The Disciplinary Role of Financial Reporting Quality in Timing Merger Bids with Overvalued Equity

This study aims to investigate the relationship between audit committee and audit change in listed Indonesia Company. We use four variables for audit committee that is independence, size, financial expertise and activity. Besides, this study also uses three control variables (ROA, LEV, and SIZE). By using the Binary Logic Model (BLM) with panel data for 654 observation, we find that all hypotheses are rejected which means that there is no role of audit committee in determining the audit change. However, big and company with the higher leverage is less likely to change audit, firm. This finding has a practical and theoretical implication. For practical implication, regulator or government agent can increase the financial reporting quality by improving the role of audit committee by changing related mechanism.

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The effect of audit committee characteristics on financial reporting quality: The moderating role of audit quality in the Netherlands

Corporate Ownership and Control ◽

10.22495/cocv18i3art2 ◽

2021 ◽

Vol 18 (3) ◽

pp. 19-30 ◽

Cited By ~ 1

Author(s):

Sana Mardessi Masmoudi

Keyword(s):

Earnings Management ◽

Financial Reporting ◽

Audit Committee ◽

Audit Quality ◽

Reporting Quality ◽

Ordinary Least Squares ◽

Real Earnings Management ◽

Financial Reporting Quality ◽

Moderating Role

The purposes of this study are to shed light, on the one hand, on the effect of audit committee characteristics, namely independent members in audit committee, a financial expert in audit committee, frequency of meetings and audit committee size on financial reporting quality proxied by real earnings management. On the other hand, it aims to investigate the moderating role of audit quality in the relationship between audit committee characteristics and financial reporting quality. The objective is to contribute to the new evidence on the role of audit committee characteristics towards the financial reporting quality with audit quality as a moderator, particularly the appointment of Big 4 company. This study uses the ordinary least squares (OLS) regression to achieve the research purpose by evaluating the data collected from 90 public listed companies from 2010 to 2019 in the Dutch context. The results state that audit committee characteristics have a statistically significant relationship with real earnings management. However, the effect of audit committee meetings on abnormal operating cash flow and discretionary expenses is not significant. There is also evidence that audit quality positively moderates the audit committee and real earnings management links. Lastly, the findings of this study will help professional accountancy bodies and governments to highlight the relevance of earnings management in safeguarding trustworthy financial information, owners’ wealth and to enhance audit committee characteristics in improving audit quality, especially after the enforcement of the Dutch Corporate Governance Code in 2016.

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The role of information asymmetry and financial reporting quality in debt trading: Evidence from the secondary loan market

Journal of Accounting and Economics ◽

10.1016/j.jacceco.2008.08.001 ◽

2008 ◽

Vol 46 (2-3) ◽

pp. 240-260 ◽

Cited By ~ 243

Author(s):

Regina Wittenberg-Moerman

Keyword(s):

Information Asymmetry ◽

Financial Reporting ◽

Reporting Quality ◽

Financial Reporting Quality ◽

Loan Market ◽

Secondary Loan Market ◽

Role Of Information

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The Role of Financial Reporting Quality in Mitigating the Constraining Effect of Dividend Policy on Investment Decisions

The Accounting Review ◽

10.2308/accr-50387 ◽

2013 ◽

Vol 88 (3) ◽

pp. 1007-1039 ◽

Cited By ~ 28

Author(s):

Santhosh Ramalingegowda ◽

Chuan-San Wang ◽

Yong Yu

Keyword(s):

Financial Reporting ◽

Firm Value ◽

Dividend Policy ◽

Investment Decisions ◽

Reporting Quality ◽

Data Availability ◽

Financial Reporting Quality ◽

High Quality ◽

Investment Projects

ABSTRACT Miller and Modigliani's (1961) dividend irrelevance theorem predicts that in perfect capital markets dividend policy should not affect investment decisions. Yet in imperfect markets, external funding constraints that stem from information asymmetry can force firms to forgo valuable investment projects in order to pay dividends. We find that high-quality financial reporting significantly mitigates the negative effect of dividends on investments, especially on R&D investments. Further, this mitigating role of financial reporting quality is particularly important among firms with a larger portion of firm value attributable to growth options. In addition, we show that the mitigating role of high-quality financial reporting is more pronounced among firms that have decreased dividends than among firms that have increased dividends. These results highlight the important role of financial reporting quality in mitigating the conflict between firms' investment and dividend decisions and thereby reducing the likelihood that firms forgo valuable investment projects in order to pay dividends. Data Availability: Data are available from public sources identified in the paper.

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

International Journal of Accounting and Financial Reporting ◽

10.5296/ijafr.v8i3.13633 ◽

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.

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

The Accounting Review ◽

10.2308/accr-10040 ◽

2011 ◽

Vol 86 (4) ◽

pp. 1255-1288 ◽

Cited By ~ 273

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.

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