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Managing Expectations Through Budgetary Slack: Evidence from Project Financing European Accounting Review (IF 2.845) Pub Date : 2024-03-07 Zahn Bozanic, Andrew Ferguson, Gabriel Pündrich
In this study, we examine whether mandatory management forecast characteristics are influenced by lender expectations around project financing approvals. In our setting, debt enters the firm’s capi...
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Readability of Pension Narrative Disclosures, Pension Regulatory Changes, and Corporate Credit Risk European Accounting Review (IF 2.845) Pub Date : 2024-03-07 Tsung-Kang Chen, Yijie Tseng, Ruey-Ching Lin, Yu-Shun Hung
We examine, using corporate bond yield spreads, whether and how the readability of pension narrative disclosures is associated with corporate credit risk. The empirical results show that lower read...
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The Effect of Fair Value Accounting on Firm Public Debt – Evidence from Business Combinations Under Common Control European Accounting Review (IF 2.845) Pub Date : 2024-02-28 Massimiliano Bonacchi, Antonio Marra, Ron Shalev
We analyze the choice allowed to parent firms under IFRS of how to account for a business combination under common control (BCUCC), and provide evidence on the motivation to select fair values and ...
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How do Climate Change Strategy Disclosure and Investment Horizon Jointly Influence Investor Judgments? European Accounting Review (IF 2.845) Pub Date : 2024-02-19 Dani Puspitasari, John Cw Ko, Soon-Yeow Phang, Ashna Prasad
Disclosure demands from investors have led companies to increasingly disclose their climate change strategies, which may vary in framing features. Strategy variations include emphasizing the desira...
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Audit Committee Chairs’ Objectives and Risk Perceptions: Implications for Audit Quality European Accounting Review (IF 2.845) Pub Date : 2024-02-12 Jürgen Ernstberger, Bernhard Pellens, André Schmidt, Thorsten Sellhorn, Katharina Weiß
Audit committee chairs (ACCs) are key links in the financial reporting value chain. Whereas prior literature analyzes how ACCs contribute to effective corporate governance, we investigate how ACCs’...
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European Global Systemically Important Banks, Banking Supervisory Power, and Audit Fees European Accounting Review (IF 2.845) Pub Date : 2024-02-11 Gerald J. Lobo, Romain Oberson, Alain Schatt
In 2011, the Financial Stability Board designated the world’s largest banks as Global Systemically Important Banks (GSIBs), subjecting them to increased supervision and additional capital requireme...
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Letter from the Incoming Editors of the European Accounting Review European Accounting Review (IF 2.845) Pub Date : 2024-02-12 Amir Amel-Zadeh, Matias Laine
Published in European Accounting Review (Vol. 33, No. 1, 2024)
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Corporate Social Responsibility and Profit Shifting European Accounting Review (IF 2.845) Pub Date : 2024-02-09 Iftekhar Hasan, Panagiotis Karavitis, Pantelis Kazakis, Woon Sau Leung
This paper examines the relation between corporate social responsibility (CSR) performance and tax–motivated income shifting. Using a profit–shifting measure estimated from multinational enterprise...
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The Power of the Default: Investors’ Reactions to Default Amortization Periods and Deviations Therefrom European Accounting Review (IF 2.845) Pub Date : 2024-02-05 Shana M. Clor-Proell, Shannon Garavaglia, Lisa Koonce, Jane Thayer
As standard setters deliberate the accounting for intangibles, the idea of establishing a default useful life with an option to deviate could reduce the costs and complexities inherent in estimatin...
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Spillover Effect of Climate Disaster for Management Forecast European Accounting Review (IF 2.845) Pub Date : 2024-01-29 KoEun Park
Climate disasters not only impose substantial economic costs on firms that are directly exposed, but they also generate significant externalities. In this study, I examine how climate disasters hit...
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How Do Corporate Tax Rates Alter Conforming Tax Avoidance? European Accounting Review (IF 2.845) Pub Date : 2024-01-09 Sebastian Eichfelder, Martin Jacob, Nadine Kalbitz, Kelly Wentland
We examine an international panel of domestic firms to quantify the degree to which conforming tax avoidance changes with statutory tax rates. We derive an estimation method that identifies conform...
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The Effect of Audit Partner Digitalization Expertise on Audit Fees European Accounting Review (IF 2.845) Pub Date : 2024-01-03 Arpine Maghakyan, Henry Jarva, Lasse Niemi, Jukka Sihvonen
This study focuses on the effects of digitalization on the auditing industry and the impact of audit partner expertise in digitalization on audit fees. Using data from listed U.S. companies between...
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Earnings Management and the Role of Moral Values in Investing European Accounting Review (IF 2.845) Pub Date : 2023-12-22 Rajna Gibson Brandon, Matthias Sohn, Carmen Tanner, Alexander F. Wagner
In this study, we use earnings management to examine (1) how investors regard a CEO’s commitment to honesty and (2) the impact of their perceptions, in light of their own moral values, on their inv...
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CFO Career Concerns and Strategic Decisions: An Empirical Analysis of M&As European Accounting Review (IF 2.845) Pub Date : 2023-12-18 Sebastian Firk, Yannik Gehrke, Sven Richter, Michael Wolff
Chief financial officers (CFOs) have become increasingly involved in strategic decisions. The literature has emphasized the potential benefits of this development, delineating CFOs as impartial adv...
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Investor Base Size and Underreaction- Consistent Stock Return Anomalies European Accounting Review (IF 2.845) Pub Date : 2023-12-14 Stefan Anchev, Nicha Lapanan
We find that several well-documented underreaction-consistent stock return anomalies, such as those based on stocks’ earnings-to-price ratios, returns on assets and past returns, arise and persist ...
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Dissemination of Accounting Research European Accounting Review (IF 2.845) Pub Date : 2023-11-27 Beatriz García Osma, Araceli Mora, Jochen Pierk
Transference of knowledge to society hinges on the effective dissemination of research findings. We document a limited societal impact of accounting, as measured by the attention generated by publi...
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Delegated Bank Monitoring by Bond Investors: Evidence from Japanese Main Banks European Accounting Review (IF 2.845) Pub Date : 2023-11-20 Naoki Futaesaku, Norio Kitagawa, Akinobu Shuto
We investigate whether bank monitoring based on private information in private debt reduces the reliance on public earnings information in public debt. We focus on Japanese main banks, which have a...
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Disclosure Tone and Short-Selling Pressure: Evidence from Regulation-SHO European Accounting Review (IF 2.845) Pub Date : 2023-11-03 Ankit Jain
Managers use disclosure tone as a strategic tool to manage investors’ expectations and demand for information. I provide evidence that investors’ actions can, in turn, exercise a disciplining effec...
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A Measure of Management’s Withholding of Bad News European Accounting Review (IF 2.845) Pub Date : 2023-11-01 Vasiliki Athanasakou, Martin Walker
We develop a measure of management’s withholding of bad news (NBF – net bad flows) based on the relative lumpiness of negative daily abnormal stock returns in the fiscal period. We present an exten...
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Accounting Accruals, Audit Quality, and Audit Pricing European Accounting Review (IF 2.845) Pub Date : 2023-10-23 Sebastian Kronenberger
This study examines the impact of the interaction between firms' accounting choices and auditors' audit effort choices on audit pricing. In a multi-period model, I focus on a central feature of acc...
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Work from Home Suitability and Credit Risk Assessment European Accounting Review (IF 2.845) Pub Date : 2023-09-29 Harvey Nguyen, Mia Hang Pham, Cameron Truong
Employing firm-level work from home (WFH) suitability derived from the U.S. universe job postings, we investigate whether rating agencies and debt holders incorporate WFH suitability in their risk ...
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Environmental Accounting in the European Accounting Review: A Reflection European Accounting Review (IF 2.845) Pub Date : 2023-09-14 Jan Bebbington, Matias Laine, Carlos Larrinaga, Giovanna Michelon
We reflect upon how European Accounting Review has conceived of environmental accounting (and to some extent social/sustainability accounting work) over its 30-year history, with the aim of discuss...
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The Spillover of U.S. Regulatory Oversight to Foreign Markets: Evidence from the Effect of PCAOB International Inspections on Executive Compensations European Accounting Review (IF 2.845) Pub Date : 2023-09-08 Chang He, Lixin (Nancy) Su, Zheng Wang, Xindong (Kevin) Zhu
Abstract We examine the spillover effect of the Public Company Accounting Oversight Board (PCAOB) international inspection program on improving the contracting role of accounting numbers in executive compensations in an international setting. For a sample of non-U.S.-listed foreign public firms with PCAOB-inspected foreign auditors, we find a significant increase in the sensitivity of their executive
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Accounting Bias and Debt Contracting European Accounting Review (IF 2.845) Pub Date : 2023-08-30 Tong Lu, Ziyun Yang, Lanyi Yan Zhang
This study investigates the effects of accounting bias on the efficiency of a debt-financed investment, which is subject to an interim liquidation/continuation decision based on the accounting report. We decompose the overall effect of accounting bias into a mean effect and a variance effect and transform binary state and report spaces into continuous ones. We derive two main results. (1) The highest
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Economists’ Political Donations and GDP Forecast Accuracy European Accounting Review (IF 2.845) Pub Date : 2023-08-27 Andrea Bafundi, Claudia Imperatore
We examine the association between economists’ political donations and the accuracy of Gross Domestic Product (GDP) forecasts. Prior research suggests that individual political donations reflect personal political orientations, leading to a partisan bias. Therefore, economists might not objectively interpret information, with a subsequent reduction in GDP forecast accuracy. Using a sample of one-quarter-ahead
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Credibility Signals from Soft Information: Evidence from Investor Reactions to Tone in Earnings Conference Calls European Accounting Review (IF 2.845) Pub Date : 2023-08-21 Jan C. Hennig, Sebastian Firk, Michael Wolff
Research assigns significant share price relevance to linguistic tone in earnings conference calls. Tone is, however, only one facet in the mosaic of the soft information that is disseminated in the interactive conference call setting. We argue that investors exploit further aspects of this soft information to simultaneously assess the tone’s credibility. Drawing on the communication literature, we
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Family Ownership Influence on Cost Elasticity European Accounting Review (IF 2.845) Pub Date : 2023-08-21 Gianfranco Siciliano, Dan Weiss
This study explores the relation between family ownership and cost elasticity. Using a sample of 1746 European firms, we first find that family ownership, a prevalent ownership type with unique characteristics, is associated with greater cost elasticity. Further, we use four empirical settings to increase our confidence that a higher cost elasticity is attributable to family ownership. We also document
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Clarification or Confusion: A Textual Analysis of ASC 842 Lease Transition Disclosures European Accounting Review (IF 2.845) Pub Date : 2023-08-19 Luminita Enache, Paul A. Griffin, Rucsandra Moldovan
Abstract We study the transition disclosures in firms’ 10-K filings preceding the mandatory adoption of Accounting Standards Codification 842 on leases. We find that ASC 842 transition disclosures become more unreadable and dissimilar the closer to adoption, potentially because the SEC guidance on transition disclosures emphasizes detail on the specifics of the standard and whether it has material
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Do Birds of a Feather Flock Together? The Joint Effects of Manager and Subordinate Narcissism on Performance Evaluation European Accounting Review (IF 2.845) Pub Date : 2023-08-10 Miriam K. Maske, Matthias Sohn
This study investigates the interaction of superior and subordinate manager narcissism on subjective performance evaluation. We build on extant research in the psychology literature and propose that superiors evaluate narcissistic subordinates less favorably than non-narcissistic subordinates. However, based on the homophily effect (i.e., the tendency of like to associate with like), we also hypothesize
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Grabbing Investor Attention with Limited Resources: A Study of Small Cap Firms’ Communication Channels European Accounting Review (IF 2.845) Pub Date : 2023-08-10 Romain Boulland, Andrei Filip, Alessandro Ghio, Luc Paugam
This paper examines the communication strategies employed by small cap firms listed on the Alternative Investment Market (AIM) of the London Stock Exchange. These small cap firms have great discretion in choosing their communication channels with investors and evolve in an environment with few information intermediaries. We investigate the use of three communication channels – press releases, conference
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Political Corruption and Accounting Conservatism European Accounting Review (IF 2.845) Pub Date : 2023-08-08 Lingmin Xie, Jeong-Bon Kim, Tao Yuan
We investigate how local political corruption shapes corporate financial reporting conservatism. Using a large sample of U.S. public firms, we find that firms located in areas with higher levels of political corruption tend to adopt greater accounting conservatism. We also find that firms in more corrupt areas bear greater political expropriation costs. Further analysis reveals that the positive effect
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The Role of Accounting Quality During Mutual Fund Fire Sales European Accounting Review (IF 2.845) Pub Date : 2023-08-07 Facundo Mercado, Silvina Rubio, Mariano Scapin
We study the ex ante role of accounting quality in mitigating the undervaluation generated by mutual fund fire sales. Asymmetric information between distressed mutual funds and the potential buyers of the securities being fire sold leads to an adverse selection problem resulting in an equilibrium in which buyers trade only at prices below the intrinsic value. Sellers accept these lower prices only
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Compensation Shifting from Salary to Dividends European Accounting Review (IF 2.845) Pub Date : 2023-07-12 Jeppe Christoffersen, Thomas Plenborg, Morten Seitz
Abstract This paper examines whether owner-managers of small firms use their compensation strategically to change reported earnings. We identify an institutional setting, Denmark, in which the owner-manager has the discretion to shift compensation from salary to dividends and hence increase reported earnings at almost no direct cost due to approximate tax neutrality between the two income streams.
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Does Board Independence Influence Annual Report Readability? European Accounting Review (IF 2.845) Pub Date : 2023-06-21 Dewan Rahman, Muhammad Kabir
We examine whether board independence improves the readability of annual reports. Using a sample of 11,938 firm-year observations over the period 1997–2016, we empirically show that board independence decreases the readability of annual reports. This result is consistent with the notion of managerial avoidance of costly board monitoring. We also run an array of cross-sectional tests to understand the
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Mobilizing Text As Data European Accounting Review (IF 2.845) Pub Date : 2023-06-07 Jihun Bae, Chung Yu Hung, Laurence van Lent
Textual analysis methods have become increasingly popular and powerful tools for researchers in finance and accounting to extract meaningful information from unstructured text data. This paper surv...
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Uniform Standards, Information Quality, and Capital Flows European Accounting Review (IF 2.845) Pub Date : 2023-06-06 Lin Nan, Chao Tang
Abstract This paper examines the impact of uniform standards from economies' perspective in the presence of capital crunches. We show that converting to uniform standards has a positive marginal productivity effect to each economy by facilitating capital flows across economies and improving investment efficiency. However, converting to uniform standards also has an information quality effect that may
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Linking Performance Measures and Feedback: Self-Regulation for Creativity European Accounting Review (IF 2.845) Pub Date : 2023-06-04 Ranjith Appuhami
ABSTRACT This study examines the proactive feedback effect of non-financial performance measures (NFPMs) and the passive feedback effect of financial performance measures (FPMs) on feedback-seeking behavior, perceived feedback quality, and individual creativity. Using a sample of survey data collected from middle-level managers in Australia, this study finds that managers passively receive performance
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Media Co-Coverage and Overreaction in Cross-Industry Information Transfers European Accounting Review (IF 2.845) Pub Date : 2023-06-04 Jingjing Xia, Rengong Zhang
Abstract This study examines whether media co-coverage – a phenomenon where multiple firms are simultaneously mentioned in the same news article as contextual information – induces excessive inter-industry information transfers between two firms due to the increased saliency of their relationship. Using firms from different product market industries that are co-covered in the same Wall Street Journal
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Innovative Data – Use-cases in Management Accounting Research and Practice European Accounting Review (IF 2.845) Pub Date : 2023-06-04 Matthias D. Mahlendorf, Melissa A. Martin, David Smith
Abstract This editorial provides an overview of innovative data and use-cases for management accounting research and practice. We cover data such as natural language, crowd-sourced ratings on online platforms, videos, geolocation, and satellite data. Moreover, we develop a matrix of new data sources and management accounting research topics and highlight combinations of data and topics that represent
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Management Accounting and Strategy – A Review and Reflections on Future Research European Accounting Review (IF 2.845) Pub Date : 2023-06-02 Salvador Carmona, Mahmoud Ezzamel
In this paper, we review extant research examining the relationship between management accounting and strategy. This relationship is not unidirectional as developments in strategic processes can al...
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Audit Market Measures in Audit Pricing Studies: The Issue of Mechanical Correlation European Accounting Review (IF 2.845) Pub Date : 2023-05-30 Marek Kacer, Alan Duboisée De Ricquebourg, Michael J. Peel, Nicholas Wilson
Mechanical correlation bias is inherent in audit pricing studies when independent variables (X) are derived from firm level audit fees (Y). Such variables are endogenous by construction leading to biased estimates, since (mechanically) X determines Y and Y determines X. After reviewing the extant auditing/accounting literature where mechanical correlation obtains we employ mathematical derivations
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Environmental Disclosure and the Cost of Capital: Evidence from the Fukushima Nuclear Disaster European Accounting Review (IF 2.845) Pub Date : 2023-05-21 Pietro Bonetti, Charles H. Cho, Giovanna Michelon
We examine the relation between environmental disclosure and the cost of capital by exploiting the Fukushima nuclear disaster as a source of variation in the relevance of environmental information for investors. Using a large hand-collected sample of Japanese firms, we find that firms disclosing carbon emissions experience a lower increase in the cost of capital than non-disclosing firms. Cross-sectional
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Deviations from the Mandatory Adoption of IFRS in Europe? Why Non-Adoption Does Not Mean Non-Compliance* European Accounting Review (IF 2.845) Pub Date : 2023-05-09 Christopher Nobes, Christian Stadler
Using Worldscope data, Pownall and Wieczynska (2018) [Deviations from the mandatory adoption of IFRS in the European Union: Implementation, enforcement, incentives, and compliance. Contemporary Accounting Research, 35(2), 1029–1066] show that there was extensive non-adoption of International Financial Reporting Standards (IFRS) by European listed firms in 2005–2012. They also suggest that much of this
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Stakeholder Focus or Strategy Focus? An Eye-Tracker Study on the Effect of Presentation Format on Nonprofessional Investors’ Information Processing Patterns European Accounting Review (IF 2.845) Pub Date : 2023-04-29 John Chi Wa Ko, Mandy M. Cheng, Wendy J. Green
ABSTRACT Using eye-tracking technology, we examine whether the information processing patterns of nonprofessional investors with a directional investment preference are affected by performance information presented based on either a focus on stakeholders (stakeholder format) or on strategic goals (strategic theme format). We find that when a company’s financial performance has declined but nonfinancial
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The Real Consequences of Classification Shifting: Evidence from the Efficiency of Corporate Investment European Accounting Review (IF 2.845) Pub Date : 2023-04-21 Seraina C. Anagnostopoulou, Kamran T. Malikov
This study investigates the real consequences of classification shifting by examining its effect on corporate investment efficiency. The underlying expectation is that the ways of reporting different profit items within the income statement should increase information asymmetry between managers and capital providers regarding the level of core and, so, more likely repeatable firm performance. We anticipate
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Understanding Multiple Accountability Logics Within Corporate Governance Policy Discourse: Resistance, Compromise, or Selective Coupling? European Accounting Review (IF 2.845) Pub Date : 2023-04-06 Maryam Safari, Lee D. Parker
ABSTRACT Conducting comparative country-based case studies of the US, the UK, and Australia over a twenty-four-year period and employing discursive and linguistic lenses, this paper scrutinizes the historical development of the founding principles of corporate governance. We aim to interpret and study the underlying meanings of public accountability within the policy discourses and hybridization patterns
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Tax Planning Through Advanced Tax Rulings – An Exploratory Analysis Using the Luxembourg Tax Leaks European Accounting Review (IF 2.845) Pub Date : 2023-03-16 Oliver Zhen Li, Stephen J. Lusch, Frank Murphy
ABSTRACT We use Luxembourg advanced tax rulings (ATRs) to provide readers with insight into the nature of tax planning that uses ATRs. Accordingly, we descriptively examine this sample of leaked Luxembourg ATRs and evaluate the determinants and outcomes associated with requesting a Luxembourg ATR. We find that the determinants of requesting an ATR differ between financial services firms and industrial
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Using Public Inquiries as a Data Source for Accounting Research: A Systematic Review European Accounting Review (IF 2.845) Pub Date : 2023-03-03 Gillian McAllister, Nicole C. Sutton, David A. Brown, Deborah Parker, Rachael Lewis, Olivia Rawlings-Way, Jiali Lin, Bronwen Harrison
Abstract This paper aims to bring to the attention of the accounting research community the opportunities and challenges associated with using public inquiry data for accounting research. We have conducted a systematic review of prior contributions in accounting that incorporate public inquiry data, and identify trends in the types of inquiries, data, and analytic techniques used within the existing
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Experience of a Job Loss and Analysts’ Subsequent Performance European Accounting Review (IF 2.845) Pub Date : 2023-02-24 Thi Mai Lan Nguyen, Chee Seng Cheong, Cameron Truong, Ralf Zurbruegg
We investigate the forecasting performance of analysts who have been rehired after experiencing a recent job loss as a result of the closure of the brokerage house they worked for. We find that forecasts of the displaced analysts are significantly more pessimistic relative to both their peers and actual earnings after they get rehired. Importantly, we also document a decline in the accuracy of their
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Audit-Firm Profitability: Determinants and Implications for Audit Outcomes European Accounting Review (IF 2.845) Pub Date : 2023-02-21 Jeff Zeyun Chen, Anastasios Elemes, Ole-Kristian Hope, Aaron S. Yoon
We use a novel dataset that links audit-firm and client-firm financial statement information from the U.K.’s largest audit firms to examine drivers of audit-firm profitability and its implications for audit outcomes. We first explore the determinants of audit-firm profitability and conclude that Big-4 and non-Big-4 audit firms have fundamentally different profitability structures. Big-4 firms have
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CFO Characteristics and Real Earnings Management European Accounting Review (IF 2.845) Pub Date : 2023-02-08 Domenico Campa, Gianluca Ginesti, Alessandra Allini
ABSTRACT We examine whether the characteristics of chief financial officers (CFOs) are associated with real earnings management (REM). Using hand-collected data on CFOs’ characteristics, we find that female CFOs and highly visible CFOs are associated with lower levels of REM, while CFOs with an MBA or with an accounting background are associated with higher levels of REM. Our analyses also reveal that
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Fit Between Regulatory Focus and Goal Pursuit Strategies on Auditors’ Professional Skepticism European Accounting Review (IF 2.845) Pub Date : 2023-01-20 Prabashi Dharmasiri, Soon-Yeow Phang
Regulators and researchers indicate that auditors do not exercise sufficient professional skepticism (hereafter skepticism) in auditing accounting estimates. Drawing on regulatory fit theory, we propose and find that priming auditor regulatory focus along with the goal pursuit strategy could enhance auditors’ skepticism. Specifically, auditors with a promotion focus exercise greater skepticism when
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Accounting, Calculative Infrastructures and Commensuration Work European Accounting Review (IF 2.845) Pub Date : 2023-01-20 Fredrik Svärdsten, Sven Modell
Accounting scholars are paying increasing attention to the notion of commensuration, or the translation of different objects into common metrics that make the entities that are subject to performance evaluation comparable, and the effects this has on organizational behavior. This body of research draws attention to organizations’ commensuration work, defined as the efforts that evaluated organizations
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Reputable Inside Directors and Internal Control Effectiveness European Accounting Review (IF 2.845) Pub Date : 2022-12-20 Zhijun Lin, Byron Y. Song, Zhimin Tian
Internal control effectiveness is an important indicator of financial reporting quality. This study investigates whether reputable inside directors impact a firm’s internal control over financial reporting. Using a large sample of Standard & Poor’s 1500 firms from 2004 to 2012, we find that firms with reputable inside directors are less likely to have reported and likely internal control weaknesses
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What is Blockchain Accounting? A Critical Examination in Relation to Organizing, Governance, and Trust European Accounting Review (IF 2.845) Pub Date : 2022-12-15 Dane Pflueger, Martin Kornberger, JAN Mouritsen
Across industry and academia, there is currently much discussion about the implications of blockchain for accounting. We contribute to these ongoing discussions by critically investigating the claim that blockchain exists as a novel and foundational accounting technology. We do so by examining the central imaginaries associated with blockchain and investigating their incomplete crystallisations in
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Public Audit Oversight and Audit Pricing: Evidence from the EU European Accounting Review (IF 2.845) Pub Date : 2022-12-08 Annita Florou, Shuai Yuan
We examine the audit pricing consequences of auditor inspections under the public oversight regime in the EU. Employing a staggered differences-in-differences design, we document an inspections audit fee increase during the post-inspection period when companies’ auditors are subject to inspections by the national Public Oversight Body (POB). However, this effect masks significant cross-sectional variation
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Product Market Effects of Customer Referencing European Accounting Review (IF 2.845) Pub Date : 2022-12-08 Tuck Siong Chung, Xiaoli Jia, Jiao Jing, Jeffrey Ng, Janus Jian Zhang
ABSTRACT Customer referencing refers to the phenomenon of a firm intentionally revealing its customers so that the firm can obtain certification of the quality of its products. In this paper, we examine the association between customer referencing and firms’ future product market performance. We find that firms that engage in customer referencing achieve better product market performance than those
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Passive Investors and Audit Quality: Evidence from the U.S. European Accounting Review (IF 2.845) Pub Date : 2022-11-23 Ting Dong, Florian Eugster, Antonio B. Vazquez
ABSTRACT The rise of index funds, or passive investing, in recent decades has caused heated debates over the efficacy of passive investors’ stewardship role in corporate governance. Our study adds to this emerging line of literature by examining whether passive investors enhance the quality of financial statement audits, a key aspect of corporate governance mechanisms. We follow [Appel, I. R., Gormley
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Advice Utilization From Predictive Analytics Tools: The Trend is Your Friend European Accounting Review (IF 2.845) Pub Date : 2022-11-23 Dennis D. Fehrenbacher, Alessandro Ghio, Martin Weisner
ABSTRACT Management decision-making is increasingly supported by new data types and advanced predictive analytics tools. Prior research suggests that the inclusion of new data types – such as social media data – in forecasting models can improve forecasting. We explore whether managers’ operational decisions differ depending on the data type used by a predictive analytics tool and the consistency of
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Do Auditors Respond to Clients’ Climate Change-related External Risks? Evidence from Audit Fees European Accounting Review (IF 2.845) Pub Date : 2022-11-15 Sven Hartlieb, Brigitte Eierle
In this study, we investigate whether auditors consider their clients’ climate change-related external risks when making audit pricing decisions. Using county-level proxies based on the number of declared natural disasters and the level of societal climate change awareness, we discover that clients with greater exposure to climate change risks pay significantly higher audit fees. After performing several