Accounting Commons^™

Can Corporate Sustainability Performance (Csp) Overcome Indonesia's Corporate Debt Problems?, Johnson Ferry Febrian, Nora Sri Hendriyeni

Jurnal Akuntansi dan Keuangan Indonesia

Based on IMF publications (2022), Indonesian companies have a risky debt level that may cause bankruptcy, so companies are required to make leverage adjustments to return the debt to its optimal level. In recent years, corporate sustainability performance (CSP) practices have been proven to improve performance and overcome financial problems such as debt by integrating sustainability aspects into business processes. Based on stakeholder theory and trade-off theory, this study aims to examine the effect of CSP on leverage adjustment and the role of competitive advantage, equity mispricing, profitability, and firm size in moderating this relationship. This study used a sample …

Do Fundamental Financial Ratios Affect The Company's Stock Price? Indonesia Evidence, Arumega Zarefar, Armadani Armadani

Jurnal Akuntansi dan Keuangan Indonesia

The objectives of this research aims to examine the effect of corporate fundamental financial ratios on stock prices and to examine whether firm age determine stock prices in the perspective of signaling theory. Here Generalized Least Squares (GLS) approach was used as the main analysis technique, and Ordinary Least Squares (OLS) was incorporated for the robustness test. The research was conducted on companies listed on the Indonesia Stock Exchange during the 2014-2020 period. This study finds that return on assets, solvency ratio, and Tobin's Q positively affect stock prices, that cash ratio has a negative effect on stock prices, and …

Beyond The Number: Tone Analysis In Annual Reports, Ani Wilujeng Suryani, Dinda Tustika Apta Fauz

Jurnal Akuntansi dan Keuangan Indonesia

In making decisions, stakeholders utilize not only quantitative information but also qualitative information, such as annual reports. However, annual reports in narrative form are often used to exaggerate company performance data. One aspect that influences stakeholders’ decision is tone. This study aims to examine the impact of positive tone disclosure in management analysis reports and discussions on company value. This study was conducted on 166 financial and property companies listed on the IDX. Management analysis and discussion reports were categorized according to their tone. Using linguistic inquiry and word count software (LIWC-22), the procedure yielded more precise and consistent analysis. …

The Governance Of Director Compensation, Lily Fang, Sterling Huang

Research Collection School Of Accountancy

The average total compensation of directors in U.S.-listed companies was $342,030 in 2020, 5.06 times the median household income. Directors set their own pay, giving rise to potential self-dealing. We argue and document that in the presence of self-dealing, external mechanisms such as legal standards act as effective means of governance. Following a landmark Delaware court ruling that subjected director pay to a more stringent legal standard, Delaware-incorporated firms reduced director compensation relative to non-Delaware firms and experienced positive and non-transient stock price reactions. Our results indicate that proper governance of director compensation enhances firm value.

"Just Beat It" Do Firms Reclassify Costs To Avoid The Base Erosion And Anti-Abuse Tax (Beat) Of The Tcja?, Stacie O. Laplante, Christina M. Lewellen, Daniel P. Pynch, Daniel M. P. Samuel

Research Collection School Of Accountancy

This study examines whether multinational corporations (MNCs) reclassify related-party payments to avoid the new base erosion and anti-abuse tax (BEAT). The Tax Cuts & Jobs Act of 2017 included the BEAT to combat income shifting from the U.S. to foreign entities. An exclusion in the tax law provides MNCs an incentive to reclassify related-party payments as cost of goods sold. We use a triple-difference design that leverages the BEAT filing threshold of $500 million in revenue and the parent company’s location to document increases in the unconsolidated sales of foreign subsidiaries of MNCs subject to BEAT relative foreign subsidiaries of …

Institutions And Corporate Tax Evasion: A Review Of The Literature And A Methodological Exploration, Kiridaran Kanagaretnam, Jimmy Lee, Chee Yeow Lim, Gerald J. Lobo

Research Collection School Of Accountancy

We first review the recent research published in JIAR on the influence of international institutions on accounting practices and follow it with a discussion of the literature studying the influence of institutions on tax avoidance and tax evasion. We then explore a new methodological approach that draws on the theory of institutional hierarchy proposed by Williamson (2000) and examine the relative importance of three broad types of institutions (informal, formal and media) in curtailing perceived tax evasion activities. We contribute to the international accounting literature by summarizing the recent research that addresses tax avoidance and tax evasion and providing preliminary …

Segment Disaggregation And Equity-Based Pay Contracts, Young Jun Cho, Hojun Seo

Research Collection School Of Accountancy

We study the role of segment disaggregation in equity-based pay contracts in diversified firms. Disaggregated segment disclosures can improve the observability of managerial actions in internal capital markets and thus increase implicit incentives for managers to allocate resources as desired by shareholders, substituting for explicit incentives provided to CEOs. We use the adoption of Statement of Financial Accounting Standards No. 131 as an identification strategy and find that firms affected by this segment reporting mandate significantly decreased the provision of equity-based incentives in the post-adoption period, especially for firms with higher operating volatilities. This effect is also more pronounced for …

Audit Evidence, Technology, And Judgement: A Review Of The Literature In Response To Ed‐500, Dereck Barr‐Pulliam, Christopher G. Calvin, Marc Eulerich, Arpine Maghakyan

Accounting Faculty Publications

In October 2022, the International Auditing and Assurance Standards Board (IAASB) issued Exposure Draft 500 (ED-500). This is focused on revising and integrating the standard auditors use when evaluating audit evidence during an external audit. This study contributes to the ongoing discourse as the IAASB evaluates feedback to ED-500 and executes its standard-setting agenda. We review academic literature published in the past 10 years to synthesize extant knowledge specifically on the use of technology and the application of professional skepticism during audit evidence evaluation. Our review offers factors the IAASB should consider when seeking to modernize and future-proof its standards, …

Common Ownership And Analyst Forecasts, Qiang Cheng, Shuqing Luo, Jinping Zhang

Research Collection School Of Accountancy

We examine the effect of the common ownership relation between brokerage houses and the firms covered by their analysts (referred to as co-owned brokerage houses, co-owned firms, and connected analysts, respectively) on analyst forecast performance. Common ownership can help the connected analysts have better access to co-owned firms, leading to higher-quality analyst research. However, common owners have incentives for higher valuation of the co-owned firms and thus can exert pressure on the connected analysts to issue optimistically biased research reports for these firms. We find that common ownership improves analyst forecast accuracy. This result is robust to a difference-in-differences design …

Don't Make Me Look Bad: A Study On The Relationship Between Ceo Narcissism And Opinion Shopping, Ali Jon Kooti

Theses, Dissertations and Capstones

CEO narcissism has become an urgent growing trend in business and accounting literature lately due to its strategic impact on CEO behavior and decision-making. Similarly, the opportunistic behavior of audit opinion shopping is a well-known concern among U.S. and international regulators and has been the subject of academic research for decades. This study investigates the association between the two. Specifically, this study examines whether narcissistic CEOs, motivated by their need for positive self-image, recognition, and praise, as well as their fear of adverse effects on their status and compensation, engage in opinion shopping in order to avoid receiving an unfavorable …

Initial Financial Assessment Of The Fraport Greece Cluster A Concession, Dimitrios V. Siskos, Alexander Maravas, Ronald Mau

International Journal of Aviation, Aeronautics, and Aerospace

There is a worldwide trend in the privatization of transport infrastructure and airports. Likewise, the Greek government launched an extensive privatization program that granted Fraport AG the right to operate 14 airports for the next forty years. The two separate concessions for clusters of seven airports each are named "Cluster A" and "Cluster B." The financial assessment of privatization contracts is crucial so decision-makers can accurately assess the value of aviation enterprises. This paper applies the Economic Value Added (EVA) methodology and enterprise valuation on Cluster A by assessing the concession company's balance sheets and income statements. We concluded that …

Investor Reaction To Spacs' Voluntary Disclosures, Vincent Castellani, Karl A. Muller, K.J. Park

Research Collection School Of Accountancy

SPACs are formed to combine with and provide a private firm public trading status and a capital infusion. Firms that enter the public market through a SPAC combination are believed to possess greater voluntary disclosure discretion than traditional IPOs as they obtain their public trading status through a merger. Consistent with regulators’ concerns, recent research finds that SPACs use this discretion opportunistically by issuing optimistic guidance. This study examines how investors respond to these disclosures. We find that optimistic projections increase retail purchasing, which is higher than that of institutional purchasing. Additionally, we find that investors partially see through the …

An Analysis Of Corporate Social Responsibility And Real Earnings Management, Rachel Brassine

Theses, Dissertations and Capstones

Real earnings management (REM) is costly in the form of intense loan restrictions, increased interest expense, and public scrutiny. Nevertheless, companies still practice REM. Based on agency and stakeholder theories, this research predicts that as a company’s CSR score increases, REM will decrease, and this association will become more negative when a critical mass of females on the board of directors exists and when a board-level CSR committee is present. This study also predicts that when a company offers an executive incentive plan based on CSR metrics, REM will decrease, and the relationship will become more negative with a critical …

Leading Financial Indicators Of Corporate Bankruptcy, Macee Patritti

Undergraduate Theses, Professional Papers, and Capstone Artifacts

No abstract provided.

Market Reaction Test On Banks & Brokers Based On Bitcoin Price History. A Look At National Commercial Banks And Security Broker, Exchanges, And Service Stocks Following The Most Volatile Swings In Bitcoin’S Price., Payton Earl

CMC Senior Theses

This paper examines if there is an inverse correlation between Bitcoin’s most volatile price swings and national commercial banks and security brokers, exchanges and service companies performance. Company performance in the dataset is measured by Cumulative Abnormal Returns during 2021 within a two-day period where Bitcoin has had the most significant uptick and downtick events. Using a market-adjusted model for my regression, it is concluded that Bitcoin’s largest uptick event did indeed have an inversely negative effect on traditional banks and trading securities companies, as the Cumulative Abnormal Returns were negative for my 107 observations and the event was statistically …

Informativeness Of Key Audit Matters: Evidence From China, Beng Wee Goh, Kiat Bee Jimmy Lee, Dan Li, Muzhi Wang

Research Collection School Of Accountancy

This study examines whether the key audit matters (KAMs) disclosed in expanded audit reports as a part of recent regulatory reforms are informative for investors in an emerging economy setting. Using the recent adoption of expanded audit reports for firms listed exclusively in Mainland China, we find robust evidence that the abnormal trading volume and earnings response coefficients (ERCs) are higher and that stock price synchronicity is lower during the postadoption than preadoption period. In additional tests, we find evidence that KAMs are more informative for non-state-owned enterprises (non-SOEs), smaller firms, and firms with a smaller analyst following. Finally, we …

Public Communication Of Audit Risks And Related-Party Transactions: Evidence From China, Ole-Kristian Hope, Heng Yue, Qinlin Zhong

Research Collection School Of Accountancy

This paper examines whether and how firms' engagement in related-party transactions (RPTs) is shaped by public communication of audit risks as required by the expanded audit report. Using the phased regulatory changes in China and a difference-in-differences design with firm fixed effects and matching, we find that firms significantly reduce their RPTs after the adoption of expanded audit reports (EARs). To investigate potential mechanisms, we find that (1) investor scrutiny increases after the adoption of EARs, (2) the reduction of RPTs is more pronounced when EARs are more likely to attract investor attention, and (3) the reduction of RPTs is …

Linking Green Innovation, Corporate Environmental Performance With Financing Constraints: A Sustainable Transition Towards Environmental Protection, Syeda Fizza Abbas, Iqra Tariq, Fareeha Waseem

Business Review

Purpose: Accessing different sources of finance becomes difficult when companies fail to take action towards environmental protection. Motivated by the theoretical propositions of stakeholder theory, this research investigates the impact of green innovation (GI) and corporate environmental performance (CEP) on financing constraints (FC) in the context of the most polluting industries of an emerging economy.

Methodology: The sample is based on 33 companies from the cement, chemical and fertilizer sectors of Pakistan for the period of 2017 to 2020. For data analysis, random effects and VCE Robust regressions models have been employed to explore the link between GI, CEP and …

Ceo Contractual Protection And Debt Contracting, Xia Chen, Qiang Cheng, Alvis K. Lo, Xin Wang

Research Collection School Of Accountancy

Chief Executive Officer (CEO) contractual protection, in the forms of CEO employment agreements and CEO severance pay agreements, is prevalent among S&P 1500 firms. While prior research has examined the impact of these agreements on corporate decisions from shareholders’ perspective, there is little research on the impact from debt holders’ perspective. We find that, compared with other loans, loans issued by firms with CEO contractual protection on average contain more performance covenants and performance-pricing provisions. This effect increases with CEOs’ risk-taking incentives and opportunities, but it decreases with CEOs’ preference for and opportunity of enjoying a quiet life. Furthermore, for …

Auditor Materiality Threshold And Audit Quality: Evidence From The Revised Isa 700 In The United Kingdom, Beng Wee Goh, Kiat Bee Jimmy Lee, Dan Li, Na Li, Muzhi Wang

Research Collection School Of Accountancy

Using a broad sample of U.K. firms that are required to disclose auditor materiality thresholds under the International Standards on Auditing (U.K. and Ireland) 700, we examine whether the auditor materiality threshold is associated with audit quality. We document that a lower materiality threshold is associated with higher audit quality, as measured by lower absolute discretionary accruals, higher accruals quality, and a lower propensity to just meet or beat analysts’ earnings expectations. We also find some evidence that the negative association between the materiality threshold and audit quality is attenuated when the audit committee is more effective and when the …

Big Data Analytics And Management Forecasting Behavior, Beng Wee Goh, Na Li, Tharindra Ranasinghe

Research Collection School Of Accountancy

This paper investigates whether the use of Big Data analytics by firms has a spillover effect on management forecasting behavior. Insights provided by Big Data could potentially improve firms’ ability to forecast earnings (supply channel) and investor demand for earnings information is likely higher for firms engaging in data analytics (demand channel). Using a text-based measure of firms’ commitments to and usage of Big Data analytics, we find that Big Data analytics usage is positively associated with the propensity to issue management earnings forecasts. Consistent with the “supply channel” explanation, we find that Big Data analytics usage is positively associated …

Esg Reporting Divergence, Qiang Cheng, Yun Lou, Mengjie Yang

Research Collection School Of Accountancy

In this paper, we provide the first large-sample empirical analysis of the consequences of ESG reporting divergence among U.S. firms. We construct and validate an ESG reporting divergence measure based on the dissimilarities in ESG reporting across firms. Validation tests confirm that it is lower for firm-pairs using the same ESG reporting framework, with similar size, and with similar ESG performance than for other firm-pairs. We find that ESG reporting divergence is positively associated with ESG rating disagreement and weakens the positive association between ESG ratings and ESG fund allocation. These results indicate that ESG reporting divergence reduces the usefulness …

An Extension Of The Theory Of Technology Dominance: Capturing The Underlying Causal Complexity, Steve G. Sutton, Vicky Arnold, Matthew Holt

Accounting Faculty Publications

The Theory of Technology Dominance (TTD) provides a theoretical foundation for understanding how intelligent systems impact human decision-making. The theory has three phases with propositions related to (1) the foundations of reliance, (2) short-term effects on novice versus expert decision-making, and (3) long-term epistemological effects related to individual deskilling and profession-wide stagnation. In this theory paper, we propose an extension of TTD, that we refer to as TTD2, primarily to increase our theoretical understanding of how, why, and when the short-term and long-term effects on decision-making occur and why advances in technology design have exacerbated some weaknesses and eroded some …

When Do Corporate Good Deeds Become A Burden? The Role Of Corporate Social Responsibility Following Negative Events, Changhyun Kim, Yoonseok Zang, Heli Wang, Kate Niu

Research Collection School Of Accountancy

This study investigates the differential roles of corporate social responsibility (CSR) in the context of negative events. By categorizing CSR and negative events by their respective stakeholder groups, primary and secondary stakeholders, we theorize and test differential impacts of CSR and their interaction effects with different types of negative events. We propose that, while CSR toward secondary stakeholders offers the monotonous risk-tempering effect, CSR toward primary stakeholders has heterogeneous effects when facing negative events. Specifically, the effect of CSR toward primary stakeholders varies with the type of negative events. When negative events are associated with secondary stakeholders in the domain …

Budgeting And Cataloging Enhancement For Small And Medium-Sized Enterprises Towards Sustainable Development Goals, Velicia Faustine Halim, Hasnul Suhaimi

Journal of Environmental Science and Sustainable Development

This paper describes a business coaching activity for small and medium enterprises (SMEs) in chemical and waste management industries. Based on the analysis results, there was a lack of budgeting practice and suboptimal catalog marketing that comprised the majority of existing problems in SMEs. This research aims to assist the SME in improving its budgeting practice and product catalog. The method used is a qualitative method based on a business coaching approach. The research instruments adopted included in-depth individual interviews (IDI). The collected data was then processed and analyzed, starting with generating the SME's business process and service blueprint, followed …

Does Corporate Social Responsibility Disclosure Increase The Stock Price Crash Risk? Evidence From Indonesia, Raden Roro Widya Ningtyas Soeprajitno, Zephyra Violetta Setiawan, Ainun Na’Im

Jurnal Akuntansi dan Keuangan Indonesia

Indonesia fully supports efforts to disclose corporate social responsibility (CSR) to increase awareness of issues regarding the environment globally, as stated in the Sustainable Development Goals (SDGs). The connection between the disclosure of corporate social responsibility and the stock price crash risk is examined in this study. Furthermore, we analyse and check robustness and endogeneity issues to avoid variable bias selections. The study uses as its sample companies that are listed on the Indonesia Stock Exchange and follow the Global Reporting Initiative (GRI) for corporate social responsibility. It is found that companies with corporate social responsibility disclosures have a positive …

Intrafirm Knowledge Sharing In The Investment Research Industry, Artur Hugon, An-Ping Lin, Stanimir Markov

Research Collection School Of Accountancy

We study interdepartment knowledge sharing in an investment research setting where the benefits are potentially significant for the brokerage and the capital market, but so are the frictions impeding it. Using hand-collected data on equity analyst access to in-house debt research expertise, we find significant benefits to equity analysts in the form of improved ability to forecast cash flows and to anticipate credit rating downgrades. Moreover, we find evidence that access to management and research expertise underlie in-house debt analysts' capacity to generate information beneficial to equity analysts. Finally, these benefits exist only in the presence of a collaborative brokerage …

Audit Adjustments And The Discontinuity In Earnings Distribution Around Zero, Chu Yeong Lim, Themin Suwardy, Tracey Chunqi Zhang

Research Collection School Of Accountancy

Accounting researchers have documented that a discontinuity exists in earnings distribution around zero. However, there is considerable debate among researchers whether the earnings discontinuity around zero is caused by earnings management. We aim to shed light on the earnings discontinuity debate by examining the impact of audit adjustments on the distribution of earnings using a unique dataset from Singapore containing both recorded and waived adjustments. We find that audit adjustments do not reduce the discontinuity of earnings distribution around zero. This affirms that the results of Lennox et. al (2016) based on pre-tax earnings also apply to post-tax earnings and …

The Effect Of Risk Profile In Pandemi Outbreak To Banking Financial Performance Case Study In Indonesia, Fajar Abdullah

Journal Of Middle East and Islamic Studies

The risk profile that occurred within the scope of banking during the Covid 19 pandemic which was quantitatively reflected in the microeconomic ratios of the BOPO, NPF/NPL, FDR/LDR ratios, and macroeconomics in this case, inflation and the USD exchange rate, were the main factors in the decline in the soundness level bank which is reflected in the value of the bank's financial performance ratio, namely Return on Assets due to. The objects in this study are the general Islamic and conventional banking industry, with data observations including BOPO, NPF/NPL, FDR/LDR, inflation, and the USD exchange rate. By comparing the effect …

Essays On Tax Impacts On Corporate Finance, Corporate Governance And Regional Disparity, Mei Li

Dissertations, Theses, and Capstone Projects

This dissertation consists of three chapters that cover topics on tax impacts on corporate finance, regional disparity and corporate governance.

Chapter 1 - How Do Net Operating Loss Carryforwards Affect Tax Impact on Corporate Capital Structure? This paper examines the impact of net operating loss (NOL) carryforwards on the tax implications of corporate capital structure. Leveraging the Tax Cuts and Jobs Act of 2017 (TCJA), the largest tax reform in four decades, this paper investigates the effect of NOL carryforwards on firms' sensitivity to tax reforms. As NOL carryforwards have become increasingly significant since 2000, but not widely researched due …