Determinants of the quality of disclosed earnings and value relevance across transitional Europe

2015 ◽  
Vol 5 (3) ◽  
pp. 325-349 ◽  
Author(s):  
Sheraz Ahmed
Keyword(s):  
Value Relevance ◽  
Listed Companies ◽  
Future Research ◽  
Firm Level ◽  
Policy Makers ◽  
Content Type ◽  
Transparency International ◽  
Corporate Transparency ◽  
Country Level

Purpose – Earlier studies have found that the country characteristics play important role in measuring the corporate transparency. The purpose of this paper is to examine whether the firm-level determinants play an important role in corporate transparency measured as the quality of disclosed earnings across transitional Europe and what role an overall transparency measured by the Corruption Perception Index plays in it. This paper further tests if the market reacts similarly to discretionary and non-discretionary components of earnings across different groups of countries with respect to transparency. Design/methodology/approach – The financial and ownership data of listed companies in ten European countries is obtained from Amadeus. The transparency ratings are obtained from Transparency International. The sample consists of a panel of 2001 listed companies and modified Jones model of Dechow et al. (1995) is used to measure the quality of earnings. Findings – This paper shows that the firm-level determinants (except firm size) of the quality of earnings are different among different groups made on the basis of transparency ratings. However, the determinants of the quality of earnings are not different within each group. The ownership structure of companies plays important role in determining the quality of earnings in most transparent countries whereas financial factors play significant role in least transparent countries. The markets respond positively to earnings quality in most transparent group of countries. Research limitations/implications – The results of this study provide interesting basis for future research on economic and social integration of Europe. Although the policy makers are trying to integrate the countries through common Laws and decrees but examining the firm-level factors such as size, growth and ownership are still important. The regulators should address the issue of corporate transparency in Europe by looking at the importance of these factors with respect to overall transparency. Originality/value – This study extends the knowledge, not only for academicians and investors but for policy makers as well. This study re-emphasizes the role of country-level transparency and firm-level determinants of the corporate transparency within Europe.

Does location in a science park really matter for firms’ intellectual capital performance?

2014 ◽  
Vol 15 (4) ◽  
pp. 497-515 ◽  
Author(s):  
Francesco Schiavone ◽  
Antonio Meles ◽  
Vincenzo Verdoliva ◽  
Manlio Del Giudice
Keyword(s):  
Intellectual Capital ◽  
Firm Characteristics ◽  
Science Park ◽  
Firm Level ◽  
Policy Makers ◽  
Science System ◽  
Content Type ◽  
The Impact ◽  
Practical Implications

Purpose – The purpose of this paper is to investigate the effect of being located in a science park (SP) on the level of a firm's intellectual capital (IC) performance. Design/methodology/approach – Using a sample of 183 Italian firms (i.e. 61 tenant and 122 non-tenant firms), and through the GLS technique, the authors regress the firms’ IC performance across various explicative variables including a dummy that discriminates tenant and non-tenant firms. Findings – Consistently with expectations, the results show that the location of a firm in a SP leads to improved IC performance. Moreover, the authors find that some other firm characteristics, such as size, age, and leverage, are important predictors of its IC-based performance. Research limitations/implications – The sample is small and the impact on performance might be biased by factors related to the regional context (e.g. level of industrialization, quality of education, and science system). Practical implications – Implications for policy makers: support the growth of firms in SPs especially in those industries full of firms with scarce performance in IC. Implications for SP managers: they could “sell” (in terms of marketing) to both entrepreneurs to attract and policy makers this result. Implications for institutional investors: they should look at SPs with greater interest to find high-quality firms and improve their screening activity. Originality/value – This paper aims to extend literature about factors explaining the level of a firm's IC performance and the current understanding of the impact of SPs at firm level.

A multi-theoretical approach on drivers of integrated reporting – uniting firm-level and country-level associations

2019 ◽  
Vol 28 (1) ◽  
pp. 168-205 ◽  
Author(s):  
Stephan Fuhrmann
Keyword(s):  
Voluntary Disclosure ◽  
Social Performance ◽  
Listed Companies ◽  
Firm Characteristics ◽  
Integrated Reporting ◽  
Firm Level ◽  
Content Type ◽  
Country Level ◽  
Disclosure Decisions ◽  
Proprietary Cost

Purpose This paper aims to unite firm- and country-level drivers of the disclosure of integrated reports. It creates a synopsis of voluntary disclosure, signaling, proprietary cost, legitimacy, stakeholder and institutional theory. Design/methodology/approach The empirical analyses build on a logistic regression model examining the disclosure decisions for integrated reports published between 2012 and 2016 by the 2,000 largest listed companies worldwide. Findings The results indicate that the disclosure of integrated reports by large listed companies is explained in parallel by multiple theories, operationalized by the firm-level characteristics of lower profitability, a higher market-to-book value, lower leverage, lower level of industry concentration and higher social performance. Additionally, the country-level characteristics of civil law setting and lower investor protection, lower power distance and lower masculinity coincide with the disclosure of integrated reports. Originality/value The inferences emphasize that a single theoretical framework cannot explain the decision to disclose an integrated report. Rather, a set of economic firm characteristics may lead to different disclosure decisions in different socio-economic and institutional environments.

scholarly journals Accounting for modern slavery: an analysis of Australian listed company disclosures

2019 ◽  
Vol 32 (3) ◽  
pp. 836-865 ◽  
Author(s):  
Katherine Leanne Christ ◽  
Kathyayini Kathy Rao ◽  
Roger Leonard Burritt
Keyword(s):  
Institutional Theory ◽  
Stock Exchange ◽  
Listed Company ◽  
Academic Research ◽  
Listed Companies ◽  
Future Research ◽  
Content Type ◽  
Modern Slavery ◽  
Wide Range

Purpose Given the impending introduction of legislation requiring large Australian listed companies to make supply chain disclosures about modern slavery, the paper aims to reveal current voluntary practice. The purpose of this paper is to provide a benchmark for assessing the current engagement of large companies with modern slavery in Australia. Design/methodology/approach Institutional theory provides the foundation for assessing current voluntary practice in relation to modern slavery disclosures by large Australian listed companies. Content analysis is used to identify quantity and quality of modern slavery disclosures of the top 100 companies listed on the Australian Stock Exchange. The contents of annual and standalone reports available on websites, as well as other online disclosures, are examined using terms associated with modern slavery identified from the literature. Findings Evidence gathered about modern slavery disclosures by ASX 100 companies shows information in annual and standalone reports reveal far less than other disclosures on company websites. Overall, the volume and quality of disclosures are low and, where made, narrative. A wide range of themes on modern slavery are disclosed with bribery and corruption and human rights issues dominant. Although currently in line with institutional theory, as there appear to be mimetic processes encouraging disclosure, results support the idea that legislation is needed to encourage further engagement. Research limitations/implications The paper provides a baseline of understanding about the volume and quality of modern slavery disclosures as a foundation for future research into the practices of Australian companies prior to the signalled introduction of legislation mandating reporting. It also identifies potential lines of research. The sample only examines large Australian listed companies which restricts generalisation from the results. Originality/value This is the first academic research paper to examine quantity and quality of modern slavery disclosures of large Australian companies. Results add support for the introduction of legislation by government.

scholarly journals The Impact Of Country-Level vs Firm-Level Factors On The Effectiveness Of IFRS Adoption: The Case Of European Union

2011 ◽  
Vol 10 (10) ◽  
pp. 79 ◽  
Author(s):  
Kanogporn Narktabtee ◽  
Suntaree Patpanichchot
Keyword(s):  
Value Relevance ◽  
Accounting Information ◽  
Firm Characteristics ◽  
Firm Level ◽  
Book Value ◽  
Ifrs Adoption ◽  
Country Level ◽  
Quality Of Accounting Information ◽  
Mandatory Adoption

The mandatory adoption of IFRS has been encouraged worldwide, with the objective to enhance the quality of accounting information. However, this effort is challenged by the argument that several factors affecting financial reporting incentives still vary across countries. Also, Gaio (2010) indicates that firm-level factors also have significant explanatory power on earning quality. Therefore, it is doubtful whether the mandatory adoption of IFRS can always lead to better quality of accounting information. This paper examines the effect of country-level and firm-level factors on value relevance of earnings and book value of equity. Among several country-level factors, this paper focuses on investor protection - proxied by anti-director right index (La Porta et al., 1998). In this study, firm-level factors refer to firm characteristics which allow or induce high use of managerial discretion. These characteristics are proxied by firm size, cash flow volatility, sales volatility, and incidence of negative earnings. Different from prior literatures which focus on level of value relevance, this paper examines the effect of country-level and firm-level factors on change in value relevance of earnings and book value of equity, arisen from the mandatory adoption of IFRS in the year 2005. By comparing value relevance of earnings and book value of equity among European Union countries during the years 1999-2007, the results indicate that the adoption of IFRS leads to improvement in value relevance. In addition, both country-level and firm-level factors have significant influence on the degree of improvement in value relevance from the IFRS adoption. In particular, the firms which operate in a weak investor protection environment and have firm characteristics which induce or allow the managers to use high managerial discretion (i.e., small size, high cash flow volatility, high sales volatility, and frequent incidences of loss) do not experience significant improvement in value relevance from IFRS adoption. The results imply that the IFRS adoption does not ensure better quality of accounting information. The improvement of the quality of accounting information depends on both country and firm characteristics, which influence financial reporting incentives.

R&D reporting methods and firm value: evidence from China

2014 ◽  
Vol 8 (3) ◽  
pp. 375-396 ◽  
Author(s):  
Yanni Wang ◽  
Weiguo Fan
Keyword(s):  
Stock Prices ◽  
Firm Value ◽  
Stock Price ◽  
Value Relevance ◽  
Listed Companies ◽  
Accounting Choice ◽  
Policy Makers ◽  
Content Type ◽  
Accounting Report ◽  
D Investment

Purpose – The purpose of this paper is to investigate how different research and development (R&D) accounting choice (capitalization and expensing) affects the value of the listed companies under the new Chinese Accounting Standards (CAS) background. According to new CAS, R&D expenditure can either be expensed as incurred as a whole or partly capitalized and partly expensed from 2007. Design/methodology/approach – The paper takes the form of an empirical study using a hand-collected sample of 3,664 observations from Chinese listed companies over 2007–2012 timeframe. Findings – It is found that different methods of reporting R&D investments do affect the value of listed firms in China. Specifically, the firms that chose to capitalize their R&D investments have higher stock price and return. On the contrary, the companies that select to expense their R&D expenditures have lower stock price and return. It is also found that capitalized R&D investments are positively connected to stock price, while expensed R&D expenditures are negatively related to stock prices. Research limitations/implications – This paper researches and finds the value relevance of R&D capitalization and expensing from the accounting report method itself. This explores some interesting research questions. Does choice of accounting method for R&D expenditure affect firm valuation? Do different methods of reporting R&D investments transfer different signal to investors? Does expensed R&D carry a negative signal to investors? So it can expand the existing R&D area of research. Practical implications – This paper can provide empirical evidence and decision support for corporate managers, R&D policy makers and investors in a non-mandatory disclosure market of R&D expenditure. Because different R&D accounting choice has different market reactions, managers can choose a favorable method of reporting R&D investments to raise their firm’s stock price. Policy makers should standardize accounting treatment of R&D expenditure, strengthen the disclosure of R&D information and develop a detailed, workable R&D capitalization accounting policies and procedures. Investors can make the right judgment and decision on business innovation capability and future development only by getting more R&D investment information. Originality/value – Different from present studies focusing on the value relevance of R&D investment, this paper explores an interesting topic showing how different methods of reporting R&D investment in China affect the value of the firms.

Does national ethical judgement matter for earnings management?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Dante Baiardo Cavalcante Viana Jr ◽  
Isabel Lourenço ◽  
Ervin Lynn Black
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Ethical Issues ◽  
Accounting Standards ◽  
Ethical Judgement ◽  
Firm Level ◽  
Content Type ◽  
Management Actions ◽  
Country Level

Purpose This study aims to analyse the association between country-level ethical judgement and earnings management and the role that firm-level enforcement and the quality of accounting standards play in this association. Design/methodology/approach The analyses are based on a sample of 45,889 firm-year observations from 34 countries between 1998 and 2018. Based on the World Values Survey questionnaire, this study constructs a comprehensive index of the ethical judgement of each country. Findings The empirical findings suggest that firms from countries where ethically suspect behaviours are less acceptable are associated with lower levels of accruals-based earnings management and that firm-level enforcement and the quality of accounting standards dampen such association. Practical implications The results contribute to the debate about ethical issues in the accounting profession in an international context, adding to the sustainable development debate given that the creation of long-term value for firms is intrinsically related to business ethics and good quality financial reporting. Social implications When it is known that countries’ ethically-related judgements reduce the level of earnings management, actions can be taken by regulators and other stakeholders to build fairer societies with a more sustainable view, given that the quality of the financial reporting is inextricably linked to how income and wealth are distributed. Originality/value While previous literature documents that ethical judgement at both the individual and organizational levels matter as key determinants of the way managers are involved with unethical accounting practices, this study investigates the role of ethical judgement at the country level in explaining earnings management.

The value relevance of financial instruments disclosure: evidence from Jordan

2016 ◽  
Vol 24 (4) ◽  
pp. 445-473 ◽  
Author(s):  
Yasean Tahat ◽  
T. Dunne ◽  
S. Fifield ◽  
D. Power
Keyword(s):  
Value Relevance ◽  
Balance Sheet ◽  
Fair Value ◽  
Listed Companies ◽  
Financial Instruments ◽  
Policy Makers ◽  
Content Type ◽  
Market Values ◽  
Related Information ◽  
Ifrs 7

Purpose The purpose of this paper is to: examine the value relevance of financial instruments disclosure (FID) provided by Jordanian listed companies under International Financial Reporting Standard (IFRS 7) as compared to that supplied under IAS 30/32; provide evidence about the value relevance of high vs low levels of FID; and investigate which components of FI-related information are more value relevant. Design/methodology/approach A sample of 70 Jordanian listed companies is used in this monograph. A disclosure index checklist was constructed to measure FI information provided by the sample companies. In addition, a valuation model is employed to test the association between FID and market value. Findings Although evidence is provided that FI information was value relevant over the two periods of investigation, the information supplied after the implementation of IFRS 7 was more strongly associated with market values. An analysis of the sub-components of FID reveals that the details about balance sheet, fair value and risk information matter when valuing equity. Overall, the results indicate that investors value FI-related information when making their equity pricing decisions. The result suggests that compliance with IFRS mandatory disclosure requirements does produce relevant financial statements. Research limitations/implications The results of the current study have a number of implications for policy makers. First, they provide a great deal of insight for the IASB about the relevance of its standards to countries outside the western context. In addition, the findings provide valuable insights for policy makers in Jordan who are concerned about the implications of mandatory disclosures. Originality/value The analysis of FID in developing countries in general, and in Jordan in particular, has been overlooked by the extant literature and therefore this study is the first of its kind to examine this research issue for a sample of Jordanian firms.

Psychiatric disorders and labour force activity

2015 ◽  
Vol 20 (1) ◽  
pp. 13-27 ◽  
Author(s):  
Annika Jonsdottir ◽  
Geoffrey Waghorn
Keyword(s):  
Vocational Rehabilitation ◽  
Psychiatric Disorders ◽  
Labour Force ◽  
Diagnostic Category ◽  
Future Research ◽  
Policy Makers ◽  
Content Type ◽  
Psychiatric Illnesses ◽  
Diagnostic Categories

Purpose – The purpose of this paper is to explore and review the range and quality of international epidemiological and observational studies reporting impacts of psychiatric disorders on labour force activity. This information is needed to explore the relative priority of different diagnostic groups for more intensive forms of vocational rehabilitation. Design/methodology/approach – The authors provide an overview of the current literature. A systematic review of papers measuring labour force variables and psychiatric disorders across a range of countries is conducted. These results are compared to OECD background unemployment rates during the same period. The results for each diagnostic category included are aggregated and compared to the other diagnostic categories. Findings – The proportions of people employed decreased with the more severe disorder categories, indicating that severe psychiatric illnesses are contributing to employment struggles for people with these illnesses, across countries. Research limitations/implications – This review is exploratory and shows that there is little consistency in reporting of labour force variables. Future research should endeavour to utilise internationally agreed definitions of labour force activity. Practical implications – This conclusion is relevant to matching community residents with psychiatric disorders to the more intensive and costly forms of vocational rehabilitation. Originality/value – To our knowledge, no previous review has examined diagnostic categories of psychiatric disorders by labour force activity internationally while taking into account background unemployment. This review found an employment gradient related to severity of diagnostic category that will be of interest to clinicians and policy makers.

Territorial capital as a company intangible

2016 ◽  
Vol 17 (1) ◽  
pp. 148-167 ◽  
Author(s):  
Mariachiara Barzotto ◽  
Giancarlo Corò ◽  
Mario Volpe
Keyword(s):  
Great Difficulty ◽  
Future Research ◽  
Manufacturing Companies ◽  
Policy Makers ◽  
Content Type ◽  
Capital Growth ◽  
Multiple Case ◽  
Definition Of ◽  
A Company

Purpose – The purpose of this paper is twofold. First, to explore to what extent being located in a territory is value-relevant for a company. Second, to understand if a company is aware of, and how it can sustain, the territorial tangible and intangible assets present in the economic area in which it is located. Design/methodology/approach – The study presents an empirical multiple case-study, investigating ten mid-/large-sized Italian companies in manufacturing sectors. Findings – The results indicate that the sampled manufacturing companies are intertwined with the environment in which they are embedded, both in their home country and in host ones. The domestic territorial capital has provided, and still provides, enterprises with workers endowed with the necessary technical skills that they can have great difficulty in finding in other places. In turn, companies support territorial capital generation through their activities. Research limitations/implications – To increase the generalisability of the results, future research should expand the sample and examine firms based in different countries and sectors. Practical implications – Implications for policy makers: developing effective initiatives to support and guide a sustainable territorial capital growth. Implications for managers and investors: improving managerial and investors’ decisions by disclosing a complete picture of the enterprise, also outside the firm boundaries. Originality/value – The study contributes to intangibles/intellectual capital literature by shedding light on the importance of including territorial capital in a company’s report to improve the definition of the firm’s value. Accounting of the territorial capital would increase the awareness of the socio-economic environment value in which companies are located and its use.

Hospital information systems in developing countries: a state-of-the-art systematic review

Kybernetes ◽  
2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jie Lei ◽  
Jianming Liu ◽  
Wu Li
Keyword(s):  
Health Care ◽  
Information System ◽  
Developing Countries ◽  
Health Care Services ◽  
Developed Countries ◽  
Future Research ◽  
Local Conditions ◽  
Content Type ◽  
The Government

Purpose Hospital information system (HIS) can be examined as a vital factor for developing the quality of health care and cost managing. There exists abundant literature on HISs, but implementation-based literature of HIS is rare, typically about progressive countries. However, a study that can comprehensively review published articles is scarce. Therefore, this paper aims to examine the systematic and comprehensive study of HIS in developed countries. Together, the benefits and harms relevant to HIS’s different mechanisms have been considered, and the fundamental challenges of them are addressed to design more efficient HIS in the future. Design/methodology/approach HIS has been used globally for numerous years and is now being used in a wide area. HIS is broadly used in clinical settings. Information technology (IT) and information system have been suggested as a required piece to solve the health-care-related issues. Hence, to improve HIS’s ability, this paper conducted a review method concentratating on research related to HIS until 2019. A total of 21 papers were recognized and examined as principal research for the summary. Findings The authors found that HIS can help in reduction of medical mistakes, enhancement doctors’ performance and increase in the quality of the care provided. HIS management can be used to provide better health-care services. Therefore, HIS must be sensible and use clear structures. The authors conclude that, generally, with an increase in awareness, acceptability and the need for HIS worldwide, there will be more strategies and approaches available. Research limitations/implications First, this paper provides an outline of the status of HIS. Second, it identifies some distinct research gaps that could be worth studying. Some flawless work may be removed because of applying some filters to select the original articles. Surveying all the papers on the topic of HIS is impossible, too. Practical implications Design and sustainability of HIS is still a big issue for most developing countries, despite its wide usage in the developed countries. The technology is changing rapidly, so the field should be reviewed regularly. This paper suggests a suitable framework that will guide HIS in the local conditions of developing countries. Social implications The government will be assisted by the suggested solving ways in its performance and design of electronic health-care projects. Originality/value The study brings the viewpoints on the state of HIS mechanisms in developing countries. The paper’s results can offer visions into future research requirements. By providing comparative information and analyzing the current growths in this area, this study will support researchers and professionals to understand the progress in HIS mechanisms better.

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