Regulating non-financial reporting: evidence from European firms’ environmental, social and governance disclosures and earnings risk

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Arif ◽  
Christohper Gan ◽  
Muhammad Nadeem
Keyword(s):  
Financial Reporting ◽  
Positive Impact ◽  
Content Type ◽  
Eu Directive ◽  
Before And After ◽  
The Difference ◽  
Earnings Risk ◽  
The Impact ◽  
The Eu

Purpose Motivated by the enactment of non-financial reporting regulations by the European Parliament, this paper aims to investigate the impact of European Union (EU) directive 2014/95/EU on the quantity of environmental, social and governance (ESG) disclosures by the S&P Europe 350 index firms. This study also investigates whether the implementation of the non-financial information (NFI) reporting regulations influences the association between ESG disclosures and firms’ earnings risk. Design/methodology/approach To measure the impact of mandatory regulations on the quantity of ESG disclosures, this study estimates the average treatment effects using a propensity weighted sample. Then this study uses the difference-in-differences method to estimate the differences in the association between ESG disclosures and earning risk before and after implementation of the EU directive. Findings The results show a significant positive impact of the EU directive on the quantity of ESG disclosures for the sample European public-interest entities, which indicates that the mandatory NFI reporting requirements could boost the availability of increasingly demanded ESG related information. The enhanced association between the ESG disclosures and firms’ earnings risk during the post-directive period reveals that mandating NFI reporting also increases the quality of ESG disclosures. Originality/value Using the legitimacy and decision-usefulness theories, this study provides novel evidence concerning the impact of the EU directive on the quantity and quality of ESG disclosures.

The impact of audit committee, CEO, and external auditor quality on the quality of financial reporting

2019 ◽  
Vol 20 (2) ◽  
pp. 263-279 ◽  
Author(s):  
Abdulaziz Alzeban
Keyword(s):  
Financial Reporting ◽  
Audit Committee ◽  
Positive Impact ◽  
Policy Makers ◽  
Content Type ◽  
Mediation Analyses ◽  
Auditor Quality ◽  
External Auditor ◽  
The Impact

Purpose This paper aims to explore the influence of corporate governance (CG) components on the quality of financial reporting (QFR). The components investigated are the Audit Committee (AC), CEO and external auditor quality. The study also examines whether the AC mediates the effects of other components of CG on the QFR. Design/methodology/approach Data were collected from 386 listed companies in four European countries for the period 2015-2017. The QFR was measured using two proxies, discretionary accruals and accruals quality. Firstly, an OLS regression model was estimated to measure the effects of the three variables investigated on the QFR, and to determine which of these variables had the greatest influence in this relationship. Secondly, several mediation analyses were performed to test whether the AC mediates the effects of the CEO, and external auditor quality on the QFR. Findings The findings reveal that each of these three components has a positive impact on the QFR, but that the AC has the greatest effect in this respect. The findings also indicate that the AC mediates the effect of the CEO on the QFR. Alternative tests and different measures for the variables confirm the robustness of the results obtained. Practical implications Significant implications are provided for regulators and policy-makers. Findings of the present study help regulators and policymakers to pay more attention to the enforcement of AC policies, and the appointment of AC members. Further, the results are helpful to policy-makers concerned with improving CG, and who need evidence of the role of high QFR in this matter. Originality/value The findings provide insights into the effect of CG on QFR, and into the most influential component in this relationship; hence, they make a valuable contribution to the literature. They also contribute to the topic of mediations analysis in CG research, providing additional evidence that the AC mediates the effects of the CEO, and external auditor quality on the QFR.

Walking a mile in their shoes: user workarounds in a SAP environment

2016 ◽  
Vol 24 (2) ◽  
pp. 185-204 ◽  
Author(s):  
Dawna M. Drum ◽  
Aimee J. Pernsteiner ◽  
Adam Revak
Keyword(s):  
Financial Reporting ◽  
Information Quality ◽  
Accounting Information ◽  
Internal Controls ◽  
Process Standardization ◽  
Content Type ◽  
Quality Of Accounting Information ◽  
The Difference ◽  
The Impact

Purpose The purpose of this paper is to examine workarounds from the perspective of the users of the system, focusing on the outcomes of workarounds and their effect on the quality of accounting information. Design/methodology/approach Interviews were conducted with employees in the accounting functions at two international organizations using SAP for their enterprise system. Results were coded by two experienced researchers and one undergraduate student, and included a categorization of the outcomes of workarounds. Findings The most striking result is the difference in views of workarounds between the two organizations. While workarounds are discouraged by the accounting function at both organizations, one seeks out workarounds and enforces standards while the other has not yet achieved process standardization. Not surprisingly, users view the workarounds of others as very detrimental to the quality of accounting information, but view their own workarounds as critical to maintain quality. Practical implications Organizations should obtain input from system users to document the extent that workarounds are used within the organization to determine the impact on the quality of their financial reporting. Originality/value The focus on outcomes of workarounds is an important shift in the literature, and more work is needed to further refine the categories used in this research, particularly for the effect of workarounds on internal controls and information quality. Additionally, this research surfaced a very strong difference in the actions taken to deal with workarounds, which may be due to organizational cultures.

Strategic Role of Zakat in Multidimensional Quality of Life in Sijunjung, Indonesia

2018 ◽  
Vol 15 (1) ◽  
pp. 55-72
Author(s):  
Herlin Hamimi ◽  
Abdul Ghafar Ismail ◽  
Muhammad Hasbi Zaenal
Keyword(s):  
Quality Of Life ◽  
Positive Impact ◽  
Wealth Distribution ◽  
Absolute Poverty ◽  
Before And After ◽  
The Status ◽  
Being There ◽  
The Impact

Zakat is one of the five pillars of Islam which has a function of faith, social and economic functions. Muslims who can pay zakat are required to give at least 2.5 per cent of their wealth. The problem of poverty prevalent in disadvantaged regions because of the difficulty of access to information and communication led to a gap that is so high in wealth and resources. The instrument of zakat provides a paradigm in the achievement of equitable wealth distribution and healthy circulation. Zakat potentially offers a better life and improves the quality of human being. There is a human quality improvement not only in economic terms but also in spiritual terms such as improving religiousity. This study aims to examine the role of zakat to alleviate humanitarian issues in disadvantaged regions such as Sijunjung, one of zakat beneficiaries and impoverished areas in Indonesia. The researcher attempted a Cibest method to capture the impact of zakat beneficiaries before and after becoming a member of Zakat Community Development (ZCD) Program in material and spiritual value. The overall analysis shows that zakat has a positive impact on disadvantaged regions development and enhance the quality of life of the community. There is an improvement in the average of mustahik household incomes after becoming a member of ZCD Program. Cibest model demonstrates that material, spiritual, and absolute poverty index decreased by 10, 5, and 6 per cent. Meanwhile, the welfare index is increased by 21 per cent. These findings have significant implications for developing the quality of life in disadvantaged regions in Sijunjung. Therefore, zakat is one of the instruments to change the status of disadvantaged areas to be equivalent to other areas.

Corporate social responsibility and earnings management in the EU: a panel data analysis approach

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Panagiotis E. Dimitropoulos
Keyword(s):  
Corporate Social Responsibility ◽  
Panel Data ◽  
Social Responsibility ◽  
Earnings Management ◽  
Financial Reporting ◽  
Negative Association ◽  
Content Type ◽  
Corporate Social ◽  
The Eu

Purpose Over the past decades, corporate social responsibility (CSR) has been considered as a significant corporate strategy and also has been documented as a main information dissemination mechanism of corporations to shareholders, creditors and other external stakeholders. This fact makes the CSR activities and CSR performance interconnected with the quality of firms’ financial reporting. The purpose of this paper is to study the impact of CSR performance on the earnings management (EM) behaviour using a sample from 24 European Union (EU) countries summing up to 121,154 firm-year observations over the period 2003–2018. Design/methodology/approach The study uses a multi-country data set with various dimensions of CSR performance including indexes regarding workforce, community relations, product responsibility and human rights protection. The empirical analysis is conducted with panel data regressions. Findings Evidence supports the negative association between CSR and EM indicating that high CSR performing firms are associated with less income smoothing and discretionary accruals, thus with higher financial reporting quality. Practical implications Regulatory agencies in the EU could use the findings of the study for the improvement of the accounting framework via enhancing the use and publications of social and environmental responsibility information and reports. Social implications Also, the current paper could be of interest not only to academic researchers but also to potential and existing investors in European corporations. The negative association between CSR performance and EM could be used by investors in assessing the risk of firms and the quality and reliability of their financial information. Originality/value This is the first study within the EU, which considers the multi-facet characteristics of CSR on the quality of accounting earnings and offers useful policy implications for regulators and investors.

Perceptions of nurses on the impact of accreditation on quality of care

2014 ◽  
Vol 19 (2) ◽  
pp. 69-82 ◽  
Author(s):  
Ahmet Yildiz ◽  
Sidika Kaya
Keyword(s):  
Regression Analysis ◽  
Patient Satisfaction ◽  
Quality Of Care ◽  
Positive Impact ◽  
Pearson Correlation ◽  
High Rate ◽  
Content Type ◽  
Independent Variables ◽  
The Impact

Purpose – This article aims to investigate perceptions of Turkish nurses on the impact of accreditation on quality of care and the effect of accreditation on quality results. Design/methodology/approach – This study was performed as a cross-sectional, questionnaire-based survey on 258 nurses who started working in the hospital before it was accredited and continued to work during and after accrediation and who therefore knew both the hospital's pre-accrediation and post-accreditation periods. In this study, descriptive statistical analyses (means and standard deviations) were carried out to explore the views of the participants on “quality results,” “benefits of accreditation” and “participation of employees.” “Quality results” was considered to be the dependent variable, while “benefits of accreditation” and “participation of employees” were accepted as the independent variables. The relationship between the dependent variable and the independent variables was tested using Pearson correlation and multiple regression analysis. External patient satisfaction data collected by the quality department of the hospital before and after accreditation were also investigated. Findings – It was found that nurses had generally high scores for the items concerning the benefits of accreditation. There was a statistically significant positive correlation between the dependent variable (quality results) and the independent variables (benefits of accreditation and participation of employees). Regression analysis indicated that R2=0.461 and the extent to which the independent variables explained the dependent variable was 46.1 per cent, which is a high rate. Patient satisfaction scores increased after accreditation. Practical implications – Our study suggest that providing support for nurses, especially nurses with administrative responsibilities and incorporating employees into the process are important for exercising quality standards. Originality/value – Hospital accreditation has a positive impact on quality results especially on quality of care provided to patients and patient satisfaction. Study findings could guide policy makers and hospital managers in Turkey and in other countries who are preparing or implementing accreditation.

Effects of leadership and accounting capacity on accountability through the quality of financial reporting by public organisations in Vietnam

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yen Thi Tran ◽  
Nguyen Phong Nguyen ◽  
Trang Cam Hoang
Keyword(s):  
Public Sector ◽  
Financial Reporting ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Equation Modeling ◽  
Content Type ◽  
Research Results ◽  
Public Organisations ◽  
The Impact

Purpose By drawing on the institutional theory and contingency theory, this study aims to examine the effects of leadership and accounting capacity on the quality of financial reporting and accountability of public organisations in Vietnam. Furthermore, this paper is to determine the impact of financial reporting quality on accountability. Design/methodology/approach The research model and hypotheses have been tested by partial least squares structural equation modeling, with 177 survey samples obtained from accountants and managers working in the public sector in Vietnam. Findings The research results indicate that leadership and accounting capacity have a positive effect on financial reporting quality; leadership and accounting capacity positively influence accountability; and the quality of financial reporting has a positive impact on accountability. Research limitations/implications The research results provide empirical evidence of the direct impact of leadership and accounting capacity on financial reporting quality and accountability of public organisations in a developing country. Moreover, the current work also provides important evidence for the impact of financial reporting quality on accountability. Practical implications Public sector organisations must realise that leadership and accounting capacity play a vital role in the accounting reform process. Public institutions likewise need to pay attention to develop accounting capacity and promote leadership. Moreover, the results respond to the continuing call for increased citizen trust in public organisations. Originality/value To the best of the authors’ knowledge, this study is the first to examine the chain from leadership, accounting capacity, financial reporting quality and accountability in the context of public sector organisations in an Asian transition market.

Rebuilding trust: sustainability and non-financial reporting and the European Union regulation

2020 ◽  
Vol 28 (5) ◽  
pp. 701-725
Author(s):  
Matteo La Torre ◽  
Svetlana Sabelfeld ◽  
Marita Blomkvist ◽  
John Dumay
Keyword(s):  
European Union ◽  
Financial Reporting ◽  
Future Research ◽  
The European Union ◽  
Special Issue ◽  
Accounting Systems ◽  
Content Type ◽  
Research And Practice ◽  
Eu Directive ◽  
The Eu

Purpose This paper introduces the special issue “Rebuilding trust: Sustainability and non-financial reporting, and the European Union regulation”. Inspired by the studies published in the special issue, this study aims to examine the concept of accountability within the context of the European Union (EU) Directive on non-financial disclosure (hereafter the EU Directive) to offer a critique and a novel perspective for future research into mandatory non-financial reporting (NFR) and to advance future practice and policy. Design/methodology/approach The authors review the papers published in this special issue and other contemporary studies on the topic of NFR and the EU Directive. Findings Accountability is a fundamental concept for building trust in the corporate reporting context and emerges as a common topic linking contemporary studies on the EU Directive. While the EU Directive acknowledges the role of accountability in the reporting practice, this study argues that regulation and practice on NFR needs to move away from an accounting-based conception of accountability to promote accountability-based accounting practices (Dillard and Vinnari, 2019). By analysing the links between trust, accountability and accounting and reporting, the authors claim the need to examine and rethink the inscription of interests into non-financial information (NFI) and its materiality. Hence, this study encourages research and practice to broaden mandatory NFR practice over the traditional boundaries of accountability, reporting and formal accounting systems. Research limitations/implications Considering the challenges posed by the COVID-19 crisis, this study calls for further research to investigate the dialogical accountability underpinning NFR in practice to avoid the trap of focusing on accounting changes regardless of accountability. The authors advocate that what is needed is more timely NFI that develops a dialogue between companies, investors, national regulators, the EU and civil society, not more untimely standalone reporting that has most likely lost its relevance and materiality by the time it is issued to users. Originality/value By highlighting accountability issues in the context of mandatory NFR and its linkages with trust, this study lays out a case for moving the focus of research and practice from accounting-based regulations towards accountability-driven accounting change.

Impact of board size on the accounting returns and the asset quality of Indian banks

2020 ◽  
Vol 62 (4) ◽  
pp. 297-313
Author(s):  
Ankur Shukla ◽  
Sivasankaran Narayanasamy ◽  
Ramachandran Krishnakumar
Keyword(s):  
Robust Regression ◽  
Positive Impact ◽  
Ordinary Least Squares ◽  
The Body ◽  
Board Size ◽  
Content Type ◽  
Indian Banks ◽  
Asset Quality ◽  
The Impact

Purpose The purpose of the paper is to explore the impact of board size on the accounting returns and asset quality of Indian banks. Design/methodology/approach This paper uses ordinary least squares regression, robust regression and panel data methods for estimation, based on data collected for a sample of 29 Indian banks that are listed on the National Stock Exchange (NSE) and form part of the NSE-500 index over a period of eight financial years 2009-2016. The data pertaining to the board size of the sample banks is collected from the annual reports of banks, whereas the data relating to return on assets (ROA) and ratio of the gross non-performing assets to total assets and control variables (bank age and bank size) is extracted from ACE Equity database. Findings This paper concludes that the size of the governing board has a positive impact on the accounting returns (measured through ROA) of the Indian banks. Further, board size is observed to be insignificant in determining the asset quality of Indian banks. Originality/value This paper contributes to the literature and practitioners in a number of ways. First, to the best of the authors’ knowledge, this is the first study on the impact of board size on the accounting returns and asset quality of Indian banks. The findings of the study contribute new theoretical insights to the body of knowledge on the influence of the size of the board, which may be useful for future researchers. Second, banks may enhance their financial performance by taking cognizance of the findings of this study. Finally, equity investors may make use of the findings of this article in deciding on whether to invest in a bank’s stock/lend to the bank based on board size of the bank.

Tax evasion and public governance before and after the European “big bang”: a red flag for policymakers

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ahmed Emadeldin Yamen ◽  
Hounaida Mersni ◽  
Abdulhadi Ramadan
Keyword(s):  
Tax Evasion ◽  
Eu Enlargement ◽  
Public Governance ◽  
Content Type ◽  
The Public ◽  
Before And After ◽  
Governance Quality ◽  
Evasion Behavior ◽  
The Impact ◽  
The Eu

Purpose The purpose of this study is to examine the impact of public governance quality on tax evasion levels in old (pre-2004) and new (post-2004) European Union (EU) members before and after the 2004 EU-enlargement. Design/methodology/approach This study uses panel data of 28 EU countries over the period 1996-2015. Tax evasion is measured using an updated version of the shadow economy size based on the light intensity, as calculated by (Medina and Schneider, 2018). The World Bank’s worldwide governance indicators are used as a measure of public governance. Findings The results indicate that new EU members have higher tax evasion levels compared to the old ones before and after the 2004 EU enlargement. The findings also report that the public governance quality is superior in old members throughout the 1996-2015 period. Furthermore, the authors found that after the EU enlargement, tax evasion levels decreased in both EU groups; however, the authors noticed an improvement in the public governance quality in new members and a deterioration in old ones. Additional analysis confirms the impact of public governance quality as an effective tool for reducing tax evasion behavior in both EU groups before and after the EU enlargement. Practical implications The findings are potentially useful for EU policymakers in identifying the most effective tools that can minimize tax evasion levels in EU countries. Additionally, the results are alarming as they show the negative consequences of the EU enlargement in old EU members. Thus, policymakers should consider them when setting their rules and regulations to reduce the significant differences between both EU groups to prevent member states from potentially exiting the EU. Originality/value To the best of the knowledge, this is the first study that examines the tax evasion behavior and public governance quality in the EU before and after the EU enlargement.

Optimizing the environmental attitudes inventory

2015 ◽  
Vol 16 (1) ◽  
pp. 16-33 ◽  
Author(s):  
Stephen G. Sutton ◽  
Emma Gyuris
Keyword(s):  
University Students ◽  
Attitude Change ◽  
Environmental Attitudes ◽  
Reduced Form ◽  
Content Type ◽  
Before And After ◽  
Students First ◽  
The Difference ◽  
University Experience ◽  
The Impact

Purpose – The purpose of this study was twofold: first, to optimize the Environmental Attitudes Inventory (EAI) and second, to establish a baseline of the difference in environmental attitudes between first and final year students, taken at the start of a university’s declaration of commitment to EfS. Design/methodology/approach – The psychometrically designed EAI was used to overcome the problems and limitations of the much-used, but controversial, revised New Environmental Paradigm (NEP) Scale. The performance of the original 72-item EAI was compared with our 37-item reduced form using a population of first- and final-year university students. Findings – The reduced 37-item EAI provides a reliable and valid tool for investigating structured, multi-dimensional environmental attitudes of university students while reducing response burden and increasing response and completion rates compared with the longer versions of the EAI. Research limitations/implications – No attempt is made to link elements of the university experience with changes in attitude between first- and third-year students. The authors expect the 12-faceted EAI to provide more detailed feedback on the affective outcomes of EfS initiatives than currently used instruments. Originality/value – This research contributes to establishing the EAI as a gold standard with which to monitor students’ environmental attitudes. Although most studies aimed at understanding the impact of EfS measure attitude change over relatively short periods of time – typically using the brief NEP scale administered immediately before and after a specific semester course – the approach developed here is designed to detect attitudinal change that may be ascribed to the entire university experience between students’ first and final year.

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