scholarly journals The Impact Of Non-Audit Fees Disclosures On Company Value Following The Enron Collapse

2011 ◽  
Vol 1 (6) ◽  
Author(s):  
Marcelo Eduardo ◽  
Tao Zhang
Keyword(s):  
Firm Value ◽  
Abnormal Returns ◽  
Financial Statements ◽  
Audit Fees ◽  
Auditor Independence ◽  
Financial Statement ◽  
Font Size ◽  
Publicly Traded ◽  
The Impact ◽  
Non Audit Services

<p class="MsoBodyTextIndent2" style="text-align: justify; text-indent: 0in; margin: 0in 0.5in 0pt;"><span style="font-style: normal; font-size: 10pt; mso-bidi-font-style: italic; mso-bidi-font-size: 12.0pt;"><span style="font-family: Times New Roman;">Investor confidence regarding the reliability of financial statements is absolutely critical for publicly traded companies. The bankruptcy of Enron has brought to the forefront the issue of auditor independence and financial statement reliability. As a response to the criticism that the growth in consulting services by CPA firms was leading to a conflict of interest and significantly hindering auditor independence, the SEC approved new auditor independence regulations that required publicly traded firms to disclose the level of fees that were paid to their external auditor for non-audit services.<span style="mso-spacerun: yes;">&nbsp; </span></span></span></p><p class="MsoBodyTextIndent2" style="text-align: justify; text-indent: 0in; margin: 0in 0.5in 0pt;"><span style="font-style: normal; font-size: 10pt; mso-bidi-font-style: italic; mso-bidi-font-size: 12.0pt;"><span style="font-family: Times New Roman;">&nbsp;</span></span></p><p class="MsoBodyTextIndent" style="text-align: justify; line-height: normal; text-indent: 0in; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt; mso-bidi-font-style: italic; mso-bidi-font-size: 12.0pt;"><span style="font-family: Times New Roman;">This paper investigates the impact that the Enron collapse has had on investor perceptions about auditor independence and financial statement reliability. Using data from proxy statements concerning non-audit fees paid to external auditors, we find evidence that auditor independence and therefore financial statement reliability are compromised by the provision of these non-audit services. The results indicate that in the wake of the Enron revelations, investors perceive financial statements as being less reliable and thus require an additional risk premium, which translates into lower stock prices and a loss of firm value. We also find that there is negative relationship between the extent to which firms use non-audit services and the negative abnormal returns they suffered during the Enron collapse.</span></span><span style="font-size: 10pt; mso-bidi-font-size: 12.0pt;"></span></p>

scholarly journals Audit Fees and Financial Performance of Deposit Taking Saccos in North RIFT, Kenya

2020 ◽  
Vol 6 (5) ◽  
pp. 15-27
Author(s):  
Dorris Serem ◽  
Dr. Rashid Fwamba ◽  
Dr. Alala Benedict
Keyword(s):  
Financial Performance ◽  
Audit Quality ◽  
Secondary Data ◽  
Financial Statements ◽  
Audit Fees ◽  
Positive Influence ◽  
Auditor Independence ◽  
Audit Firm ◽  
Firm Experience ◽  
The Impact

The collapse of Deposit-Taking SACCOS and financial institutions in Kenya has caught the attention of the public and supervisory agencies to query the quality of audit. SACCO Societies Regulatory Authority on its inspection report indicated that SACCOs have been implicated in maladministration, scams and fraudulent dealings that led to their eventual collapse. SASRA also revoked licenses and rejected audited financial statements of some Deposit Taking SACCOs between 2013 to 2017.These financial scandals have been traced to poor audit quality. The study aimed to test the impact of audit quality on financial performance of Deposit-Taking SACCOs in North Rift Region, Kenya. The study sought to establish the influence of audit fees on financial performance; determine the influence of audit firm tenure on financial performance; establish the influence of auditor independence on financial performance and to determine the influence of audit firm experience on financial performance of Deposit-Taking SACCOs in North Rift Region, Kenya. This study was based on Agency theory, Role theory and the Concept of audit expectation gap, and Stakeholders’ theory. This research adopted descriptive cross-sectional research design. The target population for the study was 266 staff of all the 16 registered Deposit-Taking SACCOs in North Rift Region, Kenya. The sample size was 48 respondents comprising of chief executive officers, finance officers and internal auditors of the Deposit-Taking SACCOs selected using purposive sampling method. Primary and secondary data was used. Questionnaires collected primary data while audited annual financial statements of SACCOs provided secondary data. Inferential and descriptive statistics was used in analyzing data through SPSS version 25. It emerged that audit fees, audit firm tenure and audit firm experience have a significant positive influence on financial performance of Deposit-Taking SACCOs in North Rift Region, Kenya. Auditor independence had an insignificant positive influence on financial performance of Deposit-Taking SACCOs in North Rift Region, Kenya. The study concluded that audit quality has a positive noteworthy impact on financial performance of Deposit-Taking SACCOs in Kenya. The study recommends that regulatory authorities should formulate strict rules on audit fee charges and oversee the implementation of the same. Also, SASRA should ensure DT-SACCOs implement auditor rotation in compliance with auditing regulations and standards. DT-SACCOs to consider auditor’s professional competence and experience before initiating any audit engagement. Finally, DT-SACCOs and auditors should reinforce the professional code of ethics in regard to auditor independence in terms of familiarity between auditor and the client that may lead audit work into jeopardy.

New product announcement: spokesperson a manifestation of increasing firm value

2018 ◽  
Vol 13 (6) ◽  
pp. 1635-1655
Author(s):  
Bikram Jit Singh Mann ◽  
Sonia Babbar
Keyword(s):  
Event Study ◽  
Firm Value ◽  
Source Credibility ◽  
Shareholder Value ◽  
Abnormal Returns ◽  
New Product ◽  
Content Type ◽  
Study Methodology ◽  
The Impact

Purpose Before introducing new products, companies make announcements regarding the launch of the product which influences stock market yields of the announcing companies. Information content of the new product announcement has never been an exclusive focused stream of research. Therefore, an assessment of the impact of the content characteristics of the new product announcement on the shareholder value and the impact of source credibility (spokesperson) in making such announcements is a major gap in the existing literature. The paper aims to discuss these issues. Design/methodology/approach First, the standard event study methodology has been employed on the sample to measure the abnormal gains/losses accruing to the announcing firms. Second, moderated regression analysis (MRA) is employed to identify the characteristics of the new product announcement and to check the role of the spokesperson in creating shareholder value. Findings The results of the event study indicate that the abnormal returns are generated during the new product announcement. The results of MRA disclose the variables having a positive and a significant influence on the effective returns of the announcing companies. Likewise, the role of the spokesperson has come out brightly as a credible communicator. Originality/value The research provides a direction to the announcing companies regarding the content of the announcement leading to a positive perception among the investing community. Likewise, it also provides direction to the investor community about the characteristics of the announcement content they give weight age in forming a perception of strength in evaluating the new product announcement, to which they are largely unaware.

scholarly journals Analysis of Financial Statement of NRC Agro with Special Reference to Goods and Service Tax

2019 ◽  
pp. 45-65
Author(s):  
Nalla Bala Kalyan ◽  
Toopalli Sirisha
Keyword(s):  
Service Provider ◽  
Central Government ◽  
Financial Analysis ◽  
Financial Statements ◽  
Financial Statement ◽  
Accounting Data ◽  
Goods And Services ◽  
The Past ◽  
Provision Of Services ◽  
The Impact

The analysis of financial statements is an important aid to financial analysis. They provide information on how the firm has performed in the past and what is its current financial position. Financial analysis is the process of identifying the financial strengths and weakness of the firm from the available accounting data and financial statements. The analysis is done by establishing relationship between the different items of financial statements. The target of this paper is to examine the major features of GST. GST also known as the Goods and Services Tax is defined as the giant indirect tax structure premeditated to maintain and enhances the economic enlargement of a country. Service tax was a tax levied by Central Government of India on services provided or agreed to be provided excluding services covered under negative list and considering the Place of Provision of Services Rules, 2012 and collected as per Point of Taxation Rules, 2011 from the person liable to pay service tax. Person liable to pay service tax is governed by Service Tax Rules, 1994 he may be service provider or service receiver or any other person made so liable. It is an indirect tax wherein the service provider collects the tax on services from service receiver and pays the same to government of India. This paper has also focused on the impact of GST (Goods and Services Tax) will be on Indian Tax Scenario.

scholarly journals The Effect of Independence and Integrity on Audit Quality: Is There A Moderating Role for E-Audit?

2021 ◽  
Vol 23 (3) ◽  
Author(s):  
Diza Dianeke Budi Prabowo ◽  
Dwi Suhartini
Keyword(s):  
Industrial Revolution ◽  
Audit Quality ◽  
Practical Implication ◽  
Financial Statements ◽  
Auditor Independence ◽  
Audit Process ◽  
Accounting Firms ◽  
Audit Reports ◽  
The Impact

The financial statements must be reliable and become a benchmark in considering an audit decision on the financial statements. In order for this to be achieved, independence and integrity is required in carrying out the audit process. E-Audit helps overcome challenges in the industrial revolution 4.0 and prevent fraud. This research aims of testing and analyzing the role of e-audit in moderating the impact of auditor independence and integrity on audit quality. The data was collected through a questionnaire distributed to auditors at Public Accounting Firms in Surabaya. There are 36 respondents involved. The data were analyzed using SmartPLS. The results showed that auditor independence positively effect audit quality, auditor integrity positively effect audit quality; e-audit does non moderate the effect of auditor independence on audit quality; ande-Audit negatively moderates the effect of auditor integrity on audit quality. The practical implication of this research is that when determining high audit quality, independent auditors should at least increase their independence and integrity so that the resulting audit reports are of high quality and can be a reference for decision makers.

scholarly journals Pelatihan Pembuatan Laporan Keuangan Bagi UMKM Sebagai Informasi Untuk Pengambilan Keputusan

2018 ◽  
Vol 2 (1) ◽  
pp. 63-82
Author(s):  
Sila Ninin Wisnantiasri ◽  
Irma Paramita Sofia ◽  
Fitriyah Nurhidayah ◽  
Karsam Sunaryo
Keyword(s):  
Financial Reporting ◽  
Business Performance ◽  
Financial Analysis ◽  
Financial Statements ◽  
Financial Statement ◽  
Educational Game ◽  
Financial Report ◽  
Study Approach ◽  
Income Statement ◽  
The Impact

The purpose of this dedication for Pisangan Village Community through financial statement training for small business in collaboration with partners of Citra Kencana Community is to improve the understanding of partners in making financial report especially income statement. The problem facing partners is not mastering how to create a correct financial statement. The financial statements can be used by partners as a benchmark of business performance and business financial analysis tools. Therefore, the methods used in this activity are: (1) convey material about basic concepts of accounting, (2) convey material about components of income statement, (3) provide business simulation and recording financial statements through educational game business accounting (4) the practice of preparing the business income statement and analysis by the entrepreneur, (5) advising / consulting the profit-loss statement. Besides, regression test is done through event study approach to know the impact of training for knowledge of financial report objectives and understanding of financial reporting from the community after getting the training. The result of this activity is increasing both knowledge and understanding of society in making financial report. This is shown by the direction of a positive and significant relationship between training with community knowledge and understanding. Keywords: Financial statement, Small entrepreneurship, Business analysis

Auditors’ response to readability of financial statement notes

2020 ◽  
Vol 28 (3) ◽  
pp. 463-480
Author(s):  
Mahdi Salehi ◽  
Mahmoud Lari Dasht Bayaz ◽  
Shaban Mohammadi ◽  
Mohammad Seddigh Adibian ◽  
Seyed Hamed Fahimifard
Keyword(s):  
Stock Exchange ◽  
Financial Statements ◽  
Audit Fees ◽  
Financial Statement ◽  
Audit Report ◽  
Financial Reports ◽  
Statistical Population ◽  
Content Type ◽  
Listed Firms ◽  
Going Concern Opinion

PurposeThe main objective of the present study is to assess the potential impact of readability of financial statement notes on the auditor's report lag, audit fees and going concern opinion (GCO).Design/methodology/approachThe statistical population of this study includes all listed firms on the Tehran Stock Exchange (TSE) for the period of 2012–2017. The systematic elimination method is used for sampling and multiple regression and EViews software are used for testing the hypothesis models.FindingsThe obtained results show that there is a significant and positive relationship between audit report lags and readability of financial statements. Moreover, it is also revealed that readability of financial statements is positively associated with audit fees. Furthermore, the findings suggest a negative correlation between readability indexes and issuing GCOs, denoting hard-to-read statements is considered as a risk factor by auditors. Finally, the observations of our robustness tests suggest that the association between audit report lag and readability of financial statements is robust.Originality/valueThis is the first conducted investigation concerning auditor's response to the readability of financial statement notes in TSE. The outcome of current paper may pave the way for revising and developing Iranian accounting standards in order to give a fairer and clearer picture of financial reports.

Qualitative Financial Statement Disclosures: Legal and Ethical Considerations

2004 ◽  
Vol 14 (3) ◽  
pp. 433-451 ◽  
Author(s):  
William E. Shafer
Keyword(s):  
Empirical Test ◽  
Financial Statements ◽  
Financial Statement ◽  
Corporate Management ◽  
Ethical Considerations ◽  
Corporate Executives ◽  
Illegal Acts ◽  
The Impact ◽  
A Company

Abstract:There is a long-running debate among legal scholars regarding the propriety and enforceability of SEC attempts to mandate disclosures of antisocial or illegal corporate activities that do not materially impact a company’s financial statements. This debate was recently revived by the issuance of SEC Staff Accounting Bulletin 99, Materiality in Financial Statements (SEC 1999), which suggests that quantitatively immaterial information relating to unlawful transactions or regulatory non-compliance should be considered for disclosure. This issue has important implications for the accounting profession, although it has generally been ignored in the accounting literature. This paper reviews legal and ethical considerations raised by the issue of qualitative disclosures, and also presents the results of a preliminary empirical test of the impact of such disclosures on financial statement users’ judgments. The results of this study indicate that investors consider the nondisclosure of immaterial illegal acts to be unethical, and reject suggestions that such information lacks moral intensity. The results also suggest that immaterial illegal acts have a significant effect on investors’ perceptions of the quality of corporate management and the likelihood of investment in a company. This effect was more pronounced when the illegal act was combined with self-dealing on the part of corporate executives.

SEC XBRL Filing Requirements: An Instructional Case on Tagging Financial Statement Disclosures

2010 ◽  
Vol 25 (3) ◽  
pp. 489-511 ◽  
Author(s):  
Ernest Capozzoli ◽  
Stephanie Farewell
Keyword(s):  
Oil And Gas ◽  
Financial Statements ◽  
Securities And Exchange Commission ◽  
Financial Statement ◽  
Publicly Traded ◽  
Item Level ◽  
Interactive Data ◽  
The U.S

ABSTRACT: On January 20, 2009, the U.S. Securities and Exchange Commission (SEC) released Rule 33-9002 for the phase-in of interactive data (SEC 2009a). An important component of this rule is the phase-in of detailed tagging of financial statement note disclosures. Tagging is the process of associating a taxonomy element with a financial statement concept for a particular context. While some of the filers have participated in the SEC Voluntary Filing Project and prepared instance documents tagged at the line item level most have not prepared detail-tagged notes to accompany the financial statements (SEC 2005; Choi et al. 2008). This case discusses the structure of disclosures, as they exist in the 2009 U.S. GAAP Taxonomy, followed by a discussion of dimensional extensions and concludes with an example of block and detailed disclosure tagging using Rivet Software’s Dragon Tag (Rivet 2009). The example uses the capitalized costs disclosure for Anadarko Petroleum, a publicly traded company. Following the example, the case requires students to block and detail tag the capitalized costs disclosure for Dig Deep, a hypothetical oil and gas company. By completing the case, students develop an understanding of the current U.S. GAAP taxonomy, skills relating to mapping and tagging processes, and make use of a commonly used XBRL taxonomy and instance document creation program.

Learning from press releases: implications for hospitality innovation

2018 ◽  
Vol 30 (1) ◽  
pp. 95-113 ◽  
Author(s):  
Florian J. Zach ◽  
Dejan Krizaj ◽  
Brian McTier
Keyword(s):  
Event Study ◽  
Firm Value ◽  
Organizational Factors ◽  
Press Releases ◽  
Publicly Traded ◽  
Strategic Development ◽  
Content Type ◽  
The Usa ◽  
Hospitality Firms ◽  
The Impact

Purpose The purpose of this study is to test the usefulness of the literature-based innovation output (LBIO) approach to identify innovation types from press releases of hospitality firms and to evaluate if the typology captures the effect of innovation on firm value. Design/methodology/approach The LBIO approach was applied to three years of press releases from two publicly traded lodging firms in the USA announcing innovations. A database of lodging and innovation relevant terms was compiled. Starting with classifications found in the innovation literature, the researchers coded each announcement. Coded announcements were clustered into innovation types using pairwise similarity analysis. Event study analysis assessed the efficacy of the overall method to find types that were useful to measure the impact on firm value from the company’s adoption of an innovation. Findings Cluster analysis identified four lodging innovation types: property and location, marketing, strategic development and guest experiences. These types corresponded closely with the innovation classification suggested by the Oslo Manual. The event study found that the typology was useful in determining the market value effects of an innovation. Research limitations/implications This study focused on innovation; future studies might test other organizational factors. The study uses data from two large, publicly traded hospitality firms and may not extend to smaller, privately held businesses. A key implication is that human coding is sufficient to identify innovation types that correspond closely with existing classifications and affect firm value. Originality value This study successful learns from hospitality press releases to identify a hospitality innovation typology and tests type impact on firm value.

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