scholarly journals Accounting Information Quality and the Clustering of Stock Prices

2020 ◽  
Vol 23 (2) ◽  
pp. 182-210
Author(s):  
Ahmed Baig ◽  
Benjamin M. Blau ◽  
Jie Hao
Keyword(s):  
Financial Markets ◽  
Stock Prices ◽  
Information Quality ◽  
Audit Quality ◽  
Accounting Information ◽  
Audit Fees ◽  
Information Environment ◽  
Big 4 ◽  
Accounting Information Quality ◽  
Price Clustering

The foundation of economic theory is based on the premise that prices will converge to their equilibrium value. However, prior research has documented that stock prices cluster on round pricing increments. In this study, we develop and test the hypothesis that audit quality and the management of earnings—both of which affects the information environment of the firm—influence the degree of price clustering. Results show that firms with Big 4 auditors have less clustering in their stock prices while firms with higher abnormal audit fees, more discretionary accruals, and firms that tend to manipulate earnings have a higher degree of price clustering. These findings support our hypothesis and suggest that accounting information quality helps explain the price clustering anomaly and subsequently influences the efficiency of financial markets.

Accounting Information Quality, Financing Constraints, And Company Innovation Investment Efficiency By Big Data Analysis

2022 ◽  
Vol 34 (3) ◽  
pp. 0-0
Keyword(s):  
Information Quality ◽  
Accounting Information ◽  
Big Data Analysis ◽  
Information Environment ◽  
Financing Constraints ◽  
Investment Efficiency ◽  
Agency Conflict ◽  
Corporate Innovation ◽  
Accounting Information Quality ◽  
The Relationship

This paper takes the listed companies in China from 2008 to 2017 as the research sample to study the relationship between accounting information quality (AIQ) and company innovation investment efficiency. The results show that AIQ is negatively correlated with both the underinvestment and overinvestment of corporate innovation. Further, AIQ can alleviate financing constraints and reduce the lack of innovation investment; At the same time, AIQ can also alleviate the agency conflict and reduce the excessive investment in innovation. Finally, AIQ can promote the innovation investment efficiency of companies with low information environment.

Accounting Information Quality, Interbank Competition, and Bank Risk-Taking

2014 ◽  
Vol 90 (3) ◽  
pp. 967-985 ◽  
Author(s):  
Carlos Corona ◽  
Lin Nan ◽  
Gaoqing Zhang
Keyword(s):  
False Alarm ◽  
Risk Taking ◽  
Information Quality ◽  
Accounting Information ◽  
Capital Requirements ◽  
Quality Of Accounting Information ◽  
Accounting Information Quality ◽  
Fierce Competition ◽  
Excessive Risk Taking

ABSTRACT We study the interaction between interbank competition and accounting information quality and their effects on banks' risk-taking behavior. We identify an endogenous false-alarm cost that banks incur when forced to sell assets to meet capital requirements. We find that when the interbank competition is less intense, an improvement in the quality of accounting information encourages banks to take more risk. Keeping the banks' investments in loans constant, the provision of high-quality accounting information reduces the false-alarm cost of assets sales and improves the discriminating efficiency of the capital requirement policy. When considering the banks' endogenous investment decisions, however, this improvement in discriminating efficiency causes excessive risk-taking, because banks respond by competing more aggressively in the deposit market, and the increase in deposit costs motivates banks to take more risk. Our paper shows that improving information quality increases risk-taking with mild competition, but has no effect under fierce competition.

Spatial Competition in Local Audit Markets and the Fallout on Deloitte from the 2007 PCAOB Censure

2016 ◽  
Vol 36 (2) ◽  
pp. 1-19 ◽  
Author(s):  
Jeff P. Boone ◽  
Inder K. Khurana ◽  
K. K. Raman
Keyword(s):  
Market Power ◽  
Audit Quality ◽  
Spatial Competition ◽  
Spatial Location ◽  
Audit Fees ◽  
Audit Market ◽  
Big 4 ◽  
Audit Fee ◽  
The Face ◽  
Market Leader

SUMMARY We examine whether Deloitte's spatial location in local audit markets affected the firm's adverse fallout—in terms of decreased ability to retain new clients and maintain audit fees—from the 2007 PCAOB censure. We motivate our inquiry by the notion that auditor-client alignment and auditor-closest-competitor distance can help differentiate the incumbent Big 4 auditor from other Big 4 auditors and thus provide market power, i.e., inhibit clients from shopping for another supplier because of the lack of a similar Big 4 provider in the local audit market. Consequently, it seems reasonable that the increase in switching risk and loss of fee growth suffered by Deloitte following the 2007 PCAOB censure will be lower in local markets where Deloitte was the market leader and its market share distance from its closest competitor was greater. Our findings suggest that the decline in Deloitte's audit fee growth rate following the 2007 PCAOB censure was concentrated in the pharmaceutical industry, although the client loss rate appears to have occurred more broadly (across all cities and industries). Collectively, our findings suggest that audit quality issues override auditor market power, i.e., differentiation does not provide Big 4 firms market power in the face of adverse regulatory action. JEL Classifications: G18; L51; M42; M49.

Did the 2005 Deferred Prosecution Agreement Adversely Impact KPMG's Audit Practice?

2018 ◽  
Vol 38 (1) ◽  
pp. 77-102 ◽  
Author(s):  
Matthew Baugh ◽  
Jeff P. Boone ◽  
Inder K. Khurana ◽  
K. K. Raman
Keyword(s):  
Service Provider ◽  
Audit Quality ◽  
Spillover Effect ◽  
Audit Fees ◽  
Data Availability ◽  
Department Of Justice ◽  
Big 4 ◽  
Tax Shelters

SUMMARY We examine the consequences of misconduct in a Big 4 firm's nonaudit practice for its audit practice. Specifically, we examine whether KPMG's audit practice suffered a loss of audit fees and clients and/or a decline in factual audit quality following the 2005 deferred prosecution agreement (DPA) with the Department of Justice for marketing questionable tax shelters. We find little evidence that the DPA adversely impacted KPMG's audit practice by way of either audit fees or the likelihood of client gains/losses, suggesting little or no harm to KPMG's audit reputation. We also find that the DPA had no effect on the firm's factual audit quality, even for those audit clients that dropped KPMG as their tax service provider. Collectively, our findings suggest that there was no spillover effect from the DPA to KPMG's audit practice. Data Availability: All data are publicly available.

Do globalisation and adoption of IFRS by banks in Africa lead to less earnings management?

2019 ◽  
Vol 17 (2) ◽  
pp. 222-248 ◽  
Author(s):  
Mohammed Amidu ◽  
Haruna Issahaku
Keyword(s):  
Financial Reporting ◽  
Design Methodology ◽  
Information Quality ◽  
Accounting Information ◽  
Financial Statements ◽  
International Standards ◽  
Content Type ◽  
Financial Reporting Standards ◽  
Accounting Information Quality ◽  
National Economies

Purpose This paper aims to analyse the implications of globalisation and the adoption of international standards (International Financial Reporting Standards [IFRS]) for accounting information quality. Design/methodology/approach This paper uses a sample of 329 banks across 29 countries leading up to and beyond the implementation of IFRS to test for related hypotheses. Findings First, banks’ financial statements are prepared on the basis of international standards as national economies are integrated when social norms are diffused. Building on these results, the second test suggests that the relatively high-quality earnings among banks in Africa during the period is attributable to the adoption of and interaction of IFRS with globalisation and the strategy of banks to diversify within and across interest and non-interest income. Originality/value The authors investigate how globalisation and the adoption of IFRS affect accounting information quality.

scholarly journals ACCOUNTING INFORMATION QUALITY AND CORPORATE PERFORMANCE OF OIL AND GAS COMPANIES IN NIGERIA

2021 ◽  
pp. 25-44
Author(s):  
T.C. Macgregor ◽  
J.N Nwaiwu
Keyword(s):  
Information Quality ◽  
Oil And Gas ◽  
Corporate Performance ◽  
Accounting Information ◽  
Return On Equity ◽  
Oil Companies ◽  
Qualitative And Quantitative ◽  
Accounting Information Quality ◽  
Oil And Gas Companies ◽  
The Relationship

But knowing the unknown and therefore estimating the relationship between accounting information quality and corporate performance are still a difficult task. The aim of this empirical study is to explore the relationship between the accounting information quality and corporate performance of oil and gas companies in Nigeria. Data on different types of accounting information quality and return on equity were primarily collected from the respondents and analyzed using ordinary least square regression analysis the data with the aid of statistical package for social sciences version 25.0. The empirical result indicates that accounting information quality significantly relate to return n equity; explaining about 85.1% of the total variation in return and equity. Relevance, faithful representation was each found to significantly relate to return on equity. The study empirically conclude that accounting information quality has the potency to make significant contribution to quoted financial performance of oil and gas companies and recommends that having investigated theoretical and empirical issues, also considering the findings and conclusion, the following recommendations were made: There should be need for preparers of accounting information to improve on the accounting information quality devoid of window dressing and creative accounting, regular disclosure, transparency and accountability of such accounting information is required since investors are sensitive to qualitative and quantitative accounting information in assessing the performance of quoted oil companies in and outside Nigeria. Also in line with qualitative and quantitative of accounting information quality, financial statements of quoted oil companies in Nigeria should be prepared and presented according to laid down regulations and ethical standards duly observed to ensure accounting information presented for among users, most and public consumption do represent the oil companies’ economic reality during reported periods.

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