Business Commons^™

Internal Control, Financial Reporting, And Corporate Governance Of Smaller Firms, Tian Tian

FIU Electronic Theses and Dissertations

Prior studies have provided mixed evidence of the benefits of integrated audits (i.e., financial statement (FS) audits integrated with audits of internal control over financial reporting (ICFR)) relative to FS-only audits. In section one, I conduct a comprehensive study to understand the implications of integrated audit for FS audit quality with a sample of small firms comprised of small- and non-accelerated filers. Unlike large firms, small firms face less complexity in control environments, and there are other alternative mechanisms that operate (i.e., mandatory FS audit and management certified ICFR effectiveness) to enhance the firms’ internal control quality. Therefore, it is …

Exploring Factors That Influence U.S. Consumer Intention To Covet Loose Change, Carlos Emilio Bared

FIU Electronic Theses and Dissertations

This study aimed to assess U.S. consumer intention to save, store, and account for the coins received as change from a cash transaction. Using a behavioral economics framework and applying Ajzen’s Theory of Planned Behavior (1985), this research provides a template to capture, observe, and analyze consumer perceptions about and behavior towards loose change or other similar byproduct decisions. Following procedures prescribed by Icek Ajzen (2006) and (2013), a questionnaire was developed for the critical constructs used to predict consumer intention to covet loose change. A sample population (n= 490) of adults residing in the United States participated …

Individual Investors’ Response Around Earnings Announcements, Their Preferred Trading Time, And The Effects Of The Covid-19 Pandemic, E. Jin Lee

FIU Electronic Theses and Dissertations

The recent remarkable rise in the number of individual (retail) investors using new electronic trading applications increases the growing demand for research on individual investors’ trading activities. This dissertation consists of two essays focused on the trading activities of individual investors on the Robinhood (electronic trading) apps. The first essay examines individual investors’ trading activities related to scheduled accounting disclosures (i.e., earnings announcements). Findings suggest that individual investors trade significantly both before and after earnings announcements (EA), but this pattern becomes weaker during the COVID-19 pandemic. In addition, I find a significant increase in trading during the after-hours on an …

Determinants And Consequences Of Early Filing Of Financial Statements, Claudia Hernandez

FIU Electronic Theses and Dissertations

The objective of this study is to identify the determinants of early filers (firms that file before their filing deadline) and to ascertain whether their accounting quality differs from that of timely filers. In 2005, the SEC (Securities and Exchange Commission) accelerated the filing deadlines affecting fiscal year 2006 and onward. An analysis of audit opinions of Form 10-K from years 2007 to 2019 shows that the Audit Reporting Lag, or ARL (the number of days between the fiscal year end and auditor signature date), is 12 days or more ahead of the deadlines in approximately 40% of the firm-years. …

Analysts’ Cash Flow Forecasts, Information Asymmetry, And Financing Choices Of Firms, Mengyu Ma

FIU Electronic Theses and Dissertations

Prior research documents mixed results regarding the usefulness of cash flow forecasts. One stream of literature documents analysts provided cash flow information is associated with more accurate earnings forecasts, better accruals quality, stronger market reaction, and more precious information about future valuation. Another stream of literature claims that cash flow forecasts are a simple extension of analysts’ own earnings forecasts and are not useful. I contribute to this debate by examining potential implications of cash flow forecasts for information environment. My dissertation consists of three separate but closely related studies, which investigate how analysts’ cash flow forecasts are linked with …

Accounting Restatements And Audit Committee Director Departures, Wu-Po Liu

FIU Electronic Theses and Dissertations

Audit committees play an important role to ensure the reliability of financial reporting. Audit committee directors could choose to depart if they perceive an increased likelihood of low-quality financial reporting. Moreover, their departures and market reactions could signal misstatement risk and the market’s attitude toward such departures, respectively. This dissertation explores whether the characteristics of audit committee directors are associated with the likelihood of departures before and after the announcement of financial restatements. Specifically, I examine if financial expertise, busyness, tenure, and gender of the directors are associated with such departures, loss of other directorships, and market reactions.

The first …

Implications Of Non-Equity Financing For Firm Financial Reporting Quality And Information Environment, Md Safayat Hossain

FIU Electronic Theses and Dissertations

Prior studies in accounting and finance have extensively evaluated the way a firm interacts with, and subsequently responds to, its contracting agents under various conditions. Specifically, studies have explored the role of accounting information in mitigating agency conflicts and designing efficient contracts. My dissertation consists of three separate, albeit closely related, studies that extend the prior understanding of contracting relationships by documenting financial reporting outcomes of those relationships.

First, I investigate whether and how the presence of debt in the capital structure improves a firm’s information environment. Empirical findings show that, after controlling for all known confounding factors, debt is …

Occurrence And Consequences Of Surprise Internal Control Disclosures, Hambisa Belina

FIU Electronic Theses and Dissertations

The Sarbanes-Oxley Act mandates public companies to establish internal control systems and assess their effectiveness. Quarterly reports by all companies and annual reports by companies with less than $75 million public float (non-accelerated filers) do not require auditor’s attestation while annual reports by companies with $75 million or more public float (accelerated filers) do require such auditor attestations. Quarterly reports should provide early warning of any impending material weakness (MW) to be disclosed in subsequent annual filings. This dissertation explores three types of “surprise” MW disclosures—positive, negative and no surprise—and consequences of such surprise disclosures.

In part one, I document …

The Effect Of Uncertain And Weak Modal Words In 10-K Filings On Analyst Forecast Attributes, Myung Sub Kim

FIU Electronic Theses and Dissertations

This study examines the determinants of the use of uncertain and weak modal words in 10-K filings and the effect of these words on analyst forecast attributes. I find that the use of uncertain and weak modal words in 10-K filings is positively (negatively) associated with firm size, volatility of business and operations (firm age and number of business segments). More importantly, after controlling for readability and management tone, I find that the use of uncertain and weak modal words in 10-K filings is associated with greater analyst following, lower forecast dispersion, greater forecast accuracy, and lower uncertainty in analysts’ …

How Does The Nature Of Accounting Standards Affect Audit Quality And Earnings Attributes?, Ran Ling

FIU Electronic Theses and Dissertations

The purpose of this study is to provide evidence on the effects of the nature of accounting standards (i.e. principles- versus rules-based accounting standards) on audit quality and earnings attributes. I construct a comprehensive instrument to effectively measure rules-based characteristics in the U.S. GAAP following Mergenthaler (2011). I then construct a firm-level instrument to capture firms' reliance on principles-based accounting standards using the textual analysis approach developed by Folsom et al. (2017). Using data from S&P 500 companies during 2009-2014, I first examine whether principles- (or rules-) based standards in the FASB Accounting Standards Codification (ASC) system affect both the …

Three Essays On Financial Statement Comparability, Mohammad Nazrul Islam

FIU Electronic Theses and Dissertations

Comparability is a central feature of financial reporting systems. Comparability is defined by FASB (2010, 19) as “the qualitative characteristic that enables users to identify and understand similarities in, and differences among, items.” The Accounting Principles Board ranked comparability as one of the most important objectives of financial reporting and Generally Accepted Accounting Principles have underscored the importance of comparability for the past four decades. Using empirical measures of financial statement comparability, studies confirm that comparability plays an important role in analyst following, audit fees, credit risk, acquisition decisions, stock price volatility, the cost of debt, the cost of equity, …

Essays On The U.S. Gaap-Ifrs Convergence Project, The Nature Of Accounting Standards, And Financial Reporting Quality, Assma M. Sawani

FIU Electronic Theses and Dissertations

In this dissertation, I examine the changes to the nature of the accounting paradigms of U.S. GAAP and International Financial Reporting Standards (IFRS) over the course of the U.S. GAAP and IFRS convergence project. I further examine whether the changes to the nature of IFRS following convergence impacts the financial reporting quality. The motivation for this study is to provide an initial review of the progress of the convergence process between U.S. GAAP and IFRS that aims to converge both sets of standards towards more principles-based paradigms. The ultimate goal of the convergence process was the development of globally recognized …

Earnings Management To Achieve The Peer Performance Benchmark, Sheng Yi

FIU Electronic Theses and Dissertations

Other than three extensively researched earnings thresholds, avoiding earnings declines, avoiding negative earnings and avoiding negative earnings surprises (Burgstahler and Dichev 1997; Degeorge, Patel, and Zeckhauser 1999), peer performance is an additional threshold that is often mentioned in news reports, compensation contracts and analysts’ reports, while largely ignored in the academic research. Thus, I examine whether firms manage earnings to achieve peer performance. First, I examine accruals-based earnings management to achieve peer performance. The empirical results show that firms exhibit more income-increasing accruals management in the current year under the following situations: 1) when firms’ prior year performance is below …

The Association Of Real Earnings Management With: Enterprise Resource Planning Systems, Audit Effort, And Future Financial Performance, Angel Arturo Pacheco Paredes

FIU Electronic Theses and Dissertations

Emerging research on real earnings management [REM] has expressed the concern that firms deviating from normal business practices may endure a negative impact on future cash flows and performance. This dissertation (in three essays) investigates the phenomenon of real earnings management in its association with: 1) enterprise resource planning systems [ERPs]; 2) audit report lags [ARLs]; and 3) future firm performance. In the first investigation I hypothesize that the increased monitoring associated with the implementation of an ERP will result in a decline in REM. In the second investigation I hypothesize that higher levels of REM will evoke greater auditor …

The Effect Of Shortened Reporting Lag On The Usefulness Of Form 20-F, Zhenfeng Liu

FIU Electronic Theses and Dissertations

This study examines the impact of the Securities and Exchange Commission’s (SEC) decision to accelerate the Form 20-F (20-F) filing deadline on the usefulness of 20-Fs. I find that only the large and medium firms experienced a significant increase in market reaction when they accelerated their 20-F filing deadlines to four months after the year-end, while no significant change in market reaction is detected for small firms. I also find that the market did not appear to have reacted to firms who voluntarily further shortened their 20-F reporting lag to less than four months after the year-end. Finally, I find …

Role Of The Audit Committee Chair In The Financial Reporting Process, Izhar Haq

FIU Electronic Theses and Dissertations

In my dissertation, I examine the role of the audit committee chair in the financial reporting process and test if the change in audit committee chair is associated with changes in audit fees, audit report lag, and audit quality. Motivation for this dissertation comes from the increased attention paid by legislators and regulators in recent years on the role of the audit committee in the financial reporting process. While prior studies have examined diverse issues related to the composition of the audit committee, no prior study has examined the role of the audit committee chair on the oversight of financial …

Can Compensation Committees Effectively Mitigate The Ceo Horizon Problem? The Role Of Co-Opted Directors, Ruonan Liu

FIU Electronic Theses and Dissertations

Extant research finds inconclusive evidence about the CEO horizon problem. One possibility is that compensation committees design CEO compensation in a way that discourages retiring CEOs from opportunistic earnings management and R&D reduction. However, compensation committees dominated by co-opted directors may not be as effective as those with fewer co-opted directors in mitigating the CEO horizon problem, because directors co-opted by the CEO tend to bias their decisions in favor of the CEO. I find that compensation committees dominated by co-opted directors are associated with higher CEO compensation packages. I document R&D reduction and accruals management in firms with retiring …

The Market Value Implications Of Pension Asset Allocation, Elizabeth H. Turner

FIU Electronic Theses and Dissertations

Pension funds have been part of the private sector since the 1850’s. Defined Benefit pension plans [DB], where a company promises to make regular contributions to investment accounts held for participating employees in order to pay a promised lifelong annuity, are significant capital markets participants, amounting to 2.3 trillion dollars in 2010 (Federal Reserve Board, 2013). In 2006, Statement of Financial Accounting Standards No.158 (SFAS 158), Employers’ Accounting for Defined Benefit Pension and Other Postemployment Plans, shifted information concerning funding status and pension asset/liability composition from disclosure in the footnotes to recognition in the financial statements. I add to the …

Market Valuation Of Environmental Performance, Islam M. Elshahat

FIU Electronic Theses and Dissertations

This research investigated the general association between corporate environmental performance and the firms’ annual returns independent of any particular environmental event. The association analysis was based on the most recent environmental data for the years 2006, 2007, and 2008. The results indicated that while some environmental variables were significantly associated with firms’ returns, the majority were not. The results also indicated that environmental concerns were more likely to be associated with increase in the firm value than were environmental strengths; however, there were no mean differences between firms whose environmental performance increased as compared with those whose performance deteriorated. Overall, …