Motivations behind users’ participation in the standard-setting process: Focus on financial analysts

Allini, Alessandra; Aria, Massimo; Macchioni, Riccardo; Zagaria, Claudia

doi:10.1016/j.jaccpubpol.2018.04.002

Cited by 15 publications

(15 citation statements)

References 63 publications

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“…This research is very pertinent, as the regulators of the audit profession assess investors' perception towards the audit, request annotations from them, and take actions according to their desires to improve the value of the audit [24,48,75,81,[111][112][113]. However, this study has theoretical, practical, and also methodological contributions.…”

Section: Implications Of the Studymentioning

confidence: 99%

A Partial Least-Squares Structural Equation Modeling Approach to Investigate the Audit Expectation Gap and Its Impact on Investor Confidence: Perspectives from a Developing Country

Akther

2019

Sustainability

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The aim of this study is to empirically explore the existence of the audit expectation gap and its impact on investors’ confidence. As a maiden attempt to assess these relationships, we developed a model with higher order constructs using a partial least-squares structural equation model (PLS-SEM). Based on a questionnaire survey with auditors and institutional investors, as one of the main users of audited financial statements, this study explored investors’ perceptions of both unreasonable and sensible audit expectation gaps from diverse aspects. The findings of this study revealed that the existence of an audit expectation gap was negatively related to investors’ confidence, and the greater the audit expectation gap was, the lower the investors’ confidence on audit. It was also found that auditors’ perceived independence and improved level of communication were negatively related with the audit expectation gap but positively related with investors’ confidence. Moreover, the monitoring role of independent audit oversight acts as a moderator among auditors’ perceived independence, auditors’ improved level of communication, audit expectation gap, and investors’ confidence. As the innate characteristic of an audit is to resolve conflict between owners and management of the organization, this study provides insight about what the investors (owners) expect from the audit and how to mitigate those expectation gaps.

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Section: Implications Of the Studymentioning

confidence: 99%

A Partial Least-Squares Structural Equation Modeling Approach to Investigate the Audit Expectation Gap and Its Impact on Investor Confidence: Perspectives from a Developing Country

Akther

2019

Sustainability

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“…Therefore, an analysis for each constituent category is warranted. Recent studies have used the Durocher et al (2007) framework to analyze participation by financial analysts on IASB standard-setting (Allini et al 2018) and 16 participant types on GASB standard-setting (Kidwell and Lowensohn 2018). Our study examines the kind of response by the following seven types of respondents: (1) auditors, (2) college and university preparers, (3) healthcare organization preparers, (4) voluntary health and welfare organization preparers, (5) other NFP organization preparers, (6) individual and academic users, and (7) professional organizations.…”

Section: Methodsmentioning

confidence: 99%

“…Written submissions to the rule-makers are one way in which lobbying takes place. The analysis of comment letters to accounting standard-setting bodies is the most frequently used approach to examine attempts to influence the standard-setting process (e.g., Allini, Aria, Macchioni, and Zagaria 2018;Bline and Skekel 1991;Durocher and Fortin 2011;Durocher, Fortin, and Cote 2007;Georgiou 2002Georgiou , 2010Holder, Karim, Lin, and Woods 2013;Kidwell and Lowensohn 2018;Saemann 1999;Schalow 1995;Tandy and Wilburn 1996;Yen, Hirst, and Hopkins 2007). Sutton (1984) reasons that the cost/benefit calculation prompts the decision to lobby rule-makers.…”

Section: Theory and Research Questionsmentioning

confidence: 99%

FASB's Not-for-Profit Financial Reporting Project: Analysis of Letters to ASU 2016-14 Exposure Draft

Deis

Shroff

2020

Journal of Governmental &Amp; Nonprofit Accounting

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In 2015, the Financial Accounting Standards Board (FASB) issued an Exposure Draft (ED) as part of its first significant project in over 20 years on financial reporting by Not-for-Profit organizations (NFP). In this study, we categorize the 264 letters received on the ED by the type of respondent and analyze the responses using ANOVA, multiple comparisons tests, and multidimensional scaling. Ultimately, as Phase 1 of its NFP project, FASB issued accounting standards update (ASU) 2016-14 containing proposed changes supported by a majority of the respondents to the ED. The Board deferred recommended changes with less support from respondents to Phase 2 of the project. Although constituents often accuse accounting standard setters of standards-overload and for being unresponsive to their comments (Herz 2003), our findings indicate otherwise. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: G00; L31; M40.

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“…Financial analysts are sophisticated intermediaries between the firms and markets, who use all available information to form their earnings forecasts (Allini, Aria, Macchioni, & Zagaria, 2018;Barniv, Hope, Myring, & Thomas, 2009;Bratten, Gleason, Larocque, & Mills, 2017;Du & Budescu, 2018;Mauler, 2019;Zhou, 2016). Analysts' main objective is to release earnings forecasts that are input for stock recommendations (Friesen & Weller, 2006).…”

Section: Introductionmentioning

confidence: 99%

“…Another issue that could affect analysts' earnings forecasts is analyst-specific characteristics. There is evidence that analysts' characteristics help explain why some analysts issue more accurate forecasts for some firms than others (Jeppson et al, 2018;Hong, Kubik, & Solomon, 2000;Hong & Kubik, 2003;Clement & Tse, 2005;Clarke & Subramanian, 2006;Allini et al, 2018;Zhou, 2016). Identifying those particular analysts' characteristics is a valuable exercise for all market participants that strive to increase the accuracy of forecasts.…”

Section: Introductionmentioning

confidence: 99%

The nexus between CEO incentives and analysts' earnings forecasts

Mamatzakis

Bagntasarian

2020

Int. J Fin Econ

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In this paper, we examine the nexus between analysts' forecasts and CEO incentives over different forecasting horizons. We assemble a unique analystlevel sample for US firms covering the period between 1992 and 2015 from three different databases that provide information for CEO incentives and analysts' characteristics. Panel regression results reveal significant effect of CEO incentives and analysts' characteristics on the forecast accuracy of the latter.The reported results suggest that CEO incentives driven by high compensation, restricted stock holdings and stock ownership can correct analysts' optimism, whereas CEO bonus and sensitivity to changes in firm's value exacerbate analysts' optimism. We further examine how CEO incentives affect the impact of earnings management on analysts' forecasts. Results show that CEO incentives can augment the effect of earnings management on analysts' forecasts with CEO bonus being the most deteriorating factor. Our findings also indicate that experienced analysts are more optimistic in their forecasts, while higher forecast frequency can correct this optimism. We further show whether regulations affect forecasts.

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Motivations behind users’ participation in the standard-setting process: Focus on financial analysts

Cited by 15 publications

References 63 publications

A Partial Least-Squares Structural Equation Modeling Approach to Investigate the Audit Expectation Gap and Its Impact on Investor Confidence: Perspectives from a Developing Country

A Partial Least-Squares Structural Equation Modeling Approach to Investigate the Audit Expectation Gap and Its Impact on Investor Confidence: Perspectives from a Developing Country

FASB's Not-for-Profit Financial Reporting Project: Analysis of Letters to ASU 2016-14 Exposure Draft

The nexus between CEO incentives and analysts' earnings forecasts

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