Review of Accounting and FinanceTable of Contents for Review of Accounting and Finance. List of articles from the current issue, including Just Accepted (EarlyCite)https://www.emerald.com/insight/publication/issn/1475-7702/vol/23/iss/1?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestReview of Accounting and FinanceEmerald Publishing LimitedReview of Accounting and FinanceReview of Accounting and Financehttps://www.emerald.com/insight/proxy/containerImg?link=/resource/publication/journal/4f12e97f79067e9361f9f162592f814f/urn:emeraldgroup.com:asset:id:binary:raf.cover.jpghttps://www.emerald.com/insight/publication/issn/1475-7702/vol/23/iss/1?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestCorporate investment sensitivity to equity market misvaluationhttps://www.emerald.com/insight/content/doi/10.1108/RAF-01-2023-0027/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe purpose of this paper is to investigate the effect of equity market misvaluation on manager behavior. Using a sample of 535 French-listed over 2000–2018, the authors analyze whether corporate investment decision is sensitive to equity market overvaluation. The study adopts market-to-book (M/B) decomposition developed by Rhodes-Kropf and Viswanathan (2004, RKV) that proxies for market misvaluation at the firm and industry levels. The authors conducted a long-term performance analysis via a portfolio sorting procedure and a Carhart (1997) four-factor pricing model. The authors tested the relationship between equity misvaluation, corporate investment decisions and equity issuance. The authors ran several robustness tests. The empirical results show that equity market misvaluation affects corporate investment positively as the stock price deviates further away from its fundamental. Based on market timing theory, the authors find that corporate investment occurs in periods of high valuation motivated by equity issuance to benefit from the low cost of capital. This effect is more prominent for financially constrained firms. Consistent with the catering channel, the authors find that the misvaluation-investment nexus is more pronounced in firms with short-horizon investors. By examining the stocks’ long-term performance of misvalued firms, via a sorting portfolio procedure, the authors find that undervalued firms outperform and generate higher abnormal returns (Jensen’s alpha) than overvalued firms, suggesting that mispricing-driven investment appear to be short-lived and lead to lower return in the long term. Corporate decision-makers and governance structures should pay attention to the rationality of the corporate investment decision in the context of equity market misvaluation. Managers who focus on maximizing the stock market value in the short-run at the expense of its long-term performance must give preference to value-creating investment, not driven by an external mechanism such as equity market mispricing. More generally, investors and portfolio managers must take into account the market mispricing process in decision-making. Nonetheless, from the portfolio sorting perspective, decision-makers must act in terms of high governance quality to mitigate suboptimal investment due to stock market mispricing (Jensen, 2005). Finally, equity market overvaluation, leading managers to invest via equity financing in particular, should be a signal to attract investors’ attention to seize the window of opportunity and embark on a short-term portfolio strategy. Such a strategy promises high returns in the short term. This paper investigates jointly two theoretical channels: equity market timing and catering. The authors propose for the analysis three components of the M/B decomposition to dissociate market misvaluation at the firm and industry level from the fundamental component of market value (growth). This procedure provides a better understanding of the role of firm and industry misvaluation in explaining corporate investments. The authors provide evidence of the equity market misvaluation via a portfolio sorting procedure and a Carhart (1997) four-factor pricing model. The authors examine the effect of misvaluation on both the investment and the financing decisions.Corporate investment sensitivity to equity market misvaluation
Senda Mrad, Taher Hamza, Riadh Manita
Review of Accounting and Finance, Vol. 23, No. 1, pp.1-38

The purpose of this paper is to investigate the effect of equity market misvaluation on manager behavior. Using a sample of 535 French-listed over 2000–2018, the authors analyze whether corporate investment decision is sensitive to equity market overvaluation.

The study adopts market-to-book (M/B) decomposition developed by Rhodes-Kropf and Viswanathan (2004, RKV) that proxies for market misvaluation at the firm and industry levels. The authors conducted a long-term performance analysis via a portfolio sorting procedure and a Carhart (1997) four-factor pricing model. The authors tested the relationship between equity misvaluation, corporate investment decisions and equity issuance. The authors ran several robustness tests.

The empirical results show that equity market misvaluation affects corporate investment positively as the stock price deviates further away from its fundamental. Based on market timing theory, the authors find that corporate investment occurs in periods of high valuation motivated by equity issuance to benefit from the low cost of capital. This effect is more prominent for financially constrained firms. Consistent with the catering channel, the authors find that the misvaluation-investment nexus is more pronounced in firms with short-horizon investors. By examining the stocks’ long-term performance of misvalued firms, via a sorting portfolio procedure, the authors find that undervalued firms outperform and generate higher abnormal returns (Jensen’s alpha) than overvalued firms, suggesting that mispricing-driven investment appear to be short-lived and lead to lower return in the long term.

Corporate decision-makers and governance structures should pay attention to the rationality of the corporate investment decision in the context of equity market misvaluation. Managers who focus on maximizing the stock market value in the short-run at the expense of its long-term performance must give preference to value-creating investment, not driven by an external mechanism such as equity market mispricing. More generally, investors and portfolio managers must take into account the market mispricing process in decision-making. Nonetheless, from the portfolio sorting perspective, decision-makers must act in terms of high governance quality to mitigate suboptimal investment due to stock market mispricing (Jensen, 2005). Finally, equity market overvaluation, leading managers to invest via equity financing in particular, should be a signal to attract investors’ attention to seize the window of opportunity and embark on a short-term portfolio strategy. Such a strategy promises high returns in the short term.

This paper investigates jointly two theoretical channels: equity market timing and catering. The authors propose for the analysis three components of the M/B decomposition to dissociate market misvaluation at the firm and industry level from the fundamental component of market value (growth). This procedure provides a better understanding of the role of firm and industry misvaluation in explaining corporate investments. The authors provide evidence of the equity market misvaluation via a portfolio sorting procedure and a Carhart (1997) four-factor pricing model. The authors examine the effect of misvaluation on both the investment and the financing decisions.

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Corporate investment sensitivity to equity market misvaluation10.1108/RAF-01-2023-0027Review of Accounting and Finance2023-12-01© 2023 Emerald Publishing LimitedSenda MradTaher HamzaRiadh ManitaReview of Accounting and Finance2312023-12-0110.1108/RAF-01-2023-0027https://www.emerald.com/insight/content/doi/10.1108/RAF-01-2023-0027/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Liquidity, interbank network topology and bank capitalhttps://www.emerald.com/insight/content/doi/10.1108/RAF-03-2023-0092/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestWhile previous literature has emphasized the causal relationship from liquidity to capital, the impact of interbank network characteristics on this relationship remains unclear. By applying the interbank network simulation, this paper aims to examine whether the causal relationship between capital and liquidity is influenced by bank positions in the interbank network. Using the sample of 506 commercial banks established in 28 European countries from 2001 to 2013, the author adopts the generalized method of moments simultaneous equations approach to investigate whether interbank network characteristics influence the causal relationship between bank capital and liquidity. Drawing on a sample of commercial banks from 28 European countries, this study suggests that the interconnectedness of banks within interbank loan and deposit networks shapes their decisions to establish higher or lower regulatory capital ratios in the face of increased illiquidity. These findings support the implementation of minimum liquidity ratios alongside capital ratios, as advocated by the Basel Committee on Banking Regulation and Supervision. In addition, the paper underscores the importance of regulatory authorities considering the network characteristics of banks in their oversight and decision-making processes. This paper makes a valuable contribution to the current body of research by examining the influence of interbank network characteristics on the relationship between a bank’s capital and liquidity. The findings provide insights that add to the ongoing discourse on regulatory frameworks and emphasize the necessity of customized approaches that consider the varied interbank network positions of banks.Liquidity, interbank network topology and bank capital
Aref Mahdavi Ardekani
Review of Accounting and Finance, Vol. 23, No. 1, pp.40-58

While previous literature has emphasized the causal relationship from liquidity to capital, the impact of interbank network characteristics on this relationship remains unclear. By applying the interbank network simulation, this paper aims to examine whether the causal relationship between capital and liquidity is influenced by bank positions in the interbank network.

Using the sample of 506 commercial banks established in 28 European countries from 2001 to 2013, the author adopts the generalized method of moments simultaneous equations approach to investigate whether interbank network characteristics influence the causal relationship between bank capital and liquidity.

Drawing on a sample of commercial banks from 28 European countries, this study suggests that the interconnectedness of banks within interbank loan and deposit networks shapes their decisions to establish higher or lower regulatory capital ratios in the face of increased illiquidity. These findings support the implementation of minimum liquidity ratios alongside capital ratios, as advocated by the Basel Committee on Banking Regulation and Supervision. In addition, the paper underscores the importance of regulatory authorities considering the network characteristics of banks in their oversight and decision-making processes.

This paper makes a valuable contribution to the current body of research by examining the influence of interbank network characteristics on the relationship between a bank’s capital and liquidity. The findings provide insights that add to the ongoing discourse on regulatory frameworks and emphasize the necessity of customized approaches that consider the varied interbank network positions of banks.

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Liquidity, interbank network topology and bank capital10.1108/RAF-03-2023-0092Review of Accounting and Finance2023-07-27© 2023 Aref Mahdavi Ardekani.Aref Mahdavi ArdekaniReview of Accounting and Finance2312023-07-2710.1108/RAF-03-2023-0092https://www.emerald.com/insight/content/doi/10.1108/RAF-03-2023-0092/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Aref Mahdavi Ardekani.http://creativecommons.org/licences/by/4.0/legalcode
The relative valuation of cash flow and current accruals affected by their extremityhttps://www.emerald.com/insight/content/doi/10.1108/RAF-12-2022-0358/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestRecent studies on the securities market’s differential pricing of earnings components have shown that cash flow from operations is more highly valued than total accruals and that moderate cash flow from operations has higher valuation than extreme total accruals. An interesting question that follows is whether these findings hold regarding the differential valuations of cash flow and current accruals. This study aims to extend prior research by addressing this issue in two ways. First, the authors examine the incremental information content of cash flow from operations beyond working capital from operations. Second, the authors assess the effect of extreme working capital from operations on the incremental information content of cash flow from operations. This study aims to extend prior research by addressing this issue in two ways. This study adopts market-based accounting research to test its hypotheses and to achieve its objectives. Specifically, this study uses statistical associations between accounting data and stock returns to examine the incremental information content (value relevance) of cash flow and working capital from operations and the effect of extreme working capital from operations on the incremental information content of cash flow. The results show that cash flow from operations is not more highly valued than current accruals (both being valued equivalently). However, moderate cash flow from operations has higher valuation than extreme current accruals (each is valued differently). Overall, these research findings indicate that cash flow becomes more important for valuation as accruals get “extreme”. As accruals are unlikely to persist to be permanent across the years, these results can be interpreted as indicating that cash flow and accruals information are used jointly by investors, with one being more important than the other depending on the relative “extremeness” of each. Therefore, both are of value to the investor and both should be reported. The paper contributes to the UK research on determining the preferred level of disaggregation of earnings components, i.e. operating cash flow, current accruals and non-current accruals. This would help investors to improve their investment and credit decisions.The relative valuation of cash flow and current accruals affected by their extremity
Wael Mostafa, Rob Dixon
Review of Accounting and Finance, Vol. 23, No. 1, pp.59-79

Recent studies on the securities market’s differential pricing of earnings components have shown that cash flow from operations is more highly valued than total accruals and that moderate cash flow from operations has higher valuation than extreme total accruals. An interesting question that follows is whether these findings hold regarding the differential valuations of cash flow and current accruals. This study aims to extend prior research by addressing this issue in two ways. First, the authors examine the incremental information content of cash flow from operations beyond working capital from operations. Second, the authors assess the effect of extreme working capital from operations on the incremental information content of cash flow from operations. This study aims to extend prior research by addressing this issue in two ways.

This study adopts market-based accounting research to test its hypotheses and to achieve its objectives. Specifically, this study uses statistical associations between accounting data and stock returns to examine the incremental information content (value relevance) of cash flow and working capital from operations and the effect of extreme working capital from operations on the incremental information content of cash flow.

The results show that cash flow from operations is not more highly valued than current accruals (both being valued equivalently). However, moderate cash flow from operations has higher valuation than extreme current accruals (each is valued differently). Overall, these research findings indicate that cash flow becomes more important for valuation as accruals get “extreme”.

As accruals are unlikely to persist to be permanent across the years, these results can be interpreted as indicating that cash flow and accruals information are used jointly by investors, with one being more important than the other depending on the relative “extremeness” of each. Therefore, both are of value to the investor and both should be reported.

The paper contributes to the UK research on determining the preferred level of disaggregation of earnings components, i.e. operating cash flow, current accruals and non-current accruals. This would help investors to improve their investment and credit decisions.

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The relative valuation of cash flow and current accruals affected by their extremity10.1108/RAF-12-2022-0358Review of Accounting and Finance2023-11-20© 2023 Emerald Publishing LimitedWael MostafaRob DixonReview of Accounting and Finance2312023-11-2010.1108/RAF-12-2022-0358https://www.emerald.com/insight/content/doi/10.1108/RAF-12-2022-0358/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
The impact of investor protection on stock market volatilityhttps://www.emerald.com/insight/content/doi/10.1108/RAF-09-2022-0244/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study aims to advance knowledge on the direct impact of the investor’s protection level on the stock market volatility, that is, whether investor’s protection is an important stock market volatility determinant. A panel data was estimated using a sample of 48 countries, from 2006 to 2018, totalizing 31,808 observations. To measure stock market volatility and the investor protection level, a generalized autoregressive conditional heteroskedasticity model and the World Bank Doing Business investor protection index were used, respectively. The results evidence that the protection of investors’ rights reduces the stock market volatility. This result indicates that a high level of investor protection, which is the result of a better quality of laws and policies in place that protect investor’s rights, promotes the country as a “safe haven.” The relationship that the authors intend to analyze becomes important, given that investor protection will give outsiders guarantees on the materialization of their investments. This study contributes important knowledge for investors and for the establishment of government policies as a way of attracting investment. Although there have been a few studies addressing this relationship, to the knowledge, none of them directly analyses the influence of investor protection on the stock market volatility.The impact of investor protection on stock market volatility
João Silva, Lígia Febra, Magali Costa
Review of Accounting and Finance, Vol. 23, No. 1, pp.80-103

This study aims to advance knowledge on the direct impact of the investor’s protection level on the stock market volatility, that is, whether investor’s protection is an important stock market volatility determinant.

A panel data was estimated using a sample of 48 countries, from 2006 to 2018, totalizing 31,808 observations. To measure stock market volatility and the investor protection level, a generalized autoregressive conditional heteroskedasticity model and the World Bank Doing Business investor protection index were used, respectively.

The results evidence that the protection of investors’ rights reduces the stock market volatility. This result indicates that a high level of investor protection, which is the result of a better quality of laws and policies in place that protect investor’s rights, promotes the country as a “safe haven.”

The relationship that the authors intend to analyze becomes important, given that investor protection will give outsiders guarantees on the materialization of their investments. This study contributes important knowledge for investors and for the establishment of government policies as a way of attracting investment.

Although there have been a few studies addressing this relationship, to the knowledge, none of them directly analyses the influence of investor protection on the stock market volatility.

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The impact of investor protection on stock market volatility10.1108/RAF-09-2022-0244Review of Accounting and Finance2023-10-13© 2023 Emerald Publishing LimitedJoão SilvaLígia FebraMagali CostaReview of Accounting and Finance2312023-10-1310.1108/RAF-09-2022-0244https://www.emerald.com/insight/content/doi/10.1108/RAF-09-2022-0244/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Intellectual capital efficiency, institutional ownership and cash holdings: a cross-country studyhttps://www.emerald.com/insight/content/doi/10.1108/RAF-01-2023-0015/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study aims to investigate the roles of intellectual capital efficiency and institutional ownership on cash holdings and their speed of adjustment. Using a sample of 432 firm-year observations of tourism-listed companies, three measures of cash holdings are used as dependent variables and intellectual capital efficiency and institutional ownership as independent variables. The financial data is collected from the S&P Capital IQ database for the period 2015–2020. Two system-generalized methods of moment estimation are used for the robustness checks of the results. The study provides evidence that an increase in intellectual capital efficiency in tourism firms results in lower cash holdings. The research findings also report that characteristics such as firm size, age and market-to-book value ratio are associated with cash holdings. Furthermore, institutional ownership in these firms did not affect the cash holdings. The results also confirm the existence of a target cash holding level to which the tourism firms attempt to converge. These results are robust to the alternative proxy of cash holding and endogeneity tests. The study uses intellectual capital efficiency measured by the model proposed by Pulic. Alternative measures of intellectual capital can be included in future studies. Future research can also investigate the impact on cash holdings before and during the pandemic for tourism companies. The study is limited to the impact of institutional ownership; thus, research can be extended to consider other types of ownership. The findings of this study indicate that tourism companies should take into account the impact of intellectual capital efficiency on their cash holding decisions. The industry uses a specific financial management strategy in light of better efficiency and possibly values the opportunity cost of holding more cash. Additionally, regulators should re-examine the role of institutional ownership in tourism firms, as it was found to have no impact on cash holdings. The regulators may need to consider other factors, such as firm size and age, when developing policies and regulations to ensure that tourism firms have adequate cash holdings. This study adds to the body of knowledge on the factors that influence cash management and ideal cash levels for the tourism industry. The examination of the effect of intellectual capital on cash holdings is a novel contribution, filling a gap in the existing literature. The findings on the speed of adjustment towards optimal cash holdings also provide support for the trade-off theory.Intellectual capital efficiency, institutional ownership and cash holdings: a cross-country study
Tamanna Dalwai, Syeeda Shafiya Mohammadi, Elma Satrovic
Review of Accounting and Finance, Vol. 23, No. 1, pp.104-129

This study aims to investigate the roles of intellectual capital efficiency and institutional ownership on cash holdings and their speed of adjustment.

Using a sample of 432 firm-year observations of tourism-listed companies, three measures of cash holdings are used as dependent variables and intellectual capital efficiency and institutional ownership as independent variables. The financial data is collected from the S&P Capital IQ database for the period 2015–2020. Two system-generalized methods of moment estimation are used for the robustness checks of the results.

The study provides evidence that an increase in intellectual capital efficiency in tourism firms results in lower cash holdings. The research findings also report that characteristics such as firm size, age and market-to-book value ratio are associated with cash holdings. Furthermore, institutional ownership in these firms did not affect the cash holdings. The results also confirm the existence of a target cash holding level to which the tourism firms attempt to converge. These results are robust to the alternative proxy of cash holding and endogeneity tests.

The study uses intellectual capital efficiency measured by the model proposed by Pulic. Alternative measures of intellectual capital can be included in future studies. Future research can also investigate the impact on cash holdings before and during the pandemic for tourism companies. The study is limited to the impact of institutional ownership; thus, research can be extended to consider other types of ownership.

The findings of this study indicate that tourism companies should take into account the impact of intellectual capital efficiency on their cash holding decisions. The industry uses a specific financial management strategy in light of better efficiency and possibly values the opportunity cost of holding more cash. Additionally, regulators should re-examine the role of institutional ownership in tourism firms, as it was found to have no impact on cash holdings. The regulators may need to consider other factors, such as firm size and age, when developing policies and regulations to ensure that tourism firms have adequate cash holdings.

This study adds to the body of knowledge on the factors that influence cash management and ideal cash levels for the tourism industry. The examination of the effect of intellectual capital on cash holdings is a novel contribution, filling a gap in the existing literature. The findings on the speed of adjustment towards optimal cash holdings also provide support for the trade-off theory.

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Intellectual capital efficiency, institutional ownership and cash holdings: a cross-country study10.1108/RAF-01-2023-0015Review of Accounting and Finance2023-11-03© 2023 Emerald Publishing LimitedTamanna DalwaiSyeeda Shafiya MohammadiElma SatrovicReview of Accounting and Finance2312023-11-0310.1108/RAF-01-2023-0015https://www.emerald.com/insight/content/doi/10.1108/RAF-01-2023-0015/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
The heterogeneous role of economic and financial uncertainty in green bond market efficiencyhttps://www.emerald.com/insight/content/doi/10.1108/RAF-07-2023-0202/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis paper aims to explore the quantile-specific short- and long-term effects of economic policy uncertainty (EPU) on the efficiency of the green bond market. This study examines the long-term cointegration relationship and the short-term fluctuation relationship of EPU, WTI crude oil price (WTI) and European Union Allowances price (EUA) with the green bond market efficiency (GBE) using the quantile autoregressive distributed lag method. Additionally, the authors analyze the differences before and after the Covid-19 pandemic. EPU has a significant positive impact on the GBE before the outbreak. However, during the crisis period, the impact of EPU and WTI was greatly weakened, whereas the impact of EUA was strengthened. This paper demonstrates the dynamics of GBE and its influencing factors under different periods. The findings provide insights for market participants and policymakers to gain a clearer understanding of the green bond market. This paper extends the study of green bonds by quantifying the GBE and elucidating the nonlinear relationship between efficiency and independent variables at different quantiles over different periods.The heterogeneous role of economic and financial uncertainty in green bond market efficiency
Ping Wei, Jingzi Zhou, Xiaohang Ren, Farhad Taghizadeh-Hesary
Review of Accounting and Finance, Vol. 23, No. 1, pp.130-155

This paper aims to explore the quantile-specific short- and long-term effects of economic policy uncertainty (EPU) on the efficiency of the green bond market.

This study examines the long-term cointegration relationship and the short-term fluctuation relationship of EPU, WTI crude oil price (WTI) and European Union Allowances price (EUA) with the green bond market efficiency (GBE) using the quantile autoregressive distributed lag method. Additionally, the authors analyze the differences before and after the Covid-19 pandemic.

EPU has a significant positive impact on the GBE before the outbreak. However, during the crisis period, the impact of EPU and WTI was greatly weakened, whereas the impact of EUA was strengthened.

This paper demonstrates the dynamics of GBE and its influencing factors under different periods. The findings provide insights for market participants and policymakers to gain a clearer understanding of the green bond market.

This paper extends the study of green bonds by quantifying the GBE and elucidating the nonlinear relationship between efficiency and independent variables at different quantiles over different periods.

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The heterogeneous role of economic and financial uncertainty in green bond market efficiency10.1108/RAF-07-2023-0202Review of Accounting and Finance2023-11-20© 2023 Emerald Publishing LimitedPing WeiJingzi ZhouXiaohang RenFarhad Taghizadeh-HesaryReview of Accounting and Finance2312023-11-2010.1108/RAF-07-2023-0202https://www.emerald.com/insight/content/doi/10.1108/RAF-07-2023-0202/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Do CSR performance and reporting facilitate access to debt financing in emerging markets? The role of asset structure and firm performancehttps://www.emerald.com/insight/content/doi/10.1108/RAF-01-2023-0020/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study aims to guide firms in emerging markets on whether corporate social responsibility (CSR) engagement facilitates their access to debt with the moderation of asset structure and firm performance. Considering the moderating effect analysis, this study explores the substitutive or complementary effect of these two contingencies on CSR-oriented firms in accessing debt financing. Drawing on data collected for 16 emerging markets between 2008 and 2019, this study runs country–industry–year fixed-effects regression. This study finds that CSR performance and reporting facilitate access to debt in emerging markets. However, CSR performance does not have an inverted U-shaped influence on firms’ access to debt financing. The moderation analysis of this study shows that asset tangibility has a negative moderating effect on the link between CSR engagements (i.e. both CSR performance and reporting) and access to debt, confirming a substitutive relationship between asset tangibility and CSR engagements in accessing debt. In contrast, firm performance is positively moderating the nexus between CSR engagement proxies and access to debt, which confirms a complementary type of relationship between firm performance and CSR engagements in accessing debt. The empirical evidence of this study implies that creditors critically consider CSR engagements of firms in the loan-granting decision process. Similarly, the inverted U-shaped relationship between CSR and access to debt implies that there is an optimal level of CSR engagement creditors might consider in their decision. Likewise, the moderating effects analysis highlights that asset tangibility and firm performance are two conditions under which CSR performance and reporting are linked to access to debt. Emerging countries are a different set of countries than developed ones; they have high growth rates and hence need financing, have a weaker institutional environment and have weaker stakeholder power. These particularities motivated the authors to conduct a separate study focusing on CSR and debt financing links drawing on a wide range of emerging countries. Thus, this study adds to the ongoing debate by examining the conditions under which CSR-oriented firms can access debt financing in emerging economies.Do CSR performance and reporting facilitate access to debt financing in emerging markets? The role of asset structure and firm performance
Ali Uyar, Ali Meftah Gerged, Cemil Kuzey, Abdullah S. Karaman
Review of Accounting and Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study aims to guide firms in emerging markets on whether corporate social responsibility (CSR) engagement facilitates their access to debt with the moderation of asset structure and firm performance. Considering the moderating effect analysis, this study explores the substitutive or complementary effect of these two contingencies on CSR-oriented firms in accessing debt financing.

Drawing on data collected for 16 emerging markets between 2008 and 2019, this study runs country–industry–year fixed-effects regression.

This study finds that CSR performance and reporting facilitate access to debt in emerging markets. However, CSR performance does not have an inverted U-shaped influence on firms’ access to debt financing. The moderation analysis of this study shows that asset tangibility has a negative moderating effect on the link between CSR engagements (i.e. both CSR performance and reporting) and access to debt, confirming a substitutive relationship between asset tangibility and CSR engagements in accessing debt. In contrast, firm performance is positively moderating the nexus between CSR engagement proxies and access to debt, which confirms a complementary type of relationship between firm performance and CSR engagements in accessing debt.

The empirical evidence of this study implies that creditors critically consider CSR engagements of firms in the loan-granting decision process. Similarly, the inverted U-shaped relationship between CSR and access to debt implies that there is an optimal level of CSR engagement creditors might consider in their decision. Likewise, the moderating effects analysis highlights that asset tangibility and firm performance are two conditions under which CSR performance and reporting are linked to access to debt.

Emerging countries are a different set of countries than developed ones; they have high growth rates and hence need financing, have a weaker institutional environment and have weaker stakeholder power. These particularities motivated the authors to conduct a separate study focusing on CSR and debt financing links drawing on a wide range of emerging countries. Thus, this study adds to the ongoing debate by examining the conditions under which CSR-oriented firms can access debt financing in emerging economies.

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Do CSR performance and reporting facilitate access to debt financing in emerging markets? The role of asset structure and firm performance10.1108/RAF-01-2023-0020Review of Accounting and Finance2023-10-11© 2023 Emerald Publishing LimitedAli UyarAli Meftah GergedCemil KuzeyAbdullah S. KaramanReview of Accounting and Financeahead-of-printahead-of-print2023-10-1110.1108/RAF-01-2023-0020https://www.emerald.com/insight/content/doi/10.1108/RAF-01-2023-0020/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Another look at the asymmetric relationship between stock returns and trading volume: evidence from the Markov-switching modelhttps://www.emerald.com/insight/content/doi/10.1108/RAF-02-2023-0045/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe purpose of this paper is to bridge the gap between the existing theoretical and empirical studies by examining the asymmetric return–volume relationship. Indeed, the authors aim to shed light on the return–volume linkages for French-listed small and medium-sized enterprises (SMEs) compared to blue chips across different market regimes. This study includes both large capitalizations included in the CAC 40 index and listed SMEs included in the Euronext Growth All Share index. The Markov-switching (MS) approach is applied to understand the asymmetric relationship between trading volume and stock returns. The study investigates also the causal impact between stock returns and trading volume using regime-dependent Granger causality tests. Asymmetric contemporaneous and lagged relationships between stock returns and trading volume are found for both large capitalizations and listed SMEs. However, the causality investigation reveals some differences between large capitalizations and SMEs. Indeed, causal relationships depend on market conditions and the size of the market. This paper explains the asymmetric return–volume relationship for both large capitalizations and listed SMEs by incorporating several psychological biases, such as the disposition effect, investor overconfidence and self-attribution bias. Future research needs to deepen the analysis especially for SMEs as most of the literature focuses on large capitalizations. This empirical study has fundamental implications for portfolio management. The findings provide a deeper understanding of how trading activity impact current returns and vice versa. The authors’ results constitute an important input to build and control trading strategies. This paper fills the literature gap on the asymmetric return–volume relationship across different regimes. To the best of the authors’ knowledge, the present study is the first empirical attempt to test the asymmetric return–volume relationship for listed SMEs by using an accurate MS framework.Another look at the asymmetric relationship between stock returns and trading volume: evidence from the Markov-switching model
Mondher Bouattour, Anthony Miloudi
Review of Accounting and Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

The purpose of this paper is to bridge the gap between the existing theoretical and empirical studies by examining the asymmetric return–volume relationship. Indeed, the authors aim to shed light on the return–volume linkages for French-listed small and medium-sized enterprises (SMEs) compared to blue chips across different market regimes.

This study includes both large capitalizations included in the CAC 40 index and listed SMEs included in the Euronext Growth All Share index. The Markov-switching (MS) approach is applied to understand the asymmetric relationship between trading volume and stock returns. The study investigates also the causal impact between stock returns and trading volume using regime-dependent Granger causality tests.

Asymmetric contemporaneous and lagged relationships between stock returns and trading volume are found for both large capitalizations and listed SMEs. However, the causality investigation reveals some differences between large capitalizations and SMEs. Indeed, causal relationships depend on market conditions and the size of the market.

This paper explains the asymmetric return–volume relationship for both large capitalizations and listed SMEs by incorporating several psychological biases, such as the disposition effect, investor overconfidence and self-attribution bias. Future research needs to deepen the analysis especially for SMEs as most of the literature focuses on large capitalizations.

This empirical study has fundamental implications for portfolio management. The findings provide a deeper understanding of how trading activity impact current returns and vice versa. The authors’ results constitute an important input to build and control trading strategies.

This paper fills the literature gap on the asymmetric return–volume relationship across different regimes. To the best of the authors’ knowledge, the present study is the first empirical attempt to test the asymmetric return–volume relationship for listed SMEs by using an accurate MS framework.

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Another look at the asymmetric relationship between stock returns and trading volume: evidence from the Markov-switching model10.1108/RAF-02-2023-0045Review of Accounting and Finance2023-12-15© 2023 Emerald Publishing LimitedMondher BouattourAnthony MiloudiReview of Accounting and Financeahead-of-printahead-of-print2023-12-1510.1108/RAF-02-2023-0045https://www.emerald.com/insight/content/doi/10.1108/RAF-02-2023-0045/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Do ESG ratings and COVID-19 severity score predict stock behavior and market perception? Evidence from emerging marketshttps://www.emerald.com/insight/content/doi/10.1108/RAF-03-2023-0083/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThe purpose of this study is to examine the impact of firm environmental, social and governance (ESG) rating scores on market perception and stock behavior from 2017 to 2021 while controlling for COVID-19 severity score. The authors used panel regression models with robust standard errors based on cross-country and cross-industry sample of 1,324 ESG firms from 25 emerging countries across four regions. Four separate regression analyses are used. Hausman test is used to determine whether fixed-effect (FE) or random-effect approaches should be used in regression models. Lagrange multiplier test is used to test for time FEs, and F-test for individual effects to choose between pooled ordinary least squares model and FE. Two-unit root tests are conducted to check stationarity. Heteroskedasticity and serial correlation were controlled through a robust covariance matrix estimation. The authors provide evidence that the stakeholder theory persists in emerging countries. Overall, the results suggest that firms’ stock behavior is positively associated with the level of environmental and social performance in the region. However, the results do not provide empirical evidence to support the link between ESG performance and stock market perception proxied by the price-to-sales ratio. The results suggest that Refinitiv and Bloomberg ESG rating scores have a positive impact on stock performance in emerging markets, albeit the Bloomberg rating score is insignificant. Favorable impact of environmental and social performance on stock performance suggests that policymakers should take initiatives to raise awareness toward investments in ESG projects. Evidence shows that ESG stock performance in emerging markets does not insulate firms from the COVID-19 severity. Furthermore, this study highlights the inconsistency in calculating the ESG ratings, therefore, a more standardized approach is recommended to support investors seeking sustainable investments. The findings have social implications for investors with proenvironmental preferences and nonpecuniary motives for ethical investments. Asset fund managers should develop ESG investment strategies to promote investor preferences that are linked to the proenvironmental and prosocial attitudes by increasing their investments in stocks of firms that behave ethically and support the environment. Furthermore, the findings show that investors pay a price for ethical and socially responsible investments as they are evaluating the environmental and social activities, hence, the firm ESG profile influences equity valuation and risk assessment. The study extends the literature and provides evidence from the unique setting of emerging markets by analyzing the relationship between ESG rating scores and the COVID-19 severity scores on one hand, and stock behavior and market perception on the other.Do ESG ratings and COVID-19 severity score predict stock behavior and market perception? Evidence from emerging markets
Mai T. Said, Mona A. ElBannan
Review of Accounting and Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

The purpose of this study is to examine the impact of firm environmental, social and governance (ESG) rating scores on market perception and stock behavior from 2017 to 2021 while controlling for COVID-19 severity score.

The authors used panel regression models with robust standard errors based on cross-country and cross-industry sample of 1,324 ESG firms from 25 emerging countries across four regions. Four separate regression analyses are used. Hausman test is used to determine whether fixed-effect (FE) or random-effect approaches should be used in regression models. Lagrange multiplier test is used to test for time FEs, and F-test for individual effects to choose between pooled ordinary least squares model and FE. Two-unit root tests are conducted to check stationarity. Heteroskedasticity and serial correlation were controlled through a robust covariance matrix estimation.

The authors provide evidence that the stakeholder theory persists in emerging countries. Overall, the results suggest that firms’ stock behavior is positively associated with the level of environmental and social performance in the region. However, the results do not provide empirical evidence to support the link between ESG performance and stock market perception proxied by the price-to-sales ratio. The results suggest that Refinitiv and Bloomberg ESG rating scores have a positive impact on stock performance in emerging markets, albeit the Bloomberg rating score is insignificant.

Favorable impact of environmental and social performance on stock performance suggests that policymakers should take initiatives to raise awareness toward investments in ESG projects. Evidence shows that ESG stock performance in emerging markets does not insulate firms from the COVID-19 severity. Furthermore, this study highlights the inconsistency in calculating the ESG ratings, therefore, a more standardized approach is recommended to support investors seeking sustainable investments.

The findings have social implications for investors with proenvironmental preferences and nonpecuniary motives for ethical investments. Asset fund managers should develop ESG investment strategies to promote investor preferences that are linked to the proenvironmental and prosocial attitudes by increasing their investments in stocks of firms that behave ethically and support the environment. Furthermore, the findings show that investors pay a price for ethical and socially responsible investments as they are evaluating the environmental and social activities, hence, the firm ESG profile influences equity valuation and risk assessment.

The study extends the literature and provides evidence from the unique setting of emerging markets by analyzing the relationship between ESG rating scores and the COVID-19 severity scores on one hand, and stock behavior and market perception on the other.

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Do ESG ratings and COVID-19 severity score predict stock behavior and market perception? Evidence from emerging markets10.1108/RAF-03-2023-0083Review of Accounting and Finance2023-12-04© 2023 Emerald Publishing LimitedMai T. SaidMona A. ElBannanReview of Accounting and Financeahead-of-printahead-of-print2023-12-0410.1108/RAF-03-2023-0083https://www.emerald.com/insight/content/doi/10.1108/RAF-03-2023-0083/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Corporate social responsibility and credit rating: evidence from French companieshttps://www.emerald.com/insight/content/doi/10.1108/RAF-03-2023-0106/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study aims to provide further insights into the connection between corporate social responsibility (CSR) and companies’ credit ratings, while also exploring the role of corporate governance as a moderating factor. The hypotheses for this relationship are rooted in both legitimacy and stakeholder theories. Using a sample of French non-financial listed firms from 2007 to 2020, this paper uses the ordered probit model introduced by Greene (2000). The issue of endogeneity has also been addressed. The study reveals that CSR practices positively impact companies’ credit ratings by enhancing solvency and financial performance. Specifically, firms that prioritize CSR, particularly in the social and environmental dimensions (such as community relations, diversity, employee relations, environmental performance and product characteristics), tend to have higher credit ratings and a reduced risk of default. This suggests that credit rating agencies likely incorporate CSR performance when assigning credit ratings. Furthermore, the quality of corporate governance acts as a moderator, strengthening the relationship between CSR and credit ratings. The findings remain robust even after accounting for key firm attributes and addressing potential endogeneity between CSR and credit ratings. This research provides valuable guidance for policymakers, corporate managers, investors and other stakeholders, as it offers insights into the influence of CSR activities on risk premiums and financing costs. For financial institutions, expanding credit decisions to encompass non-financial factors such as CSR can result in more accurate predictions of firm credit quality compared to relying solely on financial indicators. To the best of the authors’ knowledge, this study stands out as the first to systematically examine the relationship between CSR and credit ratings within the French context. Moreover, it distinguishes itself by investigating the moderating influence of corporate governance on this relationship, setting it apart from prior research.Corporate social responsibility and credit rating: evidence from French companies
Sourour Ben Saad, Mhamed Laouiti, Aymen Ajina
Review of Accounting and Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study aims to provide further insights into the connection between corporate social responsibility (CSR) and companies’ credit ratings, while also exploring the role of corporate governance as a moderating factor. The hypotheses for this relationship are rooted in both legitimacy and stakeholder theories.

Using a sample of French non-financial listed firms from 2007 to 2020, this paper uses the ordered probit model introduced by Greene (2000). The issue of endogeneity has also been addressed.

The study reveals that CSR practices positively impact companies’ credit ratings by enhancing solvency and financial performance. Specifically, firms that prioritize CSR, particularly in the social and environmental dimensions (such as community relations, diversity, employee relations, environmental performance and product characteristics), tend to have higher credit ratings and a reduced risk of default. This suggests that credit rating agencies likely incorporate CSR performance when assigning credit ratings. Furthermore, the quality of corporate governance acts as a moderator, strengthening the relationship between CSR and credit ratings. The findings remain robust even after accounting for key firm attributes and addressing potential endogeneity between CSR and credit ratings.

This research provides valuable guidance for policymakers, corporate managers, investors and other stakeholders, as it offers insights into the influence of CSR activities on risk premiums and financing costs. For financial institutions, expanding credit decisions to encompass non-financial factors such as CSR can result in more accurate predictions of firm credit quality compared to relying solely on financial indicators.

To the best of the authors’ knowledge, this study stands out as the first to systematically examine the relationship between CSR and credit ratings within the French context. Moreover, it distinguishes itself by investigating the moderating influence of corporate governance on this relationship, setting it apart from prior research.

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Corporate social responsibility and credit rating: evidence from French companies10.1108/RAF-03-2023-0106Review of Accounting and Finance2024-02-06© 2024 Emerald Publishing LimitedSourour Ben SaadMhamed LaouitiAymen AjinaReview of Accounting and Financeahead-of-printahead-of-print2024-02-0610.1108/RAF-03-2023-0106https://www.emerald.com/insight/content/doi/10.1108/RAF-03-2023-0106/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2024 Emerald Publishing Limited
Corporate governance and green innovation: international evidencehttps://www.emerald.com/insight/content/doi/10.1108/RAF-04-2023-0137/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study aims to exploit Tobin’s Q model of investment to examine the relationship between corporate governance and green innovation. The study is based on a sample of 3,896 firms from 2002 to 2021, covering 45 countries worldwide. The authors adopt Tobin’s Q model to conceptualize the relationship between corporate governance and investment in green research and development (R&D). The authors argue that agency costs and financial market frictions affect corporate investment and are fundamental factors in R&D activities. By limiting agency conflicts, effective governance favors efficiency, facilitates access to external financing and encourages green innovation. The authors analyzed the causal effect by using the system-generalized method of moments (system-GMM). The results reveal that the better the corporate governance, the more the firm invests in green R&D. A 1%-point increase in the corporate governance ratings leads to an increase in green R&D expenses to the total asset ratio of about 0.77 percentage points. In addition, an increase in the score of each dimension (strategy, management and shareholder) of corporate governance results in an increase in the probability of green product innovation. Finally, green innovation is positively related to firm environmental performance, including emission reduction and resource use efficiency. The findings provide implications to support managers and policymakers on how to improve sustainability through corporate governance. Governance mechanisms will help resolve agency problems and, in turn, encourage green innovation. Understanding the impact of corporate governance on green innovation may help firms combat climate change, a crucial societal concern. The present study helps achieve one of the precious UN’s sustainable development goals: Goal 13 on climate action. This study goes beyond previous research by adopting Tobin’s Q model to examine the relationship between corporate governance and green R&D investment. Overall, the results suggest that effective corporate governance is necessary for environmental efficiency.Corporate governance and green innovation: international evidence
Marcellin Makpotche, Kais Bouslah, Bouchra M’Zali
Review of Accounting and Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study aims to exploit Tobin’s Q model of investment to examine the relationship between corporate governance and green innovation.

The study is based on a sample of 3,896 firms from 2002 to 2021, covering 45 countries worldwide. The authors adopt Tobin’s Q model to conceptualize the relationship between corporate governance and investment in green research and development (R&D). The authors argue that agency costs and financial market frictions affect corporate investment and are fundamental factors in R&D activities. By limiting agency conflicts, effective governance favors efficiency, facilitates access to external financing and encourages green innovation. The authors analyzed the causal effect by using the system-generalized method of moments (system-GMM).

The results reveal that the better the corporate governance, the more the firm invests in green R&D. A 1%-point increase in the corporate governance ratings leads to an increase in green R&D expenses to the total asset ratio of about 0.77 percentage points. In addition, an increase in the score of each dimension (strategy, management and shareholder) of corporate governance results in an increase in the probability of green product innovation. Finally, green innovation is positively related to firm environmental performance, including emission reduction and resource use efficiency.

The findings provide implications to support managers and policymakers on how to improve sustainability through corporate governance. Governance mechanisms will help resolve agency problems and, in turn, encourage green innovation.

Understanding the impact of corporate governance on green innovation may help firms combat climate change, a crucial societal concern. The present study helps achieve one of the precious UN’s sustainable development goals: Goal 13 on climate action.

This study goes beyond previous research by adopting Tobin’s Q model to examine the relationship between corporate governance and green R&D investment. Overall, the results suggest that effective corporate governance is necessary for environmental efficiency.

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Corporate governance and green innovation: international evidence10.1108/RAF-04-2023-0137Review of Accounting and Finance2024-01-08© 2023 Emerald Publishing LimitedMarcellin MakpotcheKais BouslahBouchra M’ZaliReview of Accounting and Financeahead-of-printahead-of-print2024-01-0810.1108/RAF-04-2023-0137https://www.emerald.com/insight/content/doi/10.1108/RAF-04-2023-0137/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Investigating accounting professionals’ intention to adopt blockchain technologyhttps://www.emerald.com/insight/content/doi/10.1108/RAF-06-2023-0185/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestBlockchain’s potential is so significant that business activities across all industries can be drastically altered. Furthermore, the characteristics of blockchain appear to be well-suited to accounting requirements. However, accounting professionals’ attitude and intention toward blockchain adoption are not clear, particularly in India. Thus, this study aims to investigate and evaluate accountants’ intention to adopt blockchain technology in accounting activities. This study examined and assessed accountants’ intention to use blockchain in accounting. To effectively measure usage intention, this study extended the unified theory of acceptance and use of technology (UTAUT) model by including context-specific constructs. To empirically test and validate the proposed model, data were collected from “369” professional accountants in India. The findings revealed that facilitating conditions, performance expectancy and initial trust had a significant impact on adoption. Furthermore, the regulatory framework materially moderated the association between usage intention and its predictors. These findings provide new empirical evidence about the impact of different predictors of usage intention by extending the UTAUT model. Relevant stakeholders can refer to this pioneering study to increase the adoption of blockchain as an efficient and trustworthy system among professional accountants, particularly in developing countries such as India.Investigating accounting professionals’ intention to adopt blockchain technology
R.K. Jena
Review of Accounting and Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

Blockchain’s potential is so significant that business activities across all industries can be drastically altered. Furthermore, the characteristics of blockchain appear to be well-suited to accounting requirements. However, accounting professionals’ attitude and intention toward blockchain adoption are not clear, particularly in India. Thus, this study aims to investigate and evaluate accountants’ intention to adopt blockchain technology in accounting activities.

This study examined and assessed accountants’ intention to use blockchain in accounting. To effectively measure usage intention, this study extended the unified theory of acceptance and use of technology (UTAUT) model by including context-specific constructs. To empirically test and validate the proposed model, data were collected from “369” professional accountants in India.

The findings revealed that facilitating conditions, performance expectancy and initial trust had a significant impact on adoption. Furthermore, the regulatory framework materially moderated the association between usage intention and its predictors.

These findings provide new empirical evidence about the impact of different predictors of usage intention by extending the UTAUT model. Relevant stakeholders can refer to this pioneering study to increase the adoption of blockchain as an efficient and trustworthy system among professional accountants, particularly in developing countries such as India.

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Investigating accounting professionals’ intention to adopt blockchain technology10.1108/RAF-06-2023-0185Review of Accounting and Finance2024-02-19© 2024 Emerald Publishing LimitedR.K. JenaReview of Accounting and Financeahead-of-printahead-of-print2024-02-1910.1108/RAF-06-2023-0185https://www.emerald.com/insight/content/doi/10.1108/RAF-06-2023-0185/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2024 Emerald Publishing Limited
The relationship between soft skills, stress and reduced audit quality practiceshttps://www.emerald.com/insight/content/doi/10.1108/RAF-06-2023-0186/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study aims to identify the effect of soft skills as a driver of audit quality and their moderating role in the relationship between stress and the propensity for auditors to engage in reduced audit quality practices (RAQP). This study uses a sample of 130 auditors, whose data were collected through an electronic questionnaire. The results were derived from the partial least squares-structural equation modelling method. The findings show that the propensity to incur RAQP increases when auditors are under job stressors but decreases when individuals have resilience and time management skills. Moreover, the results suggest that the moderating effect of these two soft skills can effectively reduce the auditors’ propensity to engage in dysfunctional actions and judgments in auditing. Emotional intelligence and self-efficacy skills are shown not to affect RAQP. This study adds to previous research on auditors’ drivers for supplying audit quality, by providing evidence of auditor characteristics as a critical input to audit quality. The results emphasize the importance of researchers including in models the moderating effect of soft skills on the relationship between audit quality and determinants associated with audit firms, clients or the regulatory framework.The relationship between soft skills, stress and reduced audit quality practices
Antonio Samagaio, Paulo Morais Francisco, Teresa Felício
Review of Accounting and Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study aims to identify the effect of soft skills as a driver of audit quality and their moderating role in the relationship between stress and the propensity for auditors to engage in reduced audit quality practices (RAQP).

This study uses a sample of 130 auditors, whose data were collected through an electronic questionnaire. The results were derived from the partial least squares-structural equation modelling method.

The findings show that the propensity to incur RAQP increases when auditors are under job stressors but decreases when individuals have resilience and time management skills. Moreover, the results suggest that the moderating effect of these two soft skills can effectively reduce the auditors’ propensity to engage in dysfunctional actions and judgments in auditing. Emotional intelligence and self-efficacy skills are shown not to affect RAQP.

This study adds to previous research on auditors’ drivers for supplying audit quality, by providing evidence of auditor characteristics as a critical input to audit quality. The results emphasize the importance of researchers including in models the moderating effect of soft skills on the relationship between audit quality and determinants associated with audit firms, clients or the regulatory framework.

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The relationship between soft skills, stress and reduced audit quality practices10.1108/RAF-06-2023-0186Review of Accounting and Finance2024-02-01© 2024 Emerald Publishing LimitedAntonio SamagaioPaulo Morais FranciscoTeresa FelícioReview of Accounting and Financeahead-of-printahead-of-print2024-02-0110.1108/RAF-06-2023-0186https://www.emerald.com/insight/content/doi/10.1108/RAF-06-2023-0186/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2024 Emerald Publishing Limited
Early adopters of institutional creativity in integrated reportinghttps://www.emerald.com/insight/content/doi/10.1108/RAF-07-2023-0209/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestIn the last two decades, risk reporting has followed a normative and calculative culture rather than the “materiality” of data. Although integrated reporting (IR) has become flooded with extra information, it does not adequately disseminate material information to stakeholders. In addition, the poor tone from the top diminishes creativity. This study aims to investigate how companies creatively address issues of the materiality of risk information in IR and how IR can be aligned with enterprise risk management. Qualitative research was conducted via interviews with 50 chief risk officers and senior management executives in the Indian and UK insurance markets. Overall, five institutions were observed to exhibit elements of being early adopters of institutional creativity. This confirmed the present study’s theoretical contribution of five divergent types of early adopters. The motivations for creativity are reflected in the resources available to these institutions. To the best of the authors’ knowledge, this study provides a new insight into IR from internal mechanisms to deal with issue of materiality.Early adopters of institutional creativity in integrated reporting
Ruchi Agarwal, Muhammad Atif
Review of Accounting and Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

In the last two decades, risk reporting has followed a normative and calculative culture rather than the “materiality” of data. Although integrated reporting (IR) has become flooded with extra information, it does not adequately disseminate material information to stakeholders. In addition, the poor tone from the top diminishes creativity. This study aims to investigate how companies creatively address issues of the materiality of risk information in IR and how IR can be aligned with enterprise risk management.

Qualitative research was conducted via interviews with 50 chief risk officers and senior management executives in the Indian and UK insurance markets.

Overall, five institutions were observed to exhibit elements of being early adopters of institutional creativity. This confirmed the present study’s theoretical contribution of five divergent types of early adopters. The motivations for creativity are reflected in the resources available to these institutions.

To the best of the authors’ knowledge, this study provides a new insight into IR from internal mechanisms to deal with issue of materiality.

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Early adopters of institutional creativity in integrated reporting10.1108/RAF-07-2023-0209Review of Accounting and Finance2023-11-24© 2023 Emerald Publishing LimitedRuchi AgarwalMuhammad AtifReview of Accounting and Financeahead-of-printahead-of-print2023-11-2410.1108/RAF-07-2023-0209https://www.emerald.com/insight/content/doi/10.1108/RAF-07-2023-0209/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited
Influence of the financial shared service center on the quality of accounting informationhttps://www.emerald.com/insight/content/doi/10.1108/RAF-08-2023-0251/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis research endeavors to assess the influence of financial shared service centers (FSSCs) on the quality of accounting information within China’s A-share listed companies. Using a multi-period difference-in-differences (DID) model, the study aims to empirically examine the correlation between the adoption of FSSCs and the quality of accounting information. The study uses a robust methodology to evaluate the relationship between FSSCs and accounting information quality (AIQ). Leveraging the established FSSCs within China’s A-share listed companies as the treatment group, this research adopts a multi-period DID model. This approach enables a rigorous empirical examination of the influence exerted by FSSCs on the overall quality of accounting information. The present study delves into the impact of FSSCs on AIQ and conducts empirical analysis using data from Chinese A-share listed companies between 2004 and 2021. The findings substantiate that: FSSCs significantly bolster the quality of accounting information, a conclusion retained even after robustness tests. Specifically, FSSCs exhibit a positive correlation with the comparability, timeliness and disclosure quality of accounting information while demonstrating no significant influence on relevance, robustness and reliability factors. First, the analysis primarily rests upon data from Chinese A-share listed companies between 2004 and 2021, potentially constraining the generalizability of findings across diverse contexts. Second, despite controlling for various factors, unobserved variables or external factors not encompassed in the model might influence the relationship between FSSCs and AIQ. Additionally, the study’s reliance solely on quantitative data confines exploration into qualitative aspects that might offer a more comprehensive understanding of FSSCs’ impact on AIQ. This paper establishes a nuanced connection between FSSC operations and AIQ, furnishing direct empirical evidence for their economic implications and propounding a novel avenue for augmenting AIQ. And, it furnishes guidance for forthcoming FSSC development, accentuating the necessity of harnessing information technology to enhance the relevance, reliability and robustness of accounting information. Majority of prior empirical studies assessing AIQ have focused on singular indicators, lacking a comprehensive depiction of its overall level. To address this gap, this paper pioneers the construction of a comprehensive index for AIQ, providing a holistic representation of its level. Furthermore, this study stands as the inaugural investigation into the relationship between China’s A-share listed firms’ FSSCs and the quality of accounting information.Influence of the financial shared service center on the quality of accounting information
Junchao Zhang
Review of Accounting and Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

This research endeavors to assess the influence of financial shared service centers (FSSCs) on the quality of accounting information within China’s A-share listed companies. Using a multi-period difference-in-differences (DID) model, the study aims to empirically examine the correlation between the adoption of FSSCs and the quality of accounting information.

The study uses a robust methodology to evaluate the relationship between FSSCs and accounting information quality (AIQ). Leveraging the established FSSCs within China’s A-share listed companies as the treatment group, this research adopts a multi-period DID model. This approach enables a rigorous empirical examination of the influence exerted by FSSCs on the overall quality of accounting information.

The present study delves into the impact of FSSCs on AIQ and conducts empirical analysis using data from Chinese A-share listed companies between 2004 and 2021. The findings substantiate that: FSSCs significantly bolster the quality of accounting information, a conclusion retained even after robustness tests. Specifically, FSSCs exhibit a positive correlation with the comparability, timeliness and disclosure quality of accounting information while demonstrating no significant influence on relevance, robustness and reliability factors.

First, the analysis primarily rests upon data from Chinese A-share listed companies between 2004 and 2021, potentially constraining the generalizability of findings across diverse contexts. Second, despite controlling for various factors, unobserved variables or external factors not encompassed in the model might influence the relationship between FSSCs and AIQ. Additionally, the study’s reliance solely on quantitative data confines exploration into qualitative aspects that might offer a more comprehensive understanding of FSSCs’ impact on AIQ.

This paper establishes a nuanced connection between FSSC operations and AIQ, furnishing direct empirical evidence for their economic implications and propounding a novel avenue for augmenting AIQ. And, it furnishes guidance for forthcoming FSSC development, accentuating the necessity of harnessing information technology to enhance the relevance, reliability and robustness of accounting information.

Majority of prior empirical studies assessing AIQ have focused on singular indicators, lacking a comprehensive depiction of its overall level. To address this gap, this paper pioneers the construction of a comprehensive index for AIQ, providing a holistic representation of its level. Furthermore, this study stands as the inaugural investigation into the relationship between China’s A-share listed firms’ FSSCs and the quality of accounting information.

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Influence of the financial shared service center on the quality of accounting information10.1108/RAF-08-2023-0251Review of Accounting and Finance2024-02-12© 2024 Emerald Publishing LimitedJunchao ZhangReview of Accounting and Financeahead-of-printahead-of-print2024-02-1210.1108/RAF-08-2023-0251https://www.emerald.com/insight/content/doi/10.1108/RAF-08-2023-0251/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2024 Emerald Publishing Limited
Climate change and the European banking sector: the effect of green technology adaptation and human capitalhttps://www.emerald.com/insight/content/doi/10.1108/RAF-10-2023-0341/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestClimate change poses effect on banking sector’s risks and profitability through adaptation of green technology. This study aims to incorporates green technology adaptation in three sectors: green banking, green entrepreneurial innovation (EI) and green human resource (HR), in a model of bank’s performance. And determines the impact of climate change on bank risk and profitability. An assessment of profitability and risk profile of commercial banks is done for 27 European countries for 2013–2022, employing a two-step difference system-generalized method of moments estimation technique with a moderate effect of climate change by including interaction between climate change and green technology adaptation. The results indicate that green banking increases profitability, reduces credit risk and increases liquidity risk. The results also show that green human resource increases profitability and becomes a source of credit and liquidity risks for the banks. Green EI increases credit risk and liquidity risk, while the effects of green EI on profitability vary with the use of two proxies: Green patents increase profitability and environment, social and corporate governance (ESG) scores decrease profitability. Supportive government initiatives, including subsidies and tax rebates to green borrowers, may take the burden of green transition off the banking sector. This paper observes the impact of green technology adaptation in three sectors: banks, EI and HR, moderated by climate change, adding substantially to the existing literature in conceptual framework and methodology.Climate change and the European banking sector: the effect of green technology adaptation and human capital
Ayesha Afzal, Jamila Abaidi Hasnaoui, Saba Firdousi, Ramsha Noor
Review of Accounting and Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

Climate change poses effect on banking sector’s risks and profitability through adaptation of green technology. This study aims to incorporates green technology adaptation in three sectors: green banking, green entrepreneurial innovation (EI) and green human resource (HR), in a model of bank’s performance. And determines the impact of climate change on bank risk and profitability.

An assessment of profitability and risk profile of commercial banks is done for 27 European countries for 2013–2022, employing a two-step difference system-generalized method of moments estimation technique with a moderate effect of climate change by including interaction between climate change and green technology adaptation.

The results indicate that green banking increases profitability, reduces credit risk and increases liquidity risk. The results also show that green human resource increases profitability and becomes a source of credit and liquidity risks for the banks. Green EI increases credit risk and liquidity risk, while the effects of green EI on profitability vary with the use of two proxies: Green patents increase profitability and environment, social and corporate governance (ESG) scores decrease profitability.

Supportive government initiatives, including subsidies and tax rebates to green borrowers, may take the burden of green transition off the banking sector.

This paper observes the impact of green technology adaptation in three sectors: banks, EI and HR, moderated by climate change, adding substantially to the existing literature in conceptual framework and methodology.

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Climate change and the European banking sector: the effect of green technology adaptation and human capital10.1108/RAF-10-2023-0341Review of Accounting and Finance2024-03-14© 2024 Emerald Publishing LimitedAyesha AfzalJamila Abaidi HasnaouiSaba FirdousiRamsha NoorReview of Accounting and Financeahead-of-printahead-of-print2024-03-1410.1108/RAF-10-2023-0341https://www.emerald.com/insight/content/doi/10.1108/RAF-10-2023-0341/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2024 Emerald Publishing Limited
From performance to horizon: managements’ horizon and firms’ investment efficiencyhttps://www.emerald.com/insight/content/doi/10.1108/RAF-11-2022-0319/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study proposes a novel measure for management’s horizon (short-termism or myopia vs long-termism or hyperopia) derived from easily obtainable firm-level accounting and stock market performance data. The authors use the measure to explore the impact of managements’ horizon on firms’ investment efficiency. The authors rely on two commonly used but uncorrelated measures of management performance: accounting performance (return on capital employed, ROCE) and stock market performance (average abnormal return, AAR). The authors combine these measures to develop a multidimensional framework for performance, which classifies firms into four groups: efficient (high accounting and high market performance), poor (low accounting and low market performance), myopic (high accounting and low market performance) and hyperopic (low accounting and high market performance). The authors validate this framework and deploy it to explore the relationship between horizon and firms’ investment efficiency. In validation tests, the authors show that management myopia (hyperopia) explains firms’ decision to cut (grow) research and development investments. Further, as expected, myopic (hyperopic) firms are associated with significantly more (less) accrual and real earnings management. The empirical tests on the link between horizon and investment efficiency suggest that myopic managers cut new investments while their hyperopic counterparts grow the same. Ultimately, the authors find that myopia (hyperopia) exacerbates(mitigates) the over-investment of free cash flow problem. The authors introduce a framework for assessing management’s horizon using easily obtainable measures of performance. The framework explains inconsistencies in prior empirical research using different measures of performance (accounting versus market). The authors demonstrate its utility by showing that the measure explains decisions around research and development investment, earnings management and firm investments.From performance to horizon: managements’ horizon and firms’ investment efficiency
Abongeh A. Tunyi, Geofry Areneke, Tanveer Hussain, Jacob Agyemang
Review of Accounting and Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study proposes a novel measure for management’s horizon (short-termism or myopia vs long-termism or hyperopia) derived from easily obtainable firm-level accounting and stock market performance data. The authors use the measure to explore the impact of managements’ horizon on firms’ investment efficiency.

The authors rely on two commonly used but uncorrelated measures of management performance: accounting performance (return on capital employed, ROCE) and stock market performance (average abnormal return, AAR). The authors combine these measures to develop a multidimensional framework for performance, which classifies firms into four groups: efficient (high accounting and high market performance), poor (low accounting and low market performance), myopic (high accounting and low market performance) and hyperopic (low accounting and high market performance). The authors validate this framework and deploy it to explore the relationship between horizon and firms’ investment efficiency.

In validation tests, the authors show that management myopia (hyperopia) explains firms’ decision to cut (grow) research and development investments. Further, as expected, myopic (hyperopic) firms are associated with significantly more (less) accrual and real earnings management. The empirical tests on the link between horizon and investment efficiency suggest that myopic managers cut new investments while their hyperopic counterparts grow the same. Ultimately, the authors find that myopia (hyperopia) exacerbates(mitigates) the over-investment of free cash flow problem.

The authors introduce a framework for assessing management’s horizon using easily obtainable measures of performance. The framework explains inconsistencies in prior empirical research using different measures of performance (accounting versus market). The authors demonstrate its utility by showing that the measure explains decisions around research and development investment, earnings management and firm investments.

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From performance to horizon: managements’ horizon and firms’ investment efficiency10.1108/RAF-11-2022-0319Review of Accounting and Finance2024-03-01© 2024 Emerald Publishing LimitedAbongeh A. TunyiGeofry ArenekeTanveer HussainJacob AgyemangReview of Accounting and Financeahead-of-printahead-of-print2024-03-0110.1108/RAF-11-2022-0319https://www.emerald.com/insight/content/doi/10.1108/RAF-11-2022-0319/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2024 Emerald Publishing Limited
Association between executives’ foreign background and audit feeshttps://www.emerald.com/insight/content/doi/10.1108/RAF-12-2022-0330/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatestThis study aims to investigate the association between executives with foreign backgrounds and the audit fees paid by the Chinese-listed firms over the period from 2010 to 2020. To examine the association between executives’ foreign experience and audit fees, this study constructs the following empirical model: Lnfeei,t = β0 + β1Foreign backgroundi,t + ∑βj Controli,t + YearFE + IndFE + εi,t (1). This study finds that auditors charge higher fees for firms hiring more executives with foreign backgrounds. The results are robust to a battery of robustness checks, including fixed effects, alternative measures of independent variable, controlling for other characteristics of executives and auditors and entropy balancing method. This study sheds light on how executives’ foreign backgrounds affect audit fees, enriching the literature on executive heterogeneity and audit fees and providing important implications for audit practitioners.Association between executives’ foreign background and audit fees
Wunhong Su, Chen Yin
Review of Accounting and Finance, Vol. ahead-of-print, No. ahead-of-print, pp.-

This study aims to investigate the association between executives with foreign backgrounds and the audit fees paid by the Chinese-listed firms over the period from 2010 to 2020.

To examine the association between executives’ foreign experience and audit fees, this study constructs the following empirical model: Lnfeei,t = β0 + β1Foreign backgroundi,t + ∑βj Controli,t + YearFE + IndFE + εi,t (1).

This study finds that auditors charge higher fees for firms hiring more executives with foreign backgrounds. The results are robust to a battery of robustness checks, including fixed effects, alternative measures of independent variable, controlling for other characteristics of executives and auditors and entropy balancing method.

This study sheds light on how executives’ foreign backgrounds affect audit fees, enriching the literature on executive heterogeneity and audit fees and providing important implications for audit practitioners.

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Association between executives’ foreign background and audit fees10.1108/RAF-12-2022-0330Review of Accounting and Finance2023-12-20© 2023 Emerald Publishing LimitedWunhong SuChen YinReview of Accounting and Financeahead-of-printahead-of-print2023-12-2010.1108/RAF-12-2022-0330https://www.emerald.com/insight/content/doi/10.1108/RAF-12-2022-0330/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest© 2023 Emerald Publishing Limited