The Effect of Country-Level Investor Protection on the Voluntary Assurance of Sustainability Reports

2014 ◽  
Vol 25 (2) ◽  
pp. 209-236 ◽  
Author(s):  
David N. Herda ◽  
Martin E. Taylor ◽  
Glyn Winterbotham
Keyword(s):  
Investor Protection ◽  
Country Level ◽  
Sustainability Reports

scholarly journals Determinants of the Adoption of Integrated Reports: An International Investigation

2020 ◽  
Vol 4 (1) ◽  
pp. 103
Author(s):  
Md. Jahidur Rahman ◽  
Pan Li ◽  
Rashedul Hasan
Keyword(s):  
Economic Development ◽  
Trade Union ◽  
Investor Protection ◽  
Union Density ◽  
Logistic Regression Models ◽  
Business Environments ◽  
Country Level ◽  
Sample Data ◽  
Reporting Decisions ◽  
Low Levels

This study examines the determinants of companies’ reporting decisions. We employ three measures at the country-level: (1) investor protection, (2) trade union density, and (3) economic development. Regression model analysis was used to measure whether companies used integrated reports (IR) or traditional sustainable reports. Using sample data from Fortune Global 300 for the year 2017, which is the latest available data, this paper follows logistic regression models. The study finds out that the probabilities of publication of IR are high in countries with high trade union density, weak investor protection, and low levels of economic development. These results help companies and managers to better cope with current business environments.

scholarly journals Investor protection and country-level governance: cross-country empirical panel data evidence

2017 ◽  
Vol 30 (1) ◽  
pp. 806-817 ◽  
Author(s):  
Paula Ramona Rachisan ◽  
Cristina Bota-Avram ◽  
Adrian Grosanu
Keyword(s):  
Panel Data ◽  
Investor Protection ◽  
Country Level ◽  
Cross Country

Auditor tenure, investor protection and accounting quality: international evidence

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Khairul Anuar Kamarudin ◽  
Wan Adibah Wan Ismail ◽  
Akmalia M. Ariff
Keyword(s):  
Financial Reporting ◽  
Positive Impact ◽  
Weighted Least Squares ◽  
Investor Protection ◽  
Joint Effect ◽  
Policy Implications ◽  
Accounting Quality ◽  
Content Type ◽  
Country Level ◽  
Auditor Tenure

Purpose This study aims to investigate whether auditor tenure has a significant influence on accounting quality and whether investor protection moderates the effect of auditor tenure on accounting quality. Design/methodology/approach This study uses weighted least squares regression on a sample of 77,855 firm-year observations from 36 countries during the period 2010–2016. This study uses the absolute value of performance-matched discretionary accruals to measure financial reporting quality. Findings This study finds that a longer auditor tenure is associated with higher accounting quality, thus supporting the knowledge effect arguments. The results on the joint effect of investor protection and auditor tenure show evidence of the substitutive effect of investor protection, where the positive impact of auditor tenure on accounting quality is weaker in a high investor-protection environment. Practical implications These findings provide input for policy implications involving the auditing profession. Regulators may need to weigh the costs and benefits of mandatory audit rotation because country-level institutional factors influence auditing regulations and practices, as well as the auditors’ behaviors. Originality/value This study adds to the limited, albeit important, evidence on the joint effect of auditor tenure and country-level governance on accounting quality. The authors respond to the call by Brooks et al. (2017) for more evidence on the role of audits on financial reporting outcomes across various legal institutions for creating effective policies.

scholarly journals Does the Relation between Information Quality and Capital Structure Vary with Cross-Country Institutional Differences?

2016 ◽  
Vol 15 (3) ◽  
pp. 131-156 ◽  
Author(s):  
Jeff Zeyun Chen ◽  
Chee Yeow Lim ◽  
Gerald J. Lobo
Keyword(s):  
Capital Structure ◽  
Information Quality ◽  
Institutional Environment ◽  
Investor Protection ◽  
External Financing ◽  
Financial Leverage ◽  
Country Level ◽  
Accruals Quality ◽  
Institutional Differences ◽  
Cross Country

ABSTRACT Prior research based on U.S. data finds that firms with better information quality raise more equity whereas firms with poorer information quality prefer to issue debt when they seek external financing. Little is known about whether the same conclusion holds outside the U.S. and how the country-level institutional environment influences the relation between information quality and capital structure choices. We examine the relation between accounting information quality (measured by earnings precision, accruals quality, and analyst consensus) and financial leverage across 24 countries and whether that relation varies systematically with country-level investor protection and financial orientation. We document a lower financial leverage for firms with better information quality. More importantly, we find a stronger relation between information quality and financial leverage in countries with weaker investor protection and more market-oriented economies. These cross-country results suggest that information quality is especially important in shaping a firm's capital structure decision when investor demand for information is greater. JEL Classifications: G32; G38; M41.

Investor Protection and the Substitution Effect of Corporate Governance and Product Market Competition on Firm Value

2020 ◽  
pp. 0148558X2093679
Author(s):  
Joseph R. Rakestraw
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Market Competition ◽  
Investor Protection ◽  
Cost Benefit ◽  
Product Market ◽  
Substitution Effect ◽  
Agency Cost ◽  
Product Market Competition ◽  
Country Level

International research has firmly established that a substitute relationship exists between corporate governance and product market competition on firm value. In this study, I reexamine this substitution effect in an international setting, allowing the relation to vary with investor protection. As hypothesized, I find that investors place a higher value on the substitution effect of corporate governance and product market competition in countries where the legal and regulatory mechanisms to protect investors are weak. This finding suggests that country-level investor protection has a moderating role in affecting the substitution between product market competition and corporate governance on firm value. These results, which are robust to several sensitivity tests and alternative specifications, are consistent with an equity agency cost benefit, resulting from product market competition and corporate governance, which is valued more by investors where investor protection is weak.

Estimates of Optimal Audit Firm Tenure Across Different Legal Regimes

2016 ◽  
Vol 32 (1) ◽  
pp. 3-39 ◽  
Author(s):  
Li (Lily) Z. Brooks ◽  
C. S. Agnes Cheng ◽  
Joseph A. Johnston ◽  
Kenneth J. Reichelt
Keyword(s):  
Quadratic Form ◽  
Audit Quality ◽  
Investor Protection ◽  
Optimal Point ◽  
Audit Firm ◽  
Country Level ◽  
Legal Regimes ◽  
Key Variables ◽  
Mandatory Rotation ◽  
Mandatory Audit Firm Rotation

Based on a quadratic form of audit tenure in explaining audit quality, we estimate a reference point that is potentially optimal for audit firm rotation for 22 countries across legal regimes with high versus low levels of investor protection. We find that our estimate for the high investor protection regime is longer than that for the low investor protection regime (24 years vs. 14 years for our main measure). However, very few firms from our sample would have been affected if there were a requirement of a mandatory rotation term, suggesting that mandatory audit firm rotation may not be necessary. In additional analyses, we not only evaluate the empirical validity of the quadratic form but also use various measures of our key variables, to conduct several other robustness tests. We continue to find a longer optimal point for countries with stronger investor protection in these robustness tests. Our findings imply that stronger country-level investor protection is a substitute for a shorter term of mandatory audit firm rotation.

Role of Country-Level Characteristics in Segment Reporting: EU Evidence

2021 ◽  
pp. 2150018
Author(s):  
Ahmed Aboud ◽  
Akrum Helfaya
Keyword(s):  
Positive Impact ◽  
Investor Protection ◽  
Firm Level ◽  
Reporting Practices ◽  
Segment Reporting ◽  
Country Level ◽  
Legal Enforcement ◽  
Ifrs 8 ◽  
The Impact

Based on a country-level-characteristics framework, we empirically tested the impact of IFRS 8 adoption, the country’s legal system and level of legal enforcement, investor protection, conservatism, and closeness between national GAAP and IFRS on both the quantity and quality of segment reporting. Using a sample of companies from 15 EU countries covering four years (two years preadoption and two years postadoption of IFRS 8), we found that the adoption of IFRS 8 is associated with a decrease in the quantity and an increase in the quality of segment reporting. Moreover, we report that a common-law system, the country-level legal enforcement, and investor protection have a significant and positive impact on the quantity and quality of segment reporting. Meanwhile, country-level conservatism and closeness between national GAAP and IFRS are negatively related to the quantity and quality of segment reporting. In addition to firm-level characteristics, this study extends the prior limited literature by documenting the importance of country-level characteristics as factors that enhance segment reporting practices in Europe. We also discuss the research contributions and implications for research, professional practice, and policymakers.

scholarly journals The Effects of Generalized Trust and Civic Cooperation on the Big N Presence and Audit Fees Across the Globe

2018 ◽  
Vol 38 (1) ◽  
pp. 193-219 ◽  
Author(s):  
W. Robert Knechel ◽  
Natalia Mintchik ◽  
Mikhail Pevzner ◽  
Uma Velury
Keyword(s):  
Investor Protection ◽  
Positive Association ◽  
Substitution Effect ◽  
Audit Fees ◽  
Generalized Trust ◽  
Demand And Supply ◽  
Auditor Choice ◽  
Country Level ◽  
Complementary Effect ◽  
The Impact

SUMMARY We examine the impact of country-level generalized trust and civic cooperation (i.e., societal trust) on Big N auditor choice and audit fees. Because higher societal trust countries are associated with lower levels of agency problems, we expect a negative association between societal trust and Big N auditor choice and audit fees. We find this to be the case in countries with strong investor protection, i.e., a substitution effect. However, because higher trust societies may also experience higher costs of inappropriate behavior and place higher value on a strong audit function, we could observe a positive association between societal trust and Big N audit demand or audit fees. We find this to be the case in countries with weaker investor protection, i.e., a complementary effect. These results suggest that both formal institutions (audit, investor protection) and informal attitudes (trust, civic cooperation) can influence the demand and supply for audit services.

Auditor Independence and Value Relevance in the European Banking Sector: Do Investor Protection Environment and Corporate Governance Matter?

2020 ◽  
pp. 0148558X2093424
Author(s):  
Riccardo Cimini ◽  
Alessandro Mechelli ◽  
Vincenzo Sforza
Keyword(s):  
Corporate Governance ◽  
Banking Sector ◽  
Value Relevance ◽  
Investor Protection ◽  
Spillover Effects ◽  
Auditor Independence ◽  
Firm Level ◽  
Country Level ◽  
Governance Quality ◽  
Corporate Governance Quality

Our study explores the effects of statutory auditor’s independence on value relevance, measuring the different impact against the quality of country-level investor’s protection and firm-level corporate governance. A sample of 98 European financial entities listed on the stock markets of 15 countries in the period from 2009 to 2014 is used to measure statutory auditor independence by taking into account audit firm tenure, partner tenure, and the percentage of nonaudit fees. Findings demonstrate that in different investor protection environments or in the presence of differences in corporate governance quality, phenomena that could be interpreted as a deterioration of the auditor independence do not necessarily determine a decrease in the value relevance of accounting numbers. Rather, they may determine a possible increase if the knowledge spillover effects prevail over the perception that independence has deteriorated. These findings add to the literature and provide regulators with insights by suggesting that not only accounting and auditing practices but also country features or firm-level corporate governance quality might influence the outcome of reforms on the independence of the statutory auditor as well as value relevance judgments.

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