PurposeThe main purpose of this study is to investigate the relationship between intangible investments (R&D, advertising, training, software acquisitions and quality) and the ability of firms to generate future OCF (hereafter cash‐flow from operations).Design/methodology/approachThe authors developed dynamic panel models to estimate the relationship between intangible investments and three subsequent periods cash flows. These models are estimated using generalized method of moments (GMM), on a panel of 300 observations related to 50 Tunisian manufacturing firms and six years of data (2001‐2006).FindingsThe findings show a positive and significant effect of intangible investments on future operating cash flows. First, this result confirms the main hypothesis of resource based view (RBV). Second, it is found that investments in R&D, quality, and advertising have significant effects on future cash flows from operations. While the effect of R&D activities and quality persists until the third lagged period, the effect of advertising expenditures is rapid and temporary.Practical implicationsThe investigation provides an empirical validation on the role of intangible investment in generating and sustaining competitive advantage. The significant effect of R&D and quality expenses indicates the role of these activities in adding value to the firm product, and hence in the creation of competitive advantage which allows the firm to manage the components of its operating cycle, especially cash received from customers, resulting in superior future cash flows from operations.Originality/valueFirst, the use of cash‐flow basis, as an alternative approach to accrual basis, for intangibles valuation avoids the shortcomings of accrual‐based performance measures in forecasting future operating cash flows because of earnings management practices. Second, the majority of the research dealing with the valuation of intangibles has been conducted in the context of developed countries, therefore in terms of the relevance of intangible investments significantly less is known about emerging economies. The choice of Tunisia, in this regard, is a particularly important contribution to the research on emerging economies.
Purpose The purpose of this study is to explore the degree of compliance of a sample of European Union (EU) listed groups with the International Financial Reporting Standard 15 (IFRS 15) mandatory disclosures in two specific sectors, namely, telecommunication and construction. Design/methodology/approach To carry out this research, the authors selected 22 annual reports for the year 2018. The authors created and completed a datasheet based on a close review of the IFRS 15 disclosure requirements. A content analysis of the selected annual reports was then performed. Findings The results show that the sampled groups do not fully comply with the IFRS 15 mandatory disclosures and the degree of compliance differs between the two investigated sectors. Originality/value To the best of the authors’ knowledge, this study explores, for the first-time, the degree of compliance with the IFRS 15 mandatory disclosures, by focusing on a cross-country sample of EU listed groups.
The aim of this study was to provide evidence to the benefit of an emerging market on whether and how the prevailing investors’ sentiment influences the earnings management tactics i.e. accrual earnings management and real earnings management. used data related to Tunisian listed firms over the period 2009–2018. We measure the investors’ sentiment index using Google search volume approach. We estimated a recursive equation system to investigate the effect of the investors’ sentiment on the trade-off decision between accrual earnings management and real earnings management. First, in line with the catering theory we found that optimistic period is an opportune occasion that encourages Tunisian managers to upward their earnings whether by accrual earnings management or by real earnings management. Indeed, Tunisian managers are likely to rely on abnormal cashflows. Second, we found that the Tunisian managers, use both techniques as complementary rather than substitutes. However, during high sentiment period, this complementary relation decreases which may be explained by total cost of earnings management tools. Our results give the investors and the financial analysts, within emerging markets, important insights and requires them to adopt necessary adjustments to their expectations when evaluated from an optimistic market’ perspective. During such periods, they should be more cautious to the possible distortions of reported earnings made by managers. Our research differs from previous studies dealing with the implication of behavioral biases emerging contexts, which is still embryonic. Such contexts have their uniqueness regarding the economic, social and political environment making evidence drawn from developed contexts questionable. Second, we address this query in a more comprehensive way. We were interested in examining the effect of the investors’ sentiment on each of earnings management technique taken individually as well as on the possible trade-off between them.
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