Corporate Social Responsibility and Financial Reporting Quality:Evidence from Restatements

2020 ◽  
Author(s):  
Yi-Hung Lin ◽  
Hua-Wei (Solomon) Huang ◽  
Mark E. Riley ◽  
Chih-Chen Lee
Keyword(s):  
Financial Reporting ◽  
Negative Relationship ◽  
Reporting Quality ◽  
Financial Statements ◽  
Financial Statement ◽  
Financial Reporting Quality ◽  
Csr Reporting ◽  
Corporate Social ◽  
Reporting Environment ◽  
The Relationship

We find a negative relationship between aggregate CSR scores and the probability that firms restated financial statements over the period 1991-2012. We then break that period into three sub-periods in order to determine whether the relationship holds for all three sub-periods. During the sub-periods of 1991-2001 and 2002-2005, the negative CSR score - restatement probability relationship holds. The negative relationship disappears in the 2006-2012 sub-period. Additional analyses indicate CSR scores are significantly higher in the 2006-2012 sub-period, suggesting the disappearance of the relationship between aggregate CSR scores and financial statement quality may relate to changes in CSR assessments and the CSR reporting environment. Our findings update the literature linking CSR scores and financial reporting quality and identify the need for further research as to the reasons the link between these constructs disappeared.

Does Auditor Explanatory Language in Unqualified Audit Reports Indicate Increased Financial Misstatement Risk?

2014 ◽  
Vol 89 (6) ◽  
pp. 2115-2149 ◽  
Author(s):  
Keith Czerney ◽  
Jaime J. Schmidt ◽  
Anne M. Thompson
Keyword(s):  
Financial Reporting ◽  
Reporting Quality ◽  
Positive Association ◽  
Financial Statements ◽  
Financial Statement ◽  
Financial Reporting Quality ◽  
Accounting Principles ◽  
Client Relationship ◽  
Financial Misstatement ◽  
Audit Reports

ABSTRACT According to auditing standards, explanatory language added at the auditor's discretion to unqualified audit reports should not indicate increased financial misstatement risk. However, an auditor is unlikely to add language that would strain the auditor-client relationship absent concerns about the client's financial statements. Using a sample of 30,825 financial statements issued with unqualified audit opinions during 2000–2009, we find that financial statements with audit reports containing explanatory language are significantly more likely to be subsequently restated than financial statements without such language. We find that this positive association is driven by language that references the division of responsibility for performance of the audit, adoption of new accounting principles, and previous restatements. In addition, we find that (1) “emphasis of matter” language that discusses mergers, related-party transactions, and management's use of estimates predicts restatements related to these matters, and that (2) the financial statement accounts noted in the explanatory language typically correspond to the accounts subsequently restated. In sum, our results suggest that present-day audit reports communicate some information about financial reporting quality.

The ISIS Impacts on the Political Connections, Board Interlock, and Quality of Financial Reporting

2021 ◽  
pp. 234779892110324
Author(s):  
Mahdi Salehi ◽  
Ali Zuhair Maalah ◽  
Hamideh Nazaridavaji
Keyword(s):  
Multiple Regression ◽  
Financial Reporting ◽  
Stock Exchange ◽  
Negative Relationship ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Political Connections ◽  
Islamic State ◽  
The Relationship

This research examines the relationship between political connections, board interlock, and the quality of financial reporting of the listed companies on the Iraq Stock Exchange (ISE) with ISIS's mediating role (the Islamic State of Iraq and Syria). This research is about the mediating part of ISIS in the relationship between board interlock, political connections, and financial reporting quality. The study attempts to reveal whether or not political connections and board interlock can improve financial reporting quality. A multiple regression model is used to test the research hypothesis. The samples consist of 245 (firm-year) companies listed on the ISE from 2012 to 2018, and the hypothesis is tested by multiple regression based on integrated data models. The results demonstrate a significant and negative relationship between political connections, board interlock, and financial reporting quality. Thus, higher political connections reduce the quality of financial reporting. The results also conveyed that ISIS contributes to the decline of this relationship. This research expands the literature review on ISIS’s impact on these engaged countries' economies.

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

Does corporate social responsibility disclosure improve firm investment efficiency?

2017 ◽  
Vol 16 (3) ◽  
pp. 348-365 ◽  
Author(s):  
Ma Zhong ◽  
Lucia Gao
Keyword(s):  
Financial Reporting ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Investment Efficiency ◽  
Firm Level ◽  
Content Type ◽  
Csr Reporting ◽  
Csr Disclosure ◽  
Corporate Social ◽  
The Impact

Purpose The purpose of this paper is to investigate the impact of corporate social responsibility (CSR) disclosure on firm-level investment efficiency. Design/methodology/approach An econometric model is used to estimate the impact of CSR reporting on investment efficiency on a sample of listed Chinese firms during the period from 2010 to 2013. Financial reporting quality is included in the model as a control variable. Investment efficiency is estimated based on existing models. Two scenarios are identified: under-investment and over-investment. Findings The results provide evidence of a higher level of investment efficiency for CSR reporting firms than for non-reporting firms. This relationship is, however, more pronounced in the over-investment scenario than in the under-investment scenario. In addition, the association between CSR disclosure and investment efficiency is stronger for firms with lower financial reporting quality (FRQ). These findings support the hypothesis that CSR disclosure provides effective incremental information that contributes to reduce information asymmetry and promote investment efficiency. Originality/value This is the first paper that directly tests the association between CSR disclosure and firm-level investment efficiency. The results suggest that firms and investors should consider the effect of CSR disclosure on information asymmetry and its impact on the availability and cost of capital. This work also contributes to the understanding of the economic impacts of CSR disclosure and provides arguments for regulatory entities to enforce CSR disclosure.

Auditor and FASB Responsibilities for Representing Underlying Economics—What U.S. Standards Actually Say

2018 ◽  
Vol 32 (3) ◽  
pp. 83-90 ◽  
Author(s):  
Zoe-Vonna Palmrose ◽  
William R. Kinney
Keyword(s):  
Financial Reporting ◽  
Audit Quality ◽  
Reporting Quality ◽  
Financial Statements ◽  
Financial Reporting Quality ◽  
Or Practice

SYNOPSIS Does the auditor's responsibility under U.S. authoritative guidance extend to providing assurance of financial reporting quality—specifically whether financial statements “faithfully reflect the firm's underlying economics”—after the auditor has concluded that financial statements are fairly presented in conformity with GAAP, in all material respects? The question arises because DeFond and Zhang (2014) state such a view and cite U.S. authoritative guidance as support. We review SEC, PCAOB, and FASB guidance and other sources and find no authoritative support for DeFond and Zhang's (2014) view. We also find that the PCAOB explicitly recognizes the lack of objective criteria that would be necessary to evaluate financial reporting quality beyond application of GAAP to events and transactions. Further, we find no evidence that practicing auditors do (separately) assess or assure that financial statements faithfully reflect the entire firm's underlying economics. Overall, these findings suggest DeFond and Zhang (2014) express a personal (and impracticable) normative view and not the auditor's actual responsibility or practice under extant U.S. standards. More broadly, results reinforce the importance of defining and measuring audit quality based on the auditor's actual responsibilities and the importance of accurately characterizing authoritative guidance and practice for scholarship regarding complex and multifaceted matters, including audit quality.

The relationship between cost stickiness and financial reporting quality in Tehran Stock Exchange

2018 ◽  
Vol 67 (9) ◽  
pp. 1550-1565 ◽  
Author(s):  
Mahdi Salehi ◽  
Nasrin Ziba ◽  
Ali Daemi Gah
Keyword(s):  
Financial Reporting ◽  
Design Methodology ◽  
Stock Exchange ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Statistical Software ◽  
Testing Hypotheses ◽  
Content Type ◽  
The Relationship ◽  
Cost Stickiness

Purpose The purpose of this paper is to investigate the relationship between financial reporting and cost stickiness in companies listed on the Tehran Stock Exchange. Design/methodology/approach Data of all Iranian manufacturing listed companies gathered for testing hypotheses during 2010–2016 and R statistical software are employed in order to analyzing data. Findings The results of this study indicate that there is a significant relationship between administrative, sale, material, labor and overhead costs and the financial reporting qualities of the companies under study. Originality/value The study focuses on relationship between financial reporting and cost stickiness in companies listed on the Tehran Stock Exchange, which is the first study of its type in Iran.

scholarly journals A literature review on the impact of IAS/IFRS and regulations on quality of financial reporting

2016 ◽  
Vol 6 (4) ◽  
pp. 102-114 ◽  
Author(s):  
Newman Wadesango ◽  
Edmore Tasa ◽  
Khazamula Milondzo ◽  
Ongayi Vongai Wadesango
Keyword(s):  
Financial Reporting ◽  
Accounting Standards ◽  
Reporting Quality ◽  
Financial Statements ◽  
Conclusive Evidence ◽  
Financial Reporting Quality ◽  
International Accounting Standards ◽  
Ifrs Adoption ◽  
The Impact

The International Accounting Standards Board (IASB) in its objectives and preamble, presume that IFRS adoption and perceived compliance to regulatory framework is associated with increased financial reporting quality. Based on these assumptions, this desktop study reviewed several documents to determine whether the IFRS adoption has led to increased financial reporting quality in Zimbabwe. The researchers reviewed literature on how the IAS/IFRS and regulations affect the financial reporting quality of listed companies. The factors around IFRS adoption were identified (mandatory, voluntary and convergence) and discussed in relation to the financial reporting quality. Evidence from previous studies conducted in line with this same issue shows that there is no conclusive evidence on how IFRS and regulations affect the financial reporting quality. Issues to be addressed in further studies include the importance of financial statements prepared under IFRS framework and the importance of compliance with accounting and auditing requirements.

scholarly journals Relevance of financial reporting quality - Theory and practice in Vietnamese enterprises

2017 ◽  
Vol 1 (Q2) ◽  
pp. 119-128
Author(s):  
Thuan Quoc Pham
Keyword(s):  
Conceptual Framework ◽  
Financial Reporting ◽  
Accounting Standards ◽  
Reporting Quality ◽  
Professional Associations ◽  
Financial Statements ◽  
Theory And Practice ◽  
Financial Information ◽  
Financial Reporting Quality

Financial reporting quality is one the most interesting topics which draw a great deal of attention to researchers and scientists in the field of accounting (Céline Michailesco, 2010). In the review of research on financial information from 1980 to 2016, Pham (2016) found that characteristics of useful financial information are relatively diverse with as many as 15 attributes being identified. In addition, he also found that all research in any period has employed the characteristics published by professional associations such as American Institute of Accountants, Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB as theoretical basis. Research on the quality of financial information is diverse yet have many things in common, above all is the Relevance characteristic which considered to be the basic qualitative component of the quality of financial information in financial statements. Conceptual Framework officially issued by FASB & IASB in 2010 (FASB & IASB 2010) has further confirmed Relevance is the basic quality component of financial information. Compared with previous announcements, there has been a considerable change in the criteria and attributes used to evaluate the appropriateness of Relevance characteristic of financial information in financial statements. This study aims at confirming the importance of the Relevance component in evaluating the quality of financial information, clarifyingg the characteristics of Relevance measurement before and after Conceptual Framework 2010 and constructing relevant scales as well as measuring the qualitative characteristic of Relevance among enterprises in Vietnam.

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