R&amp;D disclosures and earnings management

Lakhal, Nadia; Dedaj, But

doi:10.1108/jfra-10-2019-0129

Cited by 22 publications

(12 citation statements)

References 65 publications

(74 reference statements)

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“…Moderating effect of IFRS adoption in developed and emerging markets : several studies (Dayanandan et al , 2016; Isaboke and Chen, 2019; Lakhal and Dedaj, 2020; Manwadu et al , 2019; Mahmoud Mostafa et al , 2019; Kouaib et al , 2018) observe that the moderating effect of IFRS convergence can either be positive or negative. For instance, Prameswari et al (2016) found a negative effect between accounting conditional conservatism and stock price crash risk. Likewise, during the financial crisis, Lakhal and Dedaj (2020) found a negative relationship between voluntary research and development disclosure and earning management practices.…”

Section: Brief Literature Reviewmentioning

confidence: 99%

“…For instance, Prameswari et al (2016) found a negative effect between accounting conditional conservatism and stock price crash risk. Likewise, during the financial crisis, Lakhal and Dedaj (2020) found a negative relationship between voluntary research and development disclosure and earning management practices. On the other hand, Manawadu et al (2019) concluded that the moderating effect of IFRS adoption was found on the association between FDI and conditional accounting conservatism in South Asia.…”

Section: Brief Literature Reviewmentioning

confidence: 99%

“…Numerous recent studies conducted in Saudi Arabia assert that IFRS adoption brings many benefits to stock markets and the country. Nevertheless, limited attention has been given to examining the latest link between disclosure quality and firm characteristics following IFRS application and results of studies from other regions are inconclusive (Lakhal and Dedaj, 2020). Whereas adoption of IFRS may alleviate information asymmetry, the application of IFRS can also impose various costs on firms as compensation to non-executive directors' increase.…”

Section: Brief Literature Reviewmentioning

confidence: 99%

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IFRS adoption, firms’ investment efficiency and financial reporting quality: a new empirical assessment of moderating effects from Saudi listed firms

Alruwaili

Ahmed

Joshi

2023

IJAIM

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Purpose Under a gradual long-term plan of the Saudi Stock Market (TADWUAL) from 2016, Saudi Arabia decided to work with International Financial Reporting Standards (IFRS) board to fully adopt its accounting standards. Saudi Arabia has undergone several reforms in governance and standards of internal controls are changing rapidly. This study aims to assess whether IFRS adoption has any moderator role in the relationship between disclosure quality and firm-specific characteristics in the Saudi Stock Market. Design/methodology/approach This study assesses whether IFRS adoption has any moderator role in the relationship between disclosure quality and firm-specific characteristics in the Saudi Stock Market. The key research hypotheses postulate that compared to IFRS status, after adoption, several independent variables influence the disclosure level. The analysis covers a local sample of 184 Saudi listed firms over the period 2016 to 2020. Using an in-depth content analysis technique, the voluntary disclosure and number of annual report pages are measured manually and year by year to capture levels and unique characteristics. The authors apply cross-sectional regression, first difference method, Pooled OLS and feasible general least square estimations. The mean of disclosure level increases from 33.03% in 2016 to 56.14% in 2020. Findings The results reveal that the vast majority of firm-specific characteristics were significant in pre-IFRS adoption period. First difference analysis shows a significant impact of firm size and non-executive composition on the disclosure level. The authors confirm that IFRS adoption plays a critical role in the quality of firms’ financial reports and supports to create a conducive economic environment in Saudi Arabia. Practical implications First, the implementation of IFRS adoption should impact the Saudi accounting information and disclosure quality in Saudi context markedly. Second, firm-specific characteristics align with corporate governance are the main determinants of accounting information and transparency; therefore, focusing on this angle enables regulators and policymakers to mitigate uncertainty and asymmetric information. Third, the findings of this research state that there is a negative relationship between disclosure quality and board meetings. This encourages policymakers to reconsider the number of board meetings in firms that was not as high as in the developed markets. Notwithstanding all previous implications, it is recommended that future research undertake a various quasi-experimental design such as a difference-in-difference approach to estimate the causal effect of corporate governance mechanisms on IFRS 7 mandatory disclosure requirements on in Saudi Arabia context. Social implications There is a lack of studies on this realm and such as these studies will enrich the understanding of aspects of IFRS adoption and contribute to the prior empirical literature. Importantly, the extend of this sample into other Gulf Cooperation Council countries and exhibition the difference effect can be very useful to enrich the knowledge of IFRS adoption aspects in corporate disclosure and accounting information quality. Originality/value Saudi Arabia has undergone several reforms in governance, and their standards of internal controls are changing rapidly. This has been attributed to the importance of providing guidelines, practices and regulations for listed companies. One of the major turning points of financial reporting quality in Saudi listed firms was adoption of IFRSs. This adoption deems to be necessity in ensuring the highest level of transparency and information reliability. Based on the findings of this research, the present investigations set up a platform and furnish many implications for policymakers, companies’ board of directors, financial analysts and other related authorities. The results should provide policymakers with greater insight of the relationship between disclosure quality and corporate-specific characteristics throughout the IFRS adoption periods. Thus, the results derived from this study can be effective and useful for the IFRS adoption committee in the Saudi Organization for Certified Public Accountants (SOCPA). According to the best of the authors’ knowledge and based on official secondary information sourced from the SOCPA website, there are several standards that are subject to difficulties in measurement and are modified from time to time, such as: IFRS1, IFRS8, IFRS12, IFRS16 and IFRS18.

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Section: Brief Literature Reviewmentioning

confidence: 99%

Section: Brief Literature Reviewmentioning

confidence: 99%

Section: Brief Literature Reviewmentioning

confidence: 99%

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IFRS adoption, firms’ investment efficiency and financial reporting quality: a new empirical assessment of moderating effects from Saudi listed firms

Alruwaili

Ahmed

Joshi

2023

IJAIM

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“…During this health crisis, suspension of activities during general lockdowns, and the associated disruptions in supply chains and lower demand led to high information asymmetry, and therefore the level of effort expended by a manager can be cloaked (Lassoued and Khanchel, 2021). Therefore, managers have incentives to increase EM by signaling high CSR engagement (Lakhal and Dedaj, 2020; Oskouei and Sureshjani, 2021). These incentives are related to contractual issues: debt contracts (Defond and Jiambalvo, 1994) and compensation contracts (Gaver et al , 1995).…”

Section: Theoretical Framework and Hypotheses Developmentmentioning

confidence: 99%

Is it hard to be different during the COVID-19 crisis? Investigating the relationship between corporate social responsibility and earnings management

Khanchel

Lassoued

2022

IJOES

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Purpose This paper aims to contribute to the literature on the earnings management (EM)–corporate social responsibility (CSR) relationship as most of the previous studies have been carried out in non-turbulent periods. This study investigates whether CSR affects EM during the pandemic period by testing two hypotheses: the cognitive biases hypothesis and the resilience hypothesis Design/methodology/approach The difference-in-difference and triple difference approaches are used for a sample of 536 US firms (268 socially responsible firms and 268 matched non-socially responsible counterparts) during the 2017–2021 period. Socially responsible firms are selected from the MSCI KLD 400 Social Index, and matched firms are identified through the propensity score matching method. Findings The authors find an income-increasing practice for both socially responsible firms and control firms for the whole period and each sub-period. Moreover, socially responsible firms are more likely to manage their earnings (income increasing) than their counterpart. Furthermore, the authors show that CSR commitment exacerbated EM in line with the cognitive biases hypothesis. Originality/value This study is the first shed light on the dark side of CSR during pandemic periods.

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“…The International Accounting Standards Board (IASB) is responsible for developing the IFRS, and the adoption of IFRS around the world has caused a major accounting regulatory change in recent years. The IFRS promote the harmonizing, transparency, quality, and comparability of financial reporting (Yamani and Almasarwah, 2019;Lakhal and Dedaj, 2020). In the case of Saudi Arabia, the Saudi Organization for Certified Public Accountants required all publicly traded companies to apply IFRS from the start of 2017 (Nurunnabi et al, 2020).…”

Section: Introductionmentioning

confidence: 99%

هیکل رأس المال وأداء الشرکة: دلیل من الشرکات السعودیة غیر المالیة بموجب المعیار الدولی لإعداد التقاریر المالیة رقم 16(باللغة الانجلیزیة)

الحسين¹,

السلطان²

2021

مجلة الاسکندریة للبحوث المحاسبیة

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This paper examines the relationship between capital structure and firm performance and considers the moderating effect on this relationship of the issuance of International Financial Reporting Standards (IFRS) 16. The study sample consists of 101 Saudi nonfinancial firms listed on the Tadawul between 2017 and 2020. The study uses two proxies for firm performance: an accounting-based measure using return on assets and a market-based measure using Tobin's q. Capital structure is measured using financial leverage. To avoid bias in the results, the study employs six control variables: growth, firm size, tangibility, risk, investment, and industry. The existing theory posits a positive relationship; however, using ordinary least squares regression, this study finds that high leverage firms in Saudi Arabia are associated with lower performance. IFRS 16 was only found to have a significantly positive impact on market performance.

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R&D disclosures and earnings management

Cited by 22 publications

References 65 publications

IFRS adoption, firms’ investment efficiency and financial reporting quality: a new empirical assessment of moderating effects from Saudi listed firms

IFRS adoption, firms’ investment efficiency and financial reporting quality: a new empirical assessment of moderating effects from Saudi listed firms

Is it hard to be different during the COVID-19 crisis? Investigating the relationship between corporate social responsibility and earnings management

هیکل رأس المال وأداء الشرکة: دلیل من الشرکات السعودیة غیر المالیة بموجب المعیار الدولی لإعداد التقاریر المالیة رقم 16(باللغة الانجلیزیة)

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