityhttps://www.emerald.com/insight/content/doi/10.1108/JAAR-05-2022-0120/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe study examines the mediating role of accounting information quality (AQ), a proxy for firms' information risk, in firms' business strategy and the cost of equity (COE) nexus to highlight how AQ provides a mechanism through which a company's business strategy affects its COE. The research study utilises data from 12,100 firm-year observations of United States (US) non-financial firms from 2001 to 2017, drawn from multiple databases, and employs the bootstrapping method of mediation analysis to test the indirect effect of AQ on the business strategy–COE relationship. The authors rely on Miles and Snow's two pure business strategy typologies, prospectors and defenders and use innate accrual quality and implied COE models to measure AQ and COE, respectively. The results suggest that AQ partially mediates the relationship between business strategy and COE. The authors document that while innovative-oriented prospector firms have a lower AQ and a higher implied COE, efficiency-oriented defenders are associated with a higher AQ and lower COE. The higher (lower) COE of prospector (defender) firms is observed to be partly due to their lower (higher) AQ. The results indicate that while the idiosyncratic risk implied in firms' strategic orientation can directly influence their COE, the business strategy implications on firms' COE can be indirect through their AQ, a source of information risk. Due to data limitation, it was not possible to measure all possible methods of measuring implied COE. The paper highlights the role of firm's business strategy in pricing decisions by investors. The paper contributes to the existing literature by providing evidence that AQ, a proxy for information risk, is a mechanism through which business strategy affects firms' COE. The authors thus complement extant literature to empirically test the information risk effect inherent in strategic orientation on security pricing.Business strategy and the cost of equity: the mediating role of accounting information quality
Teddy Ossei Kwakye, Kamran Ahmed
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

The study examines the mediating role of accounting information quality (AQ), a proxy for firms' information risk, in firms' business strategy and the cost of equity (COE) nexus to highlight how AQ provides a mechanism through which a company's business strategy affects its COE.

The research study utilises data from 12,100 firm-year observations of United States (US) non-financial firms from 2001 to 2017, drawn from multiple databases, and employs the bootstrapping method of mediation analysis to test the indirect effect of AQ on the business strategy–COE relationship. The authors rely on Miles and Snow's two pure business strategy typologies, prospectors and defenders and use innate accrual quality and implied COE models to measure AQ and COE, respectively.

The results suggest that AQ partially mediates the relationship between business strategy and COE. The authors document that while innovative-oriented prospector firms have a lower AQ and a higher implied COE, efficiency-oriented defenders are associated with a higher AQ and lower COE. The higher (lower) COE of prospector (defender) firms is observed to be partly due to their lower (higher) AQ. The results indicate that while the idiosyncratic risk implied in firms' strategic orientation can directly influence their COE, the business strategy implications on firms' COE can be indirect through their AQ, a source of information risk.

Due to data limitation, it was not possible to measure all possible methods of measuring implied COE.

The paper highlights the role of firm's business strategy in pricing decisions by investors.

The paper contributes to the existing literature by providing evidence that AQ, a proxy for information risk, is a mechanism through which business strategy affects firms' COE. The authors thus complement extant literature to empirically test the information risk effect inherent in strategic orientation on security pricing.

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Business strategy and the cost of equity: the mediating role of accounting information quality10.1108/JAAR-05-2022-0120Journal of Applied Accounting Research2023-08-07© 2023 Emerald Publishing LimitedTeddy Ossei KwakyeKamran AhmedJournal of Applied Accounting Researchahead-of-printahead-of-print2023-08-0710.1108/JAAR-05-2022-0120https://www.emerald.com/insight/content/doi/10.1108/JAAR-05-2022-0120/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
An experimental study on the effect of penalties on employers' trust and employees' reciprocity and the moderating effect of communicationhttps://www.emerald.com/insight/content/doi/10.1108/JAAR-05-2022-0122/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThere is growing scholarly interest in the use of penalty in employment contracts which reduce employees' pay if the employee's performance does not meet a pre-specified performance threshold. Prior accounting research has focused exclusively on the effect of penalty on employee performance. In this study, the authors extend earlier research by examining how penalty affects the employers' wage offers. Prior research suggests that employers' generous wage offers in employment contracts are normally translated as trust by employees who in turn reciprocate with higher effort. The authors present a theory that predicts penalty reduces employers' wage offers. Then, the authors propose unrestricted communication between employers and employees as a potential moderator for the negative effect of penalty on trust and reciprocity. The authors implement a controlled lab experiment with a 2 × 3 experimental design (Penalty: Present and Absent; and Communication: None, One-Way and Two-Way). The authors develop their predictions by utilizing insights from motivational-crowding and organizational communication theories. The authors hypothesize and find evidence that employers' ability to penalize employees can reduce employers' motivation to offer generous wages. As a result, reduced trust demotivates employees to provide high effort. However, the authors find that a two-way communication moderates the negative effect of penalties by restoring trust, thereby, increasing reciprocity. Finally, the authors find evidence that relationship-oriented messages explain the moderating effect of communication. This study is subject to limitations inherent in all experimental studies. The decisions in the study experiment are less complex than those found in practice. Moreover, there are significantly higher costs and potential benefits to shirk on effort in practice. The authors encourage future research on other organizational features that would influence the generalizability of their theory and results. Nonetheless, this study makes an important contribution to the literature on trust, reciprocity, gift-exchange contracts, managerial controls and communication. This paper has several important implications for theory and practice. The authors show that the presence of penalty may not automatically result in increasing employees' effort level, contrary to traditional economic theory predictions. This effect is driven mainly by the crowding out effect of a penalty on employers' desire to signal trust. Therefore, the presence of an open communication channel may become an important tool to reverse the psychological effect of reduced trust when penalty is present. Therefore, the study's findings contribute to the trust–reciprocity literature on how management control system influences employers' and employees' behavior. These findings are especially germane given the trend in the workplace toward establishing open communication at different levels within the firm hierarchy. The study also contributes to the literature on trust–reciprocity as critical informal controls and social norms in accounting practices (Bicchieri, 2006; Stevens, 2019), shedding light on how firms may influence employees' reciprocity in management control practices and induce them to act in line with the firm's objectives by opening communication channels. Prior accounting research document that penalty in employment contracts increases employee performance due to loss aversion. The study, however, demonstrates that the positive effect of penalty is not sustained in a gift-exchange contract. Specifically, the study's experimental results provide evidence that the availability of penalties can psychologically change the way employers perceive their decisions on offering generous wages (i.e. trust) and consequently reduce employees' reciprocation of high effort levels. Yet, the authors propose a two-way communication as a restorative mechanism for the lost trust. Implications for theory and practice are discussed.An experimental study on the effect of penalties on employers' trust and employees' reciprocity and the moderating effect of communication
Heba Abdel-Rahim, Jing Liu
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

There is growing scholarly interest in the use of penalty in employment contracts which reduce employees' pay if the employee's performance does not meet a pre-specified performance threshold. Prior accounting research has focused exclusively on the effect of penalty on employee performance. In this study, the authors extend earlier research by examining how penalty affects the employers' wage offers. Prior research suggests that employers' generous wage offers in employment contracts are normally translated as trust by employees who in turn reciprocate with higher effort. The authors present a theory that predicts penalty reduces employers' wage offers. Then, the authors propose unrestricted communication between employers and employees as a potential moderator for the negative effect of penalty on trust and reciprocity.

The authors implement a controlled lab experiment with a 2 × 3 experimental design (Penalty: Present and Absent; and Communication: None, One-Way and Two-Way).

The authors develop their predictions by utilizing insights from motivational-crowding and organizational communication theories. The authors hypothesize and find evidence that employers' ability to penalize employees can reduce employers' motivation to offer generous wages. As a result, reduced trust demotivates employees to provide high effort. However, the authors find that a two-way communication moderates the negative effect of penalties by restoring trust, thereby, increasing reciprocity. Finally, the authors find evidence that relationship-oriented messages explain the moderating effect of communication.

This study is subject to limitations inherent in all experimental studies. The decisions in the study experiment are less complex than those found in practice. Moreover, there are significantly higher costs and potential benefits to shirk on effort in practice. The authors encourage future research on other organizational features that would influence the generalizability of their theory and results. Nonetheless, this study makes an important contribution to the literature on trust, reciprocity, gift-exchange contracts, managerial controls and communication.

This paper has several important implications for theory and practice. The authors show that the presence of penalty may not automatically result in increasing employees' effort level, contrary to traditional economic theory predictions. This effect is driven mainly by the crowding out effect of a penalty on employers' desire to signal trust. Therefore, the presence of an open communication channel may become an important tool to reverse the psychological effect of reduced trust when penalty is present. Therefore, the study's findings contribute to the trust–reciprocity literature on how management control system influences employers' and employees' behavior. These findings are especially germane given the trend in the workplace toward establishing open communication at different levels within the firm hierarchy. The study also contributes to the literature on trust–reciprocity as critical informal controls and social norms in accounting practices (Bicchieri, 2006; Stevens, 2019), shedding light on how firms may influence employees' reciprocity in management control practices and induce them to act in line with the firm's objectives by opening communication channels.

Prior accounting research document that penalty in employment contracts increases employee performance due to loss aversion. The study, however, demonstrates that the positive effect of penalty is not sustained in a gift-exchange contract. Specifically, the study's experimental results provide evidence that the availability of penalties can psychologically change the way employers perceive their decisions on offering generous wages (i.e. trust) and consequently reduce employees' reciprocation of high effort levels. Yet, the authors propose a two-way communication as a restorative mechanism for the lost trust. Implications for theory and practice are discussed.

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An experimental study on the effect of penalties on employers' trust and employees' reciprocity and the moderating effect of communication10.1108/JAAR-05-2022-0122Journal of Applied Accounting Research2023-08-30© 2023 Emerald Publishing LimitedHeba Abdel-RahimJing LiuJournal of Applied Accounting Researchahead-of-printahead-of-print2023-08-3010.1108/JAAR-05-2022-0122https://www.emerald.com/insight/content/doi/10.1108/JAAR-05-2022-0122/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Earnings management, investor sentiment and short-termismhttps://www.emerald.com/insight/content/doi/10.1108/JAAR-05-2023-0127/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study examines the investment horizon influence, mediated by market optimism, on earnings management based on accruals and real activities. Based on short-termism, the authors argue that earnings management increases in optimistic periods to boost corporate profits. The authors analyzed non-financial Brazilian publicly traded firms from 2010 to 2020 by estimating industry-fixed effects of groups of short- and long-horizon firms to compare their behavior on earnings management practices during bullish moments. For robustness, the authors used alternate measures and trade-off analyses between earning management practices. The findings indicate that, during bullish moments, companies prioritize managing their earnings through real activities management (RAM) rather than accruals earnings management (AEM), depending on their time horizon. The results demonstrate the trade-off between earnings management practices. This study presents limitations when using proxies for earnings management and investor sentiment. Investors and regulators should closely monitor companies' operations, especially during bullish market conditions to prevent fraud. The study addresses investor sentiment mediation in the earnings management discussion, introducing the short-termism approach.Earnings management, investor sentiment and short-termism
Kléber Formiga Miranda, Márcio André Veras Machado
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study examines the investment horizon influence, mediated by market optimism, on earnings management based on accruals and real activities. Based on short-termism, the authors argue that earnings management increases in optimistic periods to boost corporate profits.

The authors analyzed non-financial Brazilian publicly traded firms from 2010 to 2020 by estimating industry-fixed effects of groups of short- and long-horizon firms to compare their behavior on earnings management practices during bullish moments. For robustness, the authors used alternate measures and trade-off analyses between earning management practices.

The findings indicate that, during bullish moments, companies prioritize managing their earnings through real activities management (RAM) rather than accruals earnings management (AEM), depending on their time horizon. The results demonstrate the trade-off between earnings management practices.

This study presents limitations when using proxies for earnings management and investor sentiment.

Investors and regulators should closely monitor companies' operations, especially during bullish market conditions to prevent fraud.

The study addresses investor sentiment mediation in the earnings management discussion, introducing the short-termism approach.

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Earnings management, investor sentiment and short-termism10.1108/JAAR-05-2023-0127Journal of Applied Accounting Research2024-01-18© 2023 Emerald Publishing LimitedKléber Formiga MirandaMárcio André Veras MachadoJournal of Applied Accounting Researchahead-of-printahead-of-print2024-01-1810.1108/JAAR-05-2023-0127https://www.emerald.com/insight/content/doi/10.1108/JAAR-05-2023-0127/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Political alignment and corporate fraud: evidence from the United States of Americahttps://www.emerald.com/insight/content/doi/10.1108/JAAR-06-2022-0159/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe paper investigates whether political geography, as measured by the degree of alignment of state politicians with the party of the USA President, has an impact on corporate fraud convictions. Prior research shows that the degree of alignment between state politicians and the president's political party is positively correlated with measures of earnings management for firms headquartered in the state. Political alignment is conducive to earnings management because it affects a firm's information and enforcement environment by increasing policy risk and promoting lenient regulatory oversight. The paper posits that this environment is also conducive to corporate fraud and tests this hypothesis using pooled ordinary least squares (OLS) and panel regressions with annual state-level data for 2003–2018. The paper documents a positive and statistically significant relationship between political alignment and corporate fraud conviction rates by state. The conclusions are tempered by data limitations. First, the conviction data are available at the state level only. Second, the true level of fraud is inherently unobservable and the conviction data may not reflect the actual number of frauds that are committed. Fraud examiners might benefit from considering the role of political connectedness in determining fraud risk. Although additional research is needed before making concrete recommendations, the initial indications clearly point to political connections as a potential concern. The findings build on evidence that political connections influence earnings management. Rather than focusing on direct measures of connectedness, such as lobbying expenditures, the paper examines a plausibly exogenous measure: political geography.Political alignment and corporate fraud: evidence from the United States of America
Adriana Cordis
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

The paper investigates whether political geography, as measured by the degree of alignment of state politicians with the party of the USA President, has an impact on corporate fraud convictions.

Prior research shows that the degree of alignment between state politicians and the president's political party is positively correlated with measures of earnings management for firms headquartered in the state. Political alignment is conducive to earnings management because it affects a firm's information and enforcement environment by increasing policy risk and promoting lenient regulatory oversight. The paper posits that this environment is also conducive to corporate fraud and tests this hypothesis using pooled ordinary least squares (OLS) and panel regressions with annual state-level data for 2003–2018.

The paper documents a positive and statistically significant relationship between political alignment and corporate fraud conviction rates by state.

The conclusions are tempered by data limitations. First, the conviction data are available at the state level only. Second, the true level of fraud is inherently unobservable and the conviction data may not reflect the actual number of frauds that are committed.

Fraud examiners might benefit from considering the role of political connectedness in determining fraud risk. Although additional research is needed before making concrete recommendations, the initial indications clearly point to political connections as a potential concern.

The findings build on evidence that political connections influence earnings management. Rather than focusing on direct measures of connectedness, such as lobbying expenditures, the paper examines a plausibly exogenous measure: political geography.

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Political alignment and corporate fraud: evidence from the United States of America10.1108/JAAR-06-2022-0159Journal of Applied Accounting Research2023-10-31© 2023 Emerald Publishing LimitedAdriana CordisJournal of Applied Accounting Researchahead-of-printahead-of-print2023-10-3110.1108/JAAR-06-2022-0159https://www.emerald.com/insight/content/doi/10.1108/JAAR-06-2022-0159/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Organizational resilience of audit firms – evidence from the outbreak of the COVID-19https://www.emerald.com/insight/content/doi/10.1108/JAAR-06-2023-0185/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis paper examines the organizational resilience of audit firms during the early stages of COVID-19. The unexpected restrictions placed on travel and on-site working created unanticipated barriers for auditors in Hong Kong. The authors expect that auditors with greater organizational resilience can respond to unexpected situations and restore expected performance levels relatively quickly. The authors utilize a sample of 1,008 companies listed on Hong Kong Stock Exchange (HKEX) with a financial year-end of December 31. The authors identify five proxies contributing to organizational resilience: auditor size, industry specialization, diversity, geographic proximity to the client and auditing a new client. The authors use audit report timeliness as this study's main dependent variable. This study's full-sample results suggest that larger auditors, industry specialists and auditors with closer relationships to clients issued more timely audit reports during the pandemic. The analysis of a subsample of companies that initially published unaudited financial statements reveals that industry expertise and longer auditor-client relationships significantly reduced the need for year-end audit adjustments. Finally, the authors find that larger auditors were more likely to offload clients, whereas industry specialists were more likely to retain clients. The results of the paper suggests that audit firm characteristics associated cognitive abilities, behavioral characteristics and contextual conditions are associated with audit firm organizational resilience and, consequently, helps auditors respond unexpected changes in the audit environment. The findings of the paper are informative for those involved in audit firm management or auditor hiring and retention decisions. This study is the first to link organizational resilience to the performance of audit firms in a time of unexpected events. The authors connect three auditor and two auditor-client dimensions to the organizational resilience of the audit firms.Organizational resilience of audit firms – evidence from the outbreak of the COVID-19
Jesper Haga, Kim Ittonen
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

This paper examines the organizational resilience of audit firms during the early stages of COVID-19. The unexpected restrictions placed on travel and on-site working created unanticipated barriers for auditors in Hong Kong. The authors expect that auditors with greater organizational resilience can respond to unexpected situations and restore expected performance levels relatively quickly.

The authors utilize a sample of 1,008 companies listed on Hong Kong Stock Exchange (HKEX) with a financial year-end of December 31. The authors identify five proxies contributing to organizational resilience: auditor size, industry specialization, diversity, geographic proximity to the client and auditing a new client. The authors use audit report timeliness as this study's main dependent variable.

This study's full-sample results suggest that larger auditors, industry specialists and auditors with closer relationships to clients issued more timely audit reports during the pandemic. The analysis of a subsample of companies that initially published unaudited financial statements reveals that industry expertise and longer auditor-client relationships significantly reduced the need for year-end audit adjustments. Finally, the authors find that larger auditors were more likely to offload clients, whereas industry specialists were more likely to retain clients.

The results of the paper suggests that audit firm characteristics associated cognitive abilities, behavioral characteristics and contextual conditions are associated with audit firm organizational resilience and, consequently, helps auditors respond unexpected changes in the audit environment.

The findings of the paper are informative for those involved in audit firm management or auditor hiring and retention decisions.

This study is the first to link organizational resilience to the performance of audit firms in a time of unexpected events. The authors connect three auditor and two auditor-client dimensions to the organizational resilience of the audit firms.

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Organizational resilience of audit firms – evidence from the outbreak of the COVID-1910.1108/JAAR-06-2023-0185Journal of Applied Accounting Research2024-01-05© 2023 Jesper Haga and Kim IttonenJesper HagaKim IttonenJournal of Applied Accounting Researchahead-of-printahead-of-print2024-01-0510.1108/JAAR-06-2023-0185https://www.emerald.com/insight/content/doi/10.1108/JAAR-06-2023-0185/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Jesper Haga and Kim Ittonenhttp://creativecommons.org/licences/by/4.0/legalcode
Determinants of ESG disclosure among listed firms under voluntary and mandatory ESG disclosure regimes in Hong Konghttps://www.emerald.com/insight/content/doi/10.1108/JAAR-07-2022-0179/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe authors examine the determinants of ESG disclosure and differentiate between voluntary and mandatory disclosure regimes in Hong Kong. The authors analyse both Bloomberg ESG scores and a disclosure index score, manually constructed according to the 2019 Hong Kong Exchange ESG Guide using regression tests. The results indicate that the level of concentrated ownership is negatively associated with the quantity of ESG disclosure only in the voluntary disclosure period, suggesting that agency problems are alleviated when ESG reporting is mandatory. The findings also show that larger firms significantly disclose higher levels of ESG information in both voluntary and mandatory disclosure periods. Furthermore, the extent of ESG disclosure significantly increases when firms' sustainability reports are audited by Big 4 accounting firms only in the voluntary disclosure period. Finally, the control variables are significantly related to the level of ESG disclosure showing that ESG disclosure increased over time and is significantly different among industries. The authors make contributions to the literature on non-financial disclosure in relation to ESG reporting by examining the relationship between firm characteristics and ESG disclosure in the Hong Kong context under both voluntary and mandatory disclosure regimes. This study also provides important implications for other stock markets and relevant stakeholders including preparers, users and the sustainability profession.Determinants of ESG disclosure among listed firms under voluntary and mandatory ESG disclosure regimes in Hong Kong
Ricky Chung, Lyndie Bayne, Jacqueline Louise Birt
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

The authors examine the determinants of ESG disclosure and differentiate between voluntary and mandatory disclosure regimes in Hong Kong.

The authors analyse both Bloomberg ESG scores and a disclosure index score, manually constructed according to the 2019 Hong Kong Exchange ESG Guide using regression tests.

The results indicate that the level of concentrated ownership is negatively associated with the quantity of ESG disclosure only in the voluntary disclosure period, suggesting that agency problems are alleviated when ESG reporting is mandatory. The findings also show that larger firms significantly disclose higher levels of ESG information in both voluntary and mandatory disclosure periods. Furthermore, the extent of ESG disclosure significantly increases when firms' sustainability reports are audited by Big 4 accounting firms only in the voluntary disclosure period. Finally, the control variables are significantly related to the level of ESG disclosure showing that ESG disclosure increased over time and is significantly different among industries.

The authors make contributions to the literature on non-financial disclosure in relation to ESG reporting by examining the relationship between firm characteristics and ESG disclosure in the Hong Kong context under both voluntary and mandatory disclosure regimes. This study also provides important implications for other stock markets and relevant stakeholders including preparers, users and the sustainability profession.

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Determinants of ESG disclosure among listed firms under voluntary and mandatory ESG disclosure regimes in Hong Kong10.1108/JAAR-07-2022-0179Journal of Applied Accounting Research2023-01-13© 2022 Emerald Publishing LimitedRicky ChungLyndie BayneJacqueline Louise BirtJournal of Applied Accounting Researchahead-of-printahead-of-print2023-01-1310.1108/JAAR-07-2022-0179https://www.emerald.com/insight/content/doi/10.1108/JAAR-07-2022-0179/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2022 Emerald Publishing Limited
The influence of financial flexibility on firm performance: the moderating effects of investment efficiency and investment scalehttps://www.emerald.com/insight/content/doi/10.1108/JAAR-07-2023-0192/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestFinancial flexibility and investment efficiency are of vital importance in strategic choices at boardrooms, particularly in post-crisis recovery strategies. This study examines the moderating effects of investment efficiency and investment scale on the relationship between financial flexibility and firm performance. The authors use sample of 10,755 US-listed firms over the period 2010–2021 to examine the relationships between investment scale, investment efficiency, financial flexibility and firm performance. Particular attention is paid to overinvestment and underinvestment. Findings of this study reveal that financial flexibility mitigates investment inefficiency through reducing overinvestment. Financial flexibility contributes to boost a firm’s accounting and market performance. Additionally, investment efficiency and investment scale have moderating effects on the relationship between financial flexibility and firm performance. However, the influence of investment efficiency is greater than the influence of investment scale. Finally, the authors find that the direct and indirect effects of financial flexibility are stronger on market performance than accounting performance, implying that market is more sensitive to corporate financial policies. Findings of this study have implications for scholars, decision-makers policymakers, investors and other stakeholders. This study has its own limitations due to the sample selection issues, country context and the research model adopted by this study. The novel contribution to the extant literature is incorporating the influence of investment scale and investment efficiency into the relationship between financial flexibility and firm performance.The influence of financial flexibility on firm performance: the moderating effects of investment efficiency and investment scale
Wei Wu, Chau Le, Yulu Shi, Fadi Alkaraan
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

Financial flexibility and investment efficiency are of vital importance in strategic choices at boardrooms, particularly in post-crisis recovery strategies. This study examines the moderating effects of investment efficiency and investment scale on the relationship between financial flexibility and firm performance.

The authors use sample of 10,755 US-listed firms over the period 2010–2021 to examine the relationships between investment scale, investment efficiency, financial flexibility and firm performance. Particular attention is paid to overinvestment and underinvestment.

Findings of this study reveal that financial flexibility mitigates investment inefficiency through reducing overinvestment. Financial flexibility contributes to boost a firm’s accounting and market performance. Additionally, investment efficiency and investment scale have moderating effects on the relationship between financial flexibility and firm performance. However, the influence of investment efficiency is greater than the influence of investment scale. Finally, the authors find that the direct and indirect effects of financial flexibility are stronger on market performance than accounting performance, implying that market is more sensitive to corporate financial policies.

Findings of this study have implications for scholars, decision-makers policymakers, investors and other stakeholders.

This study has its own limitations due to the sample selection issues, country context and the research model adopted by this study.

The novel contribution to the extant literature is incorporating the influence of investment scale and investment efficiency into the relationship between financial flexibility and firm performance.

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The influence of financial flexibility on firm performance: the moderating effects of investment efficiency and investment scale10.1108/JAAR-07-2023-0192Journal of Applied Accounting Research2024-03-12© 2024 Emerald Publishing LimitedWei WuChau LeYulu ShiFadi AlkaraanJournal of Applied Accounting Researchahead-of-printahead-of-print2024-03-1210.1108/JAAR-07-2023-0192https://www.emerald.com/insight/content/doi/10.1108/JAAR-07-2023-0192/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2024 Emerald Publishing Limited
Economic policy uncertainty and cost rigidity: the moderating effects of government contracts and political connectionshttps://www.emerald.com/insight/content/doi/10.1108/JAAR-07-2023-0224/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study examines the relationship between economic policy uncertainty (EPU) and managers' ex ante strategic choice on firms’ fixed and variable costs structure, i.e. cost rigidity and the moderating effect of government contracts and political connections. Using a sample of 4,162 US firms during 2003–2019 and EPU measure from Baker et al. (2016), the authors examine the association between EPU and cost rigidity using multivariate regression analysis. The authors also examine the moderating effects of government customers and political connections using the subsampling method. This study finds that increases in EPU leads to higher cost rigidity, suggesting that managers tend to look ahead and make an ex ante commitment to invest more in fixed costs to avoid congestion costs in anticipation of future product demand during EPU. The study also finds that the presence of government customers and political connections moderates the need for adopting greater cost rigidity. This study measures firms' cost rigidity based on archival data. Future studies could utilize managers' cost structure choices using firms' internal management cost structure forecasts data to measure cost rigidity to examine the relationship between cost rigidity and EPU. This study demonstrates that managers tend to make a proactive commitment to invest in fixed inputs when facing demand uncertainty from EPU to avoid congestion costs. This study also highlights the value of having government contracts and political connections by demonstrating that managers are less concerned about the congestion costs, hence weakening the impact of EPU on cost rigidity when they have government as major customers and/or political connections. This study extends the management accounting literature by documenting that cost rigidity is related to EPU and that the relationship between cost rigidity and EPU also depends on whether the firm has government as major customers and/or political connections or not.Economic policy uncertainty and cost rigidity: the moderating effects of government contracts and political connections
Hoyoung Kim, Maretno Agus Harjoto
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study examines the relationship between economic policy uncertainty (EPU) and managers' ex ante strategic choice on firms’ fixed and variable costs structure, i.e. cost rigidity and the moderating effect of government contracts and political connections.

Using a sample of 4,162 US firms during 2003–2019 and EPU measure from Baker et al. (2016), the authors examine the association between EPU and cost rigidity using multivariate regression analysis. The authors also examine the moderating effects of government customers and political connections using the subsampling method.

This study finds that increases in EPU leads to higher cost rigidity, suggesting that managers tend to look ahead and make an ex ante commitment to invest more in fixed costs to avoid congestion costs in anticipation of future product demand during EPU. The study also finds that the presence of government customers and political connections moderates the need for adopting greater cost rigidity.

This study measures firms' cost rigidity based on archival data. Future studies could utilize managers' cost structure choices using firms' internal management cost structure forecasts data to measure cost rigidity to examine the relationship between cost rigidity and EPU.

This study demonstrates that managers tend to make a proactive commitment to invest in fixed inputs when facing demand uncertainty from EPU to avoid congestion costs. This study also highlights the value of having government contracts and political connections by demonstrating that managers are less concerned about the congestion costs, hence weakening the impact of EPU on cost rigidity when they have government as major customers and/or political connections.

This study extends the management accounting literature by documenting that cost rigidity is related to EPU and that the relationship between cost rigidity and EPU also depends on whether the firm has government as major customers and/or political connections or not.

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Economic policy uncertainty and cost rigidity: the moderating effects of government contracts and political connections10.1108/JAAR-07-2023-0224Journal of Applied Accounting Research2023-12-12© 2023 Emerald Publishing LimitedHoyoung KimMaretno Agus HarjotoJournal of Applied Accounting Researchahead-of-printahead-of-print2023-12-1210.1108/JAAR-07-2023-0224https://www.emerald.com/insight/content/doi/10.1108/JAAR-07-2023-0224/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Differential reporting and earnings quality: is more better?https://www.emerald.com/insight/content/doi/10.1108/JAAR-08-2022-0206/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestWhen financial statements are public, the choice between alternative reporting regimes constitutes a signal that addresses external stakeholders. Generally, the choice of more complex regimes acts as a complement of firms' transparency. However, in the absence of audits, opportunistic behaviors could be incentivized. This study aims to test whether SMEs' choice between alternative accounting regimes is associated with earnings quality. Drawing on the literature about accounting choices and earnings quality, this study investigates whether the same conclusions are confirmed for SMEs. Using a sample of 4,054 Italian companies and 12,114 observations, it compared four earnings quality proxies of a group of companies that opted for the “Full” rules and those of a subsample of the population of companies that applied the Simplified rules. The results suggest that the signaling power of accounting rules' choice could lead to wrong conclusions for SMEs. Indeed, a positive relationship emerged (H1) between the choice of the “Full” rules and income smoothing behaviors, while the same choice appears to reduce the probability to disclose SPOS. Moreover, the results suggest that opportunistic behaviors are more frequent for firms that have settled in a “non-cooperative” social environment (H2). This study could foster research on financial reporting quality in private firms. Comparing the quality of financial statements drawn up according to two alternative accounting regimes could provide useful suggestions for both users and regulators. The results contribute to the limited literature on the implications of differential reporting. Finally, it enriches the literature about heterogeneity in accounting quality within private firms.Differential reporting and earnings quality: is more better?
Mario Daniele
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

When financial statements are public, the choice between alternative reporting regimes constitutes a signal that addresses external stakeholders. Generally, the choice of more complex regimes acts as a complement of firms' transparency. However, in the absence of audits, opportunistic behaviors could be incentivized. This study aims to test whether SMEs' choice between alternative accounting regimes is associated with earnings quality.

Drawing on the literature about accounting choices and earnings quality, this study investigates whether the same conclusions are confirmed for SMEs. Using a sample of 4,054 Italian companies and 12,114 observations, it compared four earnings quality proxies of a group of companies that opted for the “Full” rules and those of a subsample of the population of companies that applied the Simplified rules.

The results suggest that the signaling power of accounting rules' choice could lead to wrong conclusions for SMEs. Indeed, a positive relationship emerged (H1) between the choice of the “Full” rules and income smoothing behaviors, while the same choice appears to reduce the probability to disclose SPOS. Moreover, the results suggest that opportunistic behaviors are more frequent for firms that have settled in a “non-cooperative” social environment (H2).

This study could foster research on financial reporting quality in private firms.

Comparing the quality of financial statements drawn up according to two alternative accounting regimes could provide useful suggestions for both users and regulators.

The results contribute to the limited literature on the implications of differential reporting. Finally, it enriches the literature about heterogeneity in accounting quality within private firms.

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Differential reporting and earnings quality: is more better?10.1108/JAAR-08-2022-0206Journal of Applied Accounting Research2023-10-03© 2023 Mario DanieleMario DanieleJournal of Applied Accounting Researchahead-of-printahead-of-print2023-10-0310.1108/JAAR-08-2022-0206https://www.emerald.com/insight/content/doi/10.1108/JAAR-08-2022-0206/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Mario Danielehttp://creativecommons.org/licences/by/4.0/legalcode
Effect of market-based regulations on corporate carbon disclosure and carbon performance: global evidencehttps://www.emerald.com/insight/content/doi/10.1108/JAAR-08-2022-0215/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestIn this study, the authors examine the relationships between market-based regulations and corporate carbon disclosure and carbon performance. The authors also investigate whether these relationships vary across emission-intensive and non-emission intensive industries. The study sample consists of the world's 500 largest companies across most major industries over a recent five-year period. Country-specific random effect multiple regression analysis is used to test empirical models that predict relationships between market-based regulations and carbon disclosure and carbon performance. Results indicate that market-based regulations significantly and positively affect corporate carbon performance. However, market-based regulations do not significantly affect corporate carbon disclosure. This study also finds that the association between regulatory pressures and carbon disclosure and carbon performance varies across emission-intensive and non-emission-intensive industries. The findings of this study have key implications for policymakers, practitioners and future researchers in terms of understanding the factors that drive businesses to increase their carbon performance and disclosure. The study sample consists of only large firms, and future researchers can undertake similar studies with small and medium-sized firms. The results of this study are expected to help business managers to identify the benefits of adopting market-based regulations. Regulators can use this study’s results to evaluate if market-based regulations effectively improve corporate carbon performance and disclosure. Furthermore, stakeholders may use this study to evaluate and improve their businesses' reporting of carbon disclosure and performance. In contrast to current literature that has used command and control regulations as a proxy for regulation, this study uses market-based regulations as a proxy for climate change regulations. In addition, this study uses a more comprehensive measure of carbon disclosure and carbon performance compared to the previous studies. It also uses global multi-sector data from carbon disclosure project (CDP) in contrast to most current studies that use national data from annual reports of sample firms of specific sectors.Effect of market-based regulations on corporate carbon disclosure and carbon performance: global evidence
Md Abubakar Siddique, Khaled Aljifri, Shahadut Hossain, Tonmoy Choudhury
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

In this study, the authors examine the relationships between market-based regulations and corporate carbon disclosure and carbon performance. The authors also investigate whether these relationships vary across emission-intensive and non-emission intensive industries.

The study sample consists of the world's 500 largest companies across most major industries over a recent five-year period. Country-specific random effect multiple regression analysis is used to test empirical models that predict relationships between market-based regulations and carbon disclosure and carbon performance.

Results indicate that market-based regulations significantly and positively affect corporate carbon performance. However, market-based regulations do not significantly affect corporate carbon disclosure. This study also finds that the association between regulatory pressures and carbon disclosure and carbon performance varies across emission-intensive and non-emission-intensive industries.

The findings of this study have key implications for policymakers, practitioners and future researchers in terms of understanding the factors that drive businesses to increase their carbon performance and disclosure. The study sample consists of only large firms, and future researchers can undertake similar studies with small and medium-sized firms.

The results of this study are expected to help business managers to identify the benefits of adopting market-based regulations. Regulators can use this study’s results to evaluate if market-based regulations effectively improve corporate carbon performance and disclosure. Furthermore, stakeholders may use this study to evaluate and improve their businesses' reporting of carbon disclosure and performance.

In contrast to current literature that has used command and control regulations as a proxy for regulation, this study uses market-based regulations as a proxy for climate change regulations. In addition, this study uses a more comprehensive measure of carbon disclosure and carbon performance compared to the previous studies. It also uses global multi-sector data from carbon disclosure project (CDP) in contrast to most current studies that use national data from annual reports of sample firms of specific sectors.

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Effect of market-based regulations on corporate carbon disclosure and carbon performance: global evidence10.1108/JAAR-08-2022-0215Journal of Applied Accounting Research2023-05-08© 2023 Emerald Publishing LimitedMd Abubakar SiddiqueKhaled AljifriShahadut HossainTonmoy ChoudhuryJournal of Applied Accounting Researchahead-of-printahead-of-print2023-05-0810.1108/JAAR-08-2022-0215https://www.emerald.com/insight/content/doi/10.1108/JAAR-08-2022-0215/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
EMAS III-based analysis of European eco-management for energy efficiency investmentshttps://www.emerald.com/insight/content/doi/10.1108/JAAR-08-2022-0216/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe aim is to analyze the European eco-management because the global warming has become a topical issue impacting the whole world. Individual countries are trying to minimize all the catalysts of global warming, such as carbon emissions. This paper addresses this issue and analyzes the performance of European eco-management for the purpose of future energy investments being environmentally. This paper develops a fuzzy decision-making model to study the performance indicators of selected countries based on EMAS III standard. It employs interval type-2 fuzzy DEMATEL to evaluate the performance factors and TOPSIS methodology to assess five selected European countries' performance in relation to eco-friendly, emission and renewable energy. Eco-friendly energy plays the most critical role in this respect followed by emissions and renewable energy which constitute significant factors. The novelty of this study is identifying significant criteria regarding environmental and energy efficiency of investments and making performance assessments of European countries with a new fuzzy decision-making model. Both expert opinions and datasets are used for the analysis. This paper supports previous research about energy efficiency investments in Europe. The innovative feature of this study is identifying significant criteria regarding environmental and energy efficiency of investments and assessing the performance of European countries with a new fuzzy decision-making model. The fact that the analysis only concerns the European region is an important limitation. In future analyses, other groups of countries can be examined. Innovations can be made regarding the method applied. In this context, analyses can be done utilizing different fuzzy numbers. Finally, the importance of the criteria can be calculated with other methods such as SWARA. The paper fills the gap in performance analysis of European eco-management for environmentally friendly and efficient energy investments is done in this manuscript. Analysis of European eco-management performance was done for environmentally friendly and efficient energy investments. A fuzzy decision-making model is constructed. The paper fills the gap in performance analysis of European eco-management for environmentally friendly and efficient energy investments.EMAS III-based analysis of European eco-management for energy efficiency investments
Hasan Dinçer, Serhat Yuksel, Muhammad Ishaq M. Bhatti, Alexey Mikhaylov
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

The aim is to analyze the European eco-management because the global warming has become a topical issue impacting the whole world. Individual countries are trying to minimize all the catalysts of global warming, such as carbon emissions. This paper addresses this issue and analyzes the performance of European eco-management for the purpose of future energy investments being environmentally.

This paper develops a fuzzy decision-making model to study the performance indicators of selected countries based on EMAS III standard. It employs interval type-2 fuzzy DEMATEL to evaluate the performance factors and TOPSIS methodology to assess five selected European countries' performance in relation to eco-friendly, emission and renewable energy.

Eco-friendly energy plays the most critical role in this respect followed by emissions and renewable energy which constitute significant factors. The novelty of this study is identifying significant criteria regarding environmental and energy efficiency of investments and making performance assessments of European countries with a new fuzzy decision-making model. Both expert opinions and datasets are used for the analysis. This paper supports previous research about energy efficiency investments in Europe.

The innovative feature of this study is identifying significant criteria regarding environmental and energy efficiency of investments and assessing the performance of European countries with a new fuzzy decision-making model. The fact that the analysis only concerns the European region is an important limitation. In future analyses, other groups of countries can be examined. Innovations can be made regarding the method applied. In this context, analyses can be done utilizing different fuzzy numbers. Finally, the importance of the criteria can be calculated with other methods such as SWARA.

The paper fills the gap in performance analysis of European eco-management for environmentally friendly and efficient energy investments is done in this manuscript.

Analysis of European eco-management performance was done for environmentally friendly and efficient energy investments. A fuzzy decision-making model is constructed. The paper fills the gap in performance analysis of European eco-management for environmentally friendly and efficient energy investments.

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EMAS III-based analysis of European eco-management for energy efficiency investments10.1108/JAAR-08-2022-0216Journal of Applied Accounting Research2023-08-15© 2023 Emerald Publishing LimitedHasan DinçerSerhat YukselMuhammad Ishaq M. BhattiAlexey MikhaylovJournal of Applied Accounting Researchahead-of-printahead-of-print2023-08-1510.1108/JAAR-08-2022-0216https://www.emerald.com/insight/content/doi/10.1108/JAAR-08-2022-0216/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
The interplay of sustainability reporting and management control – an exploration of ways for dovetailing to develop reporting beyond accountabilityhttps://www.emerald.com/insight/content/doi/10.1108/JAAR-08-2022-0222/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestCompanies must no longer just report on corporate sustainability (CS) performance but also demonstrate that they are aligning their strategies with sustainability. However, suitable management control systems (MCS) are required to implement a sustainability strategy. Thereby, sustainability reporting (SR) can also be employed for control purposes. On the other hand, existing MCS can be used to develop SR that goes beyond accountability. Accordingly, this paper explores how this interplay can be designed. For the study, 20 semi-structured interviews were conducted with persons from ATX and DAX companies. Since the interplay should be examined from a holistic control perspective, the authors used the MCS package of Malmi and Brown as an analysis framework. Nowadays, merely focusing on reporting is too narrow a view. It is therefore not surprising that the investigation was able to reveal various possible linkages between MCS and SR that span the full range of the MCS package of Malmi and Brown. Future research should also consider non-listed companies to investigate potential differences and take a closer look at the proposed reciprocal nature of the interplay. The findings expand the knowledge of how companies can use SR for control purposes and how existing MCS can help develop a reporting that goes beyond accountability. The study contributes by highlighting the potential of SR to control CS performance from a holistic MCS perspective and likewise the impact of existing MCS on reporting. In addition, different theoretical perspectives are used to explain why the interplay can be designed differently in practice.The interplay of sustainability reporting and management control – an exploration of ways for dovetailing to develop reporting beyond accountability
Albert Anton Traxler, Daniela Schrack, Dorothea Greiling, Julia Feldbauer, Michaela Lautner
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

Companies must no longer just report on corporate sustainability (CS) performance but also demonstrate that they are aligning their strategies with sustainability. However, suitable management control systems (MCS) are required to implement a sustainability strategy. Thereby, sustainability reporting (SR) can also be employed for control purposes. On the other hand, existing MCS can be used to develop SR that goes beyond accountability. Accordingly, this paper explores how this interplay can be designed.

For the study, 20 semi-structured interviews were conducted with persons from ATX and DAX companies. Since the interplay should be examined from a holistic control perspective, the authors used the MCS package of Malmi and Brown as an analysis framework.

Nowadays, merely focusing on reporting is too narrow a view. It is therefore not surprising that the investigation was able to reveal various possible linkages between MCS and SR that span the full range of the MCS package of Malmi and Brown.

Future research should also consider non-listed companies to investigate potential differences and take a closer look at the proposed reciprocal nature of the interplay.

The findings expand the knowledge of how companies can use SR for control purposes and how existing MCS can help develop a reporting that goes beyond accountability.

The study contributes by highlighting the potential of SR to control CS performance from a holistic MCS perspective and likewise the impact of existing MCS on reporting. In addition, different theoretical perspectives are used to explain why the interplay can be designed differently in practice.

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The interplay of sustainability reporting and management control – an exploration of ways for dovetailing to develop reporting beyond accountability10.1108/JAAR-08-2022-0222Journal of Applied Accounting Research2023-10-30© 2023 Albert Anton Traxler, Daniela Schrack, Dorothea Greiling, Julia Feldbauer and Michaela LautnerAlbert Anton TraxlerDaniela SchrackDorothea GreilingJulia FeldbauerMichaela LautnerJournal of Applied Accounting Researchahead-of-printahead-of-print2023-10-3010.1108/JAAR-08-2022-0222https://www.emerald.com/insight/content/doi/10.1108/JAAR-08-2022-0222/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Albert Anton Traxler, Daniela Schrack, Dorothea Greiling, Julia Feldbauer and Michaela Lautnerhttp://creativecommons.org/licences/by/4.0/legalcode
Corporate social responsibility decoupling: a systematic literature review and future research agendahttps://www.emerald.com/insight/content/doi/10.1108/JAAR-08-2022-0223/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis paper aims to synthesize the corporate social responsibility decoupling (CSRD) literature, CSRD's causes and consequences and discuss other organizational attributes examined by CSRD scholars during 2010 and 2020. The authors provide suggestions for a future research agenda in this domain. The authors' systematic literature review (SLR) uses the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) framework to extract CSRD studies. The authors filter collected articles against quality and relevancy criteria and finally review 175 published articles. A theme analysis identifies and structures the many themes related to CSRD. The authors discuss the drivers of CSRD and reveal the consequences companies face after CSRD. The authors also provide a comprehensive CSRD discussion in the context of developed and developing economies. CSR communication is also identified as a tool for decoupling and recoupling. The identified themes provide a thorough illustration of CSRD literature for new CSRD scholars. The authors also provide suggestions for future research, such as examining country-level policy-making and implications of CSRD variance and identifying cultural and economic hurdles to achieving core CSR purposes. Policymakers and scholars may adopt the approach that CSRD is a misreporting of information similar to accounting fraud. This is particularly relevant given that an increasing number of CSRD scandals indicate that the purpose of bringing change through corporate CSR has not been adopted well by corporations. The authors' study offers a comprehensive literature review for the period of 2010–2020. The studies identified are structured into meaningful themes which can provide groundwork for future researchers.Corporate social responsibility decoupling: a systematic literature review and future research agenda
Shabana Talpur, Muhammad Nadeem, Helen Roberts
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

This paper aims to synthesize the corporate social responsibility decoupling (CSRD) literature, CSRD's causes and consequences and discuss other organizational attributes examined by CSRD scholars during 2010 and 2020. The authors provide suggestions for a future research agenda in this domain.

The authors' systematic literature review (SLR) uses the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) framework to extract CSRD studies. The authors filter collected articles against quality and relevancy criteria and finally review 175 published articles.

A theme analysis identifies and structures the many themes related to CSRD. The authors discuss the drivers of CSRD and reveal the consequences companies face after CSRD. The authors also provide a comprehensive CSRD discussion in the context of developed and developing economies. CSR communication is also identified as a tool for decoupling and recoupling.

The identified themes provide a thorough illustration of CSRD literature for new CSRD scholars. The authors also provide suggestions for future research, such as examining country-level policy-making and implications of CSRD variance and identifying cultural and economic hurdles to achieving core CSR purposes.

Policymakers and scholars may adopt the approach that CSRD is a misreporting of information similar to accounting fraud. This is particularly relevant given that an increasing number of CSRD scandals indicate that the purpose of bringing change through corporate CSR has not been adopted well by corporations.

The authors' study offers a comprehensive literature review for the period of 2010–2020. The studies identified are structured into meaningful themes which can provide groundwork for future researchers.

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Corporate social responsibility decoupling: a systematic literature review and future research agenda10.1108/JAAR-08-2022-0223Journal of Applied Accounting Research2023-01-13© 2023 Emerald Publishing LimitedShabana TalpurMuhammad NadeemHelen RobertsJournal of Applied Accounting Researchahead-of-printahead-of-print2023-01-1310.1108/JAAR-08-2022-0223https://www.emerald.com/insight/content/doi/10.1108/JAAR-08-2022-0223/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Ownership structure and corporate tax avoidance: a structured literature review on archival researchhttps://www.emerald.com/insight/content/doi/10.1108/JAAR-10-2022-0259/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestTo the best of the author’s knowledge, the author conducts the first detailed review on the impact of ownership variables on corporate tax avoidance, based on 69 archival studies over the two last decades. Referring to an agency-theoretical framework, the author differentiates between six categories of ownership (institutional, state, family, foreign, managerial and cross-ownership/ownership concentration). The author also includes research on ownership proxies as moderators of other determinants of tax avoidance. The review indicates that most research refers to institutional, state and family ownership. Moreover, except for state ownership, no clear tendencies on the impact of included ownership types can be found in line with the author’s agency-theoretical framework. Regarding research recommendations, among others, the author stresses the urgent need for recognizing heterogeneity within and interactions between ownership proxies. Researchers should also properly address endogeneity concerns by advanced econometric models (e.g. by the difference-in-difference approach). As international standard setters have implemented massive reform initiatives on both tax avoidance and corporate governance, this literature review underlines the huge interaction between those topics. Firms should carefully analyze their ownership structure and change their tax planning due to owners' individual tax preferences. This analysis makes useful contributions to prior research by focusing on six categories of ownership and their impact on tax avoidance in (multinational) firms and moderating effects. The author provides a detailed overview about current archival research and likes to guide researchers to focus on ownership heterogeneity and endogeneity concerns.Ownership structure and corporate tax avoidance: a structured literature review on archival research
Patrick Velte
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

To the best of the author’s knowledge, the author conducts the first detailed review on the impact of ownership variables on corporate tax avoidance, based on 69 archival studies over the two last decades.

Referring to an agency-theoretical framework, the author differentiates between six categories of ownership (institutional, state, family, foreign, managerial and cross-ownership/ownership concentration). The author also includes research on ownership proxies as moderators of other determinants of tax avoidance.

The review indicates that most research refers to institutional, state and family ownership. Moreover, except for state ownership, no clear tendencies on the impact of included ownership types can be found in line with the author’s agency-theoretical framework.

Regarding research recommendations, among others, the author stresses the urgent need for recognizing heterogeneity within and interactions between ownership proxies. Researchers should also properly address endogeneity concerns by advanced econometric models (e.g. by the difference-in-difference approach).

As international standard setters have implemented massive reform initiatives on both tax avoidance and corporate governance, this literature review underlines the huge interaction between those topics. Firms should carefully analyze their ownership structure and change their tax planning due to owners' individual tax preferences.

This analysis makes useful contributions to prior research by focusing on six categories of ownership and their impact on tax avoidance in (multinational) firms and moderating effects. The author provides a detailed overview about current archival research and likes to guide researchers to focus on ownership heterogeneity and endogeneity concerns.

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Ownership structure and corporate tax avoidance: a structured literature review on archival research10.1108/JAAR-10-2022-0259Journal of Applied Accounting Research2023-09-18© 2023 Emerald Publishing LimitedPatrick VelteJournal of Applied Accounting Researchahead-of-printahead-of-print2023-09-1810.1108/JAAR-10-2022-0259https://www.emerald.com/insight/content/doi/10.1108/JAAR-10-2022-0259/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
A deep learning-based SEM-ANN analysis of the impact of AI-based audit services on client trusthttps://www.emerald.com/insight/content/doi/10.1108/JAAR-10-2022-0273/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe advent of technology has propelled audit firms to incorporate AI-based audit services, bringing the relationship between audit clients and firms into sharper focus. Nonetheless, the understanding of how AI-based audit services affect this relationship remains sparse. This study strives to probe how an audit client's satisfaction with AI-based audit services influences their trust in audit firms. Identifying the variables affecting this trust, the research aspires to gain a deeper comprehension of the implications of AI-based audit services on the auditor-client relationship, ultimately aiming to boost client satisfaction and cultivate trust. A conceptual framework has been devised, grounded in the client-company relationship model, to delineate the relationship between perceived quality, perceived value, attitude and satisfaction with AI-based audit services and their subsequent impact on trust in audit firms. The research entailed an empirical investigation employing Facebook ads, gathering 288 valid responses for evaluation. The structural equation method, utilized in conjunction with SPSS and Amos statistical applications, verified the reliability and overarching structure of the scales employed to measure these elements. A hybrid multi-analytical technique of structural equation modeling and artificial neural networks (SEM-ANN) was deployed to empirically validate the collated data. The research unveiled a significant and positive relationship between perceived value and client satisfaction, trust and attitude towards AI-based audit services, along with the link between perceived quality and client satisfaction. The findings suggest that a favorable attitude and perceived quality of AI-based audit services could enhance satisfaction, subsequently augmenting perceived value and client trust. By focusing on the delivery of superior-quality services that fulfill clients' value expectations, firms may amplify client satisfaction and trust. Further inquiries are required to appraise the influence of advanced technology adoption within audit firms on client trust-building mechanisms. Moreover, an understanding of why the impact of perceived quality on perceived value proves ineffectual in the context of audit client trust-building warrants further exploration. In interpreting the findings of this study, one should consider the inherent limitations of the empirical analysis, inclusive of the utilization of Facebook ads as a data-gathering tool. The research yielded insightful theoretical and practical implications that can bolster audit clients' trust in audit firms amid technological advancements within the audit landscape. The results imply that audit firms should contemplate implementing trust-building mechanisms by creating value and influencing clients' stance towards AI-based audit services to establish trust, particularly when vying with competing firms. As technological evolutions impinge on trustworthiness, audit firms must prioritize clients' perceived value and satisfaction. To the researcher's best knowledge, no previous study has scrutinized the impact of satisfaction with AI-based audit services on cultivating audit client trust in audit firms, in contrast to past research that has focused on the auditors' trust in the audit client. To bridge these gaps, this study employs a comprehensive and integrative theoretical model.A deep learning-based SEM-ANN analysis of the impact of AI-based audit services on client trust
Awni Rawashdeh
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

The advent of technology has propelled audit firms to incorporate AI-based audit services, bringing the relationship between audit clients and firms into sharper focus. Nonetheless, the understanding of how AI-based audit services affect this relationship remains sparse. This study strives to probe how an audit client's satisfaction with AI-based audit services influences their trust in audit firms. Identifying the variables affecting this trust, the research aspires to gain a deeper comprehension of the implications of AI-based audit services on the auditor-client relationship, ultimately aiming to boost client satisfaction and cultivate trust.

A conceptual framework has been devised, grounded in the client-company relationship model, to delineate the relationship between perceived quality, perceived value, attitude and satisfaction with AI-based audit services and their subsequent impact on trust in audit firms. The research entailed an empirical investigation employing Facebook ads, gathering 288 valid responses for evaluation. The structural equation method, utilized in conjunction with SPSS and Amos statistical applications, verified the reliability and overarching structure of the scales employed to measure these elements. A hybrid multi-analytical technique of structural equation modeling and artificial neural networks (SEM-ANN) was deployed to empirically validate the collated data.

The research unveiled a significant and positive relationship between perceived value and client satisfaction, trust and attitude towards AI-based audit services, along with the link between perceived quality and client satisfaction. The findings suggest that a favorable attitude and perceived quality of AI-based audit services could enhance satisfaction, subsequently augmenting perceived value and client trust. By focusing on the delivery of superior-quality services that fulfill clients' value expectations, firms may amplify client satisfaction and trust.

Further inquiries are required to appraise the influence of advanced technology adoption within audit firms on client trust-building mechanisms. Moreover, an understanding of why the impact of perceived quality on perceived value proves ineffectual in the context of audit client trust-building warrants further exploration. In interpreting the findings of this study, one should consider the inherent limitations of the empirical analysis, inclusive of the utilization of Facebook ads as a data-gathering tool.

The research yielded insightful theoretical and practical implications that can bolster audit clients' trust in audit firms amid technological advancements within the audit landscape. The results imply that audit firms should contemplate implementing trust-building mechanisms by creating value and influencing clients' stance towards AI-based audit services to establish trust, particularly when vying with competing firms. As technological evolutions impinge on trustworthiness, audit firms must prioritize clients' perceived value and satisfaction.

To the researcher's best knowledge, no previous study has scrutinized the impact of satisfaction with AI-based audit services on cultivating audit client trust in audit firms, in contrast to past research that has focused on the auditors' trust in the audit client. To bridge these gaps, this study employs a comprehensive and integrative theoretical model.

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A deep learning-based SEM-ANN analysis of the impact of AI-based audit services on client trust10.1108/JAAR-10-2022-0273Journal of Applied Accounting Research2023-09-01© 2023 Emerald Publishing LimitedAwni RawashdehJournal of Applied Accounting Researchahead-of-printahead-of-print2023-09-0110.1108/JAAR-10-2022-0273https://www.emerald.com/insight/content/doi/10.1108/JAAR-10-2022-0273/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Value relevance of compliance with IFRS 7: evidence from Canadahttps://www.emerald.com/insight/content/doi/10.1108/JAAR-10-2022-0280/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis paper aims to test whether the extent of compliance with International Financial Reporting Standards (IFRS) 7 requirements is value relevant and whether it influences the value relevance of the firm's accounting information (book value of shareholders' equity and net income). The sample for this paper consists of 288 financial institutions listed on the Toronto Stock Exchange (TSX) from 2016 to 2019. Panel regressions have been used in this study. The findings reveal that compliance with IFRS 7 is positively associated with the firm's market value. After making a classification between high-compliance and low-compliance companies, the authors' results indicate that the compliance level is positively associated with the value relevance of net income. Surprisingly, when examining the value relevance of financial instruments disclosures (FID) supplied after the adoption of IFRS 9, the authors find that book values of shareholders' equity and earnings are not more value relevant in the post-IFRS 9 period. Given that the authors' analysis has been restricted to the Canadian setting, the regression results might not be generalized for other countries with different capital markets features. The authors' findings point out that FID can affect investors' decisions as well as their confidence in the companies in which they invest. Hence, the regulatory bodies should gear more efforts to ensure high-compliance levels. To the best of the authors' knowledge, this research is among the first attempts to investigate whether the new FID (after the adoption of IFRS 9) improves the firm disclosure quality and enhances the value relevance of accounting information.Value relevance of compliance with IFRS 7: evidence from Canada
Yosra Mnif, Oumaima Znazen
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

This paper aims to test whether the extent of compliance with International Financial Reporting Standards (IFRS) 7 requirements is value relevant and whether it influences the value relevance of the firm's accounting information (book value of shareholders' equity and net income).

The sample for this paper consists of 288 financial institutions listed on the Toronto Stock Exchange (TSX) from 2016 to 2019. Panel regressions have been used in this study.

The findings reveal that compliance with IFRS 7 is positively associated with the firm's market value. After making a classification between high-compliance and low-compliance companies, the authors' results indicate that the compliance level is positively associated with the value relevance of net income. Surprisingly, when examining the value relevance of financial instruments disclosures (FID) supplied after the adoption of IFRS 9, the authors find that book values of shareholders' equity and earnings are not more value relevant in the post-IFRS 9 period.

Given that the authors' analysis has been restricted to the Canadian setting, the regression results might not be generalized for other countries with different capital markets features.

The authors' findings point out that FID can affect investors' decisions as well as their confidence in the companies in which they invest. Hence, the regulatory bodies should gear more efforts to ensure high-compliance levels.

To the best of the authors' knowledge, this research is among the first attempts to investigate whether the new FID (after the adoption of IFRS 9) improves the firm disclosure quality and enhances the value relevance of accounting information.

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Value relevance of compliance with IFRS 7: evidence from Canada10.1108/JAAR-10-2022-0280Journal of Applied Accounting Research2023-09-29© 2023 Emerald Publishing LimitedYosra MnifOumaima ZnazenJournal of Applied Accounting Researchahead-of-printahead-of-print2023-09-2910.1108/JAAR-10-2022-0280https://www.emerald.com/insight/content/doi/10.1108/JAAR-10-2022-0280/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Do retail and institutional investors react differently to earnings management? Evidence from Indian IPOshttps://www.emerald.com/insight/content/doi/10.1108/JAAR-10-2022-0281/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study investigates the impact of pre-IPO earnings management on investor demand in the Indian IPO market. It also examines whether earnings management by issuer firms affects IPO valuation, a topic that is underexplored in accounting research. The study uses the data of 310 IPOs from India during the period 2000–2021. The association between pre-IPO earnings management with investor demand and valuation is tested using cross-sectional ordinary least squares regression models with heteroscedasticity-robust standard errors. The study finds that the degree of pre-IPO earnings management impacts retail investor demand, measured as their over-subscription multiple. Pre-IPO earnings management is unrelated to institutional investor bidding. Further, this paper suggests no relation between pre-IPO earnings management and IPO valuation. Future studies could explore various other forms of earnings management and their impact on investor demand and valuation. The findings of this study will help the investors and regulators to understand the practice of earnings management among IPO firms and how it is related to IPO demand and valuation. This study contributes to the existing literature on IPO-earnings management and investor demand by documenting that issuer firms engage in earnings management to influence investor demand, particularly retail investor demand. Analysis of IPO valuation reveals that earnings management is mostly unrelated to IPO valuation, contrary to the general perception in the literature.Do retail and institutional investors react differently to earnings management? Evidence from Indian IPOs
V.P. Priyesh, Lukose P.J. Jijo
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study investigates the impact of pre-IPO earnings management on investor demand in the Indian IPO market. It also examines whether earnings management by issuer firms affects IPO valuation, a topic that is underexplored in accounting research.

The study uses the data of 310 IPOs from India during the period 2000–2021. The association between pre-IPO earnings management with investor demand and valuation is tested using cross-sectional ordinary least squares regression models with heteroscedasticity-robust standard errors.

The study finds that the degree of pre-IPO earnings management impacts retail investor demand, measured as their over-subscription multiple. Pre-IPO earnings management is unrelated to institutional investor bidding. Further, this paper suggests no relation between pre-IPO earnings management and IPO valuation.

Future studies could explore various other forms of earnings management and their impact on investor demand and valuation.

The findings of this study will help the investors and regulators to understand the practice of earnings management among IPO firms and how it is related to IPO demand and valuation.

This study contributes to the existing literature on IPO-earnings management and investor demand by documenting that issuer firms engage in earnings management to influence investor demand, particularly retail investor demand. Analysis of IPO valuation reveals that earnings management is mostly unrelated to IPO valuation, contrary to the general perception in the literature.

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Do retail and institutional investors react differently to earnings management? Evidence from Indian IPOs10.1108/JAAR-10-2022-0281Journal of Applied Accounting Research2023-10-24© 2023 Emerald Publishing LimitedV.P. PriyeshLukose P.J. JijoJournal of Applied Accounting Researchahead-of-printahead-of-print2023-10-2410.1108/JAAR-10-2022-0281https://www.emerald.com/insight/content/doi/10.1108/JAAR-10-2022-0281/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Does IFRS convergence affect the readability of annual reports by Indian listed companies?https://www.emerald.com/insight/content/doi/10.1108/JAAR-10-2022-0284/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe purpose of this study is to investigate the influence of IFRS convergence on annual report readability in an emerging market context, with an emphasis on the contents of management discussion and analysis (MD&A), notes to the accounts (Notes) and the whole annual report. The study performs firm-fixed effect regression on a sample of 143 Indian listed companies over a period spanning from 2012 to 2021 to examine the influence of IFRS convergence on readability. This assessment primarily focuses on broader spectrums of readability dimensions, namely annual report length and complexity, wherein complexity is measured using the Gunning Fog, Flesch Reading ease and Flesch-Kincaid grade index. As Indian firms shift to IFRS reporting, the findings suggest that annual reports have become significantly lengthier and more complex, causing deterioration in readability. The Notes section, in particular, exhibits the most significant increase in length and complexity, followed by the entire annual report and MD&A section. Furthermore, the findings also indicate that the complexity of the Notes section is instrumental in the observed complexity growth of the whole annual report in the post-IFRS period. The current study employs readability indices rather than directly taking into consideration the opinions of actual users of annual reports to determine readability. As a result, the study does not provide direct evidence on how information in annual reports affects users' readability. The findings provide insightful information to managers and policymakers about the difficulties stakeholders may encounter while reading IFRS-based annual reports, which ultimately impact their investment decisions. Thus, there is an important managerial implication from this, depending upon the severity of complexity corporations participate in while complying with IFRS in the post-IFRS period. Analyzing the influence of exogenous information shock, such as IFRS convergence, on readability is critical, particularly for emerging markets like India, where a lack of financial literacy and weaker enforcement already have detrimental effects on the capital market. In light of this, the current study provides a comprehensive examination of the impact of IFRS convergence on annual report readability and contributes to the growing IFRS literature in the less explored emerging market context.Does IFRS convergence affect the readability of annual reports by Indian listed companies?
R. Saravanan, Firoz Mohammad, Praveen Kumar
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

The purpose of this study is to investigate the influence of IFRS convergence on annual report readability in an emerging market context, with an emphasis on the contents of management discussion and analysis (MD&A), notes to the accounts (Notes) and the whole annual report.

The study performs firm-fixed effect regression on a sample of 143 Indian listed companies over a period spanning from 2012 to 2021 to examine the influence of IFRS convergence on readability. This assessment primarily focuses on broader spectrums of readability dimensions, namely annual report length and complexity, wherein complexity is measured using the Gunning Fog, Flesch Reading ease and Flesch-Kincaid grade index.

As Indian firms shift to IFRS reporting, the findings suggest that annual reports have become significantly lengthier and more complex, causing deterioration in readability. The Notes section, in particular, exhibits the most significant increase in length and complexity, followed by the entire annual report and MD&A section. Furthermore, the findings also indicate that the complexity of the Notes section is instrumental in the observed complexity growth of the whole annual report in the post-IFRS period.

The current study employs readability indices rather than directly taking into consideration the opinions of actual users of annual reports to determine readability. As a result, the study does not provide direct evidence on how information in annual reports affects users' readability.

The findings provide insightful information to managers and policymakers about the difficulties stakeholders may encounter while reading IFRS-based annual reports, which ultimately impact their investment decisions. Thus, there is an important managerial implication from this, depending upon the severity of complexity corporations participate in while complying with IFRS in the post-IFRS period.

Analyzing the influence of exogenous information shock, such as IFRS convergence, on readability is critical, particularly for emerging markets like India, where a lack of financial literacy and weaker enforcement already have detrimental effects on the capital market. In light of this, the current study provides a comprehensive examination of the impact of IFRS convergence on annual report readability and contributes to the growing IFRS literature in the less explored emerging market context.

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Does IFRS convergence affect the readability of annual reports by Indian listed companies?10.1108/JAAR-10-2022-0284Journal of Applied Accounting Research2023-08-16© 2023 Emerald Publishing LimitedR. SaravananFiroz MohammadPraveen KumarJournal of Applied Accounting Researchahead-of-printahead-of-print2023-08-1610.1108/JAAR-10-2022-0284https://www.emerald.com/insight/content/doi/10.1108/JAAR-10-2022-0284/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Female directors' representation and intellectual capital efficiency: does institutional ownership matter?https://www.emerald.com/insight/content/doi/10.1108/JAAR-11-2022-0295/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study examines the impact of female directors' representation in the boardroom and the role of institutional ownership (IO) on intellectual capital efficiency (ICE) and its three efficiency components: human capital efficiency (HCE); innovation capital efficiency (INCE) and capital employed efficiency (CEE). A sample of non-financial French firms listed within the Société des Bourses Françaises-120 (SBF-120) was employed for the period from 2011 to 2020 using the generalized method of moments (GMM) approach to test the set of hypotheses. Grounded in agency and resource dependence theories, this study found that female directors play a vital role in enhancing ICE. IO also has a significant role to play. Active institutional investors tend to push toward gender-balanced boardrooms and play an external supervisory role to improve efficiency. Moreover, female financial experts on audit committees also contribute to the ICE decision-making process within firms with high IO levels. This study focused only on IO. Future research may use other forms of ownership, such as foreign or family ownership. The findings may serve as a reference for managers and policymakers to enhance IC management and make appropriate investment decisions. Managers and policymakers may rely on strategic and effective decisions regarding the efficient use of IC for value creation through the judgments of female directors. The current study adds significant insights to the accounting and intellectual capital literature.Female directors' representation and intellectual capital efficiency: does institutional ownership matter?
Ghassan H. Mardini, Fathia Elleuch Lahyani
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study examines the impact of female directors' representation in the boardroom and the role of institutional ownership (IO) on intellectual capital efficiency (ICE) and its three efficiency components: human capital efficiency (HCE); innovation capital efficiency (INCE) and capital employed efficiency (CEE).

A sample of non-financial French firms listed within the Société des Bourses Françaises-120 (SBF-120) was employed for the period from 2011 to 2020 using the generalized method of moments (GMM) approach to test the set of hypotheses.

Grounded in agency and resource dependence theories, this study found that female directors play a vital role in enhancing ICE. IO also has a significant role to play. Active institutional investors tend to push toward gender-balanced boardrooms and play an external supervisory role to improve efficiency. Moreover, female financial experts on audit committees also contribute to the ICE decision-making process within firms with high IO levels.

This study focused only on IO. Future research may use other forms of ownership, such as foreign or family ownership.

The findings may serve as a reference for managers and policymakers to enhance IC management and make appropriate investment decisions. Managers and policymakers may rely on strategic and effective decisions regarding the efficient use of IC for value creation through the judgments of female directors.

The current study adds significant insights to the accounting and intellectual capital literature.

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Female directors' representation and intellectual capital efficiency: does institutional ownership matter?10.1108/JAAR-11-2022-0295Journal of Applied Accounting Research2023-06-30© 2023 Emerald Publishing LimitedGhassan H. MardiniFathia Elleuch LahyaniJournal of Applied Accounting Researchahead-of-printahead-of-print2023-06-3010.1108/JAAR-11-2022-0295https://www.emerald.com/insight/content/doi/10.1108/JAAR-11-2022-0295/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Institutional investors' information needs in the context of the sustainable finance disclosure regulation (EU/2019/2088): the implications for companies' sustainability reportinghttps://www.emerald.com/insight/content/doi/10.1108/JAAR-11-2022-0303/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe paper aims to provide companies with a better understanding of the needs of institutional investors to improve the disclosure of sustainability information by companies. The study investigates the changed information needs of institutional investors resulting from the Sustainable Finance Disclosure Regulation (SFDR). This study uses an internet-based survey instrument amongst institutional investors to gain insights into their needs regarding sustainability information. The authors received 155 responses in total and use descriptive statistics and t-tests to analyse the survey data. The results demonstrate that the implementation of the SFDR challenges institutional investors, as it affects their decision process. Additionally, the findings still indicate a lack of available corporate sustainability information, making it even more challenging for institutional investors to make appropriate investment decisions. Respondents suggest that information on climate-related risks is more important than the European Union (EU) Taxonomy metrics for meeting the SFDR requirements. The findings are mainly restricted to the opinion of European investors. However, the evidence contributes to the existing literature by investigating institutional investors' information needs in the new regulatory landscape. As the study provides insights into institutional investors' needs, reporting companies recognise the relevance of transparently providing sustainability information to be further considered in the investment process of institutional investors despite the regulation. The findings can help regulators develop uniform and global sustainability reporting standards. This paper is the first to provide evidence on sustainability information requested on the institutional investors' side. The survey gathers primary data from professional investment members unavailable in databases or reports.Institutional investors' information needs in the context of the sustainable finance disclosure regulation (EU/2019/2088): the implications for companies' sustainability reporting
Maria Gebhardt, Anne Schneider, Marcel Seefloth, Henning Zülch
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

The paper aims to provide companies with a better understanding of the needs of institutional investors to improve the disclosure of sustainability information by companies. The study investigates the changed information needs of institutional investors resulting from the Sustainable Finance Disclosure Regulation (SFDR).

This study uses an internet-based survey instrument amongst institutional investors to gain insights into their needs regarding sustainability information. The authors received 155 responses in total and use descriptive statistics and t-tests to analyse the survey data.

The results demonstrate that the implementation of the SFDR challenges institutional investors, as it affects their decision process. Additionally, the findings still indicate a lack of available corporate sustainability information, making it even more challenging for institutional investors to make appropriate investment decisions. Respondents suggest that information on climate-related risks is more important than the European Union (EU) Taxonomy metrics for meeting the SFDR requirements.

The findings are mainly restricted to the opinion of European investors. However, the evidence contributes to the existing literature by investigating institutional investors' information needs in the new regulatory landscape.

As the study provides insights into institutional investors' needs, reporting companies recognise the relevance of transparently providing sustainability information to be further considered in the investment process of institutional investors despite the regulation. The findings can help regulators develop uniform and global sustainability reporting standards.

This paper is the first to provide evidence on sustainability information requested on the institutional investors' side. The survey gathers primary data from professional investment members unavailable in databases or reports.

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Institutional investors' information needs in the context of the sustainable finance disclosure regulation (EU/2019/2088): the implications for companies' sustainability reporting10.1108/JAAR-11-2022-0303Journal of Applied Accounting Research2023-10-23© 2023 Emerald Publishing LimitedMaria GebhardtAnne SchneiderMarcel SeeflothHenning ZülchJournal of Applied Accounting Researchahead-of-printahead-of-print2023-10-2310.1108/JAAR-11-2022-0303https://www.emerald.com/insight/content/doi/10.1108/JAAR-11-2022-0303/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Audit quality and classification shifting: evidence from UK and Germanyhttps://www.emerald.com/insight/content/doi/10.1108/JAAR-11-2022-0309/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe authors examine the impact of audit quality (AQ) on classification shifting (CS) among non-financial firms operating in the UK and Germany. This paper used various audit committee variables (size, meetings, gender diversity and financial expertise) to measure AQ and its impact on CS. The authors used a total of 2,110 firm-year observations from 2010 to 2019. The authors found that the presence of female members on the audit committee and audit committee financial expertise deter the UK and German managers from shifting core expenses and revenue items into special items to inflate core earnings. However, audit committee size is positively related to CS among German firms but has no impact on UK firms. The authors also document evidence that audit committee meetings restrain UK managers from engaging in CS. However, the authors found no impact on CS among German firms. The study results hold even after employing several tests. Overall, the study findings provide broad support in an international setting for the board to improve its auditing practices and offer essential information to investors to assess how AQ affects the financial reporting process. Most CS studies used market-oriented economies such as the USA and UK and ignored bank-based economies such as Germany, France and Japan. The authors provide a comparison among bank and market-oriented economies on whether the AQ has a similar impact on CS or not among them.Audit quality and classification shifting: evidence from UK and Germany
Muhammad Usman, Jacinta Nwachukwu, Ernest Ezeani, Rami Ibrahim A. Salem, Bilal Bilal, Frank Obenpong Kwabi
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

The authors examine the impact of audit quality (AQ) on classification shifting (CS) among non-financial firms operating in the UK and Germany.

This paper used various audit committee variables (size, meetings, gender diversity and financial expertise) to measure AQ and its impact on CS. The authors used a total of 2,110 firm-year observations from 2010 to 2019.

The authors found that the presence of female members on the audit committee and audit committee financial expertise deter the UK and German managers from shifting core expenses and revenue items into special items to inflate core earnings. However, audit committee size is positively related to CS among German firms but has no impact on UK firms. The authors also document evidence that audit committee meetings restrain UK managers from engaging in CS. However, the authors found no impact on CS among German firms. The study results hold even after employing several tests.

Overall, the study findings provide broad support in an international setting for the board to improve its auditing practices and offer essential information to investors to assess how AQ affects the financial reporting process.

Most CS studies used market-oriented economies such as the USA and UK and ignored bank-based economies such as Germany, France and Japan. The authors provide a comparison among bank and market-oriented economies on whether the AQ has a similar impact on CS or not among them.

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Audit quality and classification shifting: evidence from UK and Germany10.1108/JAAR-11-2022-0309Journal of Applied Accounting Research2023-08-01© 2023 Emerald Publishing LimitedMuhammad UsmanJacinta NwachukwuErnest EzeaniRami Ibrahim A. SalemBilal BilalFrank Obenpong KwabiJournal of Applied Accounting Researchahead-of-printahead-of-print2023-08-0110.1108/JAAR-11-2022-0309https://www.emerald.com/insight/content/doi/10.1108/JAAR-11-2022-0309/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
CSR disclosure and ownership structure: insights from a dynamic empirical framework using an emerging economy contexthttps://www.emerald.com/insight/content/doi/10.1108/JAAR-12-2021-0338/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study examines the bi-directional relationship between corporate social responsibility disclosure (CSRD) and ownership structure through a dynamic empirical framework in an emerging economy context. Data over 10 years are used to investigate the response of disclosure to ownership structure variables and vice versa. Dynamic bi-directional relationships are hypothesised and empirically investigated using a panel vector autoregressive (PVAR) model. The ownership structure variables used are government ownership, block ownership and director ownership, while CSRD is constructed as a score through content analysis. A bi-directional negative relationship between CSRD and government ownership is found, revealing a preference for the state to invest in companies with opaque disclosure. CSRD is found to respond negatively to block ownership, albeit weakly. Results also show that directors prefer to own shares in the company they manage when there are low levels of CSRD. The current empirical set-up of using a small emerging economy may not carry to the context of larger emerging economies where the institutional context may differ. Thus, future research could use this dynamic empirical approach to re-examine the questions raised in this paper using data from other emerging economies. The use of a longer time series makes it feasible to explore further analysis what was not possible in this study, such as an impulse response analysis examining the reaction of the variables of interest, CSRD and ownership variables for a specific time horizon to particular changes or shocks associated with one of the endogenous variables in the PVAR. A major implication is that expecting disclosure practices to improve due to government and director initiatives would be less likely in emerging economies. State and director shareholders prefer to invest in opaque companies because they may purposely choose to keep the minimum disclosure levels. The paper calls for a transparent process and ethical guidelines to guide government investment in firms. The study investigates the bi-directional relationship between ownership structure and CSRD in contrast to the existing literature's presupposed one-way relationship between these variables by demonstrating that bi-directionality does matter. This paper also contributes to the CSRD literature in the emerging economy context. The bi-directional negative relationship between CSRD and government ownership calls for a transparent selection process of board members as representatives of the state in those companies where the government has an ownership stake. It also calls for a transparent process and ethical guidelines to guide government investment in firms.CSR disclosure and ownership structure: insights from a dynamic empirical framework using an emerging economy context
Dinesh Ramdhony, Saileshsingh Gunessee, Oren Mooneeapen, Pran Boolaky
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study examines the bi-directional relationship between corporate social responsibility disclosure (CSRD) and ownership structure through a dynamic empirical framework in an emerging economy context.

Data over 10 years are used to investigate the response of disclosure to ownership structure variables and vice versa. Dynamic bi-directional relationships are hypothesised and empirically investigated using a panel vector autoregressive (PVAR) model. The ownership structure variables used are government ownership, block ownership and director ownership, while CSRD is constructed as a score through content analysis.

A bi-directional negative relationship between CSRD and government ownership is found, revealing a preference for the state to invest in companies with opaque disclosure. CSRD is found to respond negatively to block ownership, albeit weakly. Results also show that directors prefer to own shares in the company they manage when there are low levels of CSRD.

The current empirical set-up of using a small emerging economy may not carry to the context of larger emerging economies where the institutional context may differ. Thus, future research could use this dynamic empirical approach to re-examine the questions raised in this paper using data from other emerging economies. The use of a longer time series makes it feasible to explore further analysis what was not possible in this study, such as an impulse response analysis examining the reaction of the variables of interest, CSRD and ownership variables for a specific time horizon to particular changes or shocks associated with one of the endogenous variables in the PVAR.

A major implication is that expecting disclosure practices to improve due to government and director initiatives would be less likely in emerging economies. State and director shareholders prefer to invest in opaque companies because they may purposely choose to keep the minimum disclosure levels. The paper calls for a transparent process and ethical guidelines to guide government investment in firms.

The study investigates the bi-directional relationship between ownership structure and CSRD in contrast to the existing literature's presupposed one-way relationship between these variables by demonstrating that bi-directionality does matter. This paper also contributes to the CSRD literature in the emerging economy context. The bi-directional negative relationship between CSRD and government ownership calls for a transparent selection process of board members as representatives of the state in those companies where the government has an ownership stake. It also calls for a transparent process and ethical guidelines to guide government investment in firms.

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CSR disclosure and ownership structure: insights from a dynamic empirical framework using an emerging economy context10.1108/JAAR-12-2021-0338Journal of Applied Accounting Research2023-07-31© 2023 Emerald Publishing LimitedDinesh RamdhonySaileshsingh GunesseeOren MooneeapenPran BoolakyJournal of Applied Accounting Researchahead-of-printahead-of-print2023-07-3110.1108/JAAR-12-2021-0338https://www.emerald.com/insight/content/doi/10.1108/JAAR-12-2021-0338/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Religiosity, financial distress and R&D accounting treatment in US contexthttps://www.emerald.com/insight/content/doi/10.1108/JAAR-12-2022-0322/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestPrior research shows that religiosity affects the degree of managers' risk aversion. As a result, religious firms are less likely to invest in R&D activities. Moreover, US GAAP treats these investments as expenses. For this reason, religious firms have fewer expenses in their earnings and are less likely to be in financial distress. Data are collected from Worldscope and the Churches and Church Membership files of the American Religion Data Archive website from 1985 to 2018. With 18,199 observations in US context, the authors used the marginal effect to test the mediating effect of R&D accounting treatment. The authors find that the marginal effect of religiosity on financial distress with US GAAP is higher than the marginal effect of religiosity on financial distress with capitalization of R&D costs, which means that accounting treatment can explain the relation between religiosity and financial distress in the US context. The authors used linear interpolation and linear extrapolation data to be able to conduct this research over a period of 1985–2018. For future researches, the authors propose to test other factors which can explain the relationship between religiosity and financial distress based on the ethics element. These results should be of interest to regulators because treating R&D activities as expenses can destroy the accounting performance of firms that prefer investing in risky projects. This favoritism prevents the comparison between two firms in the same industry with different risk-taking behaviors. This problem is more prevalent if the authors have two firms with different ratios of religiosity. This paper suffers from a major limitation related to data availability. This may be the first study that investigates why religious firms are less likely to be in financial distress. This paper notes that religious firms are less likely to be in financial distress because their conservative behavior towards R&D activities coincides with the conservative R&D accounting treatment. In fact, the mismatch between expenses and revenues from R&D activities can cause financial distress.Religiosity, financial distress and R&D accounting treatment in US context
Ines Gharbi, Mounira Hamed-Sidhom, Khaled Hussainey
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

Prior research shows that religiosity affects the degree of managers' risk aversion. As a result, religious firms are less likely to invest in R&D activities. Moreover, US GAAP treats these investments as expenses. For this reason, religious firms have fewer expenses in their earnings and are less likely to be in financial distress.

Data are collected from Worldscope and the Churches and Church Membership files of the American Religion Data Archive website from 1985 to 2018. With 18,199 observations in US context, the authors used the marginal effect to test the mediating effect of R&D accounting treatment.

The authors find that the marginal effect of religiosity on financial distress with US GAAP is higher than the marginal effect of religiosity on financial distress with capitalization of R&D costs, which means that accounting treatment can explain the relation between religiosity and financial distress in the US context.

The authors used linear interpolation and linear extrapolation data to be able to conduct this research over a period of 1985–2018. For future researches, the authors propose to test other factors which can explain the relationship between religiosity and financial distress based on the ethics element.

These results should be of interest to regulators because treating R&D activities as expenses can destroy the accounting performance of firms that prefer investing in risky projects. This favoritism prevents the comparison between two firms in the same industry with different risk-taking behaviors. This problem is more prevalent if the authors have two firms with different ratios of religiosity. This paper suffers from a major limitation related to data availability.

This may be the first study that investigates why religious firms are less likely to be in financial distress. This paper notes that religious firms are less likely to be in financial distress because their conservative behavior towards R&D activities coincides with the conservative R&D accounting treatment. In fact, the mismatch between expenses and revenues from R&D activities can cause financial distress.

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Religiosity, financial distress and R&D accounting treatment in US context10.1108/JAAR-12-2022-0322Journal of Applied Accounting Research2023-09-28© 2023 Emerald Publishing LimitedInes GharbiMounira Hamed-SidhomKhaled HussaineyJournal of Applied Accounting Researchahead-of-printahead-of-print2023-09-2810.1108/JAAR-12-2022-0322https://www.emerald.com/insight/content/doi/10.1108/JAAR-12-2022-0322/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
The impact of the IFRS adoption reform on audit market concentration, auditor choice and audit qualityhttps://www.emerald.com/insight/content/doi/10.1108/JAAR-12-2022-0323/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe study examines the changes in audit market concentration, auditor choice and audit quality in Russia following International Financial Reporting Standards (IFRS) adoption. Scholars have called for further examination of the effects of IFRS adoption on auditors, with an emphasis on the importance of analyzing emerging markets that are characterized by enforcement challenges and lack of proper infrastructure. It focuses on a unique feature of Russian companies – dual audits under Russian Accounting Standards (RAS) and IFRS – and investigates changes in audit concentration and audit quality for the two audit markets. The authors rely on the audited financial statements of Russian public companies and perform pre-/post-IFRS adoption estimation using a logit regression to ascertain whether public firms change auditors from local firms with limited IFRS expertise to those with global reputation, namely Big 4 audit firms. Further, they examine whether the change in audit market concentration post-2012 affects audit quality as proxied by companies' propensity to receive a modified audit opinion and discretionary accruals. Auditor attributes were hand-collected from audited financial statements and matched with financial variables from Datastream. The IFRS audit market was dominated by the Big 4 audit firms prior to 2012, and there is strong evidence that audit market share (concentration) increases for IFRS reports but not for RAS reports. In addition, companies are more likely to choose a Big 4 audit firm for an RAS audit, conditional upon a Big 4 firm conducting the IFRS audit. The authors do not find evidence of decrease in the probability of audit firms issuing a modified audit opinion under either RAS or IFRS, indicating that, in the Russian setting, increased auditor concentration post-IFRS adoption does not lead to enhanced risk or decline in audit quality. Moreover, they find that discretionary accruals decline post-2012. Overall, the findings indicate that the concern of global regulators regarding audit market concentration is not justified. The Russian reporting environment is unique and generally characterized by significant agency problems, and the study’s estimation sample is not large, compared to prior studies conducted predominantly in Western jurisdictions. Nevertheless, the authors shed light on the audit concentration phenomenon within emerging markets, for which empirical evidence is scarce. Future research could explore the impact of other capital market events and exogenous shocks, not limited to IFRS adoption, on the characteristics of Russia's audit market. The IFRS reporting regime is commonly associated with enhanced reporting quality and improved information transparency among public companies. Yet, impairment of audit quality as a result of IFRS-driven increase in audit market share of Big 4 can potentially negate these capital market effects. This study shows that the concerns of global regulators are not valid and that audit quality does not change with increased share of Big 4 post-IFRS adoption. Dual audits, whereby companies must prepare two sets of financial statements per the IFRS mandate, are not unique to Russia, and the evidence of IFRS reporting on the structural changes in the audit market and implications for audit quality under a dual regime is scarce. Accordingly, the study's findings are important and timely and are expected to aid regulators of countries that have announced or are contemplating the adoption of IFRS for public reporting purposes.The impact of the IFRS adoption reform on audit market concentration, auditor choice and audit quality
Michael Eric Bradbury, Oksana Kim
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

The study examines the changes in audit market concentration, auditor choice and audit quality in Russia following International Financial Reporting Standards (IFRS) adoption. Scholars have called for further examination of the effects of IFRS adoption on auditors, with an emphasis on the importance of analyzing emerging markets that are characterized by enforcement challenges and lack of proper infrastructure. It focuses on a unique feature of Russian companies – dual audits under Russian Accounting Standards (RAS) and IFRS – and investigates changes in audit concentration and audit quality for the two audit markets.

The authors rely on the audited financial statements of Russian public companies and perform pre-/post-IFRS adoption estimation using a logit regression to ascertain whether public firms change auditors from local firms with limited IFRS expertise to those with global reputation, namely Big 4 audit firms. Further, they examine whether the change in audit market concentration post-2012 affects audit quality as proxied by companies' propensity to receive a modified audit opinion and discretionary accruals. Auditor attributes were hand-collected from audited financial statements and matched with financial variables from Datastream.

The IFRS audit market was dominated by the Big 4 audit firms prior to 2012, and there is strong evidence that audit market share (concentration) increases for IFRS reports but not for RAS reports. In addition, companies are more likely to choose a Big 4 audit firm for an RAS audit, conditional upon a Big 4 firm conducting the IFRS audit. The authors do not find evidence of decrease in the probability of audit firms issuing a modified audit opinion under either RAS or IFRS, indicating that, in the Russian setting, increased auditor concentration post-IFRS adoption does not lead to enhanced risk or decline in audit quality. Moreover, they find that discretionary accruals decline post-2012. Overall, the findings indicate that the concern of global regulators regarding audit market concentration is not justified.

The Russian reporting environment is unique and generally characterized by significant agency problems, and the study’s estimation sample is not large, compared to prior studies conducted predominantly in Western jurisdictions. Nevertheless, the authors shed light on the audit concentration phenomenon within emerging markets, for which empirical evidence is scarce. Future research could explore the impact of other capital market events and exogenous shocks, not limited to IFRS adoption, on the characteristics of Russia's audit market.

The IFRS reporting regime is commonly associated with enhanced reporting quality and improved information transparency among public companies. Yet, impairment of audit quality as a result of IFRS-driven increase in audit market share of Big 4 can potentially negate these capital market effects. This study shows that the concerns of global regulators are not valid and that audit quality does not change with increased share of Big 4 post-IFRS adoption.

Dual audits, whereby companies must prepare two sets of financial statements per the IFRS mandate, are not unique to Russia, and the evidence of IFRS reporting on the structural changes in the audit market and implications for audit quality under a dual regime is scarce. Accordingly, the study's findings are important and timely and are expected to aid regulators of countries that have announced or are contemplating the adoption of IFRS for public reporting purposes.

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The impact of the IFRS adoption reform on audit market concentration, auditor choice and audit quality10.1108/JAAR-12-2022-0323Journal of Applied Accounting Research2023-11-29© 2023 Emerald Publishing LimitedMichael Eric BradburyOksana KimJournal of Applied Accounting Researchahead-of-printahead-of-print2023-11-2910.1108/JAAR-12-2022-0323https://www.emerald.com/insight/content/doi/10.1108/JAAR-12-2022-0323/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Financial distress prediction in private firms: developing a model for troubled debt restructuringhttps://www.emerald.com/insight/content/doi/10.1108/JAAR-12-2022-0325/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study aims to develop a model based on the financial variables for better accuracy of financial distress prediction on the sample of private French, Spanish and Italian firms. Thus, firms in financial difficulties could timely request for troubled debt restructuring (TDR) to continue business. This study used a sample of 312 distressed and 312 non-distressed firms. It includes 60 French, 21 Spanish and 231 Italian firms in both distressed and non-distressed groups. The data are extracted from the ORBIS database. First, the authors develop a new model by replacing a ratio in the original Z”-Score model specifically for financial distress prediction and estimate its coefficients based on linear discriminant analysis (LDA). Second, using the modified Z”-Score model, the authors develop a firm TDR probability index for distressed and non-distressed firms based on the logistic regression model. The new model (modified Z”-Score), specifically for financial distress prediction, represents higher prediction accuracy. Moreover, the firm TDR probability index accurately depicts the probabilities trend for both groups of distressed and non-distressed firms. The findings of this study are conclusive. However, the sample size is small. Therefore, further studies could extend the application of the prediction model developed in this study to all the EU countries. This study has important practical implications. This study responds to the EU directive call by developing the financial distress prediction model to allow debtors to do timely debt restructuring and thus continue their businesses. Therefore, this study could be useful for practitioners and firm stakeholders, such as banks and other creditors, and investors. This study significantly contributes to the literature in several ways. First, this study develops a model for predicting financial distress based on the argument that corporate bankruptcy and financial distress are distinct events. However, the original Z”-Score model is intended for failure prediction. Moreover, the recent literature suggests modifying and extending the prediction models. Second, the new model is tested using a sample of firms from three countries that share similarities in their TDR laws.Financial distress prediction in private firms: developing a model for troubled debt restructuring
Asad Mehmood, Francesco De Luca
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study aims to develop a model based on the financial variables for better accuracy of financial distress prediction on the sample of private French, Spanish and Italian firms. Thus, firms in financial difficulties could timely request for troubled debt restructuring (TDR) to continue business.

This study used a sample of 312 distressed and 312 non-distressed firms. It includes 60 French, 21 Spanish and 231 Italian firms in both distressed and non-distressed groups. The data are extracted from the ORBIS database. First, the authors develop a new model by replacing a ratio in the original Z”-Score model specifically for financial distress prediction and estimate its coefficients based on linear discriminant analysis (LDA). Second, using the modified Z”-Score model, the authors develop a firm TDR probability index for distressed and non-distressed firms based on the logistic regression model.

The new model (modified Z”-Score), specifically for financial distress prediction, represents higher prediction accuracy. Moreover, the firm TDR probability index accurately depicts the probabilities trend for both groups of distressed and non-distressed firms.

The findings of this study are conclusive. However, the sample size is small. Therefore, further studies could extend the application of the prediction model developed in this study to all the EU countries.

This study has important practical implications. This study responds to the EU directive call by developing the financial distress prediction model to allow debtors to do timely debt restructuring and thus continue their businesses. Therefore, this study could be useful for practitioners and firm stakeholders, such as banks and other creditors, and investors.

This study significantly contributes to the literature in several ways. First, this study develops a model for predicting financial distress based on the argument that corporate bankruptcy and financial distress are distinct events. However, the original Z”-Score model is intended for failure prediction. Moreover, the recent literature suggests modifying and extending the prediction models. Second, the new model is tested using a sample of firms from three countries that share similarities in their TDR laws.

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Financial distress prediction in private firms: developing a model for troubled debt restructuring10.1108/JAAR-12-2022-0325Journal of Applied Accounting Research2023-11-20© 2023 Asad Mehmood and Francesco De LucaAsad MehmoodFrancesco De LucaJournal of Applied Accounting Researchahead-of-printahead-of-print2023-11-2010.1108/JAAR-12-2022-0325https://www.emerald.com/insight/content/doi/10.1108/JAAR-12-2022-0325/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Asad Mehmood and Francesco De Lucahttp://creativecommons.org/licences/by/4.0/legalcode
Back to goodwill amortisation: impact of the 2016 Spanish regulation on the mispricing of listed firmshttps://www.emerald.com/insight/content/doi/10.1108/JAAR-12-2022-0331/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis article analyses the recent inverse transition from goodwill impairment to goodwill amortisation implemented in Spain in 2016. The authors contribute to the existing literature by describing their differing impact over goodwill and impairment figures and testing the impact of goodwill on balances over stock prices. First, using a database with all Spanish non-financial firms with positive goodwill on their balance sheets, the authors describe the impact of the regulatory change over goodwill and impairment figures. Second, focussing on listed firms only, the authors study the impact of financial reporting of goodwill and impairment on stock prices. Average goodwill per company and the share of goodwill over total assets significantly reduced after 2016, but the results cannot be easily extrapolated to listed firms due to lack of data. When testing the impact of potentially inflated goodwill balances on prices, the authors find that investors kept overvaluing firms with inflated goodwill balances also with the amortisation method. The lack of data for listed firms with goodwill in Spain makes it difficult to obtain statistically sound evidence, the results could be biased by the cultural traits of the country and related to the intensity of enforcement and monitoring. This might suggest that the effects of the impairment method linger, so the authors conform to the interpretation that the systematic amortisation paired with a periodic impairment test may lead to accounting that better reflects the underlying economics of goodwill. To the best of the authors' knowledge, there are no recent articles that analyse this new “turn-around” requiring again the systematic amortisation of goodwill.Back to goodwill amortisation: impact of the 2016 Spanish regulation on the mispricing of listed firms
Fernando Ruiz-Lamas, David Peón
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

This article analyses the recent inverse transition from goodwill impairment to goodwill amortisation implemented in Spain in 2016. The authors contribute to the existing literature by describing their differing impact over goodwill and impairment figures and testing the impact of goodwill on balances over stock prices.

First, using a database with all Spanish non-financial firms with positive goodwill on their balance sheets, the authors describe the impact of the regulatory change over goodwill and impairment figures. Second, focussing on listed firms only, the authors study the impact of financial reporting of goodwill and impairment on stock prices.

Average goodwill per company and the share of goodwill over total assets significantly reduced after 2016, but the results cannot be easily extrapolated to listed firms due to lack of data. When testing the impact of potentially inflated goodwill balances on prices, the authors find that investors kept overvaluing firms with inflated goodwill balances also with the amortisation method.

The lack of data for listed firms with goodwill in Spain makes it difficult to obtain statistically sound evidence, the results could be biased by the cultural traits of the country and related to the intensity of enforcement and monitoring.

This might suggest that the effects of the impairment method linger, so the authors conform to the interpretation that the systematic amortisation paired with a periodic impairment test may lead to accounting that better reflects the underlying economics of goodwill.

To the best of the authors' knowledge, there are no recent articles that analyse this new “turn-around” requiring again the systematic amortisation of goodwill.

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Back to goodwill amortisation: impact of the 2016 Spanish regulation on the mispricing of listed firms10.1108/JAAR-12-2022-0331Journal of Applied Accounting Research2023-12-13© 2023 Emerald Publishing LimitedFernando Ruiz-LamasDavid PeónJournal of Applied Accounting Researchahead-of-printahead-of-print2023-12-1310.1108/JAAR-12-2022-0331https://www.emerald.com/insight/content/doi/10.1108/JAAR-12-2022-0331/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
The role of firm-level CSR governance characteristics as a driver of comprehensive CSR reporting – the moderating role of profitabilityhttps://www.emerald.com/insight/content/doi/10.1108/JAAR-12-2022-0343/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study aims to examine the impact of firm-level corporate social responsibility (CSR) governance characteristics on the extent, quality and comprehensiveness of CSR reporting of Pakistani listed enterprises. This study used content analysis of corporate annual reports and stand-alone CSR reports available on corporate websites in 2021 to identify CSR-related governance features and to calculate CSR reporting scores. Multivariate regression is used to test relationships. In addition, the analysis tested the moderating role of profitability in these relationships. Firm-level CSR governance characteristics contribute to the extent, quality and comprehensiveness of CSR reporting in a developing country. Further, results confirm that profitability moderates the relationship between CSR governance and the extent and comprehensiveness of CSR reporting. This study employed cross-sectional data and focused on a single developing country. Future studies might include a cross-national sample and longitudinal data to demonstrate the broader relevance of these findings. The outcomes of this study are restricted to CSR disclosures based on CSR reports and annual reports. Future research may examine additional corporate communication channels, such as websites and social media platforms. This research validates the important role of CSR governance mechanisms as a driver of comprehensive CSR reporting. Business leaders and policymakers can facilitate improved corporate reporting by requiring companies to implement CSR-related governance mechanisms. This is the first study to test the influence of firm-level CSR governance mechanisms in promoting the quantity, quality and comprehensiveness of CSR reporting in a developing country.The role of firm-level CSR governance characteristics as a driver of comprehensive CSR reporting – the moderating role of profitability
Waris Ali, Jeffrey Wilson, Amr Elalfy, Hina Ismail
Journal of Applied Accounting Research, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study aims to examine the impact of firm-level corporate social responsibility (CSR) governance characteristics on the extent, quality and comprehensiveness of CSR reporting of Pakistani listed enterprises.

This study used content analysis of corporate annual reports and stand-alone CSR reports available on corporate websites in 2021 to identify CSR-related governance features and to calculate CSR reporting scores. Multivariate regression is used to test relationships. In addition, the analysis tested the moderating role of profitability in these relationships.

Firm-level CSR governance characteristics contribute to the extent, quality and comprehensiveness of CSR reporting in a developing country. Further, results confirm that profitability moderates the relationship between CSR governance and the extent and comprehensiveness of CSR reporting.

This study employed cross-sectional data and focused on a single developing country. Future studies might include a cross-national sample and longitudinal data to demonstrate the broader relevance of these findings. The outcomes of this study are restricted to CSR disclosures based on CSR reports and annual reports. Future research may examine additional corporate communication channels, such as websites and social media platforms.

This research validates the important role of CSR governance mechanisms as a driver of comprehensive CSR reporting. Business leaders and policymakers can facilitate improved corporate reporting by requiring companies to implement CSR-related governance mechanisms.

This is the first study to test the influence of firm-level CSR governance mechanisms in promoting the quantity, quality and comprehensiveness of CSR reporting in a developing country.

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The role of firm-level CSR governance characteristics as a driver of comprehensive CSR reporting – the moderating role of profitability10.1108/JAAR-12-2022-0343Journal of Applied Accounting Research2023-10-31© 2023 Emerald Publishing LimitedWaris AliJeffrey WilsonAmr ElalfyHina IsmailJournal of Applied Accounting Researchahead-of-printahead-of-print2023-10-3110.1108/JAAR-12-2022-0343https://www.emerald.com/insight/content/doi/10.1108/JAAR-12-2022-0343/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited