Blockchain and corporate fraud

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hugo Benedetti ◽  
Ehsan Nikbakht ◽  
Sayan Sarkar ◽  
Andrew Craig Spieler

Purpose The purpose of this paper is to develop conceptual designs for blockchain implementations aimed at reducing corporate fraud. The proposed framework consists of different levels of implementation with specific examples for each level. Design/methodology/approach The paper uses a multi-level framework to highlight the properties of blockchain technology as suitable for reducing corporate fraud. The five levels of technological complexity designed for this research include information storage, information flow, information processing, information enhancement and information and financial integration. Specific cases of corporate fraud are discussed to complement the proposed methodology. Findings The potential ability to limit fraud and increase transparency could greatly improve faith in financial reporting. These benefits accrue to all capital market participants. The blockchain infrastructure can significantly improve the existing monitoring system and provide value added in detecting, deterring, and documenting possible fraud. Originality/value The paper contributes to the growing field on corporate fraud and blockchain technology. The paper is novel in the implementation of the nascent blockchain methods to detect and deter fraud at the organizational level. The proposed five conceptual levels provide practical use.

2020 ◽  
Vol 36 (2) ◽  
pp. 249-262
Author(s):  
Hesham I. Almujamed ◽  
Mishari M. Alfraih

Purpose This paper aims to explore how the characteristics of the board of directors (BoD) shape earnings and book value information available to market participants. Design/methodology/approach The authors investigated the impact of board size, presence of non-executives and role duality as proxies of effective corporate governance on the value relevance of financial reporting for 178 firms on the Kuwait stock exchange in 2013. Regression analysis based on Ohlson’s (1995) valuation model was used to test hypotheses. Findings The authors found that board size was significantly associated with company value and that Kuwaiti firms with large boards increased the value-relevance of earnings and book value. The influence of role duality was positive although not significant. The presence of non-executives on the board had a negative correlation with market value (not significant). Research limitations/implications These findings deliver empirical support for the prediction that the characteristics of the BoD improve the value relevance of financial reporting. Limitations such as small sample size and one-year duration of the study did not negate the basic findings, however. Future studies will use larger samples, longer duration and additional board characteristics. Practical implications This study provides empirical support for the hypothesis that board size influences market valuation. This study may benefit managers, investors and other decision-makers. Originality/value This study delivers empirical evidence on the impact of board characteristics on the value relevance of accounting information. It will be useful for regulators and market participants monitoring the influence of board characteristics on the value relevance of accounting information.


2017 ◽  
Vol 25 (1) ◽  
pp. 22-38 ◽  
Author(s):  
Mishari M. Alfraih

Purpose Drawing on market efficiency theory and studies on intellectual capital (IC) disclosure, this study aims to examine if IC information provided in the corporate annual reports of Kuwait Stock Exchange (KSE) listed companies in 2013 is value-relevant. Design/methodology/approach The analysis is divided into two parts. First, the level of intellectual capital disclosure (ICD) of KSE-listed companies is examined using the content analysis method. Second, the value relevance of financial reporting is examined empirically using Ohlson’s (1995) valuation model. Findings The results reveal that ICD is positively and significantly associated with market value, suggesting that greater ICD is valued by KSE market participants, who incorporate it into their valuation models. Practical implications Given the importance of ICD in enhancing equity valuation, a practical implication of this study is to make managers aware of its positive and significant effect on equity valuation, which may encourage companies to increase their level of disclosure. Originality/value This is the first study of the association between the level of ICD and the value relevance of financial reporting for market participants in Kuwait. It therefore extends and confirms the prior literature by broadening its scope to include frontier markets. Furthermore, it provides empirical evidence in support of recent calls from regulators and professional bodies for information that supplements and complements traditional financial reporting.


2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Craig McLaughlin ◽  
Stephen Armstrong ◽  
Maha W. Moustafa ◽  
Ahmed A. Elamer

Purpose This paper aims to empirically analyse specific characteristics of an audit committee that could be associated with the likelihood of corporate fraud/scandal/sanctions. Design/methodology/approach The sample includes all firms that were investigated by the Financial Reporting Council through the audit enforcement procedure from 2014 to 2019, and two matched no-scandal firms. It uses logistic binary regression analysis to examine the hypotheses. Findings Results based on the logit regression suggest that audit member tenure and audit committee meeting frequency both have positive associations to the likelihood of corporate scandal. Complementing this result, the authors find negative but insignificant relationships amongst audit committee female chair, audit committee female members percentage, audit committee qualified accountants members, audit committee attendance, number of shares held by audit committee members, audit committee remuneration, board tenure and the likelihood of corporate scandal across the sample. Research limitations/implications The results should help regulatory policymakers make decisions, which could be crucial to future corporate governance. Additionally, these results should be useful to investors who use corporate governance as criteria for investment decisions. Originality/value The authors extend, as well as contribute to the growing literature on the audit committee, and therefore, wider corporate governance literature and provide originality in that it is the first, to the knowledge, to consider two characteristics (i.e. remuneration and gender) in a UK context of corporate scandal. Also, the results imply that the structure and diversity of the audit committee affect corporate fraud/scandal/sanctions.


2018 ◽  
Vol 3 (2) ◽  
pp. 145-164 ◽  
Author(s):  
Grace W.Y. Wang ◽  
Qingcheng Zeng ◽  
Chenrui Qu ◽  
Joan Mileski

Purpose Regardless of the facts showing a booming Chinese cruise market, cruise operations in China are very different from the current practices of the two major cruise markets – the US and the Mediterranean Sea. This study aims to quantify pricing strategies and possible incentive mechanisms of cruise operations in China. Design/methodology/approach Using optimization in economic-based game theory, the complexity of the pricing strategies and interaction and/or possible coordination within the cruise value-added chain can be captured. Findings The results show that a coordinative pricing strategy with Shapley profit redistribution within the value-added chain offers benefits to both cruise passengers and service suppliers. With two subsidy scenarios, one to the passenger and the other to the travel agent, a cooperative pricing strategy outperforms other strategies and successfully increases market shares and total revenue. Originality/value The advantages of coordination between participants in cruise value chain are quantified. Effective strategies for attracting players participating in cruise value chain are designed. This paper will provide market participants with strategies to enhance their decision-making processes.


2020 ◽  
Vol 14 (6) ◽  
pp. 1221-1238 ◽  
Author(s):  
Stefan Höhne ◽  
Victor Tiberius

Purpose The purpose of this study is to formulate the most probable future scenario for the use of blockchain technology within the next 5–10 years in the electricity sector based on today’s experts’ views. Design/methodology/approach An international, two-stage Delphi study with 20 projections is used. Findings According to the experts, blockchain applications will be primarily based on permissioned or consortium blockchains. Blockchain-based applications will integrate Internet of Things devices in the power grid, manage the e-mobility infrastructure, automate billing and direct payment and issue certificates regarding the origin of electricity. Blockchain solutions are expected to play an important big role in fostering peer-to-peer trading in microgrids, further democratizing and decentralizing the energy sector. New regulatory frameworks become necessary. Research limitations/implications The Delphi study’s scope is rather broad than narrow and detailed. Further studies should focus on partial scenarios. Practical implications Electricity market participants should build blockchain-based competences and collaborate in current pilot projects. Social implications Blockchain technology will further decentralize the energy sector and probably reduce transaction costs. Originality/value Despite the assumed importance of blockchain technology, no coherent foresight study on its use and implications exists yet. This study closes this research gap.


2017 ◽  
Vol 7 (2) ◽  
pp. 249-265 ◽  
Author(s):  
Mohamed Chakib Kolsi

Purpose The purpose of this paper is to identify the factors affecting firm voluntary disclosure policy adopted by a sample of 25 UAE companies listed on the Abu Dhabi Securities Exchange (ADX) for the period 2010-2014. Design/methodology/approach The author computes a weighted disclosure index (Botosan, 1997) for three-factor voluntary disclosure items and uses a multivariate regression analysis between disclosure index and a set of explanatory variables identified by previous research. The author also controls for endogeneity problem and uses panel data estimation. Findings It has been found that listing history, governmental sector, firm profitability and foreign listing positively affect the level of voluntary disclosure adopted by ADX listed companies. By contrast, the percentage of shares owned by block holders and industrial sector negatively affect the level of voluntary disclosure by ADX listed companies. Finally, the board and firm size, managers’ stock options and the leverage ratio do not have any impact on the level of voluntary disclosure adopted by ADX firms. The results remain unchanged to additional sensitivity checks. Research limitations/implications The research presents some limitations: first, the author does not take into account all voluntary disclosure items such as human resources and environmental data disclosed by ADX listed firms. Second, other voluntary disclosure determinants remain unexplored for UAE firms such as culture and tax incentives in the light of the new tax rules including corporate tax and value-added tax. Practical implications The study has many implications: first, it can help investors in their decision making and lead to fair allocation of resources. Second, it gives helpful directives to UAE accounting authorities to enhance the quality of financial reporting in the light of the New Commercial Company Law 2015 for mandatory adoption of IFRS by all listed companies. The paper also presents helpful directives for tax authorities planning for both company and value-added taxes. It also sheds light on factors driving corporate social responsibility disclosures as a crucial component of voluntary disclosure policy Originality/value The paper explores the new determinants of voluntary disclosure such as foreign listing, governmental status and block holding for an emerging relatively unexplored stock market: ADX.


2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mirela Oana Pintea ◽  
Andreea Mădălina Pop ◽  
Marius Dan Gavriletea ◽  
Ioana Cristina Sechel

PurposeThe purpose of this research is to evaluate the impact of adopting the principles of corporate governance on the financial performance of companies listed on the Bucharest Stock Exchange (BSE). To assess the implementation of corporate governance principles, the authors built an index based on the principles specified in the BSE Corporate Governance Code (CGC).Design/methodology/approachAn econometric analysis was conducted to estimate the impact that the authors’ corporate governance indicator had on financial performance, measured successively through Tobin's Q, return on equity (ROE), economic value added (EVA) and total shareholder return (TSR).FindingsFollowing the regression model, the authors noticed the absence of a significant impact of corporate governance practices on performance measured by ROE, EVA and TSR but instead, a significant and positive relationship for Tobin's Q rate was found.Research limitations/implicationsDue to the lack of data before the implementation of the BSE Code of Corporate Governance, the research period is limited to 2010–2015, but the authors’ future studies will try to extend the research period.Originality/valueAlthough numerous studies have been conducted to analyze the empirical relationship between corporate governance and financial performance, no conclusive results have been obtained. The diversity of these findings can refer to methods used in the construction of a corporate governance measure as well as to the accuracy of financial reporting.


2018 ◽  
Vol 16 (4) ◽  
pp. 660-676
Author(s):  
Arthur Joseph Avwokeni

PurposePotential investors need information on corporate social issues to choose less risky investments, but the IASB framework excludes corporate social disclosure from financial reporting, and this corroborates Ohlson (1995) and Myers’ (1999) view that financial statements do not provide all domain variables to predict value relevance. The purpose of this study is to ascertain whether market participants place a premium on the future prospect of the firm when making investment decisions, and if they do, then Ohlson and Myers are correct, and this would be glaring evidence to recommend a rethink on the IASB reporting framework.Design/methodology/approachNigeria provides a realistic research setting to detect value relevance attributable to the IFRS because it is less affected by the 2007/2008 financial crisis. The price model was estimated for Nigerian domestic accounting standards and the International Financial Reporting Standards (IFRS). The means for each predictor were plugged into each estimated equation to obtain the average value relevance of each financial reporting system. Then, the IFRS accounting policies were made to play by the rules of the domestic accounting standards. If, in fact, accounting information is the dominant factor that drives value relevance, then equalizing backgrounds should equalize value relevance, otherwise market participants place a premium on the future prospect of the firm.FindingsThe study detects,inter alia, a significant gap even after equalizing backgrounds, suggesting that market participants look beyond the financial statements in forming perceptions on the future prospect of the firm; e.g. relationship with host communities, development stages of new products in their life cycles, etc.Practical implicationsThe findings ring a bell for the IASB to include metrics of future prospect of the firm in corporate financial reporting so that investors can choose less risky investment portfolios. Furthermore, the findings lend support to Ohlson and Myers’ argument that financial statements do not provide all domain variables to predict value relevance.Originality/valueTo date, no study has reported the amount of value relevance attributable to the IFRS vis-à-vis domestic accounting standards and future prospect of the firm.


2019 ◽  
Vol 46 (6) ◽  
pp. 749-760
Author(s):  
Ehsan Nikbakht ◽  
Manuchehr Shahrokhi ◽  
Alford Corriette

Purpose The purpose of this paper is to investigate the emergence of blockchain to determine its feasibility for electronic transfer payments. An integrated conceptual framework is developed for blockchain electronic transfer. The three “markers” of classic money (store of value, medium of exchange and unit of account and efficiency) are assessed in the case of blockchain technology. A survey is also conducted among the executives of financial vs manufacturing sectors with respect to five major variables for the emerging distributed financial data based on blockchain. Design/methodology/approach Conducting a literature review and using prior knowledge from the works of those well-versed and knowledgeable in the field. This research is also supported by collecting and analyzing the results of a behavioral survey of the executives in two different industries. Findings Blockchain technology has the potential to have widespread change in how firms operate and implement a new method for electronic payments transfer through cryptocurrencies. Although the community for blockchain technology is deregulated and has drawbacks, it is expected that the limitations will gradually be mitigated through its growth. The results of the behavioral survey show that there are significant differences between the expectations/perceptions of participants in the sectors of finance vs manufacturing. Namely, the knowledge/awareness of participants about blockchain, the value-added convenience for end users, and participants’ willingness to embracing and accepting new applications are significantly different between the two sectors. Originality/value The reach and applications for Blockchain are not limited to business or any particular sector. Blockchain technology may contribute to the operations of different types of organizations and industry sectors. Since the perception of participants about blockchain is different between selected industries, this research suggests the need for more education and building awareness among the participants in different sectors of the economy.


2020 ◽  
Vol 19 (5) ◽  
pp. 231-242
Author(s):  
Clinton Longenecker ◽  
Sheri Caldwell ◽  
Deborah Ball

Purpose The purpose of this paper is to identify and share the specific factors that cause senior human resource (HR) leaders to lose their jobs. The paper will also provide readers with key lessons to help them improve their senior HR leadership talents and acumen while at the same time providing them with a checklist of specific questions that address the causes of termination. Design/methodology/approach In this paper, the authors will describe a leadership development process that they use to help senior HR leaders identify the causes of senior HR leadership failure. A focus group methodology is used so that senior leaders are able to share their experience and input in response to the question, “Based on your experience, what are the primary factors that will cause a senior HR leader to be terminated from their position?” In this paper, the authors will share what they have learned from these HR leaders having gone to this process with hundreds of senior HR leaders. The authors will also provide the readers with lessons based on their input. Findings Senior HR leader focus groups revealed a set of “failure factors” that included a lack of understanding of the core business model, inability to fashion an effective value-added HR strategy, poor working relationships with members of the senior leadership team, a marked lack of emotional intelligence, political factors and an inability to create best HR practices and leverage technology, among others. Participant leaders provided rich dialogue and discussion points that provide the readers with a better understanding of why senior HR leaders fail, and equally important, how to avoid HR leadership failure. Research limitations/implications The basis for the findings stated in this paper is based on the content analysis of a convenience sample which may limit the generalizability of these findings. Having said that, the findings will provide the readers with a rich context for better understanding of the nature of senior HR leaders’ terminations. Practical implications The practical implications of this project provide the readers with any number of important lessons requiring application. From a senior HR leader’s perspective, the key lessons from this research provide them with a checklist of factors that need attention and forging and implementing an effective HR strategy and set of best practices. At the organizational level, these findings can serve as a needs assessment that can be used in senior HR leader selection, orientation and development. Social implications Any time a paper provides guidelines that can help prevent senior leadership failure, there is a positive social effect for both organizations and individuals operating in these environments. The authors believe that the findings will provide the readers with effective guidelines to improve the overall effectiveness of senior HR leaders when properly implemented. Previous research makes it clear that when organizations have great HR practices, the quality of work life for organizational members moves in the right direction. Originality/value As a general rule, there is limited research on the subject matter of why leaders fail while antidotal information and literature abound. It is the authors purpose to provide the readers of Strategic HR Review, the relevant information based on the input of their fellow members of the C-suite so as to improve their performance and provide their organizations with the template for organizational HR success.


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