Accrual Management and Firm-Specific Risk

Widianingsih, Yuni Pristiwati Noer; Setiawan, Doddy; Aryani, Y. Anni; Gantyowati, Evi

doi:10.3390/ijfs10040111

Cited by 2 publications

(2 citation statements)

References 38 publications

(65 reference statements)

Supporting

Mentioning

Contrasting

Order By: Relevance

“…A stream of corporate governance research suggests that higher-quality corporate governance practice improves firm financial reporting quality (Cohen et al , 2004; Bhuiyan et al , 2013; Cheung et al , 2010). DACC is often referred to as a proxy for the quality of a firm financial reporting, and they represent the portion of accruals that are subject to management judgement and can be influenced by managerial discretion (Healy, 1996; Dechow et al , 1995; Kothari et al , 2005; Widianingsih et al , 2022) evidence that the lower quality of earnings affects firm risk. Using agency theory, Abbaszadeh et al (2022) examined the potential conflict of interest between managers and investors in Iran’s capital market, concentrating on issues such as lowering capital costs for managers and increasing return on assets for investors.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Do advisory directors increase discretionary accruals?

Salma,

Bhuiyan

2023

IJAIM

View full text Add to dashboard Cite

Purpose This study aims to examine whether the presence of advisory directors affects firm discretionary accruals (DACC), a widely used proxy for financial reporting quality. The authors argue that the advisory director weakens the board monitoring role and impairs the firm financial reporting quality by increasing DACC. Design/methodology/approach The sample consists of listed firms on the Australian Stock Exchange from 2001 to 2015 using 7,649 firm-year observations. The authors perform descriptive statistics, regression and propensity score matching analyses to examine the research hypothesis. Findings The research evidence that firms with a higher presence of advisory directors have more DACC, indicating poor financial reporting quality. Furthermore, the authors categorize the DACC and find that the firm has higher income-increasing DACC in the presence of higher advisory directors. The findings are robust concerning endogeneity issues. Research limitations/implications The research evidence that firms with a higher presence of advisory directors have more DACC, indicating poor financial reporting quality. Furthermore, the authors categorize the DACC and find that the firm has higher income-increasing DACC in the presence of higher advisory directors. The findings are robust concerning endogeneity issues. Practical implications The research contributes valuable insights for regulators and policymakers seeking to comprehend the implications of firms using more advisory directors. Additionally, the authors recognize the potential significance of the findings for the institution of directors, as they can provide a nuanced understanding of the specific roles played by advisory directors in organizational dynamics. Originality/value While the extensive body of literature on corporate governance and financial reporting quality has been well-established, a noticeable void exists in academic research delving into the relationship between advisory directors and DACC management. This study seeks to fill this gap, making a distinctive and original contribution to the existing literature on corporate governance.

show abstract

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Do advisory directors increase discretionary accruals?

Salma,

Bhuiyan

2023

IJAIM

View full text Add to dashboard Cite

show abstract

“…ESG firms comprise stakeholders and shareholders to create value. These firms embrace an implicit contract with society to invest in environmentally and socially beneficial projects [ 5 ]. However, a much contested issue is that these investing strategies diminish overall shareholder return, making ESG firms subordinate to typical firms [ 6 , 7 ].…”

Section: Introductionmentioning

confidence: 99%

Financial reporting quality of ESG firms listed in China

Abeysekera

2023

PLoS ONE

View full text Add to dashboard Cite

Given the growing importance of environmental protection in China, this study investigated the determinants of the financial reporting quality of environmental, social and governance (ESG) firms listed in China. The quality of financial reporting shows how informative the accounting numbers are for decision-making. Because business outlook can influence financial reporting quality, this study examined predictable, moderately predictable and unpredictable business outlooks. The study randomly selected 100 firms from the 2021 China ESG Top 500 Outstanding Enterprises published by the Sina Finance ESG Rating Centre and then analysed those firms in 2018, 2019 and 2020. It investigated determinants (financial health, governance and earnings management), controlling for the influence of known variables (firm age and firm-specific risk) on financial reporting quality measured as accruals quality and earnings smoothness. Ordinary robust least square regression was conducted. Financial health had a negative influence, but governance variables and earnings management did not affect financial reporting quality. Firm-specific risk had a positive effect, but firm age did not influence financial reporting quality. Changes in business outlook had no impact on the determinants’ effect on financial reporting quality. The study found that ESG firms did not engage in earnings management and aggressively manage earnings, pointing to ethical behaviour. This is the first study to contribute to understanding the financial reporting quality of ESG firms listed in China. It examined different business outlooks to understand ESG firms’ behaviour towards financial reporting quality. The findings invite replicable studies outside China to understand the contextual validity and reliability of the financial reporting quality of ESG firms, and to investigate the effect of determinants not examined in this study.

show abstract

Accrual Management and Firm-Specific Risk

Cited by 2 publications

References 38 publications

Do advisory directors increase discretionary accruals?

Do advisory directors increase discretionary accruals?

Financial reporting quality of ESG firms listed in China

Contact Info

Product

Resources

About