scholarly journals The effects of company characteristics on financial reporting quality – the application of the machine learning technique

2021 ◽  
Vol 34 (1) ◽  
pp. 57-72
Author(s):  
Željana Aljinović Barać ◽  
Mario Bilić
Keyword(s):  
Machine Learning ◽  
Financial Reporting ◽  
Reporting Quality ◽  
Listed Companies ◽  
Financial Reporting Quality ◽  
Accounting System ◽  
Machine Learning Technique ◽  
Reporting Practices ◽  
Economic Decision Making ◽  
Learning Technique

Purpose: The paper aims to determine the level of financial reporting quality (FRQ) in listed companies in Croatia, as an example of a macro-based accounting system with an underdeveloped capital market, and identify company characteristics that affect it. The paper systematizes the existing key knowledge of FRQ. Furthermore, it critically analyses the principles and direction of influence of various qualitative and quantitative as well as financial and non-financial characteristics of a company. Methodology: The empirical analyses involve joint testing of the machine learning technique (MLT) and the economic hypotheses. M5 algorithm is applied to identify the factors that influence the quality of voluntary reporting as well as the direction and intensity of their influence. Results: The results show that profitability, stock market listing duration (in years), and company size positively affect the level and extent of FRQ through voluntary disclosure of information in the annual financial reports of Croatian listed companies. In addition, differences in FRQ between different areas of economic activity and depending on the type of auditor were found. Conclusion: Croatian companies should adopt good reporting practices to meet the requirements of the global market and thus contribute to the improvement of the overall transparency system. The same is expected from the relevant regulatory authorities who should encourage full disclosure. The paper provides several scientific contributions: first, the spatial dimension of the research; second, the comprehensive literature review; and third, the MLT application in the research on FRQ. An important practical implication of these findings is that they will help financial statement users in the economic decision-making process.

Culture and financial reporting quality in GCC countries: what do we know about tribal culture?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Saeed Rabea Baatwah ◽  
Khaled Salmen Aljaaidi ◽  
Ehsan Saleh Almoataz ◽  
Zalailah Salleh
Keyword(s):  
Financial Reporting ◽  
Boards Of Directors ◽  
Fixed Effects ◽  
Reporting Quality ◽  
Financial Reporting Quality ◽  
Sensitivity Analyses ◽  
Content Type ◽  
Reporting Practices ◽  
Tribal Culture ◽  
Gcc Countries

PurposeAlthough the effect of culture on financial reporting practices has been addressed in earlier studies, the existing empirical evidence totally neglects an important dimension in Gulf Cooperation Council (GCC) markets: tribal culture. The authors fill this gap in the literature using Oman as the setting.Design/methodology/approachThe authors collect data for 583 company-year observations for companies listed on the Omani capital market, 2007–2014. The authors run a two-way fixed effects panel data regression to test their hypothesis.FindingsTribal culture has a negative effect on financial reporting quality (FRQ), measured by both accrual-based and real earnings management. The findings are robust under a variety of sensitivity analyses. In additional analysis, the findings confirm that tribal culture negatively moderates the effectiveness of internal monitoring mechanisms and is associated with low-quality auditing. Further, the authors find tribal culture associated with delayed financial information.Originality/valueTo the authors' knowledge, the study makes several contributions to the literature because it is the first archival evidence linking tribal culture with FRQ. It is the first to show that the effect of corporate governance mechanisms on FRQ is moderated by tribal culture. The study has valuable implications for policymakers, regulators, boards of directors and auditors in GCC countries as well as in countries with similar cultures.

scholarly journals Assessing Financial Reporting Quality of Listed Companies in Developing Countries: Evidence from Ghana

2019 ◽  
Vol 11 (9) ◽  
pp. 29
Author(s):  
Joseph Mbawuni
Keyword(s):  
Financial Reporting ◽  
Stock Exchange ◽  
Reporting Quality ◽  
Listed Companies ◽  
Sub Saharan Africa ◽  
Financial Reporting Quality ◽  
Financial Reports ◽  
Financial Reporting Standards ◽  
Sub Saharan

The adoption of International Financial Reporting Standards (IFRS) in Ghana is expected to improve the quality of financial reporting among companies in Ghana. This paper assesses the extent to which financial reports of companies listed on the Ghana Stock Exchange (GSE) meet financial reporting quality (FRQ) dimensions of IFRS. It was a descriptive study that employed two experienced professional chartered accountants who practice as independent auditors to use FRQ criteria to assess financial reports of 20 purposively selected companies listed on GSE for 2012 and 2013. Given the high inter-rater reliability (r = .96, 95% C.I., p < .0001), the findings indicate that, overall, FRQ of the listed companies meet FRQ standards by 56.48%. Generally, the financial reports were 60.95% faithfully represented, 51.01% relevant, 50.10% understandable, 40.09% comparable and 19.75% timely audited (or 80.25% untimely). Fundamental FRQ characteristics were more prevalent than enhancing FRQ. Poorly rated FRQ areas were in the use of historical cost as measurement basis, no use of graphs and tables to clarify information, no inclusion of comprehensive glossary, ratios and index, no information on adjustment in past accounting figures for future decisions, and no comparison of current and previous accounting periods and with those of other firms. The study concludes that FRQ of the listed companies is moderate but needs considerable improvement. Implications to theory, practitioners, policy makers and industry regulators are discussed. This study fills the dearth of empirical research in FRQ in IFRS-compliance companies in Sub-Saharan Africa in general and Ghana in particular.

scholarly journals An empirical study on the influence of IFRS and regulations on the quality of financial reporting of listed companies in a developing country

2016 ◽  
Vol 6 (4) ◽  
pp. 317-323 ◽  
Author(s):  
Newman Wadesango ◽  
Edmore Tasa ◽  
Ongayi Vongayi Wadesango ◽  
Khazamula Milondzo
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Negative Relationship ◽  
Reporting Quality ◽  
Target Population ◽  
Listed Companies ◽  
Financial Reporting Quality ◽  
Primary Data ◽  
Research Approach ◽  
Data Content

This research sought to establish if International Accounting Standards (IAS), International Financial Reporting Standards (IFRS) and regulations in Zimbabwe have been associated with increased financial reporting quality for listed companies. The study adopted mixed research approach. Questionnaires and unstructured interviews were used as research instruments to collect primary data. Content analysis was also adopted to triangulate the results. Target population was the listed companies in Zimbabwe. The study found a significant negative relationship between voluntary adoption of IFRS and earnings management of listed companies in Zimbabwe. The negative relationship may indicate that IFRS does not promote earnings management for voluntary adopters, thereby implying an increased financial reporting quality. It is recommended that top management, external auditors and regulators being the key players in standards, should work together and tighten compliance so that impact of IFRS could be felt more.

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