scholarly journals Executives vs. governance: Who has the predictive power? Evidence from narrative tone

2021 ◽  
Author(s):  
Hesham Bassyouny ◽  
Tarek Abdelfattah
Keyword(s):  
Financial Reporting ◽  
Predictive Power ◽  
Annual Reports ◽  
Main Question ◽  
Moderation Effect ◽  
Future Performance ◽  
The Us ◽  
Disclosure Tone ◽  
The Uk ◽  
Practical Implications

AbstractThis study aims to investigate not only Narrative Disclosure Tone predictive power, but also who has this power within companies to predict future performance in the UK context (executive vs. governance). We conduct a computerized textual analysis to measure the tone of UK annual reports narratives. Our results contribute to accounting and financial reporting literature by showing that corporate narrative tone can predict future performance. However, answering our main question about who has this predictive power, we found executives’ reporting tone has the power to predict a company’s future performance but not governance tone. Considering the moderation effect of the 2014 financial reporting guidance, we found this guidance increases corporate narrative tone power in general and executive tone in particular in predicting future performance. Moreover, the current study contributes to financial reporting literature by providing a UK evidence, which operates under the principles-based approach with more flexibility in financial reporting than the US context that follows the rules-based approach. Finally, this study has practical implications for regulators and external users of financial reporting.

Writing write-downs: the rhetoric of goodwill impairment

2017 ◽  
Vol 14 (1) ◽  
pp. 81-102
Author(s):  
Niklas Sandell ◽  
Peter Svensson
Keyword(s):  
Financial Reporting ◽  
Design Methodology ◽  
Annual Reports ◽  
Close Reading ◽  
Content Type ◽  
Goodwill Impairment ◽  
Financial Communication ◽  
Rhetorical Practice ◽  
Nasdaq Omx ◽  
Practical Implications

Purpose The aim of this paper is to study the rhetoric of goodwill impairment, more specifically rhetoric, as it is constructed in the form of accounts (i.e. statements that explain unanticipated or untoward behavior). The authors argue that goodwill impairment is not only a technical matter but also a rhetorical practice by means of which external scrutiny is responded to. Design/methodology/approach The data corpus consists of explanations provided by corporations regarding impairment of goodwill. Data were collected from annual reports from companies quoted on NASDAQ OMX Stockholm, Sweden. The impairment explanations were analyzed according to a taxonomy of account types. The explanations were subjected to close reading to discern the potential rhetorical functions of the different accounts. Findings Seven account types are identified and discussed, namely, excuse, justification, refocusing, concession, mystification, silence and wordification. Research limitations/implications There is a need for further research that explores the process of authorship (i.e. writing, editing, negotiating and revising) through which the texts of financial communication are produced. Practical implications The findings have implications for the future formulations of standards regarding qualitative explanations in financial reporting in general and explanations of goodwill impairment in particular. Originality/value The paper contributes to the knowledge about the use of natural language and rhetoric in financial communication.

scholarly journals The repurchase by a holding company of treasury shares held by subsidiaries: A South African perspective

2012 ◽  
Vol 43 (4) ◽  
pp. 33-44 ◽  
Author(s):  
N. Wesson ◽  
W. D. Hamman
Keyword(s):  
South African ◽  
Financial Reporting ◽  
Stock Exchange ◽  
Annual Reports ◽  
Share Repurchases ◽  
Share Repurchase ◽  
Financial Reporting Standards ◽  
Holding Company ◽  
Johannesburg Stock Exchange ◽  
The Uk

This study aims to establish whether the repurchasing of treasury shares by a holding company is a regular occurrence for companies listed on the Johannesburg Stock Exchange (JSE); whether these repurchasing companies have complied with the relevant legal and reporting requirements; and what their stated motivations were for these repurchases.In a sample of 251 companies listed on the JSE from 1999 till their 2009 financial year-end, 120 (47,8%) companies executed share repurchases. Thirty-six (30%) of the 120 companies repurchased treasury shares from their subsidiaries in 55 different transactions, representing 22% of the total number of shares repurchased.Companies which repurchase treasury shares do not always comply with the legal requirements (such as obligatory Security News Agency (SENS) announcements and circulars); and the accounting requirements of International Financial Reporting Standards (IFRS) (relevant to the disclosure of the reconciliation of the number of shares in issue) are applied in an inconsistent manner in annual reports. The most common reason for the repurchase of treasury shares was that the 10% limit (on treasury shares held by subsidiaries) had nearly been reached. Various business purposes were also given. Income tax implications did not seem to be a conclusive motivation for repurchasing treasury shares.The repurchase of treasury shares by the holding company is not allowed in most other countries, like the UK, and presents unique challenges to the South African share repurchase environment. More stringent application of the JSE Listing Requirements, as well as better guidance on the IFRS disclosure requirement on the reconciliation of the number of shares in issue, is needed in South Africa. This will enable stakeholders to make better-informed decisions and will also assist research on share repurchases.This material is based upon work supported financially by the National Research Foundation. However, any opinions, findings, conclusions and recommendations expressed in this article are those of the authors alone, and the NRF does not accept any liability in regard thereto.

scholarly journals Review of accounting for goodwill: Historical to current perspectives

2011 ◽  
Vol 8 (3) ◽  
pp. 233-241
Author(s):  
Yousef Shahwan
Keyword(s):  
Content Analysis ◽  
Financial Reporting ◽  
Intangible Assets ◽  
Accounting Standards ◽  
Controversial Issues ◽  
International Accounting Standards ◽  
Financial Regulations ◽  
The Us ◽  
The Usa ◽  
The Uk

Accounting for goodwill is one of the most controversial issues in financial reporting. It has been on the agenda of the International Accounting Standards Board (IASB) as well as the Accounting Standards Board of Australia, the UK, and the US. IASB has also identified accounting for intangible assets (including goodwill) as a high priority. The objective of the present paper is to review the developments of accounting standards for goodwill made by the USA, UK, Canada, Australia, and the IASB. Reference to accounting and financial regulations is made to explore the effect of standard developments in promoting uniformity of practice in accounting for goodwill. Content analysis approach is adopted in this study. It concludes that the current regulations to account for goodwill provide little and further developments are still ahead.

scholarly journals A Comparison of Equity Valuation Models: Empirical Evidence from a Sample of UK Companies

2019 ◽  
Vol 4 (2) ◽  
pp. 105
Author(s):  
Ja Ryong Kim
Keyword(s):  
Time Series ◽  
Stock Price ◽  
Residual Income ◽  
Main Question ◽  
Book Value ◽  
Pricing Errors ◽  
The Future ◽  
The Uk ◽  
Errors Analysis ◽  
Practical Implications

This paper aims to answer one main question: can the superior models in accounting field be superior in finance field? That is, can models that generate a better approximation to stock price also generate higher returns in the future? To answer this question, I conduct pricing errors analysis and time-series returns analysis. The most important finding is models that approximate stock price better tend to produce higher returns in the future; implying findings in accounting literature have practical implications to analysts and investors. The consistent rankings of models are observed throughout the research: forward earnings multiples perform the best, followed by fundamental valuation models and historical earnings multiples, and book value and sales multiples worst. However, multiples are ranked rather as a group in the UK. Interestingly, residual income models produce similar returns to forward earnings multiples, but the accuracy of their estimates varies depending on their terminal value assumptions.

scholarly journals Accounting and accountability practices in times of crisis: a Foucauldian perspective on the UK government's response to COVID-19 for England

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Thomas Ahrens ◽  
Laurence Ferry
Keyword(s):  
Financial Reporting ◽  
News Media ◽  
Design Methodology ◽  
Value For Money ◽  
Content Type ◽  
Government Accounting ◽  
The Government ◽  
The Uk ◽  
Accountability Practices ◽  
Practical Implications

PurposeThis paper considers the accounting and accountability practices of the UK government’s response to COVID-19 for England, focussing on the first wave of the pandemic in 2020.Design/methodology/approachBased on a close reading of the news media and official reports from government departments, Parliament select committees and the National Audit Office, among others, this paper frames the UK government's uses of accounting and accountability in its response to COVID-19. This is by using the categories of “apparatuses of security”, Foucault's schematic of government for economising on the uses of state power.FindingsThe paper shows that an important role for accounting is in the process of enabling the government to gauge the extent of the crisis and produce calculations to underpin its response, what Foucault called “normalisation”. This role was unlike statistics and economics. The government relied most on monthly statistical reporting and budgeting flexibilities. By contrast, the multi-year Spending Review and financial reporting were not timely enough. That said, financial reporting fed into financial sustainability projections and enabled audit that could provide potential accountability regarding regularity, probity, value for money and fairness. The authors’ findings suggest that, conceptually, accountability should be added to the object–subject element of Foucault's apparatuses of security because of its significance for governments' ability to pursue crisis objectives that require popular assent.Practical implicationsIn view of the ongoing uncertainty, with the crisis extending over longer budget and financial reporting periods, a Spending Review is becoming ever more necessary for better planning, without limiting, however, the budget flexibilities that have proven so useful for rapid government responses. Moreover, the government should continue its accounting reforms post COVID-19 so that improved accountability and audit can contribute to enhanced future financial resilience.Originality/valueThis is the first paper to apply Foucault's notion of apparatuses of security to an analysis of government accounting and accountability practices.

scholarly journals Non-linear Causality Between Stock Returns And Inflation Uncertainty: Evidence From The US And The UK

2012 ◽  
Vol 12 (1) ◽  
pp. 63
Author(s):  
Esin Cakan
Keyword(s):  
Stock Returns ◽  
Granger Causality ◽  
Predictive Power ◽  
Inflation Uncertainty ◽  
The Us ◽  
Non Linear ◽  
Causality Tests ◽  
Granger Causality Tests ◽  
The Uk ◽  
Dynamic Relationships

This study analyzes the dynamic relationships between inflation uncertainty and stock returns by employing the linear and non-linear Granger causality tests for the US and the UK. Using GARCH model to generate a measure of inflation uncertainty, it does not have a predictive power for stock returns, as predicted by Friedman, and it does not support the opportunistic central bank hypothesis suggested by Cukierman-Meltzer. However, the findings from non-linear Granger causality put forth that there is a bi-directional non-linear predictive power between these variables. Stock market is used as a hedge against inflation uncertainty.

Conclusion

2018 ◽  
Author(s):  
Joshua T. McCabe
Keyword(s):  
Political Institutions ◽  
Child Poverty ◽  
Poverty Rate ◽  
Welfare Regimes ◽  
Extensive Discussion ◽  
The Us ◽  
Tax Benefits ◽  
The Uk ◽  
Practical Implications

Chapter 7 reviews the evidence presented in the previous chapters. It summarizes the support for my theories of fiscalization, presents an extensive discussion of alternative arguments, and explains why these other theories are wrong or cannot explain as well as my theories do the timing or the shape that fiscalization took in the US, the UK, and Canada. It concludes with a discussion of the theoretical implications of for the study of culture and political institutions and its practical implications for reform-oriented advocates interested in the politics of tax and antipoverty policies. This discussion includes a detailed blueprint for a politically viable consolidation of child-related tax benefits that would bring the US’s child poverty rate down in line with other liberal welfare regimes.

The interaction between mandatory and voluntary risk disclosure: a comparative study

2017 ◽  
Vol 32 (7) ◽  
pp. 682-714 ◽  
Author(s):  
Michela Cordazzo ◽  
Marco Papa ◽  
Paola Rossi
Keyword(s):  
Analytical Framework ◽  
Risk Information ◽  
Annual Reports ◽  
Risk Disclosure ◽  
Risk Regulation ◽  
Content Type ◽  
Complementary Effect ◽  
The Us ◽  
Regulatory Regimes ◽  
The Uk

Purpose The purpose of this paper is to investigate whether the interaction between mandatory and voluntary risk disclosure is a complementary or substitutive consequence of different risk regulatory regimes. The paper is a cross analysis comparing Germany, the US, Italy, France and the UK during the period 2007-2010. Design/methodology/approach Content analysis is used to examine mandatory and voluntary risk information in corporate annual reports. A framework for the identification and measurement of risk information is developed by considering national and supranational regulations. Findings A complementary effect between mandatory and voluntary risk disclosure exists in each risk regulation jurisdiction. This effect does not depend on the presence of national risk rules (Germany and the US) as against national risk guidelines (France and the UK). Some cross-country differences emerge in the extent of the complementary effect, which are based on the national risk regulations. Germany shows the highest degree of complementing mandatory with voluntary risk disclosures. Research limitations/implications The main limitations relate to the sample size, which is based on the choice of a matched approach and to some country-specific influences on regulatory regimes, which are not analysed. The practical implications refer to the revision or addition of mandated rules by accounting standard setters. Originality/value The paper contributes to the literature in two ways. First, it proposes an incremental analysis of corporate risk disclosure by examining the interaction between mandatory and voluntary risk disclosure with a complementary or substitutive consequence in different risk regulatory settings not previously investigated. Second, the paper makes a method-based contribution by developing an original analytical framework based on the analysis of different regulatory regimes.

Stress test

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Keyword(s):  
Stress Test ◽  
Human Relations ◽  
Content Type ◽  
Personal Lives ◽  
Work From Home ◽  
The Us ◽  
Pertinent Information ◽  
The Uk ◽  
Almost All ◽  
Practical Implications

Purpose The Coronavirus outbreak that started in China in late 2019 and spread globally in 2020 has had profound impacts on almost all areas of our working and personal lives. In the workplace, one of the functions that was perhaps most under the spotlight was human relations (HR) as first they had to deal with how people could work from home, and then if people should be put on furlough or worse, if they should lose their jobs. While countries such as Denmark and the UK agreed to fund people’s wages up to a certain percentage or cap of their salary, other countries such as the US saw millions simply become unemployed overnight. HR departments worldwide suddenly had to make some of the toughest decisions they will have ever been asked to do and implement them in a matter of days. Design/methodology/approach This briefing is prepared by an independent writer who adds his/her own impartial comments and places the articles in context. Findings The Coronavirus outbreak that started in China in late 2019 and spread globally in 2020 has had profound impacts on almost all areas of our working and personal lives. In the workplace, one of the functions that was perhaps most under the spotlight was human relations (HR) as first they had to deal with how people could work from home, and then if people should be put on furlough or worse, if they should lose their jobs. While countries such as Denmark and the UK agreed to fund people’s wages up to a certain percentage or cap of their salary, other countries such as the US saw millions simply become unemployed overnight. HR departments worldwide suddenly had to make some of the toughest decisions they will have ever been asked to do and implement them in a matter of days. Practical implications This paper provides strategic insights and practical thinking that have influenced some of the world’s leading organizations. Originality/value The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

scholarly journals An Investigation of the Level of Compliance with Financial Reporting Standards (FRS 101) by Malaysian SMEs

2019 ◽  
Vol 6 (1) ◽  
pp. 26-33 ◽  
Author(s):  
Azhar Abdul Rahman ◽  
Mohd Diah Hamdan
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
Annual Reports ◽  
International Accounting Standards ◽  
Reporting Standards ◽  
Listed Firms ◽  
Financial Reporting Standards ◽  
Disclosure Requirements ◽  
Regulatory Bodies ◽  
Practical Implications

Purpose This study aims to investigate the association between five firm-specific characteristics and the level of mandatory compliance with Financial Reporting Standards (FRS 101), which is equivalent to International Accounting Standards (IAS) 1 by Malaysian SMEs. Design/Methodology/Approach A disclosure index is used to measure the extent of compliance with FRS 101. Each of the 105 sampled firms' annual reports were examined against the index for the financial year ending December 31, 2013. Findings The results reveal an overall compliance of 96 per cent. Regression results report that only firm size and profitability have a positive and negative significant association, respectively, with FRS 101 disclosure requirements. Practical Implications This study should be particularly relevant to regulatory bodies in Malaysia for strategizing and encouraging compliance with FRS 101 by non-listed firms. Originality/Value Additionally, the study contributes to financial reporting literature relating to a developing country, Malaysia. Since SMEs in Malaysia contribute significantly to the economic development in the country, it is interesting to examine how they present their financial statements to interested parties and the degree of their compliance with Financial Reporting Standards as required by the relevant authorities

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