The impact of International Financial Reporting Standards adoption on the integration of capital markets

Zahid, R. M. Ammar; Şımga-Muğan, Can

doi:10.1002/ijfe.2684

Cited by 12 publications

(15 citation statements)

References 49 publications

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“…This creates a unique quasi‐experimental situation that allows us to examine the causes and effects of pay restrictions. To check the causal impact of pay restrictions, we utilized the difference‐in‐difference (DiD) technique, a popular quasi‐experimental approach used in econometrics to estimate the causal impact of a policy (Zahid & Simga‐Mugan, 2022). By utilizing DiD, we were able to determine whether SOEs experienced a significant shift in GI during the post‐regulation period compared with non‐SOEs.…”

Section: Resultsmentioning

confidence: 99%

Nexus between government surveillance on executive compensation and green innovation: Evidence from the type of state‐owned enterprises

Li,

Maqsood,

Zahid

2023

Business Ethics Env & Resp

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The Chinese government capped executive compensation in state‐owned enterprises (SOEs) to address income inequality and promote a more equitable distribution of wealth. This study investigates whether regulating top executives' pay alters their motivation for corporate green innovation (GI) initiatives. Using data from 2006 to 2018 for Chinese‐listed SOEs, the regression analysis and difference‐in‐difference methods revealed that government restrictions on executive compensation negatively affect GI. Furthermore, the types of SOE results show that the negative effect of pay restrictions on GI exists only in local SOEs, as opposed to central SOEs. Moreover, high managerial shareholding positively moderates this negative effect, demonstrating that the adverse effects of compensation restrictions are mitigated by the convergence of interests between managers and stakeholders. These findings are robust to instrumental variables and other robustness tests. This study provides policy recommendations for the government to boost its assistance in GI and establish new environment‐related incentives that motivate managers to promote GI and inspire enterprises to deploy sustainable environmental initiatives.

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Section: Resultsmentioning

confidence: 99%

Nexus between government surveillance on executive compensation and green innovation: Evidence from the type of state‐owned enterprises

Li,

Maqsood,

Zahid

2023

Business Ethics Env & Resp

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“…In line with the prior literature, the following firm-level control factors are included in the study: firm size (Fama and French, 1995), corporate age, capital structure (Grossman and Hart, 1982), group affiliation (Douma et al, 2006) and application of the International Financial Reporting Standards (Zahid and Simga-Mugan, 2022). Additionally, country-level factors, such as governance practices and legal systems, affect ownership-performance nexus (La Porta et al, 1999) as the regulatory environment protects investors and businesses and improves market confidence.…”

Section: Control Variablesmentioning

confidence: 99%

The effect of ownership composition on corporate financial performance in the European frontier markets

Zahid

Țaran²,

Khan³

et al. 2023

BJM

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PurposeThis study investigates the influence of ownership composition on market-based and accounting-based financial performance in the European frontier markets (EFMs), a target region for global investors.Design/methodology/approachOwnership composition is defined as shareholders' concentration and structure (i.e. foreign, domestic, state and free-float), whereas financial performance is measured as Tobin's Q and return on assets. The system generalised method of moments panel data estimation technique is employed on a sample of 241 companies.FindingsFindings reveal that companies from European Union (EU) frontier markets are controlled, on average, by one to five large shareholders. Being a signal of expropriation rationale of majority shareholders regardless of the capital structure, this highly concentrated ownership and decision-making model negatively affects the market-based and accounting-based financial performance of the companies and thereby supports the agency theory in the frontier markets.Research limitations/implicationsThe findings provide empirical evidence for authorities, investors, analysts and corporations regarding the effect of ownership percentage and structure in the Eastern European region, assisting also other frontier and emerging markets in corporate governance and other regulatory decisions.Originality/valueThe ownership–performance relationship varies from developed to emerging markets with conflicting results. This study provides evidence on monitoring and expropriation effects of majority shareholders in the context of different categories of shareholders. In doing so, it combines the analysis of both ownership concentration and structure in the EFMs.

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“…They are crucial for ESG firms, which engage in investments following ESG criteria with a more extended gestation period. ESG firms must convince about cash flow sufficiency using various methods (e.g., dividend payouts strategy) [ 7 , 20 ]. These investments have various unobservable performances relating to the firm’s revenue, expenses, assets and liabilities.…”

Section: Relevant Literaturementioning

confidence: 99%

“…Directors typically implement an internal control system with policies and procedures that all staff must follow as a monitoring mechanism [ 7 , 43 ]. Internal controls can reduce earnings management using discretionary accruals and making accounting errors, frauds and misstatements ‎[ 45 ].…”

Section: Relevant Literaturementioning

confidence: 99%

“…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 ]. An ESG strategy that does not produce favourable financial results can bring financial distress to ESG firms and affect financial reporting quality.…”

Section: Introductionmentioning

confidence: 99%

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Financial reporting quality of ESG firms listed in China

Abeysekera

2023

PLoS ONE

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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.

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The impact of International Financial Reporting Standards adoption on the integration of capital markets

Cited by 12 publications

References 49 publications

Nexus between government surveillance on executive compensation and green innovation: Evidence from the type of state‐owned enterprises

Nexus between government surveillance on executive compensation and green innovation: Evidence from the type of state‐owned enterprises

The effect of ownership composition on corporate financial performance in the European frontier markets

Financial reporting quality of ESG firms listed in China

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