Recent Trends in Audit Report and Earnings Announcement Lags

2009 ◽  
Vol 23 (3) ◽  
pp. 265-288 ◽  
Author(s):  
Jayanthi Krishnan ◽  
Joon S. Yang
Keyword(s):  
Financial Reporting ◽  
Earnings Announcements ◽  
Reporting Quality ◽  
Securities And Exchange Commission ◽  
Fiscal Year ◽  
Audit Report ◽  
Quality Of Reporting ◽  
Earnings Announcement ◽  
Quality Reporting

SYNOPSIS: The Securities and Exchange Commission introduced accelerated filing requirements for corporate 10-K and 10-Q filings in 2003. The major accounting firms and some companies expressed concerns about the acceleration, arguing that other changes in financial reporting and disclosure requirements, corporate governance, and auditing standards would make it difficult to meet the shorter deadlines while maintaining good quality reporting. Using longitudinal samples of companies for the period 2001–2006, we examine two lags in the corporate reporting process: the audit report lag (the number of days between the fiscal year-end and the audit report date), and the earnings announcement lag (the number of days between the fiscal year-end and the earnings announcement date). Our results indicate that both lags increased significantly in the two-year period 2001–2002 prior to the introduction of the accelerated filing requirements and in the period 2003–2006 when the new filing requirements were in effect. Furthermore, when we examine the sample of companies for which both the audit lag and earnings announcement lags are available, we find that the likelihood that companies announced earnings prior to the audit report date increased considerably over the period 2001–2006, but particularly during 2004–2006 when Section 404 of the Sarbanes-Oxley Act of 2002 (SOX) was in effect. Thus it appears that an unintended consequence of recent policy changes is that companies are less likely to wait for completion of their audits to announce earnings. We also examine the quality of reporting (measured by absolute discretionary accruals and quality of accruals) for the sample period. We find that long audit report lags (or 10-K filings lags) were not associated with lower quality of earnings or accruals (except for a mild effect in 2004), providing no support for the concern that companies that have to rush to meet the deadlines may suffer a loss of reporting quality. However, when we examine potential reporting quality effects of early earnings announcements, we find some mild evidence that for those companies that made earnings announcements several days in advance of completion of their audits, the quality of earnings/accruals was lower in some years during the period 2003–2006.

Audit committee impact on the quality of financial reporting and disclosure

2016 ◽  
Vol 39 (12) ◽  
pp. 1639-1662 ◽  
Author(s):  
Mahdi Salehi ◽  
Mohammadamin Shirazi
Keyword(s):  
Financial Reporting ◽  
Audit Committee ◽  
Stock Exchange ◽  
Panel Data Analysis ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Fiscal Year ◽  
Corporate Disclosure ◽  
Content Type

Purpose The purpose of this study is to shed further light on the characteristics of an audit committee (AC) and its probable relationship with the quality of financial reporting and disclosure. Based on the findings of extant research that there are different factors that may have implications for the AC’ effectiveness, the authors posit an association between the aforementioned financial aspects and AC presence. Design/methodology/approach The authors test their hypotheses by performing panel data analysis on a sample of 100 companies listed on the Tehran Stock Exchange (TSE) during 2013-2014. The tests were conducted by using Eviews software. Findings Examining previously tested characteristics of an AC, the authors indicate that the number of AC meetings held during fiscal year is negatively associated with the quality of corporate disclosure, whereas AC expertise and size are positively associated with the quality firm’s financial disclosure. Their findings are also indicative of a non-significant relationship between other AC attributes and financial reporting quality (FRQ) except for AC independence, which is positively associated with FRQ. Finally, they provide some evidence that the size of a firm positively affects the quality of its financial reporting and disclosure. Research limitations/implications Although the study has been thoroughly considered and cautiously planned, some limitations have yet arisen. Initially, this research was conducted in an Iranian setting where the formation of ACs is on the verge of regulation; therefore, the data utilized for the study only contains the two-year period of ACs’ statutory activity. In addition, a lack of consensus on the precise measures of an AC’s effectiveness could be considered as a restrictive factor. Originality/value The authors’ study contributes to the AC literature by providing empirical evidence of an association between ACs’ different attributes and financial aspects in a newly regulated environment like the TSE. The results provided in this paper could be fruitful for auditors, regulators, institutional investors and policymakers.

scholarly journals Quality Reporting of Mixed Methods Research in Tourism-Related Studies

2021 ◽  
Vol 10 (10(6)) ◽  
pp. 1794-1810
Author(s):  
CH Van Heerden
Keyword(s):  
Mixed Methods ◽  
Mixed Methods Research ◽  
Reporting Quality ◽  
International Standards ◽  
Future Research ◽  
Quality Of Reporting ◽  
Data Set ◽  
Postgraduate Students ◽  
Quality Reporting

The aim of this study is to gain scientific insight into internationally-accepted criteria for quality reporting of mixed methods research (MMR). Articles published post-2012 in a particular journal, which referred to “mixed methods” and “tourism”, and reported that qualitative and quantitative data were collected, were drawn from Google Scholar and Scopus. The reporting quality of these studies was analysed according to the GRAMMS framework (Good Reporting of a Mixed Methods Study). Most of the articles in the data set did not report on all the elements embedded in GRAMMS. It must not be seen as a reflection of the quality of the MMR design itself, nor is the study flawed. It indicates gaps in the reporting of important MMR elements that could be addressed in future research. Exemplars were identified that could serve as case studies for researchers in terms of the quality of reporting on MMR. Editorial boards should adopt guidelines on how MMR could be presented in articles submitted to their journals. These guidelines could assist authors in preparing their articles to conform to international standards on the reporting of MMR studies. Peer reviewers should use the guidelines to judge the quality of reporting on MMR methodology in articles under review. This study could also serve as a future reference for researchers, postgraduate students and supervisors who aim to incorporate MMR in their research.

scholarly journals THE INITIAL IMPLEMENTATION OF ACCRUAL BASED ACCOUNTING, THE EFFECT ON PERFORMANCE AND FINANCIAL REPORTING QUALITY AT LOCAL GOVERNMENTS IN INDONESIA

2019 ◽  
Vol 11 (1) ◽  
pp. 13
Author(s):  
Rindu Rika Gamayuni
Keyword(s):  
Financial Performance ◽  
Financial Reporting ◽  
Local Governments ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Fiscal Year ◽  
Accounting Standard ◽  
Government Accounting ◽  
Before And After

Abstract: In Indonesia local government, accrual based Government Accounting Standard (GAS) was started to be mandatorily applied in 2015, so this research aims to investigate to what extent the role of accrual GAS implementation toward quality of financial reporting and financial performance especially at local governments. Population of this study is Local Governments of districts/cities in Indonesia for Fiscal Year 2014 and Fiscal Year 2015, as many as 542 local governments (before and after the implementation of accrual base).  Sampling method uses probability sampling which is cluster sampling. In this case, the population is divided based on 34 province clusters, so the number of sample obtained is 242 local governments of districts/cities in Indonesia.  The hypothesis testing uses paired t test. The object of research is the financial reporting quality and financial performance. The results of this study provide empirical evidence that there is an increase in the quality of financial reporting after the application of accrual-based accounting at local governments in Indonesia, but have not proven the existence of the increased financial performance. There is no differences in financial performance before and after accrual based accounting implementation at local governments in Indonesia. This hyphothesis  was not supported due to the application of accrual basis accounting is still in the early stages of implementation (1 year) that still have constraints in limited human resources competencies, necessary adaptations or adjustments in the process of change. Local governments in Indonesia must apply accrual based accounting because it is proven that it increases financial report quality.  However, the system implementation in the beginning period found many obstacles so it needs continuous adjustment and learning in order to reach desirable goal. There is still a debate on how important is the implementation or adoption of accrual IPSAS in many countries, including Indonesia.  In Indonesia, the implementation of accrual based Government Accounting Standard (SAP/GAS) is new mandatory since 2015. The result of this research will give contribution to the theory, that there is significant influence of implementation accrual based GAS to financial reporting quality, but no significant increase in financial performance (efficiency and effectiveness) at local government.  Therefore, this result study will be used to determine related policies about the implementation of accrual based GAS. Keywords: Accrual Based Accounting, Financial Reporting Quality, Financial Performance, Government

scholarly journals Assessment of Government Internal Control Systems on Financial Reporting Quality in Ghana: A Case Study of Ghana Revenue Authority

2018 ◽  
Vol 10 (11) ◽  
pp. 40
Author(s):  
Wonder Agbenyo ◽  
Yuansheng Jiang ◽  
Prince Komla Cobblah
Keyword(s):  
Control Systems ◽  
Financial Reporting ◽  
Internal Control ◽  
Negative Impact ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Quality Reporting ◽  
The Impact

Internal control systems cannot be underestimated as it serves as the lifeblood of most institutions in terms of its imperative roles that it plays in both tangible and intangible assets of an organization. Internal control actions on quality financial report state positive goals more especially when all parties involved adhere to their duties; thus, making the quality of financial reporting comparable, understandable, relevant, and reliable. In this regard, this study investigated the impact of government internal control systems on financial reporting quality in Ghana using Ghana Revenue Authority as the case study. Specifically, the study examined the nature and quality of financial reporting and the impact of government internal control systems on financial reporting quality. Both quota and simple random sampling techniques were used to select fifty (50) persons as the sample size of the study. Questionnaires were used to obtain data. The correlation matrix was used to examine the relationship between government internal control systems and financial reporting quality. The study finds out that contrary to apriori expectation sign monitoring as an element of internal control system has a negative impact on the financial quality reporting but was however statistically significant. The study also revealed that with a unit increase in the collection performance, the financial reporting quality of GRA will improve. The study recommended that the government should ensure that the internal control systems are well monitored and regulated. 

scholarly journals Non-Financial Reporting of Industrial Corporations – A Czech Case Study

2020 ◽  
Vol 68 (3) ◽  
pp. 625-636
Author(s):  
Jaroslav Sedláček
Keyword(s):  
Multinational Corporations ◽  
Financial Reporting ◽  
Reporting Quality ◽  
Quality Of Reporting ◽  
Chi Square ◽  
Positive Correlation ◽  
The Public ◽  
Negative Impacts ◽  
And Performance

Scientific research and studies from recent years point to the growing interest of large multinational corporations in publishing reports that inform the public not only about their performance, but also about their behavior in terms of social responsibility and long-term sustainability. These are not only effects in the context of their success, but also the negative impacts of their environmental, social and administrative activities. Although corporate responsibility reporting integrating financial and non-financial information is becoming a standard practice, these approaches have not yet been investigated or published in the Czech region. Therefore, the aim of the research was to determine how the new quality of reporting is perceived by Czech industrial corporations. Data for empirical research were excerpted from reports published in 2018. To verify the generally perceived assumption of a positive correlation between the size of corporations and the quality of their reports, respectively between reporting quality and corporate performance, eight hypotheses have been formulated. The Chi-Square independence test was used to confirm or refute the hypotheses. The tests confirmed a significant dependence of reporting quality on the size of the corporation. A positive correlation was also found between quality of report and performance, but the expected negative correlation between indebtedness could not be demonstrated.

scholarly journals OPINI AUDIT DAN PENGUNGKAPAN ATAS LAPORAN KEUANGAN PEMERINTAH KABUPATEN SERTA KAITANNYA DENGAN KORUPSI DI INDONESIA

ETIKONOMI ◽  
2015 ◽  
Vol 13 (1) ◽  
Author(s):  
Rini Rini ◽  
Adhariani Sarah
Keyword(s):  
Local Government ◽  
Financial Reporting ◽  
Reporting Quality ◽  
Financial Statements ◽  
Financial Statement ◽  
Quality Of Reporting ◽  
Audit Opinion ◽  
Content Analysis Method ◽  
The Relationship

The study examined the relationship between the areas of financial reporting quality proxy by the audit opinion of the financial statements and the disclosure of local government (LKPD) districts, as well as the level of corruption in Indonesia. Study is qualitative and descriptive content analysis method (content) to process the data. The results of this study indicate that the quality of reporting of financial statements has increased as indicated by the improvement in the audit opinion above LKPD district in Indonesia. The second finding shows there is no link between the financial statement disclosures local government district with the opinion given by the BPK. The third findings showed case of corruption in Indonesian is increasing. The findings of the fourth, the disclosure of financial statements and audit opinions district has associated with the level of corruption in IndonesiaDOI: 10.15408/etk.v13i1.1875

Section 404 Compliance and Financial Reporting Quality

2010 ◽  
Vol 24 (3) ◽  
pp. 441-454 ◽  
Author(s):  
Albert L. Nagy
Keyword(s):  
Financial Reporting ◽  
Internal Control ◽  
Reporting Quality ◽  
Financial Statements ◽  
Securities And Exchange Commission ◽  
Small Companies ◽  
Section 404 ◽  
Financial Reports ◽  
Sarbanes Oxley

SYNOPSIS: This study examines whether the Sarbanes-Oxley Act Section 404 (S404) compliance efforts lead to higher quality financial reports. An objective of S404 is to encourage companies to devote adequate resources and attention to their internal control systems, which should lead to more reliable financial statements. A natural laboratory of S404 compliance and noncompliance companies exists because the Securities and Exchange Commission has deferred the S404 compliance date for small companies (nonaccelerated filers). A logistic regression model is estimated using a sample of companies surrounding the S404 compliance threshold to measure the S404 compliance effect on the likelihood of issuing materially misstated financial statements. The results show a significant and negative relation between S404 compliance and issuance of materially misstated financial statements, and suggest that the S404 regulation is meeting its objective of improving the quality of financial reports.

Comparing Non-GAAP EPS in Earnings Announcements and Proxy Statements

2021 ◽  
Author(s):  
Dirk E. Black ◽  
Ervin L. Black ◽  
Theodore E. Christensen ◽  
Kurt H. Gee
Keyword(s):  
Financial Reporting ◽  
Capital Market ◽  
Firm Value ◽  
Earnings Announcements ◽  
Securities And Exchange Commission ◽  
Earnings Announcement ◽  
Market Incentives ◽  
Earnings Per Share ◽  
Earnings Components ◽  
Annual Earnings

We compare non-GAAP earnings per share (EPS) in firms’ annual earnings announcements and proxy statements using hand-collected data from U.S. Securities and Exchange Commission filings. We find that proxies for capital market incentives (contracting incentives) are more highly associated with firms’ disclosure of non-GAAP EPS in annual earnings announcements (proxy statements). However, we find systematic differences in the properties of firms’ non-GAAP earnings and exclusions depending on whether they disclose non-GAAP EPS in both the earnings announcement and the proxy statement. When firms disclose non-GAAP EPS in both documents, we find that non-GAAP EPS is more useful for assessing firm value. Specifically, these firms are more likely to: (1) exclude nonrecurring items, (2) exclude less persistent earnings components, and (3) provide less aggressive non-GAAP EPS. Our results suggest that non-GAAP EPS is higher in quality for investors when disclosed in both the annual earnings announcement and the proxy statement. We provide some of the first large-sample evidence consistent with the use of non-GAAP EPS metrics in both financial reporting and compensation contracting. This paper was accepted by Brian Bushee, accounting.

scholarly journals Financial reporting quality following the corporate governance reforms: A conditional conservatism perspective

2021 ◽  
Vol 10 (2, special issue) ◽  
pp. 216-225
Author(s):  
Wan Adibah Wan Ismail ◽  
Iman Harymawan ◽  
Dian Agustia ◽  
Khairul Anuar Kamarudin
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Reporting Quality ◽  
Quality Of Reporting ◽  
High Quality ◽  
Asymmetric Timeliness ◽  
Conditional Conservatism ◽  
Corporate Governance Reforms ◽  
Governance Reforms

This study examines the quality of financial reporting during the period following the corporate governance reforms in Malaysia, as motivated by the importance of investors’ needs for high-quality financial reporting. Using the asymmetric timeliness of the earnings model, we analysed the sample of 6,819 firm-year observations of Malaysian listed companies from 2002 to 2011. The findings show evidence of the high quality of reporting following the corporate governance reforms. We found that firms have reported a more timely recognition of losses than gains in the post-reform period. Our results suggest that conditional conservatism has been prevalent during the period, and the results are robust even after conducting extensive specification tests. This study suggests that after the corporate governance reforms, Malaysian companies’ financial statements have been more reliable for investors in making investment decisions.

The Impact of Going Concern on Financial Reporting Quality: Evidence from Vietnam

2018 ◽  
Vol 34 (3) ◽  
Author(s):  
Phung Anh Thu ◽  
Nguyen Vinh Khuong
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Financial Distress ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Viet Nam ◽  
Listed Firms ◽  
Going Concern ◽  
Debt Covenant

The investigation was conducted to contribute empirical evidence of the association between going concern and financial reporting quality of listed firms on the Vietnam stock market. Based on data from 279 companies listed on the HNX and HOSE exchanges in Vietnam for the period 2009-2015, the quantitative research. Results found that the relationship between the going concern and financial reporting quality of listed firms. Research results are significant for investors, regulators to the transparency of financial reporting information. Keywords Going concern, financial reporting quality, listed firms References Agrawal, K., & Chatterjee, C. (2015). Earnings management and financial distress: Evidence from India. Global Business Review, 16(5_suppl), 140S-154S.Bergstresser, D., & Philippon, T. (2006). CEO incentives and earnings management. Journal of Financial Economics, 80(3), 511–529.Burgstahler, D., & Dichev, I. (1997). Earnings management to avoid earnings decreases and losses. Journal of Accounting and Economics, 24(1), 99–126.Charitou, A., Lambertides, N., & Trigeorgis, L. (2007a). Earnings behaviour of financially distressed firms: The role of institutional ownership. Abacus, 43(3), 271–296.Chen, Y., Chen, C., & Huang, S. (2010). An appraisal of financially distressed companies’ earnings management: Evidence from listed companies in China. Pacific Accounting Review, 22(1), 22–41Dechow, P., & Dichev, I. (2002). The Quality of Accruals and Earnings: The Role of Accrual Estimation Errors. The Accounting Review, 77, 35-59.DeFond, M., & Jiambalvo, J. (1994). Debt covenant violation and manipulation of accruals. Journal of Accounting and Economics, 17(1), 145–176.DeFond, M.L., & Park, C.W. (1997). Smoothing income in anticipation of future earnings. Journal of Accounting and Economics, 23(2), 115–139.Dichev, I., & Skinner, D. (2004). Large sample evidence on the debt covenant hypothesis. Journal of Accounting Research, 40(4), 1091–1123.Đinh Thị Thu T., Nguyễn Vĩnh K. (2016). Tác động của hành vi điều chỉnh thu nhập đến khả năng hoạt động liên tục trong kế toán: Nghiên cứu thực nghiệm cho các doanh nghiệp niêm yết tại Việt Nam, Tạp chí phát triển khoa học và công nghệ, Quí 3, tr.96-108.Đỗ Thị Vân Trang (2015). Các mô hình đánh giá chất lượng báo cáo tài chính, Tạp chí chứng khoán Việt Nam, 200, tr 18-21.Habib, A., Uddin Bhuiyan, B., & Islam, A. (2013). Financial distress, earnings management and market pricing of accruals during the global financial crisis. Managerial Finance, 39(2), 155-180.Jaggi, B., & Lee, P. (2002). Earnings management response to debt covenant violations and debt restructuring. Journal of Accounting, Auditing & Finance, 17(4), 295–324.Kasznik, R., (1999). On the association between voluntary disclosure and earnings management. Journal of accounting research, 37(1), pp.57-81.Lu, J. (1999). An empirical study of earnings management by loss-making listed Chinese companies. KuaijiYanjiu (Accounting Research), (9), 25–35.McNichols, M.F. and Stubben, S.R., (2008). Does earnings management affect firms’ investment decisions?. The accounting review, 83(6), pp.1571-1603.Selahudin, N.F., Zakaria, N.B., & Sanusi, Z.M. (2014). Remodelling the earnings management with the appear- ance of leverage, financial distress and free cash flow: Malaysia and Thailand evidences. Journal of Applied Sciences, 14(21), 2644–2661.Skinner, D.J., & Sloan, R. (2002). Earnings surprises, growth expectations, and stock returns or don’t let an earnings torpedo sink your portfolio. Review of Accounting Studies, 7(2/3), 289–312.Sweeney, A.P., (1994). Debt-covenant violations and managers' accounting responses. Journal of Accounting & Economics, 17(3): 281-308.Trần Thị Thùy Linh, Mai Hoàng Hạnh (2015). Chất lượng báo cáo tài chính và kỳ hạn nợ ảnh hưởng đến hiệu quả hoạt động của doanh nghiệp Việt Nam, Tạp chí phát triển kinh tế, 10, tr.27-50.Trương Thị Thùy Dương (2017). Nâng cao chất lượng báo cáo tài chính công ty đại chúng, Tạp chí tài chính, 1(3), tr.55-56.Uwuigbe, Ranti, Bernard, (2015). Assessment of the effects of firm’s characteristics on earnings management of listed firms in Nigeria, Asian Economic and Financial Review,5(2):218-228.

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