The dynamic of financial crises and its non-monotonic effects on earnings quality

Trombetta, Marco; Imperatore, Claudia

doi:10.1016/j.jaccpubpol.2014.02.002

Cited by 71 publications

(71 citation statements)

References 61 publications

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“…The crisis had its consequences also in the UK where troubled mortgage providers or banks were rescued (Barth and Landsman, 2010;Iqbal and Kume, 2013;Iatridis and Dimitras, 2013; Kousenidis et al, 2013;Bowen and Khan, 2014;Trombetta and Imperatore, 2014).…”

Section: Introductionmentioning

confidence: 99%

The association between earnings quality and the cost of equity capital: Evidence from the UK

Eliwa

Haslam

Abraham

2016

International Review of Financial Analysis

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This study examines the association between earnings quality and the cost of equity in the United Kingdom (UK) over the time period 2005-2011. This setting and time period enables us to examine the effect of IFRS based earnings on the pricing of earnings quality and how this relation is influenced by a period of severe macroeconomic turbulence as in the case of the recent global financial crisis. We find a significant negative association between each accounting-based earnings quality proxy considered separately and the cost of equity. Our results also indicate that during the financial crisis the relationship between earnings quality and cost of equity becomes more prominent than in the pre-crisis period. This strengthening of the relationship during a period of macroeconomic turbulence shows the importance investors place on earnings quality as a measure of risk. Our results also document that investors place more importance on the innate component of accruals quality than on the discretionary component. These results should be reassuring to US standard setters who are considering adopting or converging to IFRS.

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Section: Introductionmentioning

confidence: 99%

The association between earnings quality and the cost of equity capital: Evidence from the UK

Eliwa

Haslam

Abraham

2016

International Review of Financial Analysis

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“…We also observed that our results were affected by alternative measures of innovation capacity, R&D spending, because R&D investment is highly uncertain and is an innovative input. We used performance-adjusted discretionary accruals as an alternative measure of earnings management by including current ROA in the modified Jones model (Kothari, Leone, & Wasley, 2005;Krishnan, Su, & Zhang, 2011;Trombetta & Imperatore, 2014). We obtained similar results in terms of polarity and significance when we used the alternative measures of earnings management.…”

Section: Sensitivity Analysis (Not Tabulated)mentioning

confidence: 69%

Untitled

2020

IJBESAR

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Some empirical findings of the role of foreign direct investment (FDIs) in a host country's export performance was found by many researchers, since exports have been for a long time viewed as an engine of economic growth. But exports and imports are inter-correlated and some works proved that sometimes, the foreign-owned companies import more than they export in some economic sectors. The paper aims to establish the relation between total FDIs and the commercial balance (goods) and between FDI stocks in the manufacturing economic sectors and the commercial balance of manufactured goods in 11 Central and Eastern European countries during the crisis period and post-crisis period (2009-2018). We have tested the causality using Granger causality test to see if there is a uni-directional or bi-directional causality between those variables. We have tested for co-integration and we haven't found a long-term relationship between those variables and we have applied the VAR technique. Our results have proved a bi-directional causality between FDI stockexports-imports and a stronger impact of FDIs stock on the trade balance of manufactured goods than the impact of total FDI stock on the commercial balance of goods in CEE countries. Design/methodology/approach: Granger causality tests, cointegration test, VAR analysis Finding: We have found no cointegration in the long-run between FDIs stocks and exports and imports in the CEE countries. We have found a bi-directional causality between those variables. We have found a stronger impact of FDIs stock on export and imports of manufactured goods than the impact of FDIs stock on total exports and imports in the CEE countries. Research limitations/implications: This research can be extended analysing a longer period of time and including more exogenous variables in the analysis such as labour productivity, labour cost and GDP growth. It can also be performed a panel analysis. The CEE countries should design adequate policies in order to attract more FDIs in the manufacturing sectors, given the strong impact of FDI stock for these sectors and given the large share of the manufactured goods of the total exports of the CEE countries. Originality/value: This research is important for CEE region because of the large share of the manufactured good of the total exports of these economies.

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“…In addition to our main hypothesis, we complement this study by examining the effect of the nancial and debt crisis in 2008 and 2010 on corporate governance (Reguera-Alvarado et al, 2019;Rivera et al, 2017;Trombetta and Imperatore, 2014). In particular, the nancial crisis forced many rms into bankruptcy or caused them to delist from the main nancial markets (e.g.…”

Section: Hypothesis Developmentmentioning

confidence: 97%

Influence of the Sarbanes-Oxley Act on Financial Reporting Quality: An Overview of EU Firms Cross-Listed in the USA

Bajra

Asllanaj

2021

Preprint

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This paper investigate whether compliance with the Sarbanes–Oxley Act of 2002 (SOX) Sect. 302 (financial reporting) and 404 (internal controls) enhances financial reporting quality (FRQ). This study focuses on EU publicly traded companies that are cross-listed in the US markets. Using a novel approach with respect to operationalization of the SOX, the empirical research integrated into this paper advances the understanding of financial reporting quality for both practitioners and policymakers. The study argues that financial reporting quality increased after SOX entered into force but, notably, we find that FRQ improves with compliance with SOX302 but not with SOX404. Examination of the latter relationship at the subsection level also reveals that compliance with certain SOX requirements is not satisfactory. We find that three out of six subsections of SOX302 are directly associated with financial reporting, while subsections (1), (5) and (6) of SOX302 are not related with FRQ, indicating that the management team, albeit not entirely, provides a reliable financial reporting systems. We also find that compliance with some SOX404’s subsections has been relatively low (i.e. subsections (1) and (3) of SOX404)), suggesting that corporations have not established and are not maintaining suitable internal control systems over financial reporting.

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The dynamic of financial crises and its non-monotonic effects on earnings quality

Cited by 71 publications

References 61 publications

The association between earnings quality and the cost of equity capital: Evidence from the UK

The association between earnings quality and the cost of equity capital: Evidence from the UK

Untitled

Influence of the Sarbanes-Oxley Act on Financial Reporting Quality: An Overview of EU Firms Cross-Listed in the USA

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