scholarly journals Earning Management and the Role of Accounting Conservatism at Firm Level

2016 ◽  
Vol 8 (2) ◽  
pp. 197 ◽  
Author(s):  
Abdul Haque ◽  
Azhar Mughal ◽  
Zohaib Zahid
Keyword(s):  
Financial Reporting ◽  
Research Study ◽  
Accounting Conservatism ◽  
Earning Management ◽  
Firm Level ◽  
Conservative Group ◽  
Reporting Practices ◽  
High Earning ◽  
The Relationship

<p>Accounting conservatism and earning management are very much pervasive in financial reporting practices. Therefore, this research study aims to investigate the relationship between accounting conservatism and earning management by using a sample of 317 non-financial Pakistani firms consisting of 4204 firm-years over the period 1999-2013. Conservatism at the firm level is estimated by using the C-Score measure and earning management is observed by calculating discretionary accruals. The estimated results show that one fourth (86 firms) of the sample is highly conservative; out of these 76% (65 firms) showed least earning management (Earning management&lt;Q<sub>1</sub>) while 24% (21 firms) showed moderate earning management (Q<sub>1</sub>&lt;Earning management&lt;Q<sub>3</sub>). On the other hand, in the least conservative group, 71% (57 firms) showed high earning management (Earning management &gt; Q<sub>3</sub>) and 29% (23 firms) showed earning management at a moderate level (Q<sub>1</sub>&lt;Earning management&lt;Q<sub>3</sub>). Thus the findings of the study reveal a negative association between accounting conservatism and earning management.</p>

In retrospect: The influence of chief executive officers’ historical relative pay on overconfidence

2021 ◽  
pp. 147612702110048
Author(s):  
J Daniel Zyung ◽  
Wei Shi
Keyword(s):  
Chief Executive Officers ◽  
Empirical Support ◽  
Chief Executive ◽  
Firm Level ◽  
Self Confidence ◽  
Self Worth ◽  
Executive Officers ◽  
Leadership Research ◽  
The Relationship

This study proposes that chief executive officers who have received over their tenure a greater sum of total compensation relative to the market’s going rate become overconfident. We posit that this happens because historically overpaid chief executive officers perceive greater self-worth to the firm whereby such self-serving attribution inflates their level of self-confidence. We also identify chief executive officer- and firm-level cues that can influence the relationship between chief executive officers’ historical relative pay and their overconfidence, suggesting that chief executive officers’ perceived self-worth is more pronounced when chief executive officers possess less power and when their firm’s performance has improved upon their historical aspirations. Using a sample of 1185 firms and their chief executive officers during the years 2000–2016, we find empirical support for our predictions. Findings from this study contribute to strategic leadership research by highlighting the important role of executives’ compensation in creating overconfidence.

ENVIRONMENTAL REGULATION IMPROVES THE FIRM PERFORMANCE IN THE PAPER INDUSTRY IN CHINA

2021 ◽  
pp. 1-32
Author(s):  
YONGLIANG YANG ◽  
LILI DING ◽  
YI LI
Keyword(s):  
Firm Performance ◽  
Positive Impact ◽  
Paper Industry ◽  
Average Treatment Effect ◽  
Small Scale ◽  
Positive Role ◽  
Firm Level ◽  
Innovation Ability ◽  
The Relationship

This research develops a difference-in-differences (DID) model to explore the relationship between environmental policy (The Measures for the Administration of Permits for the Discharge of Key Water Pollutants in the Huaihe and Taihu River Basins, MAPD) and the performance of firms involved in the paper and paper products industry (MPP) in China. Cost and innovation are introduced as mediators to explore the mediating effects. A firm-level dataset from 1998 to 2007 is adopted for empirical study. The findings support the positive role of the MAPD, and the average treatment effect is 0.016.The heterogeneity analysis shows that the MAPD exerts a positive impact on non-state-owned and small-scale enterprises, with coefficients of 0.018 and 0.021, respectively. Moreover, MAPD increases enterprise costs harming firm performance. On the other hand, it can promote firm performance by improving innovation ability.

The effect of equity ownership structure on non-conditional conservatism: an empirical study based on listed companies in Egypt

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Laila Mohamed Alshawadfy Aladwey
Keyword(s):  
Financial Reporting ◽  
Ownership Structure ◽  
Listed Companies ◽  
Negative Association ◽  
Accounting Conservatism ◽  
Content Type ◽  
Conditional Conservatism ◽  
Equity Ownership ◽  
Equity Ownership Structure ◽  
The Relationship

Purpose This paper aims to examine the effect of different modes of equity ownership structure in unconditional conservatism of financial reporting for non-financial listed companies in Egypt. Design/methodology/approach Using a large sample of Egyptian non-financial listed companies for the period from 2011–2018, this paper used the ordinary least square regression model to test the impact of equity ownership equity on accounting conservatism based on an accrual-based measure developed by Givoly and Hayn (2000) and Ahmed and Duellman (2007). Findings The paper finds that, on average, Egyptian listed companies tend to demonstrate lower levels of unconditional conservatism during the period from 2011–2018. Regarding the different patterns of equity shareholding, a negative association between unconditional conservatism and managerial ownership is found. Briefly, the mild equity shareholding of managers in Egyptian listed companies is accompanied by higher demand for conservative reporting. Besides, a negative association is also reported for the relationship between concentrated ownership and unconditional conservatism in which the concentration of shareholding by a few numbers of individual investors lessen the demand for conservatism. By contrast, a non-significance relationship is reported neither for institutional shareholders nor for governmental ownership in their relationship with unconditional conservatism. Research limitations/implications The paper does not take into account the modifications conducted on the Egyptian accounting standards according to decree number 69 for the year of 2019 because they were not valid until the publishing of this paper. It considers only non-conditional conservatism. Practical implications First, the paper provides clear empirical evidence that Egyptian listed companies are adopting less-conservative accounting policies in their financial reporting during a high-tension period that witnessed several radical political and economic events. This evidence should stimulate regulators and policymakers to revisit the reporting standards to improve the quality of financial information and should also guide investors’ decisions because it helps in clarifying their interpretation of figures and trends reported in financial statements. Second, the paper would direct the attention of the Egyptian government to the importance of increasing their investment in the stock market to enhance its regulatory role. Third, it gives some implications to investors and policymakers toward the shape of the relationship between accounting conservatism and each pattern of equity shareholding in Egypt. Originality/value This paper visualizes an image toward the current state of equity ownership structure for listed companies in Egypt within a period that witnessed critical vulnerabilities and irregularities. In addition, it addresses how the accounting conservatism would be shaped according to the different types of equity shareholdings in Egypt.

Nonfinancial Stakeholder Orientation and Conditional Accounting Conservatism

2020 ◽  
Vol 23 (04) ◽  
pp. 2050031
Author(s):  
Qing Liao Burke ◽  
Mengying Wang ◽  
Yijia Eddie Zhao
Keyword(s):  
Financial Reporting ◽  
Agency Costs ◽  
Accounting Conservatism ◽  
Cross Sectional ◽  
Reporting Practices ◽  
Stakeholder Orientation ◽  
Conditional Conservatism ◽  
Increasing Trend

This study examines the relation between conditional accounting conservatism and nonfinancial stakeholder orientation. Using the staggered passage of constituency statutes to identify increases in nonfinancial stakeholder orientation, we document that firms report more conservatively after statute adoption. Cross-sectional analyses indicate the increase in conditional conservatism after statute enactment is more pronounced for firms with higher agency costs between shareholders and managers, and less pronounced for firms with customers that have greater bargaining strength. Collectively, our study sheds light on how the increasing trend of nonfinancial stakeholder orientation plays a role in shaping financial reporting practices.

HR signals in the context of HRM-firm performance relationship: development of a conceptual framework

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Chiradip Bandyopadhyay ◽  
Kailash B. L. Srivastava
Keyword(s):  
Firm Performance ◽  
Human Resources ◽  
Conceptual Model ◽  
Design Methodology ◽  
Relationship Development ◽  
Firm Level ◽  
Content Type ◽  
Factors Affecting ◽  
The Relationship

PurposeThe purpose of this paper is to reframe human resources' (HR) systems and practices as HR signals drawing from conceptualizations of signals. The construct of the strength of signal is developed to quantify the attributional ability of HR signals. To examine the role of HR signals in influencing employee behaviours and firm performance, human resource management (HRM)-firm performance relationship is considered as a framework to develop a firm-level conceptual model which integrates factors affecting HR signals and its consequences.Design/methodology/approachThe paper examines the existing literature on the relationship between HRM and firm performance. In the process, the paper considers the concept of HR signal and makes a case for the strength of HR signal. Finally, the paper offers a conceptual model in order to link the antecedents and consequents of HR signals.FindingsThe paper offers a conceptual model to address the gaps in the relationship between HRM and firm performance. It also brings into focus an understanding of HRM as signals and its importance in understanding firm performance.Originality/valueThe paper enriches the existing literature by examining HRM as HR signals. It adds to the literature by considering the attributional ability of HR, through the construct of the strength of HR signals.

scholarly journals Venture Capital and Financial Reporting in Newly Public Firms

2018 ◽  
pp. 411-429
Author(s):  
Lars Helge Hass ◽  
Monika Tarsalewska
Keyword(s):  
Earnings Management ◽  
Empirical Evidence ◽  
Financial Reporting ◽  
Reporting Quality ◽  
Active Role ◽  
Real Earnings Management ◽  
Venture Capitalists ◽  
Public Firms ◽  
Reporting Practices

Financial intermediaries such as venture capitalists (VCs) not only provide financing, they also play an active role in firm governance and in financial practices before a firm goes public. Venture capitalists are actively engaged in monitoring and advising their portfolio firms. Thus, one also expects them to exert significant influence over the development of financial reporting practices. This chapter reviews recent literature and empirical evidence on VCs and financial reporting quality in newly public firms. It surveys the role of VCs in such activities as earnings management. In particular, it discusses how their monitoring activities and reputation can impact how their portfolio firms establish financial reporting practices. Subsequently, it also reviews the consequences of misreporting, and whether they affect VC behavior ex ante. Finally, the chapter uses recent data to provide empirical evidence on the effect of VCs on accrual and real earnings management.

The impact of corporate governance mechanisms on earning management: Literature review and proposing framework

2012 ◽  
Vol 2 (1) ◽  
pp. 134
Author(s):  
Ebraheem Saleem Salem Alzoubi ◽  
Mohamad Hisyam Selamat
Keyword(s):  
Corporate Governance ◽  
Conceptual Framework ◽  
Financial Reporting ◽  
Audit Committee ◽  
Research Study ◽  
Senior Management ◽  
Earning Management ◽  
Starting Point ◽  
Governance Practices ◽  
The Impact

This research study seeks to come up with a conceptual framework that investigates the different mechanisms of corporate governance and its effects on earning management (EM). This is to help build a conceptual framework of governance practices and its mechanisms, which mainly consists of board of directors and audit committee. To build the conceptual framework, the background of governance practices and EM theory served as a good starting point. The current research study is based on the complete assessment of present literatures, the two mechanisms of governance practices and EM. This paper serves as a guide to senior management, who seeks to improve their company’s financial reporting quality (FRQ) through the execution of governance practices, in which the governance practices support their company’s FRQ efforts. Furthermore, the conceptual framework serves as a benchmark for practitioners to execute their governance practices more effectively and efficiently in their own respective firms. This paper seeks to close the gap on the existing literature, by giving guidance to the senior management of governance practices companies that aspires to discover the competency of EM. By developing a deeper understanding of the relationship between corporate governance practices and EM, senior management can thus focus their efforts on the practices that ensure the firms’ ability to establish a competitive FRQ.

Cause Related Marketing and Customer Value: The Role of Service Quality and Perceived Risk as Mediators

2018 ◽  
Vol 5 (01) ◽  
Author(s):  
Shelleka Gupta ◽  
Alka Sharma ◽  
Aubid Hussain Parrey
Keyword(s):  
Literature Review ◽  
Service Quality ◽  
Direct Effect ◽  
Perceived Risk ◽  
Customer Value ◽  
Research Study ◽  
Cause Related Marketing ◽  
Relationship Of ◽  
The Relationship

The present research paper is an attempt to understand the role of mediating variables in the relationship of cause related marketing and customer Value. Based on the literature review, the role of service quality and perceived risk as mediators has been analysed in depth. The data for the study has been collected from mobile subscribers of the select telecom companies that were running cause campaigns. The results of the research showed higher total effect than direct effect, which signalled the role of mediators in the relationship of cause related marketing and customer value. Furthermore it is evident from the analysis that service quality has a direct and significant impact on the relationship of Cause related marketing and customer value, as compared to the perceived risk. This research study emphasizes the role of Cause Related Marketing in enhancing customer value via service quality.

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