Early Earnings Releases and the Role of Accounting Quality

2021 ◽  
Author(s):  
Scott E. Seavey ◽  
James D. Whitworth ◽  
Michael J Imhof
Keyword(s):  
Financial Reporting ◽  
Market Demand ◽  
Accounting Quality ◽  
Managerial Ability ◽  
Public Companies ◽  
Auditor Tenure ◽  
Complex Process ◽  
Ex Ante ◽  
Earnings Releases

More than half of U.S. public companies announce earnings before audit completion. We examine how accounting quality, as a measure of the ex-ante reliability of earnings, affects the decision to release earnings early. Using four proxies for accounting quality, we show that firms with higher accounting quality are more likely to release earnings before a completed audit, and that the association is stronger when market demand for timely earnings is high. We provide evidence that accounting quality remains important in the timing of earnings release even after controlling for other factors which affect earnings reliability, such as managerial ability, auditor tenure, and financial reporting problems in a prior period. Overall we emphasize the role of accounting quality in the complex process of when to release earnings relative to audit completion, and suggest that the importance of the audit in the earnings release decision varies based on firm-specific accounting quality.

scholarly journals The Role of Financial Reporting Quality in Accessing to Financial Debt: Evidence From Italy

2018 ◽  
Vol 8 (3) ◽  
pp. 278
Author(s):  
Andrea Rey ◽  
Giovanni Landi
Keyword(s):  
Financial Reporting ◽  
Financial Institution ◽  
Reporting Quality ◽  
Positive Association ◽  
Financial Statement ◽  
Financial Reporting Quality ◽  
Accounting Quality ◽  
Accrual Quality

This paper aims to assess whether financial reporting quality affect the access of Italian Non-SME firms to financial debt. In order to measure the financial reporting quality, we assume as proxy the accrual quality. We carried out a regression analysis, using financial statement data of firms sampled. The results reveal a positive association between financial reporting quality and the access to bank and financial institution debt. In addition, our findings also show no association between financial debt maturity and the accounting quality of firms.

Financial Reporting Quality and Investment Efficiency of Private Firms in Emerging Markets

2011 ◽  
Vol 86 (4) ◽  
pp. 1255-1288 ◽  
Author(s):  
Feng Chen ◽  
Ole-Kristian Hope ◽  
Qingyuan Li ◽  
Xin Wang
Keyword(s):  
Emerging Markets ◽  
Financial Reporting ◽  
Public Information ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Private Firms ◽  
Investment Efficiency ◽  
Market Demand ◽  
Firm Level

ABSTRACT Prior research shows that financial reporting quality (FRQ) is positively related to investment efficiency for large U.S. publicly traded companies. We examine the role of FRQ in private firms from emerging markets, a setting in which extant research suggests that FRQ would be less conducive to the mitigation of investment inefficiencies. Earlier studies show that private firms have lower FRQ, presumably because of lower market demand for public information. Prior research also shows that FRQ is lower in countries with low investor protection, bank-oriented financial systems, and stronger conformity between tax and financial reporting rules. Using firm-level data from the World Bank, our empirical evidence suggests that FRQ positively affects investment efficiency. We further find that the relation between FRQ and investment efficiency is increasing in bank financing and decreasing in incentives to minimize earnings for tax purposes. Such a connection between tax-minimization incentives and the informational role of earnings has often been asserted in the literature. We provide explicit evidence in this regard.

scholarly journals The Role of IFRS on Financial Reporting Quality and Global Convergence: A Conceptual Review

2019 ◽  
Vol 3 (1) ◽  
pp. 67
Author(s):  
Auwalu Musa
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Accounting Quality ◽  
Ifrs Adoption ◽  
The World ◽  
Timely Loss Recognition

This study examines the role of International Financial Reporting Standards on financial reporting quality and the global convergence. The IFRS adoption is already an issue of global relevance across countries of the world due to the quest for uniformity, reliability and comparability of financial statements of companies. The adoption of IFRS in Europe is an example of accounting quality across-borders with different institutional frameworks and enforcement rules. This allows investigating whether, and to what extent accounting regulation per se can affect the quality of financial reporting and leads to convergence in financial reporting. Specifically, the study review how the change in the recognition and measurement of firms operating accrual item, the loan loss provision, affects income smoothing behaviour and timely loss recognition. The study found that the IFRS convergence reduces the scope for earnings management, is related to more timely loss recognition and leads to more value relevant accounting measures. Thus, the study reviews background and guidance on the change in financial reporting quality following extensive IFRS adoption around the world countries. The study found that a difference in accounting quality is related to country’s overall infrastructure setting. The study also highlights the importance of investor protection for financial reporting quality and the need for regulators to design mechanisms that limit managers' earnings management practice. The study found from different literatures that the adoption of IFRS leads to higher quality of accounting numbers and improve foreign direct investment across countries.

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.

FINANCIAL DIAGNOSTICS IN THE CRISIS MANAGEMENT SYSTEM

2020 ◽  
Author(s):  
Vitalij Kudelskyi ◽  
Keyword(s):  
Crisis Management ◽  
Financial Reporting ◽  
Management System ◽  
Financial Stability ◽  
Enterprise Management ◽  
Complex Process ◽  
Enterprise Management System ◽  
Definition Of ◽  
Constituent Elements

The article is devoted to the study of financial diagnostics and the role in the crisis management system. The necessity of financial diagnostics is substantiated. The author emphasizes the need to systematically provide management with information about the current level of financial stability. The essence of the concept of "diagnostics" is investigated. The author's interpretation of diagnostics is formed. Methods of diagnostics are investigated. The essence of the concept of "financial diagnostics" is analyzed. Methods of financial diagnostics are determined. Methods of financial diagnostics are investigated. The author's definition of financial diagnostics is formed. The results of financial diagnostics are investigated. The constituent elements of financial diagnostics are investigated. Methods of financial diagnostics are investigated. The concept of "crisis management" is analyzed. The author's definition of anti-crisis management is formed. The purpose of crisis management is investigated. The object of crisis management has been identified. The subject of anti-crisis management is formed. Problems leading to crises or bankruptcy have been identified. The input information of financial diagnostics is investigated. Financial reporting is defined as a source of information for financial diagnostics. The functions of financial diagnostics are highlighted. The condition of the object and the process of financial diagnostics are studied. The reasons for conducting financial diagnostics are identified. The influence of factors on the process of financial diagnostics is investigated. An anti-crisis management system has been formed. The functions of crisis management are investigated. Approaches to management in the crisis period are investigated. The stages of anti-crisis man-agement of the enterprise are investigated.The complex process of information re-search is determined. Methods and types of crisis management are investigated. The role of financial diagnostics in the crisis management system is determined. The information of anti-crisis management technology is investigated. The place of financial diagnostics in the enterprise management system is determined. The bases of financial diagnostics are investigated.

scholarly journals Financial Reporting Quality, Private Information, Monitoring, and the Lease-versus-Buy Decision

2010 ◽  
Vol 85 (4) ◽  
pp. 1215-1238 ◽  
Author(s):  
Anne Beatty ◽  
Scott Liao ◽  
Joseph Weber
Keyword(s):  
Financial Reporting ◽  
Private Information ◽  
Capital Expenditure ◽  
Balance Sheet ◽  
Reporting Quality ◽  
Accounting Quality ◽  
Control Rights ◽  
Information Monitoring ◽  
Accounting Reports

ABSTRACT: A flourishing stream of research suggests that liquidity-constrained firms with low accounting quality have limited access to capital for investments. We extend this research by investigating whether these firms are more likely to lease their assets. Lessors’ superior control rights allow them to provide capital to constrained firms with low-quality accounting reports. Consistent with this conjecture, we find that low accounting quality firms have a higher propensity to lease than purchase assets. To verify that leasing does not merely reflect these firms’ desire for off-balance-sheet accounting, we investigate whether banks’ access to private information and monitoring affect the relation between accounting quality and leasing. We find the association between accounting quality and leasing decreases when banks have higher monitoring incentives and when loans contain capital expenditure provisions. These results suggest that other mechanisms can substitute for the role of accounting quality in reducing information problems.

Business Model Literature Overview

2014 ◽  
pp. 79-130 ◽  
Author(s):  
Ales Novak
Keyword(s):  
Business Model ◽  
Financial Reporting ◽  
Business Models ◽  
Potential Role ◽  
Financial Instruments ◽  
Business Logic ◽  
Literature Overview ◽  
Ifrs 9 ◽  
Definition Of

The term ?business model' has recently attracted increased attention in the context of financial reporting and was formally introduced into the IFRS literature when IFRS 9 Financial Instruments was published in November 2009. However, IFRS 9 did not fully define the term ‘business model'. Furthermore, the literature on business models is quite diverse. It has been conducted in largely isolated fashion; therefore, no generally accepted definition of ?business model' has emerged. Therefore, a better understanding of the notion itself should be developed before further investigating its potential role within financial reporting. The aim of this paper is to highlight some of the perceived key themes and to identify other bases for grouping/organizing the literature based on business models. The contributions this paper makes to the literature are twofold: first, it complements previous review papers on business models; second, it contains a clear position on the distinction between the notions of the business model and strategy, which many authors identify as a key element in better explaining and communicating the notion of the business model. In this author's opinion, the term ‘strategy' is a dynamic and forward-looking notion, a sort of directional roadmap for future courses of action, whereas, ‘business model' is a more static notion, reflecting the conceptualisation of the company's underlying core business logic. The conclusion contains the author's thoughts on the role of the business model in financial reporting.

Composition and characteristics of the financial statements elements in accordance with IFRS

2020 ◽  
pp. 36-42
Author(s):  
Mohammad Tariq Jassim
Keyword(s):  
Financial Reporting ◽  
Financial Statements ◽  
International Financial Reporting Standards ◽  
International Accounting ◽  
Reporting Standards ◽  
Financial Reporting Standards ◽  
Current Trends ◽  
Similarities And Differences ◽  
Qualitative Characteristics

In a market economy, the role of International Financial Reporting Standards is increasing. In order to understand their significance in modern conditions it seems necessary to consider the peculiarities of evolution of IFRS formation. The article reflects actual issues concerning the role and significance of International Accounting and Reporting Standards in modern conditions. The author has defined the necessity of applying International Accounting and Reporting Standards by Russian companies. The article highlights the main elements and users of financial statements prepared on the basis of IFRS, and analyzes the similarities and differences that exist in the formation of financial statements, based on the requirements of IFRS and RAS. The main qualitative characteristics of financial statements are considered in detail. Based on the results of the research, the author has identified current trends in the transition to international financial reporting standards.

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