scholarly journals The Price Contagion Effects of Financial Reporting Fraud and Reputational Losses: Evidence from the Individual Audit Partner Level

2015 ◽  
Author(s):  
Ferdinand A. Gul ◽  
Chee Yeow Lim ◽  
Kun Wang ◽  
Yanping Xu
Keyword(s):  
Financial Reporting ◽  
Contagion Effects ◽  
The Individual ◽  
Financial Reporting Fraud

scholarly journals Stock Price Contagion Effects of Low-Quality Audits at the Individual Audit Partner Level

2018 ◽  
Vol 38 (2) ◽  
pp. 151-178 ◽  
Author(s):  
Ferdinand A. Gul ◽  
Chee Yeow Lim ◽  
Kun Wang ◽  
Yanping Xu
Keyword(s):  
Financial Reporting ◽  
Stock Price ◽  
Personal Characteristics ◽  
Time Lapse ◽  
Share Price ◽  
Cross Sectional ◽  
Contagion Effects ◽  
Audit Firms ◽  
Stock Market Valuation ◽  
The Individual

SUMMARY We use Chinese audit partner data to show that partners associated with financial reporting fraud induce share price declines among non-fraudulent firms audited by the same audit partners. In cross-sectional analyses, we find that share price declines are more pronounced when low-quality partners (LQPs) failed to issue modified audit opinions during the period in question and when the LQPs were from one of the Top 10 audit firms. Additional analyses show that investors impose larger penalties on contagion firms when fraudulent firms are larger and the time lapse between sanction and fraud commitment is shorter. The personal characteristics of LQPs (except gender) do not cause a difference in market reaction to contagion firms. Overall, our results speak to the importance of audit partner identity to stock market valuation. JEL Classifications: M41; M42; M48.

scholarly journals Why “Less is More” in Non-Financial Reporting Initiatives: Concrete Steps Towards Supporting Sustainability

2020 ◽  
Vol 10 (2) ◽  
Author(s):  
Georgina Tsagas ◽  
Charlotte Villiers
Keyword(s):  
Financial Reporting ◽  
Corporate Sustainability ◽  
Sustainability Reporting ◽  
Integrated Reporting ◽  
Less Is More ◽  
Csr Reporting ◽  
Corporate Reporting ◽  
Long Run ◽  
The Individual ◽  
Key Aspects

AbstractCalls are repeatedly made on corporations to respond to the challenges facing the planet from a sustainable development perspective and governments take solace in the idea that corporations' transparency on their corporate activity in relation to sustainability through voluntary reporting is adequately addressing the problem. In practice, however, reporting is failing to deliver truly sustainable results. The article considers the following questions: how does the varied reporting landscape in the field of non-financial reporting impede the objectives of fostering corporations' sustainable practices and which initiative, among the options available, may best meet the sustainability objectives after a decluttering of the landscape takes place?The article argues that the varied corporate reporting landscape constitutes a key obstacle to fostering sustainable corporate behaviour, insofar as the flexible and please all approach followed in the context of corporate sustainability reporting offers little to no real incentive to companies to behave more sustainably and ultimately pleases none in the long run. The case made is that “less is more” in non-financial reporting initiatives and hence the article calls for a revision of key aspects of the European Non-Financial Reporting Directive, which, as is argued, is more likely to achieve the furtherance of sustainable corporate behaviour. Although the different reporting requirements offer the benefits of focussing on different corporate goals and activities, targeting different audiences and allowing for a level of flexibility that respects the individual risks to sustainability associated with each industry, the end result is a landscape that lacks overall consistency and comparability of measurements and accountabilities, making accountability more, rather than less, difficult to achieve.The article acknowledges the existence of several variances relating to the notion of sustainability per se, which continues to remain a contested concept and variances between companies and industries in relation to how each is operating sustainably or unsustainably respectively. Such variances have so far inhibited the legislator from easily outlining through tailored legislation the individual risks to global sustainability in an all-encompassing manner. The end product is a chaotic system of financial reporting, CSR reporting, non-financial reporting and integrated reporting and little progress to increase comparability and credibility in order for companies to be held accountable and to behave in ways that do not harm the planet. A “clean up” of the varied initiatives in the terrain of non-financial reporting is recommended.

Approaches to the Organization of International Accounting in Russian Enterprises

TEM Journal ◽  
2021 ◽  
pp. 249-258
Author(s):  
Ekaterina V. Surkova ◽  
Galina A. Skachko ◽  
Larisa K. Nikandrova ◽  
Maria M. Starkova ◽  
Nina F. Sakharova
Keyword(s):  
Financial Reporting ◽  
Accounting Information ◽  
Financial Statements ◽  
Reporting Standards ◽  
Optimal Method ◽  
Accounting Standard ◽  
Financial Reporting Standards ◽  
Advantages And Disadvantages ◽  
The Individual ◽  
Selection Of

The article discusses current issues of transformation of accounting information in accordance with international financial reporting standards (IFRS). This study is primarily aimed at developing approaches that determine the need for Russian enterprises to provide accounting information comparable at the international level. The authors analyze methods of transferring data from the Russian Accounting Standard (RAS) to IFRS. The methods used to form financial statements in accordance with IFRS are discussed. The issues of the application of these methods, as well as their advantages and disadvantages, are discussed. The author's approach to the selection of the optimal method of transformation is proposed taking into account the individual needs of organizations.

Financial Reporting Fraud: Public and Private Companies

2016 ◽  
Vol 1 (1) ◽  
pp. A27-A41 ◽  
Author(s):  
A. Scott Fleming ◽  
Dana R. Hermanson ◽  
Mary-Jo Kranacher ◽  
Richard A. Riley
Keyword(s):  
Financial Reporting ◽  
Primary Objective ◽  
Private Company ◽  
Private Companies ◽  
Public And Private ◽  
Public Companies ◽  
Multivariate Tests ◽  
Public Company ◽  
Public Versus Private ◽  
Financial Reporting Fraud

ABSTRACT This study uses survey data gathered by the Association of Certified Fraud Examiners (ACFE) and provided to the Institute for Fraud Prevention (IFP) to examine differences in the profile of financial reporting fraud (FRF) between private companies and public companies. Although private companies represent a significant portion of the economy, largely due to lack of data on these companies, most research on FRF examines only public companies. The primary objective of this study is to determine how private company FRF is different from FRF in public companies. Our multivariate tests reveal that public companies have stronger anti-fraud environments, are more likely to have frauds that involve timing differences, tend to experience larger frauds, have frauds that involve a larger number of perpetrators, and are less likely to have frauds that are discovered by accident. Overall, it appears that the stronger anti-fraud environment in public companies leads public company FRF perpetrators to use less obvious fraud methods (i.e., timing differences) and to involve larger fraud teams to circumvent the controls. These public company frauds are larger than in private companies, and their larger size may make them more likely to be detected through formal means, rather than by accident. Based on the results, we encourage auditors and others to be particularly attuned to the unique risks of the public versus private setting.

The Limitations of Financial Reporting on Innovation and Its Value-Relevance for the Investor's Decision-Making Process

2019 ◽  
pp. 390-418
Author(s):  
Francisco Leote ◽  
Ana Damião
Keyword(s):  
Decision Making ◽  
Financial Reporting ◽  
Value Relevance ◽  
Financial Statements ◽  
Individual Characteristics ◽  
Decision Making Process ◽  
Accounting Systems ◽  
Financial Factors ◽  
The Individual ◽  
Industry Sectors

This chapter aims to present some limitations of financial reporting on innovation with an impact on the investor's decision-making process. In order to do so, the authors show how accounting recognizes and measures innovation factors: the intangibles. Based on the literature, the authors discuss how the value relevance of financial reporting on innovation is conditioned by non-financial factors. The impacts of the adoption of IFRSs, the effect of the industry sectors and the effect of the individual characteristics of the different countries on the value relevance of the intangible assets are analyzed. The literature suggests a decrease in the value relevance of financial statements due to the manner in which intangibles are recognized and measured in accounting. However, financial reporting on innovation is value relevant to the investor's decision-making and is conditioned by non-financial factors. Value relevance differs among different industry sectors, between different countries and is conditioned by the accounting systems used in the preparation of the financial information.

Application of Fuzzy Logic to Fraud Detection

2005 ◽  
pp. 135-139
Author(s):  
Mary Jane Lenard ◽  
Pervaiz Alam
Keyword(s):  
Financial Reporting ◽  
Average Cost ◽  
Medical Insurance ◽  
Financial Statements ◽  
Third Party ◽  
Insurance Fraud ◽  
Fraudulent Financial Reporting ◽  
The Cost ◽  
The U.S ◽  
Financial Reporting Fraud

In light of recent reporting of the failures of some of the major publicly-held companies in the U.S. (e.g., Enron & WorldCom), it has become increasingly important that management, auditors, analysts, and regulators be able to assess and identify fraudulent financial reporting. The Enron and WorldCom failures illustrate that financial reporting fraud could have disastrous consequences both for stockholders and employees. These recent failures have not only adversely affected the U.S. accounting profession but have also raised serious questions about the credibility of financial statements. KPMG (2003) reports seven broad categories of fraud experienced by U.S. businesses and governments: employee fraud (60%), consumer fraud (32%), third-party fraud (25%), computer crime (18%), misconduct (15%), medical/insurance fraud (12%), and financial reporting fraud (7%). Even though it occurred with least frequency, the average cost of financial reporting fraud was the highest, at $257 million, followed by the cost of medical/insurance fraud (average cost of $33.7 million).

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