scholarly journals Financial Reporting Material Misstatements, Earnings Conservatism and Managerial Replacement Decisions

2021 ◽  
Vol 14 (1) ◽  
pp. 7-21
Author(s):  
Jo-Ting Wei
Keyword(s):  
Financial Reporting ◽  
Signal Theory ◽  
Legitimacy Theory ◽  
Organizational Image ◽  
Replacement Decisions

Purpose: Based on signal theory and legitimacy theory, this paper examines whether firms with financial reporting misstatements (restatements) would prefer conservative financial reporting to send signals regarding their determinants of improving financial reporting credibility and legitimate organizational image in Taiwan. This paper further examines whether these firms reduce the demand for conservative financial reporting after replacing managers in the reveal of restatements.

scholarly journals Web-based Financial Reporting Disclosure: Evidence from Selected Banks in the Kingdom of Saudi Arabia (KSA)

2020 ◽  
Vol 9 (2) ◽  
pp. 183-197 ◽  
Author(s):  
Adel M. Sarea
Keyword(s):  
Financial Reporting ◽  
Islamic Law ◽  
Positive Association ◽  
Legitimacy Theory ◽  
Kingdom Of Saudi Arabia ◽  
Web Based ◽  
Independent Variables ◽  
High Level ◽  
Transparency And Disclosure ◽  
Relative Factors

AbstractWith insights drawn from legitimacy theory undergirding perceived relative factors expected to influence the level of Web-Based Financial Reporting Disclosure (WBFRD), this paper sheds light on the level of the Web-Based Financial Reporting Disclosure (WBFRD) in selected banks in the KSA in 2017. Several gauges exist for measuring the level of transparency and disclosure practices. As a result of the unique characteristics of the banking sectors operating in the KSA under the Sharia-compliant (Islamic) law, however, the researcher eschewed employing Standard & Poor’s Transparency and Disclosure checklist. Accordingly, the researcher designed a 90-item index based on metrics identified in previous studies. The selected banks in the KSA evince a high level of Web-Based Financial Reporting Disclosure (WBFRD) on the order of 76%. Regression analysis indicates a positive association between the independent variables Bank Size, Bank age, and Profitability on one side, and the dependent variable Web-Based Financial Reporting Disclosure (WBFRD) on the other side.

Social responsibility or smoke screening: evidence from India

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nemiraja Jadiyappa ◽  
Bhavik Parikh ◽  
Namrata Saikia ◽  
Adam Usman
Keyword(s):  
Energy Consumption ◽  
Social Responsibility ◽  
Financial Reporting ◽  
Firm Value ◽  
Emerging Market ◽  
Negative Relationship ◽  
Public Image ◽  
Legitimacy Theory ◽  
Data Set ◽  
Content Type

Purpose The purpose of this study is to examine whether the choice of a firm to spend resources on corporate social responsibility (CSR) activities is associated with its actual social impacts as measured by its energy consumption and the quality of its financial reporting. Based on legitimacy theory, the authors argue firms in India use CSR expenditures as mere smoke screens to build a positive public image. Design/methodology/approach By using energy consumption per unit of sale as a measure of real environmental impact, the authors model firms' CSR investment behavior. Additionally, the authors use earnings management measures to examine whether CSR spenders engage in manipulating reported earnings, a practice socially responsible firms would not engage in. These hypotheses are tested using a panel data set of Indian firms for the period 2012–2014. Findings Consistent with legitimacy theory, the authors show firms that participate in socially undesirable activities such as heavy energy consumption and accounting manipulation are more likely to pursue CSR voluntarily. Additionally, the authors find evidence suggesting firms that voluntarily engage in CSR tend to have lower firm values. Originality/value This study examines the social and environmental concerns of firms that invest in CSR, especially in an emerging market context. The findings help understand the motivation for CSR behavior of corporate firms and may well explain the observed negative relationship between firm value and voluntary CSR spending observed in many emerging market contexts, especially in India.

scholarly journals Corporate Sustainability Practices in Polluting Industries: Evidence from India, China and USA

2020 ◽  
Vol 15 (1) ◽  
pp. 161-168
Author(s):  
Prem Sagar Mishra ◽  
◽  
Ajay Kumar ◽  
Niladri Das
Keyword(s):  
Financial Reporting ◽  
Social Performance ◽  
Corporate Sustainability ◽  
Sustainability Reporting ◽  
Legitimacy Theory ◽  
Reporting Practices ◽  
Corporate World ◽  
Financial Perspective ◽  
Sustainability Reports ◽  
Sustainability Practices

In recent years, the tilt of the corporate world towards non-financial reporting can be clearly seen from traditional accounting practices. Sustainability reporting disclosures are an important tool for providing information about the environmental and social performance of companies to their various stakeholders. From a financial perspective, for any firm, there is always a possibility of reporting more of the information that favours their interests or conceal that which is not in their favour. This study evaluates the annual and sustainability reports of 380 Indian, 400 Chinese and 400 USA companies from five highly polluting industries on the basis of GRI (global reporting initiatives) guidelines. From the result, it is inferred that the findings are consistent with the legitimacy theory. The result shows that the profitability and capital structure of firms in the sample do not affect the sustainability reporting practices significantly. In addition, larger firms have a tendency to disclose more information in their annual and sustainability reports than smaller firms.

scholarly journals Društvena odgovornost banaka u vrijeme financijske krize: ususret direktivi Europske unije o nefinancijskom izvještavanju

2017 ◽  
Vol 6 (1) ◽  
Author(s):  
Ana Kundid Novokmet ◽  
Bruna Bilić
Keyword(s):  
Financial Crisis ◽  
Social Responsibility ◽  
Financial Reporting ◽  
Banking Sector ◽  
Legitimacy Theory ◽  
Socially Responsible ◽  
Banking Business ◽  
Current Financial Crisis ◽  
Corporate Social ◽  
Voluntary Adoption

The current financial crisis reaffirmed the relevance of social responsibility and ethics in financial products. Frauds, scandals, collective law suits by organizations for consumer protection, negative reputations as well as increasing anti-corporate activism have not circumvented the banking industry. In a situation of constant emphasis of social costs and operating damages, the banks are expected to embrace social responsibility more significantly, as well as to endure the sizeable burden of the economic crisis. According to the legitimacy theory, the voluntary adoption of the corporate social responsibility concept within the banking business may serve as a method of building up the reputational capital of the banks and regaining the trust of society in banking products, all segments where it is important that socially responsible actions are adequately reported and disclosed. Thanks to the 5/EU on non-financial reporting of large-sized and listed companies as well as public-interest entities, social responsibility reporting will soon become mandatory for the banking sector. By giving an insight into the scale of social responsibility reporting of selected Croatian banks, this paper will address responsibility reporting has increased during the financial crisis, as the legitimacy theory suggests. It will also give an answer how prepared are banks for the new regulatory requirements in the nonfinancial reporting area.

Evaluating the temporal dimension of legitimisation strategies

2018 ◽  
Vol 15 (3) ◽  
pp. 282-312 ◽  
Author(s):  
Warren Maroun
Keyword(s):  
South African ◽  
Financial Reporting ◽  
Single Case ◽  
Organisational Change ◽  
Platinum Group Metals ◽  
Legitimacy Theory ◽  
Temporal Dimension ◽  
Mining Company ◽  
Content Type

Purpose The purpose of this study is to examine how social disclosures by one of the world’s largest producers of Platinum Group Metals are used to maintain and repair legitimacy in the context of South Africa’s prevailing socio-economic conditions and in response to the immediate challenge to legitimacy posed by violent worker demonstrations taking place at its operations in Marikana during August 2012. This is done to highlight how legitimacy strategies take account of the temporal characteristics of a threat to legitimacy and how these, in turn, may constrain the need for far-reaching organisational change. Design/methodology/approach Suchman’s (1995) outline of legitimacy theory and Laughlin’s (1991) model of organisational change provide a frame of reference for a detailed thematic content analysis which identifies the use of different strategies by an organization to respond to threats to its credibility and how these impact, resulting changes to business philosophies, policies and systems. Findings The study highlights the temporal dimension of legitimisation strategies. Social-related disclosures provided by the case entity in response to labour unrest are aimed at addressing both the episodic and continual threat to legitimacy resulting from the unfavourable event. These also have the effect of limiting the extent of internal changes to select business policies and sub-systems. Carefully managing legitimacy allows the case entity to avoid the need to reformulate its business ethos. Research limitations/implications The study deals only with a single case organisation. Although the emphasis is on highlighting themes and principles, results are not necessarily applicable in different contexts. Related to this, although the study deals with a major South African mining company, it does not prove the relevance of local cultural differences to the legitimisation process. Originality/value The study dispenses with the use of proxies, such as frequencies of disclosures, to demonstrate how organisations use non-financial reporting to secure legitimacy. Instead, it offers a detailed account of how different sub-sets of legitimacy are being mobilised in corporate reports response to long-term and episodic legitimacy considerations. In addition, the study offers one of the first interpretive accounts of how strategies used to manage legitimacy may constrain the potential of a material external shock resulting in internal organisational change. Finally, the study offers one of the first examples of the operation of legitimacy and organisational change theory from the African Continent.

The Effect of Firms' Depreciation Method Choice on Managers' Capital Investment Decisions

2008 ◽  
Vol 83 (2) ◽  
pp. 351-376 ◽  
Author(s):  
Scott B. Jackson
Keyword(s):  
Financial Reporting ◽  
Capital Investment ◽  
Investment Decision ◽  
Investment Decisions ◽  
Cash Flows ◽  
Method Choice ◽  
Straight Line ◽  
Replacement Decisions ◽  
Accelerated Depreciation ◽  
Executive Managers

This study examines whether straight-line depreciation, relative to accelerated depreciation, causes non-executive managers to make non-value-maximizing capital investment decisions. To do this, I conduct experiments in which managers must decide whether to continue using an existing asset or invest in a replacement asset. By design, replacing the existing asset yields higher cash flows and managers are aware of this fact. However, if the asset is replaced, then the greater remaining book value under straight-line depreciation relative to accelerated depreciation causes earnings to be lower. Lower earnings and psychological forces may push managers of firms that use straight-line depreciation away from making the economically efficient capital investment decision. The results suggest that managers of firms that use straight-line depreciation are less likely to invest in a replacement asset than are managers of firms that use accelerated depreciation. Further, the results suggest that managers perceive that an asset depreciated using straight-line depreciation has provided less retrospective utility than an asset depreciated using accelerated depreciation. In turn, I find that depreciation method-induced differences in managers' retrospective utility perceptions influence their prospective utility perceptions, which, in turn, influence managers' asset replacement decisions. By theoretically and empirically linking firms' depreciation method choice to managers' capital investment decisions, I provide evidence that a seemingly innocuous choice made for external financial reporting purposes can cause managers to make non-value-maximizing capital investment decisions.

scholarly journals Os Escândalos De Corrupção Na JBS S.A. E As Estratégias De Legitimidade Organizacional De Lindblom

2020 ◽  
Vol 23 (3) ◽  
pp. 309
Author(s):  
Pablinne De Paula Oliveira ◽  
Fernanda Fernandes Rodrigues ◽  
Mariana Guerra
Keyword(s):  
Financial Reporting ◽  
Securities And Exchange Commission ◽  
The Political ◽  
Legitimacy Theory ◽  
Financial Reports ◽  
Information User ◽  
The Media ◽  
Reference Form ◽  
The Impact ◽  
Management Report

Objective: Evaluate the narrative financial reports released by the Brazilian meatpacker JBS SA and identify how the company has sought to influence its information user while coping with its recent corruption scandals.  Method: A qualitative analysis of narrative financial reports – Market Notices, Material Facts, Management Report, and Reference Form and Prospects – was carried out for the base year 2017 based on the Legitimacy Theory (Lindblom, 1994).Originality/Relevance: Parameters are shown that could be used by managers, separately or concurrently, intentionally or unintentionally, to achieve, preserve or recover the company’s legitimacy. Mechanisms of manipulation are also shown as used in corporate reports.Results: JBS used Lindblom’s (1994) first legitimacy strategy in all reports, but more frequently in the Material Facts. Such a strategy was used for regulatory and penal reasons (i.e., the Securities and Exchange Commission of Brazil, and the Federal Public Prosecutor’s Office) as JBS acknowledged the impact of the negative event (i.e., the corruption scandals covered by the media) and provided information related to how it has addressed such a legitimacy-threatening problem.Theoretical/Methodological contributions: Lindblom’s (1994) 2nd and 3rd legitimacy strategies were not as frequent (9% and 12,5% respectively) as reported in the literature. Adding to the literature, this study provides a better understanding of financial reporting as an instrument of legitimacy and manipulation within the political and economic environment.

Pengaruh Budaya Terhadap Akuntansi, Auditing Dan Praktik Akuntansi Internasional

2016 ◽  
Vol 3 (1) ◽  
pp. 78-95
Author(s):  
Priyastiwi Priyastiwi
Keyword(s):  
Cultural Values ◽  
Leadership Style ◽  
Financial Reporting ◽  
National Level ◽  
Deep Understanding ◽  
Cultural Dimensions ◽  
Financial Disclosure ◽  
Cross Cultural Differences ◽  
The Future ◽  
The Impact

The purpose of this article is to provide the basic model of Hofstede and Grays’ cultural values that relates the Hofstede’s cultural dimensions and Gray‘s accounting value. This article reviews some studies that prove the model and develop the research in the future. There are some evidences that link the Hofstede’s cultural values studies with the auditor’s judgment and decisions by developing a framework that categorizes the auditor’s judgments and decisions are most likely influenced by cross-cultural differences. The categories include risk assessment, risk decisions and ethical judgments. Understanding the impact of cultural factors on the practice of accounting and financial disclosure is important to achieve the harmonization of international accounting. Deep understanding about how the local values may affect the accounting practices and their impacts on the financial disclosure are important to ensure the international comparability of financial reporting. Gray’s framework (1988) expects how the culture may affect accounting practices at the national level. One area of the future studies will examine the impact of cultural dimensions to the values of accounting, auditing and decision making. Key word : Motivation, leadership style, job satisfaction, performance

Pengaruh Konvergensi International Financial Reporting Standards (Ifrs) Terhadap Penghindaran Pajak(Tax Avoidance)

2018 ◽  
Vol 26 (2) ◽  
pp. 158-169
Author(s):  
Umi Wahidah ◽  
Sri Ayem
Keyword(s):  
Financial Reporting ◽  
Tax Evasion ◽  
Stock Exchange ◽  
Control Variable ◽  
Tax Avoidance ◽  
Sampling Technique ◽  
International Financial Reporting Standards ◽  
Reporting Standards ◽  
Control Variables ◽  
Financial Reporting Standards

This research aimed to examine the effect of the convergence of International Financial Reporting Standards (IFRS) on tax avoidance on companies listed in Indonesia Stock Exchange. Tax avoidance that used in this research was Cash Efective Tax Rate (CETR). This research is also use the control variable to get other different influence that different such as CSR, size, and earning management (EM. This research used populations sector of transport service companies that listed in Indonesia Stock Exchange. The data of this research taken from secondary data that was from the Indonesia Stock Exchange in the form of Indonesian Capital Market Directory (ICMD) and the annual report of the company 2011-2015. The method of collecting sample was purposive sampling technique, the population that to be sampling in this research was populations that has the criteria of a particular sample. Companies that has the criteria of the research sample as many as 78 companies. The method of analysis used in this research is multiple regression analysis. Based on regression testing shows that the convergence of International Financial Reporting Standards (IFRS) has a positiveand significant impact on tax evasion. This shows that IFRS convergence actually improves tax evasion practices. The control variables of firm size and earnings management also significantly influence the application of IFRS in improving tax avoidance practices, while CSR control variables have no role in convergence IFRS in improving tax evasion practice.

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